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IMPORTANT LEGAL NOTICE - IMPORTANT LEGAL NOTICE - The source of this judgment is the web site of the Court of Justice of the European Communities. The information in this database has been provided free of charge and is subject to a Court of Justice of the European Communities disclaimer and a copyright notice. This electronic version is not authentic and is subject to amendment.
JUDGMENT OF THE COURT (Fifth Chamber)
27 November 1997(1)
(Accession of the Kingdom of Sweden - Agriculture - Sugar - National levy on
sugar stocks)
In Case C-27/96,
REFERENCE to the Court under Article 177 of the EC Treaty by the Länsrätt i
Jönköpings Län (Sweden) for a preliminary ruling in the proceedings pending
before that court between
Danisco Sugar AB
and
Allmänna Ombudet
on the interpretation of Articles 137(2), 145(2) and 149(1) of the Act concerning
the conditions of accession of the Kingdom of Norway, the Republic of Austria, the
Republic of Finland and the Kingdom of Sweden and the adjustments to the
Treaties on which the European Union is founded (OJ 1994 C 241, p. 21), Articles
39 and 40 of the EC Treaty, Council Regulation (EEC) No 1785/81 of 30 June
1981 on the common organization of the markets in the sugar sector (OJ 1981
L 177, p. 4), and Commission Regulation (EC) No 3300/94 of 21 December 1994
laying down transitional measures in the sugar sector following the accession of
Austria, Finland and Sweden (OJ 1994 L 341, p. 39),
THE COURT (Fifth Chamber),
composed of: M. Wathelet, President of the First Chamber, acting as President of
the Fifth Chamber, J.C. Moitinho de Almeida, D.A.O. Edward, P. Jann and
L. Sevón (Rapporteur), Judges,
Advocate General: A. La Pergola,
Registrar: H. von Holstein, Deputy Registrar,
after considering the written observations submitted on behalf of:
- Danisco Sugar AB, by Lars Gildéus, Advokat, Malmö, and Otfried
Lieberknecht, Michael Schütte and Wolfgang Kirchhoff, Rechtsanwälte,
Brussels,
- the Swedish Government, by Erik BrattgÊard, DepartementsrÊad in the
Foreign Trade Department of the Ministry of Foreign Affairs, acting as
Agent,
- the Commission of the European Communities, by Eugenio De March,
Legal Adviser, and Knut Simonsson, of its Legal Service, acting as Agents,
having regard to the Report for the Hearing,
after hearing the oral observations of Danisco Sugar AB, represented by Lars
Gildéus, Otfried Lieberknecht and Michael Schütte; the Swedish Government,
represented by Erik BrattgÊard; the Danish Government, represented by Peter
Biering, Head of Division in the Ministry of Foreign Affairs, acting as Agent; and
the Commission, represented by Knut Simonsson, at the hearing on 17 April 1997,
after hearing the Opinion of the Advocate General at the sitting on 17 June 1997,
gives the following
Judgment
- By order of 26 January 1996, received at the Court on 30 January 1996, the
Länsrätt i Jönköpings Län (Jönköping County Administrative Court) referred to the
Court for a preliminary ruling under Article 177 of the EC Treaty two questions
on the interpretation of Articles 137(2), 145(2), and 149(1) of the Act concerning
the conditions of accession of the Kingdom of Norway, the Republic of Austria, the
Republic of Finland and the Kingdom of Sweden and the adjustments to the
Treaties on which the European Union is founded (OJ 1994 C 241, p. 21;
hereinafter 'the Act of Accession'), Articles 39 and 40 of the EC Treaty, Council
Regulation (EEC) No 1785/81 of 30 June 1981 on the common organization of the
markets in the sugar sector (OJ 1981 L 177, p. 4) and Commission Regulation (EC)
No 3300/94 of 21 December 1994 laying down transitional measures in the sugar
sector following the accession of Austria, Finland and Sweden (OJ 1994 L 341,
p. 39).
- Those questions were raised in proceedings between Danisco Sugar AB
(hereinafter 'Danisco') and the Allmänna Ombudet (Public Attorney),
representing the Statens Jordbruksverk (the Swedish Agricultural Board,
hereinafter 'the Jordbruksverk'), concerning the payment of a national levy on
sugar stocks, which was adopted by the Swedish Parliament on 20 December 1994
and which entered into force on 31 December 1994, one day before the accession
of the Kingdom of Sweden to the European Union. The levy is charged on sugar
which was held in stock in Sweden on 31 December 1994.
The Community legislation
The Act of Accession
- Article 137(2), second indent, of the Act of Accession lays down that, except where
the Act provides otherwise, 'the rights and obligations resulting from the common
agricultural policy shall be applicable in full in the new Member States'.
- Article 145(2) governs the situation of agricultural products which were held in
stock at the time of accession:
'Any stock of products in free circulation within the territory of the new Member
States on 1 January 1995 and exceeding the quantity which could be regarded as
constituting a normal carryover of stock must be eliminated by these Member
States at their cost under Community procedures to be specified and within
deadlines to be determined in accordance with the procedure referred to in
Article 149(1). The concept of normal carryover stock shall be defined for each
product on the basis of criteria and objectives particular to each common market
organization.'
- Article 149(1) provides:
'If transitional measures are necessary to facilitate the transition from the existing
regime in the new Member States to that resulting from application of the common
organization of the markets under the conditions set out in this Title, such
measures shall be adopted in accordance with the procedure laid down in Article
38 of Regulation No 136/66/EEC or, as appropriate, in the corresponding Articles
of the other Regulations on the common organization of agricultural markets.
These measures may be taken during a period expiring on 31 December 1997 and
their application shall be limited to that date.'
The common organization of the markets in the sugar sector
- The common organization of the markets in the sugar sector is governed by
Regulation No 1785/81, which has undergone a number of amendments, the most
recent occasion prior to the material time being the Act of Accession. That
Regulation makes arrangements, in Articles 28 and 28a (the latter inserted by
Council Regulation (EEC) No 1107/88 of 25 April 1988, OJ 1988 L 110, p. 20), for
the producers themselves, through a system of production levies and additional
levies, to bear all the costs of disposing of the Community's surplus production in
relation to internal consumption.
- Regulation No 3300/94, which lays down transitional measures entailed by the
accession of three new Member States, notes in the third recital in its preamble
that for the 1994/95 marketing year, the entire sugar output of Austria, Finland and
Sweden was produced under national arrangements and much of the sugar they
produced was disposed of before 1 January 1995. Accordingly, there are grounds
'for not applying the provisions on self-financing laid down in Articles 28 and 28a
of Regulation (EEC) No 1785/81 to sugar produced before 1 July 1995'.
- Article 5(1) of Regulation No 3300/94 fixes the normal carryover stock for Sweden
in respect of sugar, expressed as white sugar, at 304 792 tonnes as of 00.00 hours
on 1 January 1995. In addition, Articles 6 and 7 of that Regulation, respectively,
require each of the new Member States to undertake a survey of sugar and
isoglucose stocks in free circulation in their respective territories on that date and
at that hour, and - pursuant to Article 145(2) of the Act of Accession - to export,
without Community intervention, a quantity equal to the difference between the
quantity recorded and the quantity of normal carryover stock fixed.
The Swedish law
- According to Article 1 of the Lag om Lageravgift pÊa Socker och Ris (Law
1994:1704 imposing a levy on stocks of sugar and rice; hereinafter the
'Lageravgiftslag'), which was adopted by the Swedish Parliament on 20 December
1994 and entered into force on 31 December 1994, any person holding stocks of
sugar or rice on the latter date is liable to pay a levy thereon to the State. Under
Article 2 of the Lageravgiftslag, the levy is charged only on the quantity by which
the total stock exceeds 3 tonnes. Article 3 sets the levy at SKR 1.80 per kilo of
white sugar and SKR 1.65 per kilo of raw sugar.
- According to the preparatory documents on the basis of which the Lageravgiftslag
was drafted (proposal of 10 November 1994, Prop. 1994/95:43), its primary
objective was to prevent the accumulation of stocks over and above the quantity
which could be regarded as representing normal carryover stock for the purposes
of Article 145(2) of the Act of Accession. The levy was also to compensate for the
costs which the Kingdom of Sweden might have to bear pursuant to Article 145(2)
of the Act of Accession in the event of stocks being abnormally high. Lastly,
introduction of the levy was justified in view of the profits which would ensue from
the application of Community provisions after accession, since before accession the
selling price of sugar in the Community was approximately 30% higher than in
Sweden. The aim was to charge a levy equivalent to the increase in the market
price brought about by accession.
- By an amendment to the Lageravgiftslag, which was adopted by the Swedish
Parliament on 30 March 1995 (1995:329) and which entered into force on 1 April
1995, further provisions were inserted in Article 3 of that Law. By virtue of that
amendment, where the levy for storage costs provided for by Article 8 of
Regulation No 1785/81 is paid, a reduction of SKR 0.15 per kilo may be obtained
on the levy payable on stocks of white sugar and a proportionate reduction in
respect of raw sugar. The purpose of that provision is to avoid the charging of two
levies on sugar stocks.
The main proceedings and the questions referred
- Danisco Sugar is the only sugar producer in Sweden.
- Pursuant to the Lageravgiftslag, the Jordbruksverk demanded, by decision of 28
June 1995, payment of SKR 434 891 586 by way of the levy on sugar stocks.
- Danisco Sugar challenged that decision before the Länsrätt i Jönköpings Län and,
accordingly, sought its annulment. In support of its action, it primarily argues that
the decision taken by the Kingdom of Sweden to introduce unilaterally a national
sugar tax was an unlawful transitional measure and contrary to the common
organization of the markets in sugar in that it gave rise to a distortion of
competition between undertakings and discrimination as regards beet growers.
Danisco pointed out that, under an agreement entered into with the Swedish
Association of Beet Growers, it had undertaken to pass on to the growers more
than half the increase in the price of sugar resulting from accession to the
European Union.
- The Länsrätt decided to stay proceedings and refer the following questions to the
Court for a preliminary ruling:
'1. On a true construction of the Act of Accession of Sweden, Finland and
Austria, in particular of Articles 137(2), 145(2) and 149(1), are decisions
taken at national level concerning levies on normal transitional stocks of
sugar as set out in the Swedish Sugar Law, as amended, to be regarded as
unlawful transitional measures?
If not:
2. On a true construction of the European Community organization of the
market in sugar, in particular of Articles 39 and 40 of the EEC Treaty,
Council Regulation (EEC) No 1785/81 and Commission Regulation (EC)
No 3300/94, are decisions taken at national level concerning levies on
normal transitional stocks of sugar as set out in the Swedish Sugar Law, as
amended, to be regarded as unlawful interference in the organization of the
market?'
The questions
- By its questions, the Länsrätt essentially asks the Court whether Articles 137(2),
145(2) and 149(1) of the Act of Accession, Articles 39 and 40 of the EC Treaty,
Regulation No 1785/81 and Regulation No 3300/94 preclude a State acceding to the
European Union from adopting, on the eve of its accession, legislation introducing
a levy on sugar being then held in stock within that State.
- Article 149(1) of the Act of Accession concerns the detailed rules governing the
adoption by the Community of transitional measures relating to the common
agricultural policy.
- Since that provision does not concern the allocation of competence between the
Community, the Member States and States applying for accession, it has no bearing
on the main proceedings.
- All the other measures referred to by the national court concern the determination
of the applicable legislation in matters relating to the common agricultural policy
after accession. That being so, there is no ground for drawing any distinction
between the provisions of the Act of Accession referred to in Question 1 and those
mentioned in Question 2; accordingly, both questions should be considered
together.
- Danisco and the Danish Government maintain that by adopting the Lageravgiftslag
after the Act of Accession had been signed, the Kingdom of Sweden contravened
the 'principle of good faith', by virtue of which a State must refrain from acts
which would defeat the object and purpose of a treaty, a principle laid down in
Article 18 of the Vienna Convention on the Law of Treaties of 23 May 1969. On
that point, they rely on the judgment in Case T-115/94 Opel Austria v Council
[1997] ECR II-39, in which it was held that this principle must be respected by the
Community institutions and that, since it is the corollary in public international law
to the protection of legitimate expectations, which is a general principle of
Community law, an individual could rely on it before that Court in proceedings for
judicial review of a Community measure.
- Danisco next argues that the Lageravgiftslag has an impact on the Community
legislation relating to sugar, since it produced its effects only after accession. It
constitutes unlawful interference by the Kingdom of Sweden in the common
organization of the markets in the sugar sector, which, pursuant to Article 28 of
Regulation No 1785/81, falls within the exclusive competence of the Community.
- According to the Swedish Government, the Lageravgiftslag governs exclusively a
situation existing before the accession of the Kingdom of Sweden to the European
Union, since it concerns sugar produced from beet grown under the national
arrangements in force before 1 January 1995. It is therefore a national measure
which does not fall within the purview of the common organization of the markets
in the sugar sector. The Swedish Government also points out that the purpose of
the Lageravgiftslag was to prevent the accumulation of excessive stock and,
accordingly, it complied with the Act of Accession.
- The Commission, too, points out that the Swedish levy on sugar stocks is a measure
prior to the accession of the Kingdom of Sweden to the European Union, which
concerns quantities of sugar produced entirely during the period before accession,
in accordance with the relevant national arrangements governing the sugar market.
Like any other provision of national law, it could be regarded as incompatible with
the Treaty provisions on agricultural products and, in particular, with those
concerning the common organization of the markets, only if it ran counter to the
objectives of the common agricultural policy or impeded the functioning of the
mechanisms used to attain those objectives. In so far as it was designed to avoid
excessive stocks, that provision complied with the Act of Accession. The objective
of 'creaming off' the profit which sugar manufacturers were to derive from
accession is not contrary to the common organization of the markets in the sugar
sector, the provisions of which are not supposed to guarantee Swedish sugar
manufacturers or beet growers a particular level of income in respect of sugar
produced before accession.
- In order to establish whether a law introducing a levy on sugar stocks, such as the
Lageravgiftslag, is contrary to the provisions of Community law concerning the
common organization of the markets in the sugar sector, it must be determined
whether that law concerns an area for which the Community rules make exhaustive
provision or interferes with the proper functioning of the mechanisms provided by
the common organization of the markets, in particular through its influence on
price formation or on the structure of agricultural holdings (see Case 222/82 Apple
and Pear Development Council v Lewis [1983] ECR 4083, paragraphs 23 and 31,
and Case 218/85 Cerafel v Le Campion [1986] ECR 3513, paragraph 13).
- On that point, it should first be noted that the Lageravgiftslag applied to an
objective factual situation existing before accession to the European Union. It is
the fact of holding sugar stocks on 31 December 1994 that gives rise to liability to
pay the levy to the Swedish State. It is only in so far as that tax could affect the
situation of agricultural products in stock on 1 January 1995 that its compatibility
with the provisions of Community law applicable in the sugar sector falls to be
examined.
- As regards the sugar forming part of the normal carryover stocks, Regulation
No 3300/94 provides that the provisions of Regulation No 1785/81 concerning the
self-financing of the sector or the system of export refunds are not to apply to
quantities of sugar produced before 1 July 1995 in the new Member States, since
the entire sugar output of those States was produced under national arrangements
and much of the sugar produced had already been disposed of before 1 January
1995.
- As regards pricing, the levy on sugar stocks could not have had any effect on the
position of sugar producers whose storage costs, including taxes, undoubtedly rose
because of the levy, but whose selling price for the product increased
commensurately by reason of accession, to come into line with the higher
Community selling price for sugar. The impact of the levy on such persons was
therefore neutral.
- On the contrary, failure to charge a levy on sugar stocks at the time of accession
would have placed Swedish sugar producers at an advantage compared with
Community sugar producers, since they would have been able to benefit from the
higher Community selling prices without, however, having contributed to the self-financing arrangements for the sector. That is why both the Treaty of Accession
and Regulation No 3300/94 contained provisions designed to prevent the
constitution of sugar stocks for purposes of speculation. The fact that much of the
sugar produced during the 1994/95 marketing year had already been disposed of
before 1 January 1995 (third recital in the preamble to Regulation No 3300/94) was
taken into account when it was decided to apply the Community selling price to
that sugar without requiring any correlative contribution to the self-financing
arrangements.
- However, such a concession on the part of the Community with regard to a
quantity of sugar regarded as marginal in Community terms does not mean that the
Community provisions prohibited the adoption of legislation designed to eliminate,
before accession, the profit which Swedish sugar producers expected to gain from
the fact of accession and the resulting difference in selling price, so long as any
legislation such as the Lageravgiftslag does not interfere with the functioning of the
mechanisms for the common organization of the markets in the sugar sector.
- The subsequent amendment to the Lageravgiftslag, the purpose of which was
simply to reduce the rate of the levy, does not invalidate that conclusion.
- In those circumstances, it is unnecessary to address the argument put forward by
Danisco and the Danish Government that, by adopting the Lageravgiftslag after the
Act of Accession had been signed, the Kingdom of Sweden contravened the
principle of good faith, by virtue of which a State must refrain from acts which
would defeat the object and purpose of a treaty, a principle laid down in Article
18 of the Vienna Convention on the Law of Treaties of 23 May 1969.
- It should therefore be stated in reply that Articles 137(2) and 145(2) of the Act of
Accession, Articles 39 and 40 of the Treaty, Regulation No 1785/81 and Regulation
No 3300/94 do not preclude a State acceding to the European Union from
adopting, on the eve of its accession, legislation introducing a levy on sugar being
then held in stock within that State.
Costs
- The costs incurred by the Swedish and Danish Governments and by the
Commission of the European Communities, which have submitted observations to
the Court, are not recoverable. Since these proceedings are, for the parties to the
main proceedings, a step in the action pending before the national court, the
decision on costs is a matter for that court.
On those grounds,THE COURT (Fifth Chamber),
in answer to the questions referred to it by the Länsrätt i Jönköpings Län by order
of 26 January 1996, hereby rules:
Articles 137(2) and 145(2) of the Act concerning the conditions of accession of the
Kingdom of Norway, the Republic of Austria, the Republic of Finland and the
Kingdom of Sweden and the adjustments to the Treaties on which the European
Union is founded, Articles 39 and 40 of the EC Treaty, Council Regulation (EEC)
No 1785/81 of 30 June 1981 on the common organization of the markets in the
sugar sector and Commission Regulation (EC) No 3300/94 of 21 December 1994
laying down transitional measures in the sugar sector following the accession of
Austria, Finland and Sweden do not preclude a State acceding to the European
Union from adopting, on the eve of its accession, legislation introducing a levy on
sugar being then held in stock within that State.
WatheletMoitinho de Almeida
Edward
Jann Sevón
|
Delivered in open court in Luxembourg on 27 November 1997.
R. Grass
C. Gulmann
Registrar
President of the Fifth Chamber
1: Language of the case: Swedish
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