Advocate General denies existence of general principle of equity.
In her opinion in Case C-328/04, Avocate General Stix Hackl yesterday denied the existence of a general principle of equity. Without going too much into the technical details of the case, in a nutshell this case concerns the company Cosun, which was charged for producing more sugar than allowed by Council Regulations 1785/81 (now repealed) and 2670/81.
An application by the Netherlands to the Commission for a remission of this charge was denied. An appeal against that decision by Cosuin was dimissed by the Court of First Instance (for this case, see this opinion of AG Stix Hackel, also delivered yesterday).
Cosun also appealed against the decision to impose the charge. The national court referred to the European Court of Justice asking, whether the Regulations were valid and citing as only criterion for assessing their validity “grounds of equity”.
The compatibility with the principle of proportionality was deliberately not raised.
The Advocate General pointed out that the sole aim of the proceedings was hence to establish “whether rules of secondary Community law comply with the general legal principle of equity.” She therefore examined whether Community law recognises such a principle.
She reminded that in Balkan-Import-Export, the Court had held that there is no legal basis in Community law for remitting charges on equitable grounds. The Court had opposed the recognition a general principle of equity in Neumann (see also the Hoche- case).
Nevertheless, in the more recent First City Trading- case, the Court held that:
“None of the general principles of Community law, and in particular the principles of force majeure, the protection of legitimate expectations, proportionality and equity, required exporters, in the circumstances described by the national court, to be authorised to retain all or part of any export refunds paid in advance.” (para. 68)
The Advocate General however argued that one cannot infer from this judgment that the Court now recognises a general legal principle of equity.
She pointed out that in the same judgement, the Court held that: “the principle of equity cannot be regarded as allowing any derogation from the application of provisions of Community law, save as provided for by the legislation or where the legislation is itself declared invalid.” (para. 48)
Nor could such principle be derived from the legal systems of the Member States.
The Advocate General argued: "Even a rough analysis of the national legal systems reveals that a legal principle of equity does not apply in all Member States. Although recognition in all Member States is not imperative, it would at least be necessary in the areas of law of decisive importance for the current proceedings, which must be regarded as part of public economic law. It is not enough for certain national rules explicitly to provide for the remission or repayment of charges on grounds of equity, since from that it cannot be inferred that a corresponding principle applies in the Member State concerned." (para. 59)
Relevant case law:
Case 118/76 Balkan-Import-Export  ECR 1177
Case 299/84 Neumann  ECR 3663
Case C-174/89 Hoche  ECR I-2681
Case C-263/97 First City Trading  ECR I-5537