Internationale Handelsgesellschaft mbH V Einfuhr und Vorratsstelle fr Getreide und Futtermittel

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Internationale Handelsgesellschaft mbH
VEinfuhr- und Vorratsstelle für Getreide und
Futtermittel

• Case 11-70, preliminary ruling

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Parties

• Reference to the Court under Article 177 of the
  EEC Treaty was made by the Verwaltungsgericht
  (administrative court) Frankfurt am Main -
  Germany for a preliminary ruling in the case
  pending before this court between
• Internationale Handelsgesellschaft mbH
  (international trading company)
• Einfuhr- und Vorratsstelle für Getreide und
  Futtermittel (import and supply agency for
  cereals and animal feed)

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Subject of the Case

• Question on the Validity of Paragraph 12 (1)
  (iii) of Regulation No. 120/67/EEC of the
  Council on the Common Organization of the market
  in cereals, of 13 June 1967
• And on the validity of Article 9 of Regulation
  No. 473/67/EEC of the Commission on import and
  export licences for cereals and processed cereal
  products, rice, broken rice and processed rice
  products, of 21 August 1967
• Both regulations based on EEC Treaty, Art. 40/43

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EEC Council Regulation 120/67, Art.12

• ' Imports into the Community or exports therefrom
  of any of the products listed in Article1 shall
  be subject to the submission of an import or
  export licence which may be issued by member
  states to any applicant irrespective of the place
  of his establishment in the Community....
• The issue of such licences shall be conditional
  on the lodging of a deposit guaranteeing that
  importation or exportation is effected during the
  period of validity of the licence the deposit
  shall be forfeited in whole or in part if the
  transaction is not effected, or is only partially
  effected, within that period.

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EEC Council Regulation 120/67, Art.12 (Cont.)

• A licence is neessary to either import or export
  cereals
• Licence can be obtained by lodging a deposit
• Forefeiture of the deposit if the export has not
  been processed during the period of validity

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EEC Regulation 473/67, Art 8,9

• ' Subject to Article 9 hereof, if the obligation
  to import or export has not been fulfilled during
  the period of validity of the licence, the
  deposit is forfeited ...'
• ' If the import or export is prevented within the
  period of validity of the licence by a
  circumstance which is to be regarded as force
  majeure, and if application is made for these
  circumstances to be taken into account, then ()
  the obligation to import or export is
  extinguished, and the deposit is not forfeited.

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Circumstances of the Case

• Applicant company (Internationale
  Handelsgesellschaft mbH) obtained export licence
  for a quantity of maize (20000 tons)
• Validity of that licence expired on 31 December
  1967
• Portion of their deposit was declared forfeited
  ( 17000DM) after the firm had only partially
  used the export licence granted to it for 20,000
  tons of ground maize

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Legal Proceedings

• Applicant Company brought legal proceedings
  challenging the validity of the deposit system
• application to the Administrative Court
  (Verwaltungsgericht) of Frankfurt/Main for
  annulment of a decision of the Einfuhr- und
  Vorratsstelle für Getreide und Futtermittel
  (EVSt)
• Verwaltungsgericht (administrative court)
  Frankfurt am Main
• Considered that deposit system was contrary to
  the principles of national constitutional law
  including freedom of action and of disposition,
  economic liberty and proportionality
• Referred question of the systems validity to the
  ECJ

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The Verwaltungsgericht

• Refused to accept the validity of the provisions
  in question
• Considers it to be essential to put an end to the
  existing legal uncertainty
• According to the its evaluation the system of
  deposits was contrary to certain principles of
  national constitutional law to be protected
  within the framework of constitutional law
• system of deposits runs counter to the principles
  of freedom of action and disposition, of economic
  liberty and of proportionality arising from the
  German Constitution

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The Verwaltungsgericht (Cont.)

• The obligation to import or export resulting from
  the issue of the licenses, together with the
  deposit attaching thereto, constitutes an
  excessive intervention in the freedom of
  disposition in trade
• the objective of the regulations could have been
  attained by methods of intervention having less
  serious consequences
• The Administrative Court obtained a preliminary
  ruling from the European Court of Justice under
  Article 177 of the Treaty establishing the
  European Economic Community
• Question Are the rules cited from these
  regulations lawful under the law of the European
  Economic Community?

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Judgement of the Court

• In the judgment of the European Court dated 17
  December 1970 the legality of the disputed
  regulations is confirmed
• The Validity of measures adopted by the
  Institutions of the Community can only be judged
  in the light of Community Law.
• The Law stemming from the Treaty, an independent
  source of Law, cannot because of its very nature
  be overridden by rules of national law, however
  framed, without being deprived of its character
  as Community Law and without the legal basis of
  the Community itself being called into question.

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Judgement of the Court (Cont.)

• The validity of a Community measure or its
  effect within a MS cannot be affected by
  allegations that it runs counter to either
  fundamental rights as formulated by the
  constitution of that state or the principles of
  its constitutional structure.

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The European Courts reasoning

• National rules of law could not take precedence
  over Community law ? autonomous status
• The rules of Community law are a necessary and
  appropriate means of enabling the authorities to
  carry out the necessary intervention on the
  cereals market
• The system of deposits violates no fundamental
  right
• The export deposit system has the advantages of
  simplicity and effectiveness over other
  imaginable systems
• Acts performed exclusively in the interests of
  particular entrepreneurs must take second place
  to a system introduced in the public interest of
  the Community

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Infringement of Fundamental Rights?

• Respect for fundamental rights integral part of
  the general principles of law protected by the
  ECJ
• protection of such rights must be ensured within
  the framework of the structure and objectives of
  the Community
• Therefore it had to be ascertained whether the
  system of deposits has infringed rights of
  fundamental nature
• examination as to whether or not any analogous
  guarantee inherent in Community Law has been
  disregarded
• The ECJ concluded that there has been no
  infringement of the rights claimed since the
  restriction on the freedom to trade etc. was not
  disproportionate to the general interest advanced
  by the deposit system

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Development in Germany

• However, after the case had returned to Germany,
  the administrative court reached a different
  conclusion
• They argued that the principle of proportionality
  enshrined in German constitutional Law had indeed
  been violated by the Community deposit system

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Conclusion

• In the Treaties establishing the European
  Communities there was no explicit provision
  underlying the primacy of EC law over national
  law to be found
• Still, the ECJ developed in its own jurisdiction
  the absolute primacy of EC Law!
• 1964 Costa/ E.N.E.L
• primacy of primary EC Law
• 1970 Internationale Handelsgesellschaft
• primacy of secondary EC Law (regulations,
  directives) over all national law including
  constitutional law and the assured fundamental
  rights there