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Judgment of the Court of 8 April 1992.

James Joseph Cato v Commission of the European Communities.

Non-contractual liability - Common fisheries policy - Non-payment of a final cessation premium in respect of a fishing vessel.

Case C-55/90.

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Judgment of 8 April 1992, Cato / Commission (C-55/90, ECR 1992 p. I-2533) ECLI:EU:C:1992:168

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James Joseph Cato v Commission of the European Communities.

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Keywords

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1. Action for damages ° Purpose ° Claim for compensation brought against the Community under the second paragraph of Article 215 of the Treaty ° Exclusive jurisdiction of the Court

(EEC Treaty, Art. 178 and second paragraph of Art. 215)

2. Fisheries ° Conservation of resources of the sea ° Aid which may be granted to Member States, with financial contributions by the Community, in order to reduce production capacity ° Approval by the Commission of a national scheme consistent with the objectives of the Community provisions ° Whether lawful

(Council Directive 83/515; Commission Decision 84/17)

Summary

1. Under Article 178 of the Treaty the Court alone has jurisdiction, to the exclusion of national courts, in disputes based on the second paragraph of Article 215 of the Treaty relating to compensation for damage caused by the Community institutions.

2. In order to encourage a reduction of production capacity, Directive 83/515 concerning certain measures to adjust capacity in the fisheries sector authorizes Member States to introduce a system of financial aid for measures reducing such capacity and provides for financial contributions by the Community to the aid thus granted. The power of verification conferred on the Commission is intended solely to determine whether the schemes proposed by Member States for reducing production capacity satisfy the conditions for financial contributions from the Community, having regard to their compliance with the directive and bearing in mind other structural measures in the fisheries sector. A decision adopted by the Commission pursuant to that power of verification and approving a national scheme applying the directive which is not contrary to the objectives thereof cannot be regarded as unlawful and hence as entailing liability on the part of the Community.

Parties

In Case C-55/90,

James Joseph Cato, residing in Ramsgate (United Kingdom), represented by Alan Tyrrell QC, and Paul Cairnes, Barrister, instructed by Binks Stern & Co., Solicitors, with an address for service in Luxembourg at the Chambers of Marco Nosbusch, 54 Avenue de la Liberté,

applicant,

v

Commission of the European Communities, represented by Peter Oliver, of its Legal Service, acting as Agent, with an address for service in Luxembourg at the office of Roberto Hayder, a representative of the Commission' s Legal Service, Wagner Centre, Kirchberg,

defendant,

supported by

United Kingdom of Great Britain and Northern Ireland, represented by H.A. Kaya, of the Treasury Solicitor' s Department, acting as Agent, assisted by Christopher Vajda, Barrister, with an address for service in Luxembourg at the British Embassy, 14 Boulevard Roosevelt,

intervener,

APPLICATION for compensation, under Articles 178 and 215 of the EEC Treaty, for the damage suffered by the applicant by reason of the non-payment of the final cessation premium in respect of a fishing vessel provided for by Article 5 of Council Directive 83/515/EEC of 4 October 1983 concerning certain measures to adjust capacity in the fisheries sector (OJ 1983 L 290, p. 15),

THE COURT,

composed of: O. Due, President, R. Joliet, F.A. Schockweiler, F. Grévisse and P.J.G. Kapteyn (Presidents of Chambers), G.F. Mancini, C.N. Kakouris, J.C. Moitinho de Almeida, G.C. Rodríguez Iglesias, M. Diez de Velasco and M. Zuleeg, Judges,

Advocate General: M. Darmon,

Registrar: J.A. Pompe, Deputy Registrar,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 10 December 1991, at which the United Kingdom was represented by J.E. Collins, acting as Agent, Christopher Bellamy QC, and Christopher Vajda, Barrister,

after hearing the Opinion of the Advocate General at the sitting on 4 February 1992,

gives the following

Judgment

Grounds

1 By application lodged at the Court Registry on 7 March 1990, James Joseph Cato brought an action under Article 178 and the second paragraph of Article 215 of the EEC Treaty based on the non-contractual liability of the Community and claiming that the Commission should be ordered to pay compensation for the damage resulting from the non-payment, in respect of the fishing vessel "Excelsior", of the final cessation premium provided for under Council Directive 83/515/EEC of 4 October 1983 concerning certain measures to adjust capacity in the fisheries sector (OJ 1983 L 290, p. 15, hereinafter "the Directive").

2 Article 1 of the Directive authorized Member States to introduce a system of financial aid, the cost of which was to be borne in part by the Community, for measures relating to the temporary or permanent reduction of production capacity in the fisheries sector. Article 2 of the Directive provides that such aid may be granted to producers, whether natural or legal persons, operating one or more vessels flying the flag of one of the Member States and registered in the territory of the Community.

3 Paragraphs 1, 2 and 3 of Article 5 in particular provide for the grant by Member States of a final cessation premium in respect of vessels the length of which between perpendiculars is 12 metres or more and which have been engaged in fishing for at least 100 days during the calendar year preceding the application for the premium, where they have been scrapped, transferred definitively to a third country or assigned to purposes other than fishing in Community waters.

4 Member States are required under paragraphs 4 and 5 of Article 5 to take the necessary measures to ensure that vessels for which final cessation premiums have been paid are permanently barred from fishing in Community waters. They are obliged to forward to the Commission a list of such vessels, which is then published in the Official Journal of the European Communities.

5 Articles 6, 7 and 8 of the Directive establish a system under which the Member States inform the Commission of their proposed measures to reduce fishing capacity. On the basis of the information provided and within two months of its communication, the Commission must examine whether the measures proposed comply with the Directive in such a manner as to fulfil the conditions for financial contributions from the Community, and must adopt a decision on the matter. Member States are required to communicate to the Commission the laws, regulations and administrative provisions adopted following that decision.

6 On 15 November 1983 the United Kingdom submitted to the Commission the draft measures which it intended to adopt in implementation of the Directive. In Decision 84/17/EEC of 22 December 1983 concerning the implementation by the United Kingdom of certain measures to adjust capacity in the fisheries sector pursuant to Council Directive 83/515/EEC (OJ 1984 L 18, p. 39) the Commission concluded that those measures fulfilled the conditions for financial contributions from the Community.

7 On 19 December 1983 the United Kingdom adopted the Fishing Vessels (Financial Assistance) Scheme 1983 (hereinafter "the United Kingdom Scheme") (S.I. 1983 No 1883), which entered into force on 21 December 1983. That scheme introduced a system of decommissioning grants payable to the owners of fishing vessels which have been permanently withdrawn from operation within the fishing industries of the Member States (Paragraph 18). Grants are made on the basis of an application which must specify the means by which the permanent withdrawal is to be effected.

8 Paragraphs 23 and 26 of the United Kingdom Scheme are worded as follows:

"Paragraph 23

1. If the appropriate Minister [of Agriculture, Fisheries and Food] is satisfied that an application for a decommissioning grant meets the foregoing requirements of this Part, he may approve the application.

2. An approval by the appropriate Minister ... may be made subject to such conditions as the appropriate Minister sees fit.

Paragraph 26

... the appropriate Minister may, if he is satisfied °

(a) that the vessel to which the declaration relates has been removed from the fishing boat register,

(b) that the conditions (if any) subject to which his approval was given have been observed, and

(c) that the foregoing requirements ... have been met in respect of the vessel, pay a decommissioning grant to the applicant."

9 Mr Cato, a fisherman, purchased the vessel "Excelsior" in 1983. He decided in 1984 to sell the vessel for 8 500 to Mr and Mrs Hann, who intended to use it as a houseboat. On the basis of information provided by the local representatives of the Minister of Agriculture, Fisheries and Food (hereinafter "the Minister"), Mr Cato expected to qualify for a decommissioning grant in the amount of 22 144.

10 The contract of sale was signed on 1 August 1984. In that contract, the purchasers stated that they were aware that the vendor had applied for a decommissioning grant and that, should the vessel once more be used for fishing in Community waters under the flag of a Member State, the new owner of the vessel might be obliged to repay the amount of the grant. Mr Cato tendered his application for a decommissioning grant on 2 August 1984. The "Excelsior" was struck off the register of fishing vessels on 9 August 1984.

11 Mr and Mrs Hann were forced to change their plans, and on 14 October 1984 they resold the vessel to two Irish nationals, Messrs Murphy and Boyle, who had expressed an interest in the vessel' s engine and in selling the hull as scrap. The purchasers declared in the contract of sale that they were aware that the "Excelsior" was to receive a decommissioning grant and that they might be required to repay the amount of that grant if the vessel was once again used for fishing within Community waters under the flag of a Member State.

12 Notwithstanding that declaration, Mr Boyle subsequently requested the Irish authorities to register the "Excelsior" as a fishing vessel. The Irish authorities were informed by their British counterparts that the previous owner of the vessel had applied for a decommissioning grant but that such grant had not yet been paid, and they accordingly proceeded to register the vessel and issue a fishing licence. In the light of those developments, the British Minister, who had waited for proof of the final use to which the vessel had been put, informed Mr Cato on 25 February 1985 of his decision to reject the application for a grant.

13 An application made by Mr Cato on 21 December 1985 for judicial review of that decision was refused by the High Court on the grounds, first, that the application had been made after the expiry of the limitation period of three months which had started to run on 25 February 1985 and, secondly, that the applicant was in any case not entitled to the grant as the Minister was not satisfied that the "Excelsior" had been withdrawn from all activity in the fishing industry. It is common ground that the High Court could have extended the three-month period if it had formed the opinion that there was merit in Mr Cato' s arguments.

14 On 29 October 1986 Mr Cato brought a second action against the Minister, this time a private-law action. This action was founded on the Minister' s contractual liability, negligent misrepresentation on his part and estoppel, based on the assurances which Mr Cato had received with regard to the payment of the grant. The action was dismissed by the High Court in a judgment of 27 May 1988, which was affirmed by the Court of Appeal on 15 June 1989. On 24 January 1990 the House of Lords refused leave to appeal.

15 Reference is made to the Report for the Hearing for a fuller account of the relevant legislation and the facts of the case, the course of the procedure and the submissions and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

Admissibility

16 The United Kingdom, the intervener, disputes the admissibility of the application. In the first place, it takes the view that the application in reality concerns the validity of an individual decision taken by the national authorities and therefore, according to the case-law of the Court (judgment in Case 12/79 Wagner v Commission [1979] ECR 3657), comes within the jurisdiction of the national courts. Secondly, the United Kingdom submits that there is no connection relevant to the problem at issue between the Commission' s conduct and the individual decision taken by the national authorities. Thirdly and finally, it takes the view that the claim for damages is in substance a claim for payment of amounts allegedly due and that, as the Court ruled in its judgment in Case 133/79 Sucrimex and Westzucker v Commission [1980] ECR 1299, such a claim ought to be brought before the national courts.

17 The claim for damages brought by Mr Cato is based on the assumption that the alleged damage is the direct consequence of Commission Decision 84/17/EEC. Under Article 178 of the Treaty the Court alone has jurisdiction in disputes relating to compensation for damage caused by the Community institutions. The argument based on the absence of a relevant connection between the conduct of the Commission and the individual decision by the United Kingdom authorities is a matter to be examined with the substance of the case. Consequently, Mr Cato' s application must be declared admissible.

Substance

18 In order to assess the merits of Mr Cato' s application, it should be recalled that, as the Court has consistently held (see for example the judgment in Case C-200/89 FUNOC v Commission [1990] ECR I-3669), it follows from the second paragraph of Article 215 of the Treaty that the Commission may incur non-contractual liability and the right to compensation for damage suffered may arise only if a series of conditions regarding the illegality of the alleged conduct of the institutions, the reality of the damage and the existence of a causal link between the conduct of the institution and the alleged damage have first been met.

19 With regard to the first condition, the applicant takes the view that by approving, in Decision 84/17/EEC, the United Kingdom Scheme, which he claims did not satisfy the provisions of the Directive, the Commission committed a sufficiently serious breach of a superior rule of law for the protection of individuals.

20 According to Mr Cato, the United Kingdom Scheme added an extra condition to those provided for under the Directive by requiring the owner to prove that the vessel in respect of which the grant was requested had been permanently withdrawn from all activity in the fishing industry. Furthermore, the United Kingdom Scheme gave the Minister a discretion as to payment of the grant, which according to the Directive should instead be automatic once the conditions laid down have been satisfied.

21 In this connection it is to be noted, first, that the object of the Directive is to encourage temporary or permanent reduction of production capacity in the fisheries sector. In order to attain that objective, the Directive authorizes Member States to introduce a system of financial aid for measures reducing such capacity and provides for financial contributions by the Community to the aid thus granted under the conditions set out in the Directive.

22 It follows that the Directive leaves it to Member States to choose whether or not to introduce such an aid scheme and to determine its form and details, provided that the latter are not at variance with the objectives of the Directive.

23 Secondly, it is to be noted that the power of verification conferred on the Commission by Articles 7 and 8 of the Directive is intended solely to determine whether the schemes proposed by Member States satisfy the conditions for financial contributions from the Community, having regard to their compliance with the Directive and bearing in mind other structural measures already existing or envisaged for the fisheries sector.

24 In that context, the fact that a national scheme requires the persons concerned to establish that the vessel will in future be used for purposes other than fishing is not at variance with the objectives of the Directive. Since the aim of the Directive, as mentioned above, is to encourage reduction of production capacity by means of scrapping, the definitive transfer of the vessel to a third country or its assignment to purposes other than fishing, the above requirement of proof cannot be regarded as constituting an obstacle to the attainment of the objective set.

25 Admittedly, Mr Cato argues that the United Kingdom Scheme imposes an impossible evidential burden on him since no one can prove that a vessel intended to be used for other purposes will not, prior to its destruction, be used once again in the unforeseeable future for fishing within Community waters.

26 Such a requirement in this connection would, it is clear, amount to a prohibition of a reduction in production capacity of the fishing fleet by methods other than the scrapping of the vessel or its definitive transfer to a third country, whereas Article 5(1) of the Directive also envisages its assignment to purposes other than fishing in Community waters. Mr Cato, however, has been unable to refer to any specific provision in the United Kingdom Scheme in support of his view and there is nothing in that scheme to suggest that it allows the national authorities to impose on an applicant for the grant such an impossible condition.

27 As the judgment of the Court of Appeal of 15 June 1989, cited above, makes clear, the United Kingdom Minister has no discretion as to the grant of aid once the conditions laid down have been satisfied. The Minister therefore, contrary to the view taken by Mr Cato, has no discretion such as would constitute an obstacle to the attainment of the Directive' s objectives.

28 The fact that the actual conduct of the United Kingdom authorities in the course of events may not be entirely free of blame cannot, no matter how regrettable, be attributed to the Commission in the exercise of its power of prior verification.

29 It follows from all the foregoing that the Commission, in approving the United Kingdom Scheme by way of Decision 84/17, did not act unlawfully in such a way as to entail liability on the part of the Community.

30 Consequently, the application must be dismissed as unfounded, and it is not necessary to determine whether the other conditions governing liability on the part of the Community have been satisfied.

Decision on costs

Costs

31 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. However, the Court considers that the special circumstances of this case, that is to say, its novelty and complexity, justify each party being ordered to pay its own costs.

32 Each party, including the intervener, must therefore be ordered to pay its own costs.

Operative part

On those grounds,

THE COURT

hereby:

1. Dismisses the application;

2. Orders each of the parties to bear its own costs.

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