CJEC, December 13, 1983, No 218-82

The court

1 By application lodged at the court registry on 13 august 1982, the Commission of the European Communities brought an action under the first paragraph of article 173 of the eec treaty for a declaration that council regulation n°1699-82 of 24 june 1982 opening, allocating and providing for the administration of a community tariff quota for rum, arrack and tafia, falling within subheading 22.09 c i of the common customs tariff and originating in the african, caribbean and pacific states (acp) (1982-1983) (official journal 1982, l 189, p. 1) is void.

2 Article 2 (1) of the second acp-eec convention, signed at lome on 31 october 1979, provides that ' ' products originating in the acp states shall be imported into the community free of customs duties and charges having equivalent effect. ' '

3 Protocol n°5 annexed to the convention creates an exception to that rule with respect to rum. Article 1 of protocol 5 states:

' ' Until the entry into force of a common organization of the market in spirits, products of tariff subheading 22.09 c i originating in the acp states shall be imported duty free into the community under conditions such as to permit the development of traditional trade flows between the acp states and the community and between the member states. ' '

4 The objective of protocol n°5 is to develop traditional trade flows in rum while limiting the amount of rum that can be imported duty free into the community.

5 To that end the community adopts each year a regulation fixing the quantity of rum which may be imported duty free from the acp states into the community and allocating that quota amongst the member states. Article 2 of the protocol regulates that allocation and provides that the quantities which may be imported free of customs duties are to be fixed annually on the basis of the largest annual quantities imported from the acp states into the community in the last three years for which statistics are available, increased by an annual growth rate of 40% on the market of the united kingdom and 18% on the other markets of the community.

6 Regulation n°1699-82 fixed the tariff quota for the products in question for the period from 1 july 1982 to 30 june 1983 at 193 178 hectolitres of pure alcohol. The quota is divided into two instalments, the first, of 125 430 hectolitres, being for united kingdom consumption, and the second, of 67 748 hectolitres, being allocated among the other member states.

7 Article 4 (2) of regulation n°1699-82 provides that:

' ' The united kingdom shall take the steps necessary to ensure that the quantities imported from the acp states under the conditions laid down in articles 1 and 2 are restricted to those meeting its domestic consumption requirements. ' '

8 According to the commission the purpose of that provision is to prevent the exportation from the united kingdom to the other member states of quantities forming part of the quota allocated to the united kingdom. The regulation in question therefore infringes articles 30 and 34 of the treaty and should therefore be declared void, subject, however, to the court ' s declaring the effects of article 1 of the said regulation to be definitive pursuant to the second paragraph of article 174 of the treaty.

9 The commission is contesting the validity not of the practice of allocating a global tariff quota among the member states but of the prohibition of re-exportation to other member states which is deduces from article 4 of the regulation.

10 According to the council, whose arguments on this point are supported by the government of the french republic, the commission ' s interpretation of article 4 as set out above is incorrect. The provision does not have scope attributed to it by the commission and thus the regulation does not infringe articles 30 and 34.

11 The council notes that traditionally more rum from the acp states is exported to the united kingdom (where it is intended for domestic consumption) than to the other member states. Taking that fact into account, article 2 (a) of the protocol provides that the growth rate for the development of trade referred to in article 1 will be different for the united kingdom (40%) and for the remainder of the member states (18%) and the regulation reflects those figures in the calculation of the quotas allocated.

12 According to the council the sole purpose of article 4 of the regulation, as is clear from the english version, is to impose an obligation of the united kingdom to import no greater quantity than may reasonably be regarded as corresponding to its domestic consumption requirements, taking into account the aforementioned growth rate, and it does not contain a prohibition against marketing in the other member states consignments of rum forming part of the united kingdom ' s quota.

13 It must be emphasized that if, as the commission maintains, that provision did contain a prohibition on exportation from the united kingdom to the other member states, it would indeed be contrary to the treaty provisions on the free movement of goods; while, therefore, as the court has confirmed, division of a global tariff quota into national quotas may, in certain circumstances, be compatible with the treaty, that is subject to the express condition that it does not hinder the free movement of the goods forming part of the quota after they have been admitted to free circulation in the territory of one of the member states.

14 It follows from the foregoing that the result of the case before the court depends on the interpretation to be given to article 4 of regulation n°1699-82.

15 The court takes the view that when the wording of secondary community law is open to more than one interpretation, preference should be given to the interpretation which renders the provision consistent with the treaty rather than the interpretation which leads to its being incompatible with the treaty.

16 In this case the interpretation suggested by the council is entirely consistent with the wording of the provision in question in its english version without being irreconcilable with the other versions of the provision and it corresponds, moreover, to the objective of protocol n°5 whose attainment it facilitates.

17 It follows from the foregoing that the contested provision does not require the united kingdom to limit exports of rum originating in the acp states to other member states, as the commission has maintained, but merely to ensure that the quantities imported into the united kingdom are limited to those corresponding to its domestic consumption requirements. The contested provision is, therefore, in conformity with the treaty.

18 Consequently the application must be dismissed.

Costs

19 Under article 69 (2) of the rules of procedure, the unseccessful party is to be ordered to pay the costs. As the commission has failed in its submissions, it must be ordered to pay the costs, including those of the intervener.

On those grounds,

The court

Hereby:

1. Dismisses the application;

2. Orders the commission to pay the costs, including those of the intervener.