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Language of document : ECLI:EU:T:1999:106

JUDGMENT OF THE COURT OF FIRST INSTANCE (Fourth Chamber)

20 May 1999 (1)

(Milk Reference quantity Compliance with a judgment of the Court ofJustice)

In Case T-220/97,

H & R Ecroyd Holdings Ltd, a company incorporated under English law, whoseregistered office is at Brinsop House, Credenhill (United Kingdom), representedby William Neville, Solicitor, Peter Duffy QC, Philippa Watson and Paul Stanley,Barristers, with an address for service in Luxembourg at the Chambers of Elvinger,Hoss and Prussen, 2 Place Winston Churchill,

applicant,

Commission of the European Communities, represented by Ana Maria AlvesVieira and Xavier Lewis, of its Legal Service, acting as Agents, with an address forservice in Luxembourg at the office of Carlos Gómez de la Cruz, of its LegalService, Wagner Centre, Kirchberg,

defendant,

United Kingdom of Great Britain and Northern Ireland, represented by MichelleEwing, of the Treasury Solicitor's Department, acting as Agent, and Kenneth

Parker and Andrew Macnab, Barristers, with an address for service in Luxembourgat the British Embassy, 14 Boulevard Roosevelt,

intervener,

RMAFFEcroyd

THE COURT OF FIRST INSTANCE

OF THE EUROPEAN COMMUNITIES (Fourth Chamber),

composed of: R.M. Moura Ramos, President, V. Tiili and P. Mengozzi, Judges,

Registrar: J. Vanhamme, Legal Secretary,

having regard to the written procedure and further to the hearing on11 February 1999,

gives the following

Judgment

Legal context

1.

Within the framework of the common agricultural policy, the Council adoptedRegulation (EEC) No 804/68 of 27 June 1968 on the common organisation of themarket in milk and milk products (OJ, English Special Edition 1968 (I), p. 176).

2.

Because of significant and increasing surpluses in the milk and milk products sector,the Council adopted Regulation (EEC) No 1078/77 of 17 May 1977 introducing asystem of premiums for the non-marketing of milk and milk products and for theconversion of dairy herds (OJ 1977 L 131, p. 1). Under Article 2(2) of thatregulation, grant of the premium was conditional upon a written undertaking by theproducer not to market milk or milk products from his holding during a period offive years.

3.

Article 4(1) of Regulation No 1078/77 laid down the following methods forcalculating and for paying non-marketing premiums:

'The non-marketing premium shall be calculated on the basis of the quantity ofmilk or its equivalent in milk products delivered by the producer during the 1976calendar year.

...

50% of the premium shall be paid during the first three months of the non-marketing period.

The balance shall be paid in the third and fifth years in two equal instalments of25% of the premium, provided the recipient satisfies the competent authorities thatthe undertakings provided for in Article 2 have been fulfilled.

4.

Article 6 provided that any person taking over an agricultural holding could claimthe balance of the premium awarded to his predecessor, provided that heundertook in writing to continue to carry out the undertakings given by hispredecessor.

5.

In 1984 it became apparent that additional measures were necessary in order torestore a balance in the milk sector. Council Regulation (EEC) No 856/84 of31 March 1984 amending Regulation No 804/68 (OJ 1984 L 90, p. 10) insertedArticle 5c into Regulation No 804/68. Article 5c instituted a system of additionallevies payable by each producer or purchaser of milk or other milk products onquantities exceeding an annual individual reference quantity, the reference quantitybeing commonly known as 'milk quota. Under that article, the sum of thereference quantities allocated in each State to the operators concerned could notexceed a guaranteed total quantity equal to the sum of quantities of milk deliveredto undertakings treating or processing milk or other milk products in each MemberState during a reference year.

6.

The rules for the application of the levy were laid down by Council Regulation(EEC) No 857/84 of 31 March 1984 adopting general rules for the application ofthe levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk andmilk products sector (OJ 1984 L 90, p. 13). With regard to producers, Article 2 ofRegulation No 857/84 provided that the reference quantity was equal to thequantity of milk or milk equivalent delivered by the producer during the 1981calendar year, plus 1%. However, the Member States could provide that on theirterritory the reference quantity was to be equal to the quantity of milk or milkequivalent delivered during the 1982 or the 1983 calendar years, weighted by apercentage established so as not to exceed the guaranteed quantity for eachMember State. The United Kingdom fixed the reference quantity on the basis ofthe 1983 calendar year.

7.

Regulation No 857/84 did not provide for the possibility of allocating milk quotato producers, commonly called 'Slom producers, who, because of their

participation in the temporary non-marketing system established by RegulationNo 1078/77, had not delivered or sold milk during the reference year adopted forthe allocation of quotas.

8.

Following the judgments in which the Court of Justice held that RegulationNo 857/84 was invalid in so far as it did not provide for the allocation of areference quantity to Slom producers (Case 120/86 Mulder v Minister van Landbouwen Visserij [1988] ECR 2321 and Case 170/86 von Deetzen v Hauptzollamt Hamburg-Jonas [1988] ECR 2355), the Council adopted Regulation (EEC) No 764/89 of20 March 1989 amending Regulation No 857/84 (OJ 1989 L 84, p. 2), whichprovided for the provisional grant of a special reference quantity (or 'Slom quota)to Slom producers who satisfied certain conditions.

9.

Under Article 3a(1) of Regulation No 857/84, as inserted by Regulation No 764/89,Slom producers had to request an allocation within three months from29 March 1989.

10.

Article 3a(2) fixed the special reference quantity at a particular percentage of thequantity of milk delivered by the Slom producer during the 12 calendar monthspreceding the month in which the application for the non-marketing premium wasmade, provided that the producer had not lost his entitlement to the premium.

11.

However, Article 3a(1) of Regulation No 857/84 also provided that transferees ofa non-marketing premium who had obtained primary quota by other means inaccordance with the conditions laid down in Article 2 of the same regulation werenot entitled to Slom quota ('the anti-accumulation rule).

12.

Following various judgments, and in particular the judgment in Case C-314/89 Rauhv Hauptzollamt Nürnberg-Fürth [1991] ECR I-1647, concerning the interpretationand validity of Article 3a of Regulation No 857/84, the Council adopted Regulation(EEC) No 1639/91 of 13 June 1991 amending Regulation No 857/84 (OJ 1991L 150, p. 35), which modified the milk quota rules once again. There was thusadded to Article 3a(1) of Regulation No 857/84 a second subparagraph whosesecond indent stated: 'Producers ... who have received the holding through aninheritance or similar means following expiry of the undertaking entered into underRegulation ... No 1078/77 by the originator of the inheritance, albeit before29 June 1989, shall receive on a provisional basis, on application submitted withina time-limit of three months from 1 July 1991 a special reference quantity .... Producers in that category are commonly known as 'Slom II producers.

13.

In Case C-264/90 Wehrs v Hauptzollamt Lüneburg [1992] ECR I-6285, the Courtheld that the second indent of Article 3a(1) of Regulation No 857/84, as amendedby Regulation No 764/89, was invalid in so far as producers who had taken over aholding participating in the non-marketing system under Regulation No 1078/77and who were accordingly transferees of non-marketing premiums were barred

from the allocation of Slom quota if they had already obtained primary quota underArticle 2 of Regulation No 857/84 ('Slom III producers).

14.

Council Regulation (EEC) No 2055/93 of 19 July 1993 allocating a specialreference quantity to certain producers of milk and milk products (OJ 1993 L 187,p. 8) was intended to cure that invalidity by providing that a transferee of a non-marketing premium who had been ineligible under Article 3a of RegulationNo 857/84 as a consequence of having received a reference quantity under Article 2of that regulation was entitled, on request made to the competent authority of theMember State concerned before 1 November 1993, to receive a special referencequantity provided that he satisfied certain conditions. One of those conditions wasthat the transferee of the non-marketing premium had not, as at the date of hisapplication, transferred all or part of the holding taken over.

Facts

15.

H & R Ecroyd Limited (hereinafter 'Ecroyd Limited), which on 10 May 1993became H & R Ecroyd Holdings Limited (hereinafter 'the applicant), was acompany acquired in 1966 by Richard Ecroyd and various family interests, includingthe trustees of a children's settlement created in 1965 by Richard Ecroyd for hischildren.

16.

Ecroyd Limited was the tenant of nine farms owned by the Ecroyd family and thechildren's settlement trust.

17.

In 1976 Ecroyd Limited and a partner, Fountain Farming, formed the partnershipCredenhill Farming. Four of the nine abovementioned farms, including one knownas Lyvers Ocle, were sub-let to Credenhill Farming by Ecroyd Limited.

18.

Credenhill Farming was authorised to participate in a non-marketing scheme fora period of five years from 14 November 1980 to 13 November 1985. EcroydLimited continued to produce milk on the five farms which it operated as tenantand in respect of which it applied for, and in 1984 obtained, primary quota underArticle 2 of Regulation No 857/84 (2 001 338 kg).

19.

Between 1980 and 1984 the partners in Credenhill Farming changed on severaloccasions. On 30 September 1984, when the two remaining partners were EcroydLimited and Richard Ecroyd, Credenhill Farming was finally dissolved following theretirement of the latter. The assets and business of Credenhill Farming were takenover by Ecroyd Limited. Consequently, from that date Ecroyd Limited had fiveholdings producing milk and four (coming from Credenhill Farming) subject to thenon-marketing scheme. Since it considered itself to be bound by the non-marketingundertaking given by Credenhill Farming, Ecroyd Limited did not, during theremainder of the five-year period covered by that undertaking, produce milk on the

land previously farmed by Credenhill Farming, although it gave no writtenundertaking to that effect.

20.

Ecroyd Limited made two applications for the award of a special reference quantityfor the land previously farmed by Credenhill Farming. The first application wasmade in August 1989 following the adoption of Regulation No 764/89 granting aright to Slom quota and the second in September 1991 following the judgments inCase C-189/89 Spagl v Hauptzollamt Rosenheim [1990] ECR I-4539, in CaseC-217/89 Pastätter v Hauptzollamt Bad Reichenhall [1990] ECR I-4585 and in Rauh,cited above. The Ministry of Agriculture, Fisheries and Food (hereinafter 'theMinistry) rejected both applications. Ecroyd Limited then initiated proceedingsagainst the Ministry, claiming that it was entitled to Slom quota.

21.

Before the national court, Ecroyd Limited claimed first of all that, notwithstandingthe fact that the other partners in Credenhill Farming had left the partnershipduring the period covered by the non-marketing scheme, so that it had then farmedthe holding for its own account, there had been no transfer of the holding fromCredenhill Farming to it for the purposes of Article 6 of Regulation No 1078/77. Consequently, it was not necessary for it to enter into a further non-marketingundertaking, and all the more so because it was in any event bound for the wholeof the period at issue by the undertaking given by Credenhill Farming. EcroydLimited added that it had abided in full by the terms of the non-marketingundertaking. Finally, as regards the anti-accumulation rule, it stated that the factthat it had received primary quota for a different holding could not, in the light ofthe judgment in Wehrs, cited above, operate as a bar to the grant of Slom quotain respect of the holding previously farmed by Credenhill Farming.

22.

According to the Ministry, on 30 September 1984 there was a transfer from oneproducer to another, namely from Credenhill Farming to Ecroyd Limited. SinceEcroyd Limited had not signed a non-marketing undertaking when it took overCredenhill Farming's holding, it followed that it was not entitled to a specialreference quantity. However, if Credenhill Farming and Ecroyd Limited were infact to be regarded as the same 'producer, Ecroyd Limited would then have beenin breach of its undertaking not to produce milk on its holding and would thereforehave lost its entitlement to the non-marketing premium, since, during the periodof the non-marketing premium scheme, it had continued milk production on thefive farms which had not been sub-let to Credenhill Farming. The reasoning of theCourt of Justice in Wehrs did not apply to the applicant because that judgmentconcerned only the situation of an assignee of a non-marketing premium, which wasnot the situation in which Ecroyd Limited found itself.

23.

The Ministry added that, even if it were accepted that Regulation No 857/84, asamended by Regulation No 764/89, was invalid in so far as it excluded a producerin the applicant's situation from the grant of a special reference quantity, theMinistry did not, on any view, have the power to award a quota to the applicantbefore the Council had adopted the necessary measures.

24.

By order of 27 October 1993 the High Court of Justice, Queen's Bench Division,referred to the Court of Justice for a preliminary ruling the following questions withregard to Ecroyd Limited's applications:

'1. Does the respondent Ministry have a power and/or duty to award aprovisional special reference quantity to the applicant and/or to treat it asif it had been awarded special reference quantity:

(i) pursuant to [Regulation No 857/84] as amended by [RegulationNo 764/89]; and/or

(ii) following the [judgment in Wehrs],

where:

(a) the applicant was a member of a partnership which farmed theholding and which gave an undertaking pursuant to a non-marketing scheme;

(b) all of the other members left the partnership before the expiryof the period of the non-marketing scheme and the holding inrespect of which the non-marketing undertaking was given bythe partnership was thereafter farmed by the applicant for itsown account;

(c) following the departure of the other members of thepartnership, the applicant did not produce milk on the holdingfor the remainder of the period of the original non-marketingscheme entered into by the partnership;

(d) no fresh written undertaking was given by the applicant,following the departure of the other members of thepartnership, pursuant to Article 6 of [Regulation No 1078/77] tocarry out the non-marketing undertaking given by thepartnership;

(e) the applicant had received primary quota in respect of aseparate holding.

If so, when did such power and/or duty arise?

2. If the answer to Question 1 above is that the respondent Ministry has nopower and/or duty is Article 3a(1) of Council Regulation No 857/84 asamended by Council Regulation No 764/89 unlawful and invalid in so far as

it excludes an applicant from an award of a special reference quantity in thecircumstances set out above?

3. If the answer to Question 2 is that Article 3a(1) of Regulation No 857/84is unlawful and invalid to the extent that it excludes the applicant from anaward of milk quota, does the respondent Ministry have the power and/orduty to award milk quota to the applicant and/or to treat it as if it had beenawarded special reference quantity, before the enactment of furtherCommunity legislation to cure or take account of the invalidity of themeasure in question?

If so, when does or did such power and/or duty arise?

4. If the answer to the above questions is that the respondent Ministry had thepower and/or duty to award a special reference quantity to the applicantand/or to treat it as if it had been awarded special reference quantity,before such time as the Council of Ministers has adopted fresh legislationand/or following the [judgment in Wehrs], is the applicant entitled inprinciple to damages from the respondent Ministry for having failed to granthim a special reference quantity?

5. If the answer to Question 4 is that the applicant is entitled to damages fromthe Ministry, on what basis are such damages to be assessed?

25.

By judgment of 6 June 1996 in Case C-127/94 R v MAFF ex parte Ecroyd [1996]ECR I-2731 ('the judgment in Ecroyd), the Court of Justice held, as regards theapplications for quota submitted by Ecroyd Limited:

'1. The competent national authority had no duty under ... Regulation ...No 857/84 ..., as amended by ... Regulation ... No 764/89 ..., and in particularunder Article 3a(1) thereof, to award a provisional special referencequantity to producers finding themselves in the circumstances describedunder points (a) to (e) of Question 1, nor did it have the power to do so.

2. The competent national authority had no duty, following the [judgment inWehrs], to award a provisional special reference quantity to producersfinding themselves in the abovementioned circumstances, nor did it have thepower to do so.

3. Article 3a(1) of Regulation No 857/84, as amended by RegulationNo 764/89, is invalid in so far as it excludes producers finding themselves inthe abovementioned circumstances from the award of a special referencequantity.

4. Before the adoption of further Community legislation intended to cure theinvalidity found, the competent national authority has no duty to award a

special reference quantity to producers finding themselves in theabovementioned circumstances, nor does it have the power to do so.

26.

After delivery of that judgment, the applicant's legal representatives asked theCommission, by letter of 26 July 1996, what action it would be taking in order tocomply with the judgment. As they did not receive a reply, they sent a furtherletter on 9 August 1996.

27.

On 6 September 1996 the applicant's legal representatives had a telephoneconversation with the relevant Commission officials, in the course of which thelatter stated that they had determined the legal repercussions of the judgment inEcroyd at an internal meeting on the previous day. In a letter of 9 September 1996the applicant's legal representatives asked the Commission to inform them inwriting of its conclusions in that regard.

28.

As the Commission did not reply, the applicant's legal representatives repeatedtheir request on 19 September 1996, referring to the telephone conversation of6 September and to their letter of 9 September.

29.

By letter of 10 October 1996 addressed to the Ministry, the Commission set out itsprovisional view on three questions:

the measures necessary at Community level in order to comply with thejudgment in Ecroyd;

the applicant's rights to quota under the existing legislation;

the obligations which arose for the national authorities from the judgmentin Ecroyd.

30.

As to the first question, the Commission stated that by adopting RegulationNo 2055/93 it had already cured the invalidity found by the Court of Justice andthat, for that reason, it was unnecessary to take further measures at Communitylevel. As to the second question, the Commission explained that, if it wereaccepted that the applicant was a Slom III producer, it could obtain a quota underRegulation No 2055/93. Lastly, as regards the third question, the Commissionstated that, in the light of the Court of Justice's answers to the questions referredfor a preliminary ruling by the High Court, the national authorities were notobliged to award a quota.

31.

In a letter sent to the applicant's legal representatives on the same day, theCommission stated that Regulation No 2055/93 was an appropriate legislativeresponse by way of compliance with the judgment of the Court of Justice and thatit was for the national authorities to examine whether or not the applicant satisfiedthe conditions for the award of a quota under that regulation.

32.

On 8 April 1997 the Council stated, in reply to a letter sent to it by the applicant'slegal representatives, that it was for the Commission to ensure that the judgmentin Ecroyd was complied with and that, if the Commission did not submit alegislative proposal to that end, the Council was not in a position to act.

33.

In a letter of 16 May 1997 the Commission confirmed the conclusions which it hadprovisionally stated in its letter of 10 October 1996.

Procedure and forms of order sought

34.

By application lodged at the Registry of the Court of First Instance on29 July 1997, the applicant brought the present action.

35.

By order of the President of the Third Chamber of the Court of 12 May 1998, theUnited Kingdom of Great Britain and Northern Ireland, pursuant to its applicationlodged at the Registry on 11 February 1998, was granted leave to intervene insupport of the form of order sought by the defendant.

36.

The written procedure closed on 2 October 1998.

37.

Upon hearing the Report of the Judge-Rapporteur, the Court decided to open theoral procedure without any preparatory inquiry. However, by way of measures oforganisation of procedure, the parties were requested to reply in writing to certainquestions before the hearing. The parties presented oral argument and answeredquestions put to them by the Court at the hearing on 11 February 1999.

38.

The applicant claims that the Court should:

annul the Commission decision of 16 May 1997;

order the defendant to pay the costs;

order any other relief which the Court may deem fit.

39.

The defendant contends that the Court should:

dismiss the application;

order the applicant to pay the costs.

Law

Arguments of the parties

40.

The applicant has put forward a single plea in law, alleging infringement ofArticles 211 and 233 EC (ex Articles 155 and 176).

41.

It states that those articles impose a legal obligation on the Commission to take thenecessary steps to comply with a judgment of the Court of Justice. In particular,the Commission must take measures where the Court of Justice has found thatthere has been an infringement of Community law. The Commission must thusreconsider the situation of the person who has been the victim of unlawfultreatment. In the present case, the Commission has manifestly failed to fulfil thatobligation.

42.

The applicant points out that compliance with a judgment of the Court of Justicemust be effective and that the institutions cannot be allowed to block compliance.

43.

Finally, the obligation to ensure effective compliance with judgments of the Courtof Justice is so fundamental that its breach constitutes a ground for liability on thepart of the institutions for the financial losses suffered by the victim of the default. Article 233 EC does not make compensation for the damage dependent on theexistence of a new fault, distinct from the unlawful measure annulled by thejudgment, but provides for compensation for damage which results from thatunlawful measure and which continues as a result of the refusal to comply with thejudgment annulling it. The applicant has suffered serious financial loss as a resultof being unlawfully deprived of the quota to which it was entitled. Those lossescontinue to grow and their cumulative effect is to create a risk of bankruptcy.

44.

The defendant states that Regulation No 2055/93 was adopted in response to thejudgment in Wehrs and that this regulation is an appropriate legislative responsewith regard to transferees of non-marketing obligations. It covers in particular thesituation of Slom III producers. It would also have covered the applicant if it hadbeen producing milk.

45.

The defendant points out next that, as the Court of Justice held in the judgmentin Ecroyd, the applicant's situation 'can be compared to that of a transferee of apremium granted under Regulation No 1078/77 who has obtained a referencequantity under Article 2 of Regulation No 857/84. The applicant should thereforehave been classified as a 'transferee of a non-marketing obligation within themeaning of Article 1(1) of Regulation No 2055/93 on 30 September 1984, that isto say the date on which Credenhill Farming was dissolved and its assetstransferred to Ecroyd Limited. Consequently, Regulation No 2055/93 covers thesituation in which the applicant was to be found at the time when the non-marketing undertaking expired.

46.

Furthermore, the judgment in Ecroyd does not examine the position of theapplicants before the national court in those proceedings vis-à-vis RegulationNo 2055/93. In fact, Questions 1 and 3 submitted to the Court of Justice in regard

to Ecroyd Limited concerned the award of a Slom III type quota before theadoption of the legislation required to amend the unlawful anti-accumulation rule.

47.

The defendant concludes that Regulation No 2055/93 constitutes a proper response,in accordance with Article 233 EC, to the illegality found in the judgment in Ecroyd,since that illegality is the same as the one found in Wehrs.

48.

The United Kingdom of Great Britain and Northern Ireland supports theCommission's view that the applicant is not entitled to a special reference quantityunder Regulation No 2055/93 because it was not, as a matter of law or fact, aproducer at the material time.

Findings of the Court

49.

In accordance with settled case-law, when the Court of Justice rules in proceedingsunder Article 234 EC (ex Article 177) that an act adopted by the Communitylegislature is invalid, its decision has the legal effect of requiring the competentCommunity institutions to adopt the measures necessary to remedy that illegality(Joined Cases 117/76 and 16/77 Ruckdeschel and Ströh v Hauptzollamt Hamburg-St. Annen [1977] ECR 1753, paragraph 13, and Case 300/86 Van Landschoot vMera [1988] ECR 3443, paragraph 22). In those circumstances, they are to takethe measures that are required in order to comply with the judgment containing theruling in the same way as they are, under Article 233 EC, in the case of a judgmentannulling a measure or declaring that the failure of a Community institution to actis unlawful. It is clear from the abovementioned case-law that, when a Communitymeasure is held to be invalid by a preliminary ruling, the obligation laid down byArticle 233 EC applies by analogy.

50.

Furthermore, when the Commission has the necessary powers to take measuresremedying the illegality found by the Court of Justice in a preliminary ruling, itsobligation so to act clearly also falls within its general obligation of supervisionimposed by Article 211 EC (Case 804/79 Commission v United Kingdom [1981]ECR 1045, paragraph 30).

51.

In the light of those initial findings, it is necessary to examine whether theCommission was entitled to decide that all the measures required in order tocomply with the judgment in Ecroyd had already been taken.

52.

The decision by the Commission essentially relates to the following extract from theoperative part of the judgment in Ecroyd:

'As regards Ecroyd Limited

...

53.

As the parties acknowledge, that declaration of invalidity concerns the anti-accumulation rule. The Court of Justice had already held that rule to be invalidin 1992, in its judgment in Wehrs. In that judgment the Court had ruled as follows:'The second indent of Article 3a(1) of ... Regulation ... No 857/84 ..., as amendedby ... Regulation ... No 764/89 ..., is invalid in so far as persons taking over apremium granted pursuant to ... Regulation ... No 1078/77 ... are barred fromallocation of a special reference quantity if they have received a reference quantityunder Article 2 of Regulation ... No 857/84.

54.

The operative part of the judgment in Ecroyd does not follow the general wordingof the declaration of invalidity contained in the judgment in Wehrs. It expresslydeclares that the anti-accumulation rule unlawfully excluded from the award of aspecial reference quantity producers finding themselves in the 'abovementionedcircumstances, that is to say, in particular, 'Ecroyd Limited, to whom the nationalauthorities had refused to award a special reference quantity in 1989 and 1991 (seeparagraph 20 above). The Court of Justice makes it clear that it had been notopen to the national authorities to decide otherwise (see paragraphs 1, 2 and 4 ofthe operative part cited in paragraph 25 above).

55.

In those circumstances, when the Commission was asked by the applicant about themeasures it would be taking following that judgment, it was not entitled simply toreply that the anti-accumulation rule had in the meantime been repealed. Notwithstanding the elimination, at administrative or legislative level, of theunlawful measure, the Commission was obliged to determine whether that measurehad caused the applicant damage which had to be made good (Case 76/79 Köneckev Commission [1980] ECR 665, paragraph 15). The wrong which, in accordancewith the judgment in Ecroyd, had been done to the applicant by the application ofthe anti-accumulation rule could not have been righted by the adoption ofRegulation No 2055/93. That regulation allowed, subject to certain conditions, aspecial reference quantity to be awarded to producers who had unlawfully beenrefused one, but it was not designed to make good harm already suffered by thoseproducers because of the application of that rule.

56.

The Commission was therefore wrong in concluding that the Community was nolonger required to adopt specific measures to remedy the illegality committed vis-à-vis the applicant and found in the judgment in Ecroyd. It is not for the Court totake the place of the Commission and to specify the measures it should have taken. However, it is appropriate to point out that the obligation on the institutions totake the necessary measures to remedy illegalities found by the Communityjudicature requires them not only to adopt the essential legislative or administrative

measures but also to make good the damage which has resulted from the unlawfulact, subject to fulfilment of the conditions laid down in the second paragraph ofArticle 288 EC (ex second paragraph of Article 215), namely the presence of fault,harm and a causal link (Case C-412/92 P Parliament v Meskens [1994] ECR I-3757,paragraph 24; Case T-84/91 Meskens v Parliament [1992] ECR II-2335,paragraphs 78 and 79). Thus, the Commission could have initiated action with aview to compensating the applicant. It may indeed be deduced from the judgmentin Ecroyd, read in the context of the 'milk quotas case-law, that the conditions fornon-contractual liability of the Community are satisfied.

57.

First of all, the Court of Justice had held that the anti-accumulation rule wasinvalid because it infringed the principle of the protection of legitimate expectations(Wehrs, paragraph 15), a superior rule of law for the protection of individuals (see,inter alia, Joined Cases C-104/89 and C-37/90 Mulder and Others v Council andCommission [1992] ECR I-3061, paragraph 15). Consequently, that invalidity,recorded afresh by the Court of Justice in the judgment in Ecroyd, constitutes asufficiently serious fault to give rise to non-contractual liability on the part of theCommunity (as was confirmed in Joined Cases T-195/94 and T-202/94 Quiller andHeusmann v Council and Commission [1997] ECR II-2247, paragraphs 53 to 57).

58.

As regards, next, the existence of harm and of a causal link, it was held in thejudgment in Ecroyd that Ecroyd Limited's situation could, at the time of itsapplications for quota in 1989 and 1991, be compared to that of a transferee of apremium granted under Regulation No 1078/77 who had obtained a referencequantity under Article 2 of Regulation No 857/84 (paragraph 62 of the judgment). Nor is it in dispute that the judgment in Ecroyd, both in the grounds and in theoperative part, treats Ecroyd Limited as a milk producer for the purposes of theCommunity legislation. Those findings effectively invalidate the justifications forthe refusals of quota (see paragraph 22 above) and thus demonstrate the existenceof a causal link between the unlawful anti-accumulation rule and those refusals. Furthermore, it can hardly be disputed that a refusal of quota causes harm to amilk producer, particularly where, as in the present case, that producer or itssuccessor resumes the marketing of milk at a subsequent stage, thereby provingthat it did not abandon milk production (see, in that regard, Mulder and Others vCouncil and Commission, cited above, paragraph 23).

59.

It follows from all of the above considerations that, by refusing to take action tocomply with the judgment in Ecroyd, the Commission has failed to fulfil itsobligation to take specific measures with regard to the applicant, as is required inorder to remedy the illegality found by the Court of Justice. As a result, thecontested decision must be annulled.

Costs

60.

Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to beordered to pay the costs if they have been applied for in the successful party'spleadings. Since the Commission has been unsuccessful and the applicant askedfor an order for costs against the Commission, the Commission must be orderedto bear its own costs and to pay those incurred by the applicant.

61.

In accordance with Article 87(4) of the Rules of Procedure, the United Kingdomof Great Britain and Northern Ireland is to bear its own costs.

On those grounds,

THE COURT OF FIRST INSTANCE (Fourth Chamber)

hereby:

1. Annuls the Commission decision of 16 May 1997 refusing to take action tocomply with the judgment of the Court of Justice of 6 June 1996 in CaseC-127/94 R v MAFF ex parte Ecroyd [1996] ECR I-2731;

2. Orders the Commission to bear its own costs and to pay those incurred bythe applicant;

3. Orders the United Kingdom of Great Britain and Northern Ireland to bearits own costs.

Moura Ramos Tiili

Mengozzi

Delivered in open court in Luxembourg on 20 May 1999.

H. Jung

R.M. Moura Ramos

Registrar

President

1: Language of the case: English.