JUDGMENT OF THE COURT

19 February 1998 (1)

(Fisheries — Hague Preferences — TACs — Cod and whiting — Discretion of theCommunity legislature — Relative stability — Principles of proportionality andnon-discrimination)

In Case C-4/96,

REFERENCE to the Court under Article 177 of the EC Treaty by the High Courtof Justice in Northern Ireland, Queen's Bench Division, for a preliminary ruling inthe proceedings pending before that court between

Northern Ireland Fish Producers' Organisation Ltd (NIFPO) and Northern IrelandFishermen's Federation

and

Department of Agriculture for Northern Ireland

on the validity of Council Regulation (EC) No 3362/94 of 20 December 1994 fixing,for certain fish stocks and groups of fish stocks, the total allowable catches for 1995and certain conditions under which they may be fished (OJ 1994 L 363, p. 1), onthe validity of Annex VII to the Resolution of 3 November 1976 adopted by theCouncil at The Hague and on the interpretation of the principle of State liabilityfor damage occasioned to individuals by breaches of Community law,

THE COURT,

composed of: G.C. Rodríguez Iglesias, President, C. Gulmann, H. Ragnemalm,R. Schintgen (Presidents of Chambers), G.F. Mancini, P.J.G. Kapteyn(Rapporteur), J.L. Murray, D.A.O. Edward, J.-P. Puissochet, G. Hirsch and P. Jann,Judges,

Advocate General: A. La Pergola,

Registrar: D. Louterman-Hubeau, Principal Administrator,

after considering the written observations submitted on behalf of:

—    the Northern Ireland Fish Producers' Organisation Ltd (NIFPO) and theNorthern Ireland Fishermen's Federation, by David Vaughan QC, FergusRandolph, Barrister, and Peter Martin, Solicitor,

—    the United Kingdom Government, by Stephanie Ridley, of the TreasurySolicitor's Department, acting as Agent, Patrick Coughlin QC andChristopher Vajda, Barrister,

—    the Danish Government, by Peter Biering, Kontorchef, acting as Agent,

—    the Irish Government, by Michael A. Buckley, Chief State Solicitor, actingas Agent, Edwin R. Alkin and Caitlín Ní Fhlaitheartaigh, BL,

—    the Council of the European Union, by John Carbery, Legal Adviser, actingas Agent, and

—    the Commission of the European Communities, by Thomas van Rijn, LegalAdviser, and Xavier Lewis, of its Legal Service, acting as Agents,

having regard to the Report for the Hearing,

after hearing the oral observations of the Northern Ireland Fish Producers'Organisation Ltd (NIFPO) and the Northern Ireland Fishermen's Federation,represented by David Vaughan and Fergus Randolph; the United KingdomGovernment, represented by Stephanie Ridley and Christopher Vajda; the IrishGovernment, represented by Michael A. Buckley, Paul Gallagher SC and EdwinR. Alkin; the Council, represented by John Carbery; and the Commission,represented by Thomas van Rijn and Xavier Lewis, at the hearing on 6 May 1997,

after hearing the Opinion of the Advocate General at the sitting on 30 September1997,

gives the following

Judgment

1.

    By order of 13 October 1995, received at the Court on 11 January 1996, the HighCourt of Justice in Northern Ireland, Queen's Bench Division, referred for apreliminary ruling under Article 177 of the EC Treaty five questions on the validityof Council Regulation (EC) No 3362/94 of 20 December 1994 fixing, for certain fishstocks and groups of fish stocks, the total allowable catches for 1995 and certainconditions under which they may be fished (OJ 1994 L 363, p. 1), on the validityof Annex VII to the Resolution of 3 November 1976 adopted by the Council at TheHague (hereinafter 'the Hague Resolution‘) and on the interpretation of theprinciple of State liability for damage occasioned to individuals by breaches ofCommunity law.

Legal framework

2.

    Those questions have been raised in judicial review proceedings brought before theHigh Court of Justice by the Northern Ireland Fish Producers' Organisation Ltd(NIFPO) and the Northern Ireland Fishermen's Federation (hereinafter 'theapplicants‘) against the decision of 5 May 1995 of the Department of Agriculturefor Northern Ireland (hereinafter 'the Department‘) allocating to NIFPO its 1995catch quotas for cod and whiting in the Irish Sea.

3.

    The principles applicable under the common fisheries policy were established inRegulation (EEC) No 2141/70 of the Council of 20 October 1970 laying down acommon structural policy for the fishing industry (OJ, English Special Edition1970 (III), p. 703) and, following Community enlargement, in Council Regulation(EEC) No 101/76 of 19 January 1976 (OJ 1976 L 20, p. 19).

4.

    By the Hague Resolution, which was adopted in November 1976, at a time whena number of non-member countries had extended their exclusive fishing zones to200 nautical miles, the Council set out a series of general guidelines for futuredevelopment of the common fisheries policy. Annex VII to that Resolution,entitled 'Draft Council Resolution on certain aspects of the internal fisheriessystem‘, is worded as follows:

'The Council considers that the reconstitution and protection of stocks in order topermit an optimum yield from potential Community resources require strict controland Community-wide measures to that end.

The Council recognises that the protection and the control of the fishing zone offIreland must not result, because of the size of this zone, in a charge, for thatMember State, which is disproportionate to the volume of Community fish

resources which can be exploited in that zone by the fishermen of that MemberState. It agrees that the implementation of available means of surveillance or thoseto be foreseen must be accompanied by appropriate measures to ensure that thecharges which ensue will be shared equitably.

Having regard to the economic relationships which characterise fishing activity inIreland, it declares its intention so to apply the provisions of the Common FisheriesPolicy, as further determined by the Act of Accession, and adapted to take accountof the extension of waters to 200 miles, as to secure the continued and progressivedevelopment of the Irish fishing industry on the basis of the Irish Government'sFisheries Development Programme for the development of coastal fisheries.

The Council furthermore recognises that there are other regions in the Community,inter alia those referred to in the Commission's proposal to the Council, (2) wherethe local communities are particularly dependent upon fishing and the industriesallied thereto. The Council therefore agrees that in applying the CommonFisheries Policy, account should also be taken of the vital needs of these fishingcommunities.

The decisions and the guidelines set out in the preceding paragraphs and thedirectives adopted for negotiations with third countries in no way prejudice thespecific provisions which it is necessary to adopt without delay in order to solve theproblems of coastal fishing activity, in particular in economically disadvantagedregions, and to regulate fishing activity within a coastal belt.‘

5.

    Of the eight annexes, only Annex I was published in the Official Journal, under thetitle 'Council Resolution of 3 November 1976 on certain external aspects of thecreation of a 200-mile fishing zone in the Community with effect from 1 January1977‘ (OJ 1981 C 105, p. 1).

6.

    In its Declaration of 30 May 1980 on the common fisheries policy (OJ 1980 C 158,p. 2), the Council pointed out that, in compliance with the Treaties and inconformity with the Hague Resolution, the common fisheries policy should, inparticular, be based on 'fair distribution of catches having regard, most particularly,to traditional fishing activities, to the special needs of regions where the localpopulations are particularly dependent upon fishing and the industries alliedthereto, and to the loss of catch potential in third country waters‘.

7.

    Pursuant to Annex VII to the Hague Resolution, and particularly to the recognitiontherein of the special needs of those regions where the local communities areparticularly dependent on fishing and allied industries, the Commission proposedto the Council, in a communication of 12 June 1980, that, for each fish stock,

Ireland should be ensured a doubling of its 1975 catch and the United Kingdomcatches of a volume equivalent to that of landings in 1975 by vessels of less than24 metres in its northern regions (the 'Hague Preference‘ system). In terms ofannual tonnage, these parameters, according to the Commission, represent 6 954tonnes of cod and 7 196 tonnes of whiting for Ireland, and 1 223 tonnes of cod and2 334 tonnes of whiting for the United Kingdom.

8.

    To supplement the provisions of Regulation No 101/76, the Council adoptedRegulation (EEC) No 170/83 of 25 January 1983 establishing a Community systemfor the conservation and management of fishery resources (OJ 1983 L 24, p. 1). Article 3 of Regulation No 170/83 provided for, inter alia, the annual fixing both oftotal allowable catches ('TACs‘) for each stock or group of stocks and of theshares available to the Community. Under Article 4(1) of Regulation No 170/83,the volume of the catches available to the Community was to be distributed amongthe Member States in a manner which assured each Member State relative stabilityof fishing activities for each of the stocks considered. Article 11 of the regulationprovided that the annual fixing of TACs and the distribution of the catchesavailable to the Community was a matter for the Council, acting by a qualifiedmajority on a proposal from the Commission.

9.

    The notion of relative stability was defined as follows in the fifth, sixth and seventhrecitals in the preamble to Regulation No 170/83:

'... conservation and management of resources must contribute to a greater stabilityof fishing activities and must be appraised on the basis of a reference allocationreflecting the orientations given by the Council;

... in other respects, that stability, given the temporary biological situation of stocks,must safeguard the particular needs of regions where local populations areespecially dependent on fisheries and related industries as decided by the Councilin its resolution of 3 November 1976, and in particular Annex VII thereto;

... therefore, it is in this sense that the notion of relative stability aimed at must beunderstood‘.

10.

    By Regulation (EEC) No 172/83 of 25 January 1983 fixing, for certain fish stocksand groups of fish stocks occurring in the Community's fishing zone, total allowablecatches for 1982, the share of these catches available to the Community, theallocation of that share between the Member States and the conditions under whichthe total allowable catches may be fished (OJ 1983 L 24, p. 30), the Council fixedfor 1982 the TACs for the stocks or groups of stocks occurring in the fishing areasof the Member States, including those for cod and whiting, and the share availableto the Community. Under Regulation No 172/83, the Council also, for the firsttime, allocated that share among the Member States.

11.

    As is clear from the fourth recital in the preamble to Regulation No 172/83, thatallocation took account of traditional fishing activities (evaluated on the basis ofaverage catches landed by each Member State during the period 1973-1978), thespecific needs of areas particularly dependent on fishing and its related industries(determined on the basis of the Hague Preferences, as quantified by theCommission in its 1980 communication), and the loss of fishing potential in thewaters of non-member countries (calculated for the reference period 1973-1976). With particular regard to Fishing Area VIIa (Irish Sea), the allocation keys were,for Ireland, 46.67% for cod and 39.625% for whiting, and, for the United Kingdom,42.67% for cod and 52.83% for whiting ('the 1983 allocation keys‘).

12.

    While the TACs fixed by the Council through subsequent annual regulations havevaried from one year to the next, the 1983 allocation keys established by RegulationNo 172/83 have remained unchanged.

13.

    The Community scheme for the conservation and management of fishery resources,established by Regulation No 170/83, was restated, with certain amendments thatare irrelevant to the main proceedings in this case, in Council Regulation (EEC)No 3760/92 of 20 December 1992 establishing a Community system for fisheriesand aquaculture (OJ 1992 L 389, p. 1).

14.

    The first subparagraph of Article 2(1) of Regulation No 3760/92 provides that:

'As concerns exploitation activities the general objectives of the common fisheriespolicy shall be to protect and conserve available and accessible living marineaquatic resources, and to provide for rational and responsible exploitation on asustainable basis, in appropriate economic and social conditions for the sector,taking account of its implications for the marine eco-system, and in particulartaking account of the needs of both producers and consumers.‘

15.

    Under Article 8(4) of Regulation No 3760/92, it is for the Council, acting byqualified majority on a proposal from the Commission, to determine, on a case-by-case basis, the TACs for each fishery or group of fisheries and to distribute thefishing opportunities between Member States in such a way as to assure eachMember State relative stability of fishing activities for each of the stocks concerned. So far as the notion of relative stability is concerned, the 12th, 13th and 14threcitals in the preamble to Regulation No 3760/92 substantially reproduce thewording of the fifth, sixth and seventh recitals in the preamble to RegulationNo 170/83.

16.

    Article 9(1) of Regulation No 3760/92 provides that Member States may, afternotifying the Commission, exchange all or part of the fishing availabilities allocatedto them.

17.

    According to the order for reference, TACs for cod and whiting in the Irish Seawere, for the period up to 1989, fixed by the Council at levels sufficiently high to

guarantee that, under the 1983 allocation keys, Ireland and the United Kingdomwere granted quotas no lower than those corresponding to their respective HaguePreferences.

18.

    However, since 1990 (in the case of whiting) and 1991 (in the case of cod), TACshave fallen below those levels, with the result that Ireland and the United Kingdomhave each year had recourse to the mechanism triggering the Hague Preferencesystem. Under that mechanism, Ireland and the United Kingdom are grantedannual quotas calculated on the basis of the mid-point between the notional quotasresulting from the application of the 1983 allocation keys alone and the notionalquotas corresponding to their Hague Preferences.

19.

    By Articles 2 and 3 of Regulation No 3362/94, the Council fixed the TACs for thestocks or groups of stocks present in the fishing areas of the Member States andthe share of those stocks available to the Community for 1995, and allocated thatshare among the Member States. The 100% share of TACs for cod and whitingavailable to the Community in Area VIIa was thus fixed at 5 800 tonnes and 8 000tonnes respectively. However, in view of the fact that this share was insufficient toguarantee that Ireland and the United Kingdom would, under the 1983 allocationkeys, be granted quotas no lower than those corresponding to their HaguePreferences, Regulation No 3362/94, pursuant to the method of calculationdescribed above, allocated to Ireland quotas of 3 820 tonnes for cod and 4 605tonnes for whiting, and to the United Kingdom quotas of 1 670 tonnes for cod and3 095 tonnes for whiting.

The dispute in the main proceedings

20.

    Following adoption of Regulation No 3362/94, the Department proceeded toallocate the quotas granted to the United Kingdom for its national fishing fleet andaddressed to NIFPO the abovementioned decision of 5 May 1995 setting outNIFPO's cod and whiting quotas in Area VIIa for 1995.

21.

    Before the national court, the applicants have argued that the Department'sdistribution of quotas was unlawful inasmuch as the Council's allocation of thosequotas to the United Kingdom in Regulation No 3362/94 was contrary toCommunity law. They submit that Annex VII to the Hague Resolution, whichconstitutes the basis of the Hague Preferences, was never formally adopted by theCouncil. They also contend that operation of the Hague Preference system iscontrary to its own stated objectives, to the common fisheries policy and to theprinciple of proportionality.

22.

    The national court first notes in this regard that the fact that Ireland invoked itsHague Preference for Irish Sea cod and whiting reduced the size of other MemberStates' quotas, including those of the United Kingdom. While the United Kingdom

can mitigate the effect on its quotas by defensively invoking its own HaguePreference, the quotas ultimately secured are still lower than they would have beenhad Ireland not invoked its Hague Preference.

23.

    The national court adds that the losses suffered by the United Kingdom as a resultof the operation of the Hague Preference system on the stocks in question have,however, been offset, either in part or fully, by exchanges of quota between theUnited Kingdom and other Member States pursuant to Article 9 of RegulationNo 3760/92.

24.

    Finally, the national court points out that the Irish fishing fleet which fishes for codand whiting in the Irish Sea has caught on average around 30% of the Irish quotasin Area VIIa, whereas, since 1990, the United Kingdom fleet has caught virtually100% of the United Kingdom cod and whiting quotas for that area. Ireland, itstates, has used some of its surplus cod and whiting quotas in Area VIIa for thepurposes of exchanging quota with other Member States.

25.

    The High Court of Justice decided to stay the proceedings and to refer thefollowing five questions to the Court for a preliminary ruling:

'(1)    Is the validity of the allocation to the United Kingdom of its cod andwhiting quotas in Area VIIa pursuant to Article 3 of Council Regulation(EC) No 3362/94 dependent on whether Annex VII to the CouncilResolution of 3 November 1976 was properly adopted?

(2)    If the answer to Question 1 is in the affirmative, was Annex VII properlyadopted?

(3)    Are the answers to Questions 1 or 2 affected by the fact that Annex VII isa document which is classified as secret and which has not been publishedor otherwise made available to the parties?

(4)    Having regard to all other circumstances, was the fixing of the said quotasby the Council compatible with:

    (i)    the common fisheries policy, and in particular Council Regulation(EEC) No 3760/92;

    (ii)    the principle of proportionality?

(5)    If the fixing of the said quotas by Regulation (EC) No 3362/94 is invalid, arethe Applicants entitled to claim damages against the Respondent and, if so,what are the conditions for liability?‘

The first question and the first part of the third question

26.

    The substance of these questions, which should be examined together, is whetherthe validity of the allocation to the United Kingdom of its cod and whiting quotasin Area VIIa by Regulation No 3362/94 depends on whether Annex VII to theHague Resolution was properly adopted, in particular since it appears that thisAnnex has not been published or otherwise made available to those affected by it.

27.

    The applicants take the view that Annex VII to the Hague Resolution was notproperly adopted, thus affecting the validity of both Regulation No 3362/94 and theDepartment's abovementioned decision of 5 May 1995. According to the case-lawof the Court, a Council resolution may be relevant for the purpose of assessing thevalidity of a national decision adopted pursuant to that resolution. They submitthat, in any event, Regulation No 3362/94 must be consistent with the basicregulations establishing the common fisheries policy (in particular, RegulationNo 170/83, replaced by Regulation No 3760/92). The principles of the commonfisheries policy established by those regulations must prevail unless any changes tothose principles can be justified by the Hague Preference system, in so far as thelatter was properly adopted.

28.

    The Irish Government takes the view that the Hague Resolution is binding innature, since it makes specific the duties of cooperation which Member Statesassumed under Article 5 of the EC Treaty when they acceded to the Community. Moreover, the Court has, in its case-law, consistently held that the provisions ofAnnex VI were binding on Member States, and the same should therefore be trueof Annex VII. It follows that, since the Council intended to bind itself by theHague Resolution and has consistently acted in accordance therewith, the principlesof legitimate expectations and of the acquis communautaire should preclude it fromdeparting from that resolution without Ireland's consent.

29.

    The United Kingdom Government, supported by the Danish Government, theCouncil and the Commission, takes the opposite view, that resolutions reflect solelythe political will of the Council and are not binding acts producing legal effects thatare capable by themselves of limiting the Council's legislative powers. There is,however, nothing to prevent the Council from having regard to the principles setout in Annex VII to the Hague Resolution when adopting a binding act such as aregulation.

30.

    It should be noted in that connection that, according to the terms of Annex VII tothe Hague Resolution, the Council, having regard to the economic relationshipswhich characterise fishing activity in Ireland, declared its intention so to apply theprovisions of the common fisheries policy as to secure the continued andprogressive development of the Irish fishing industry. It further agreed to takeaccount of the vital needs of the local communities in other regions.

31.

    Annex VII, which expresses essentially the Council's political will to take account,in applying the future common fisheries policy, of the special needs of regions in

which the populations are particularly dependent on fishing and related activities,cannot produce legal effects capable of limiting the Council's legislative powers.

32.

    Annex VII, moreover, differs in nature from Annex VI to the Hague Resolution,which, in the particular field to which it applies, makes specific the duties ofcooperation which the Member States assumed under Article 5 of the Treaty whenthey acceded to the Community (see Case 141/78 France v United Kingdom [1979]ECR 2923, paragraph 8). Annex VI relates to the introduction of conservationmeasures by the Member States and the procedure to be followed in that regardand specifies, in that context, the obligations of Member States flowing from Article5 of the Treaty.

33.

    Pursuant to its commitment at the political level, the Council subsequently adoptedRegulations No 170/83 and No 3760/92, which are binding legal measures givingeffect to the guidelines contained in Annex VII to the Hague Resolution. Thus,Article 4 of Regulation No 170/83, and subsequently Article 8(4) of RegulationNo 3760/92, set out the principle of relative stability of activities as a criterion forthe distribution among Member States of the volume of catches available to theCommunity, construing the notion of relative stability as relating in particular to thesafeguarding of the special needs of regions in which the local populations areespecially dependent on fishing and related industries.

34.

    Regulation No 3362/94 was not adopted pursuant to any binding commitments suchas are claimed to have arisen under Annex VII to the Hague Resolution but on thebasis of Article 8(4) of Regulation No 3760/92, which, it is not denied, was validlyadopted by the Council under Article 43 of the EC Treaty.

35.

    It follows that the question whether Annex VII to the Hague Resolution wasproperly adopted or not is irrelevant in assessing the validity of RegulationNo 3362/94.

36.

    The fact that it was not published or made available to the parties cannotinvalidate that finding.

37.

    The answer to the first question and the first part of the third question musttherefore be that the validity of the allocation of cod and whiting quotas in AreaVIIa by Regulation No 3362/94 is not dependent on whether Annex VII to theHague Resolution was properly adopted.

The second question and the second part of the third question

38.

    In light of the reply to the first question, it is unnecessary to rule on the secondquestion and the second part of the third question.

The fourth question

39.

    By this question, the national court asks whether Regulation No 3362/94, in so faras it allocates cod and whiting quotas in Area VIIa to the United Kingdom, is notcontrary to the rules governing the common fisheries policy, in particularRegulation No 3760/92, and whether Regulation No 3362/94 is compatible with theprinciple of proportionality. In order to give a reply that will assist the nationalcourt in deciding whether Regulation No 3362/94 is compatible with the principleof proportionality, it is also necessary to consider whether the fixing of those quotasby Regulation No 3362/94 does not run counter to the principle of non-discrimination set out in Article 40(3) of the EC Treaty.

The common fisheries policy

40.

    The applicants challenge the validity of the allocation of the quotas in issuepursuant to Regulation No 3362/94, on the ground that the effects of the HaguePreferences, which form the basis for fixing those quotas, are contrary to theprovisions of the common fisheries policy.

41.

    As a preliminary point, it should be noted that when the Council, pursuant toArticle 8(4) of Regulation No 3760/92, fixes TACs and distributes fishingopportunities among Member States, it has to evaluate a complex economicsituation.

42.

    When implementation by the Council of the Community's agricultural policynecessitates the evaluation of a complex economic situation, its discretion is notlimited solely to the nature and scope of the measures to be taken but also, tosome extent, to the finding of basic facts inasmuch as, in particular, it is open to theCouncil to rely if necessary on general findings. In reviewing the exercise of sucha power the Court must confine itself to examining whether there has been amanifest error or misuse of power or whether the authority in question has clearlyexceeded the bounds of its discretion (Case C-122/94 Commission v Council [1996]ECR I-881, paragraph 18).

43.

    In support of their argument, the applicants first contend that to grant guaranteedminimum quotas under the Hague Preference system without regard to scientificdata concerning the situation of the fish stocks in question would jeopardise theobjective of conserving and rationally exploiting marine aquatic resources set outin Article 2(1) of Regulation No 3760/92.

44.

    It must be noted in that regard that application of the Hague Preference systemby Regulation No 3362/94 affects only the allocation among the Member States ofthe share of TACs available to the Community but does not operate at thepreceding stage, at which the Council determines the level of those TACs and the

share available to the Community in the light of the needs of conservation andrational exploitation of marine aquatic resources.

45.

    The applicants also take the view that operation of the Hague Preference systemadversely affects the fishing opportunities of the Northern Irish fishing fleet in AreaVIIa and cannot therefore, pursuant to Article 8(4)(ii) of Regulation No 3760/92,assure relative stability of their fishing activities in that area.

46.

    It must be borne in mind in that regard that, under Article 8(4) of RegulationNo 3760/92, the Council distributes the fishing opportunities among the MemberStates in such a way as to assure each Member State relative stability of fishingactivities for each of the stocks concerned. The 13th recital in the preamble to thatregulation adds that such stability must safeguard the particular needs of regionswhere local populations are especially dependent on fisheries and related activities,as decided by the Council in the Hague Resolution, and in particular Annex VIIthereto. It should also be recalled that, as the Council indicated in its declarationof 30 May 1980, cited above, in making a fair distribution of catches regard mustbe had, most particularly, to traditional fishing activities, to the special needs ofregions where the local populations are particularly dependent upon fishing andrelated industries, and to the loss of catch potential in the waters of non-membercountries.

47.

    It follows that the aim of the quotas is to ensure for each Member State a shareof the Community's TACs, determined essentially on the basis of the catches fromwhich traditional fishing activities, the local populations dependent on fisheries andrelated industries of that Member State benefited before the quota system wasestablished (see, regarding Regulation No 170/83, Case C-3/87 The Queen v Ministryof Agriculture, Fisheries and Food, ex parte Agegate [1989] ECR 4459, paragraph 24,and Case C-216/87 The Queen v Ministry of Agriculture, Fisheries and Food, ex parteJaderow [1989] ECR 4509, paragraph 23).

48.

    It is accordingly for the Council, when allocating fishing opportunities among theMember States, to reconcile, for each of the stocks concerned, the interestsrepresented by each Member State with particular regard to its traditional fishingactivities and, where relevant, its local populations and industries dependent onfishing.

49.

    It is clear from the documents in this case that when the Council, by RegulationNo 3362/94, allocated the cod and whiting quotas for 1995, it intended to give effectto the principle of relative stability by balancing those interests through applicationof the 1983 allocation keys and the operation of the Hague Preference system,which, for its part, seeks to address the special needs of Ireland and the northernparts of the United Kingdom.

50.

    Even if this balancing of interests leads to a reduction in catch opportunities forfishermen from Northern Ireland, the Council cannot on that ground be regarded

as having committed a manifest error of assessment or as having manifestlyexceeded the limits which the requirement of relative stability imposes on itsdiscretion.

51.

    The applicants then go on to argue that it is clear from the 13th recital in thepreamble to Regulation No 3760/92 that it was only because of the temporarysituation of fish stocks that the Hague Preference system, which derogates from thenormal allocation rules, was allowed to operate. Over the years, it is argued, thatsystem has become a permanent measure.

52.

    That argument rests on a misconstruction of the 13th recital in the preamble toRegulation No 3760/92. As the United Kingdom Government has correctly pointedout, the reference to the temporary biological situation of stocks is intended solelyto highlight the fluctuations in fishery resources and the resultant quota reductionsagainst which the Hague Preference system is intended to protect fishermen fromIreland and the United Kingdom. In contrast, nothing in the wording of RegulationNo 3760/92 justifies the assumption that the policy giving effect to the HaguePreferences must be limited in time.

53.

    Finally, the applicants contend that the Hague Preference system was already takeninto account when the 1983 allocation keys were fixed and that its operation whenRegulation No 3362/94 was adopted amounts to double counting.

54.

    Suffice it to note that, even if the special needs of fishing communities in Irelandand the northern parts of the United Kingdom were taken into account when the1983 allocation keys were being applied, it does not follow that the Council isprecluded from taking account of the Hague Preference system once again if areduction in TACs affects the vital interests of those communities. By using thatmethod of taking account of special needs in the balancing of interests which it isrequired to carry out in order to allocate the quotas among the Member States, theCouncil cannot be regarded as having committed a manifest error or manifestlyexceeded the bounds of its discretion.

The principles of proportionality and non-discrimination

55.

    The applicants contend that the Hague Preference system is contrary to theprinciple of proportionality. First, they argue that it has the effect of reducing thecod and whiting quotas for fishermen from Northern Ireland operating in AreaVIIa to a much greater extent than the individual TACs for those stocks, therebyresulting, contrary to the system's own objectives, in an appreciable loss of fishingopportunities in that area for those fishermen. Second, they claim that fishermenfrom Ireland, unlike those from the United Kingdom, use only a very small part ofthe quotas which Ireland has obtained under the Hague Preference system for Area

VIIa and which it then uses for the purpose of exchanges with other MemberStates, thereby benefiting operators not affected by the system.

56.

    The applicants further argue that the Hague Preferences, which form the basis ofthe quota allocation under Regulation No 3362/94, breach the prohibition ofdiscrimination set out in Article 40(3) of the Treaty in so far as the fleets of thenorthern parts of the United Kingdom, which include that of Northern Ireland, areentitled only to the catches made in 1975 by vessels under 24 metres, whereas theIrish fleet is entitled to twice its 1975 catch.

57.

    The Court has consistently held (see, in particular, Case C-256/90 Mignini v ALMA[1992] ECR I-2651, paragraph 16) that in order to establish whether a provision ofCommunity law complies with the principle of proportionality, it must beascertained whether the means which it employs are suitable for the purpose ofachieving the desired objective and whether they do not go beyond what isnecessary to achieve it. Furthermore, whilst a measure's patent unsuitability forachieving the objective which the competent institution seeks to pursue may affectits legality, the Community institutions must nonetheless be recognised as havinga broad discretion in regard to agricultural policy which reflects the responsibilitieswhich the Treaty imposes on them.

58.

    The Court has also held that the prohibition of discrimination laid down in Article40(3) of the Treaty requires that comparable situations should not be treated in adifferent manner unless the difference in treatment is objectively justified (see, inparticular, Case C-280/93 Germany v Commission [1994] ECR I-4973, paragraph67).

59.

    The need for different treatment, in appropriate cases, of various classes of theagricultural community is acknowledged in Article 39(2) of the EC Treaty, whichprovides that 'in working out the common agricultural policy ... account shall betaken of: (a) the particular nature of agricultural activity, which results from thesocial structure of agriculture and from structural and natural disparities betweenthe various agricultural regions‘ (Case 139/77 Denkavit Futtermittel v FinanzamtWarendorf [1978] ECR 1317, point 15).

60.

    In the present case, it is common ground that the Council, by introducing theHague Preferences, sought to take account, when elaborating the common fisheriespolicy, of the special needs of those regions whose local populations are particularlydependent on fishing and related industries. In particular, the Council expressedits intention in Annex VII to the Hague Resolution so to apply the provisions ofthe common fisheries policy as to secure the continued and progressivedevelopment of the Irish fishing industry and also to take account of the vital needsof the populations of other regions, such as the northern parts of the UnitedKingdom.

61.

    By deciding, in light of the special needs of the regions concerned, to allocatehigher fishing quotas to Ireland than to the United Kingdom, the Councilconsequently made an agricultural policy choice that lay within the scope of itsdiscretion and which is consistent with the objectives of that common policy, asdefined by Article 39 of the Treaty.

62.

    The applicants have not established that this distinction is arbitrary or manifestlyinappropriate in relation to the objective of safeguarding the respective needs ofthe communities dependent on fishing in Ireland and the northern parts of theUnited Kingdom.

63.

    The United Kingdom Government has pointed out in that regard, without beingcontradicted by the applicants, that, while the United Kingdom's 1995 quotas forcod and whiting were lower than what it would have been entitled to catch underthe 1983 allocation keys, those quotas were, prior to exchanges under Article 9 ofRegulation No 3760/92, still significantly above Hague Preference tonnages. Furthermore, as that Government correctly notes, the United Kingdom has, byinvoking its own Hague Preference and exchanging quotas, been able to increase,in the case of cod, and almost maintain, in the case of whiting, its share of theTACs in Area VIIa, despite a substantial reduction in those TACs since 1990.

64.

    As regards the criterion of vessel length, which must not exceed 24 metres, itappears from the documents before the Court that, for the northern parts of theUnited Kingdom, landings by such vessels are regarded as constituting the norm onthe basis of which those regions' vital needs are satisfied.

65.

    Finally, so far as concerns the applicants' argument that, by reason of Ireland'squota exchanges with other Member States, the advantages accruing from theHague Preference system have unjustifiably been extended to categories ofoperators other than those originally protected, it should be noted, as the AdvocateGeneral has stated in point 76 of his Opinion, that those exchanges benefit Irishfishermen, who can thereby fish for stocks other than cod and whiting, while theother Member States making the exchanges with Ireland are obliged to relinquish,wholly or in part, their quotas for those stocks.

66.

    It follows that the objective of the Hague Preferences, which is to safeguard thespecial needs of the populations of communities dependent on fishing, is met in thecase of such quota exchanges.

67.

    The allocation by Regulation No 3362/94 of quotas to the United Kingdom istherefore not contrary either to the principle of proportionality or to that of non-discrimination set out in Article 40(3) of the Treaty.

68.

    The answer to the fourth question must consequently be that consideration ofRegulation No 3362/94 has revealed no factor of such a kind as to affect its validity.

The fifth question

69.

    In light of the reply to the fourth question, it is unnecessary to rule on the fifthquestion.

Costs

70.

    The costs incurred by the United Kingdom, Danish and Irish Governments, and bythe Council of the European Union and the Commission of the EuropeanCommunities, which have submitted observations to the Court, are not recoverable.Since these proceedings are, for the parties to the main proceedings, a step in theproceedings pending before the national court, the decision on costs is a matter forthat court.

On those grounds,

THE COURT,

in answer to the questions referred to it by the High Court of Justice in NorthernIreland, Queen's Bench Division, by order of 13 October 1995, hereby rules:

1.    The validity of the allocation of cod and whiting quotas in Area VIIa byCouncil Regulation (EC) No 3362/94 of 20 December 1994 fixing, forcertain fish stocks and groups of fish stocks, the total allowable catches for1995 and certain conditions under which they may be fished is notdependent on whether Annex VII to the Resolution of 3 November 1976adopted by the Council at The Hague was properly adopted.

2.    Consideration of Regulation No 3362/94 has revealed no factor of such akind as to affect its validity.

Rodríguez Iglesias     Gulmann            Ragnemalm Schintgen Mancini             Kapteyn            Murray Edward Puissochet                 Hirsch Jann

Delivered in open court in Luxembourg on 19 February 1998.

R. Grass

G.C. Rodríguez Iglesias

Registrar

President

1: Language of the case: English.

2:     The regions referred to are Greenland, the northern parts of the UnitedKingdom, and Ireland.