Order of 29 May 1974

Reasons:

A.

1

A German import/export business brought an action before the Frankfurt/Main Administrative Court (Verwaltungsgericht) seeking the annulment of a notice issued by the [German] Authority for the Import and Stocking of Grain and Feedstuffs that had declared the forfeiture of a deposit of DM 17,026.47 after the business had only partially used an export licence that it had been granted for 20,000 tonnes of corn semolina.

2

1. This notice was issued on the basis of Art. 12(1) subsection (3) of Regulation No. 120/67/EEC of the Council of the European Economic Communities of 13 June 1967 (Official Journal of the European Communities p. 2269) and Art. 9 of Regulation No. 473/67/EEC of the Commission of the European Economic Communities of 21 August 1967 (Official Journal of the European Communities no. 204, p. 16).

3

Art. 12(1) of Regulation No. 120/67/EEC states as follows:

4

(1) Imports into the Community or exports therefrom of any of the products listed in Article 1 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.

5

Art. 8(2) of Regulation No. 473/67/EEC states as follows:

6

(2) If the obligation to import or export has not been fulfilled during the period of validity of the licence, the deposit shall be forfeited subject to Article 9.

7

Art. 9 of Regulation No. 473/67/EEC states as follows:

8

(1) Where import or export is prevented within the period of validity of the licence by a circumstance to be regarded as force majeure and where it is requested that such circumstances be taken into consideration:

(a) in the cases referred to in section (2)(a) to (d), the obligation to effect importation or exportation has expired and the deposit shall not be forfeited.

(b) in the cases referred to in section (2)(e) to (h), the period of validity of the licence shall be extended by such period as the competent body considers necessary as a result of those circumstances.

Upon request, the competent body can determine that the obligation to effect importation or exportation has expired and the deposit shall not be forfeited.

[…]

9

2. Pursuant to Art. 177 of the Treaty Establishing the European Economic Community (hereinafter: the Treaty), the Administrative Court obtained a preliminary ruling from the Court of Justice of the European Communities regarding the question of whether the aforementioned provisions of the regulations in question are lawful under the law of the European Economic Community. By judgment of 17 December 1970 – Case 11/70 –, the Court of Justice confirmed the lawfulness of the contested regulations (likewise in its judgment of 10 March 1971 – C 38/70 –).

10

The Court of Justice held: Given its independent nature, Community law cannot be overridden by national law. The contested provisions of Community law are necessary and appropriate to enable the authorities to make the required interventions on the market in cereals. The system of deposits reflects the voluntary nature of requests for licences and has the dual advantage over other possible systems of simplicity and efficacy. The interest and behaviour of certain traders must yield before a system laid down in the public interest of the Community. The forfeiture of a deposit constitutes neither a fine nor a penalty, since it is merely the guarantee that an undertaking voluntarily assumed will be carried out. The exception in cases of force majeure is a provision which, without imposing an undue burden on importers or exporters, is capable of ensuring the normal functioning of the organisation of the market in cereals. The concept of force majeure is sufficiently flexible as it is not limited to absolute impossibility but must be understood in the sense of unusual circumstances, outside the control of the importer or exporter, the consequences of which, in spite of the exercise of all due care, could not have been avoided except at the cost of excessive sacrifice.

11

3. Thereupon, the Administrative Court, by order of 24 November 1971, suspended the proceedings and referred the matter to the Federal Constitutional Court in judicial review proceedings pursuant to Art. 100(1) of the Basic Law (Grundgesetz – GG). It requested that the Federal Constitutional Court decide whether the obligation to export under Community law and the related obligation to lodge a deposit was compatible with the Basic Law and, if that was found to be the case, whether the fact that the deposit is only released in cases of force majeure was compatible with the Basic Law.

12

The Administrative Court considers the challenged provisions of Community law to be incompatible with the Basic Law, including in the interpretation adopted by the Court of Justice of the European Communities. […]

13-15

[…]

16

4. The Federal Minister of Justice made a statement on behalf of the Federal Government. The Minister considers the referral to be inadmissible on the grounds that Art. 100(1) of the Basic Law is neither directly applicable to regulations of the European Economic Community, nor is it applicable by analogy.

17

[…]

18

5. The VIIth Division of the Federal Administrative Court (Bundesverwaltungsgericht) submitted that it has not made a determination on the constitutionality of the provisions in question in its case-law. […]

19

6. The plaintiff in the initial proceedings was given the opportunity to submit a statement.

B.-I.

20

The referral is admissible.

21

1. It is an essential preliminary in this case to render a more detailed, albeit not yet conclusive, determination of the relationship between the constitutional law of the Federal Republic of Germany and European Community law, which has developed on the basis of the Treaty Establishing the European Economic Community (hereinafter: Community law). The present case requires only a clarification of the relationship between the fundamental rights guarantees of the Basic Law and those rules of secondary Community law of the European Economic Community whose execution is in the hands of administrative authorities of the Federal Republic of Germany. This is because there is currently no indication that provisions of the Treaty Establishing the European Economic Community, i.e. primary Community law, conflict with provisions of the Basic Law. […]

22

2. The Second Senate of the Federal Constitutional Court reaffirms – in line with both its previous case-law and with the case-law of the Court of Justice – that Community law is neither part of the domestic legal order nor international law. Rather, it constitutes an independent legal order based on an independent source of law (Decisions of the Federal Constitutional Court, Entscheidungen des Bundesverfassungsgerichts – BVerfGE 22, 293 <296>; 31, 145 <173 f.>). The Community is not a state, especially not a federal state, but rather ‘a community of a special nature, engaged in a process of ongoing integration’, an ‘international organisation’ within the meaning of Art. 24(1) of the Basic Law.

23

It follows from the foregoing that, in principle, the two legal spheres coexist independent of one another, and that it falls to, in particular, the competent Community institutions, including the Court of Justice, to decide on the binding force, interpretation and observance of Community law, while decisions on the binding force, interpretation, and observance of the constitutional law of the Federal Republic of Germany fall to the competent national institutions. The Court of Justice cannot make a binding decision on whether a rule of Community law is compatible with the Basic Law, just as the Federal Constitutional Court cannot make a binding decision on whether and in what interpretation a rule of secondary Community law is compatible with primary Community law. This does not lead to any difficulties as long as the content of the two legal orders does not come into conflict. Therefore, the special relationship that has arisen between the Community and its members following the Community’s establishment imposes a duty on the competent institutions, in particular, the two courts responsible for judicial review – the Court of Justice and the Federal Constitutional Court – to work towards concordance of the two legal orders in their respective case-law. Only in cases where this is unsuccessful can conflicts arise which demand that consequences be drawn from the fundamental relationship between the two legal spheres.

24

In such cases, it is not sufficient to simply speak of the ‘precedence’ of Community law over national constitutional law to justify the conclusion that Community law must always prevail over national law on the grounds that otherwise the Community would be called into question. Community law is not called into question if, in exceptional cases, it cannot prevail over imperative constitutional law, just as international law is not called into question by Art. 25 of the Basic Law, which provides that the general rules of international law only take precedence over ordinary federal law, and just as another (foreign) legal order is not called into question when it is superseded by the ordre public of the Federal Republic of Germany. According to the spirit and purpose of the European Treaties, the binding effect of the Treaty on the Federal Republic of Germany (and on all Member States) is not one-sided, but also compels the Community established by the Treaties to do its part in resolving the purported conflict at issue here, which means finding a framework that is compatible with the imperative constitutional principles of the Federal Republic of Germany. Thus, invoking such a conflict does not constitute an infringement of the Treaties, but sets in motion the Treaty mechanism within the European institutions to resolve the conflict politically.

25

3. Art. 24 of the Basic Law makes reference to the transfer of sovereign powers to international organisations. This cannot be taken literally. Just like every other fundamental provision of the Constitution, Art. 24 of the Basic Law must be understood and interpreted in the context of the Constitution as a whole. Viewed in this way, this provision does not allow for the use of legislation enacted by an international organisation to change the basic structure of the Constitution, which is the foundation of its identity, without constitutional amendment. It is true that the competent Community institutions have law-making powers that the competent German constitutional organs do not have under the Basic Law, and that the laws made by Community institutions are nevertheless valid and directly applicable in the Federal Republic of Germany. Yet Art. 24 of the Basic Law limits these law-making powers, as it does not permit Treaty amendments that would override the identity of the German Constitution by encroaching on its constituent structures. The same applies to rules of secondary Community law adopted on the basis of interpretation of the applicable Treaty that would have the same effect on the basic structures of the Basic Law. Rather than authorising the actual transfer of sovereign powers, Art. 24 of the Basic Law creates an opening in the domestic legal order (subject to the limits set out therein) that allows law from another source to become directly valid and applicable within Germany’s sovereign sphere, curtailing Germany’s exclusive claim to sovereign power within the scope of application of the Basic Law.

26

4. The part of the Basic Law setting out the fundamental rights catalogue is an essential component of the German Constitution that forms part of its basic structure and cannot be given up. Art. 24 of the Basic Law does not permit this fundamental rights part to be relativised without reservation. In this regard, the Community’s current state of integration is of decisive importance. The Community still lacks a parliament with direct democratic legitimation elected by universal suffrage that has legislative powers and to which the law-making Community institutions are fully accountable. In particular, it still lacks a codified fundamental rights catalogue that content-wise is just as reliable and unequivocally established for future application as the Basic Law’s catalogue and therefore would allow a comparison and decision on whether the generally binding fundamental rights standards of Community law are congruent on a long-term basis with the fundamental rights standards of the Basic Law and thus do not exceed the limits set by Art. 24, irrespective of possible modifications. As long as this legal certainty, which cannot be guaranteed by the case-law of the Court of Justice alone – as favourable as this case-law has been to fundamental rights –, has not been achieved in the course of further integration of the Community, the reservation derived from Art. 24 of the Basic Law applies. This legal problem only arises from the ongoing process of Community integration, which is still in flux, and will disappear once the current transitional phase is over.

27

In the case of a purported conflict between Community law and a part of national constitutional law, specifically the fundamental rights guarantees of the Basic Law, a temporary question arises as to which legal order takes precedence and supplants the other order. In this legal conflict, the fundamental rights guarantees of the Basic Law will prevail as long as the competent Community institutions have not resolved the conflict in accordance with the Treaty mechanism.

28

5. The relationship between the Basic Law and Community law set out above gives rise to the following conclusions with regard to the jurisdiction of the Court of Justice on the one hand and of the Federal Constitutional Court on the other:

29

a) In accordance with the rules on competences laid down in the Treaty, the Court of Justice has jurisdiction to decide on the validity of provisions of Community law (including, according to the Court of Justice, unwritten rules of Community law) and their interpretation. The Court of Justice cannot decide incidental questions of national law of the Federal Republic of Germany (or any other Member State), at least not with binding effect on that state. Where the reasons attached to its decisions contain statements to the effect that certain contents of a Community provision were congruent or compatible with a provision of national constitutional law – in this case with a fundamental rights guarantee of the Basic Law –, these constitute non-binding obiter dicta.

30

In the framework of its jurisdiction, the Court of Justice determines the contents of Community law with binding effect for all Member States. The domestic courts of the Federal Republic of Germany must therefore obtain a decision from the Court of Justice pursuant to Art. 177 of the Treaty before raising the question of compatibility of a provision of Community law relevant to their decision with the fundamental rights guarantees of the Basic Law.

31

b) It follows from the foregoing that the Federal Constitutional Court never decides on the validity or invalidity of a provision of Community law. At most, it can conclude that German authorities and courts cannot apply such a provision insofar as it conflicts with one of the Basic Law’s fundamental rights. The Federal Constitutional Court can decide incidental questions arising from Community law itself (just as the Court of Justice can), insofar as the requirements of Art. 177 of the Treaty – which is binding on the Federal Constitutional Court – have not been met or the Court of Justice has not already decided the matter in a decision that is binding on the Federal Constitutional Court under Community law.

32

6. Fundamental rights can be guaranteed in more than one legal sphere and thus enjoy several layers of judicial protection. According to its case-law, the Court of Justice considers itself to be competent for protecting fundamental rights in accordance with Community law through its decisions. By contrast, the protection of fundamental rights guaranteed by the Basic Law is vested solely in the Federal Constitutional Court within the framework of the competences afforded to it by the Basic Law. No other court can take over this constitutional duty. Insofar as citizens of the Federal Republic of Germany have a claim to judicial protection of their fundamental rights guaranteed in the Basic Law, this claim cannot be impaired solely because these citizens are directly affected by legal acts of German authorities or courts that are based on Community law. Otherwise, there would be a significant gap in judicial protection, precisely for the most elementary status rights of citizens. In principle, the considerations that apply to a free and democratic federal state also apply to a community of states with free and democratic constitutions: It does not prejudice the Community and its free (and democratic) structures if its members provide for stronger freedoms for their citizens in their constitutions than the Community does.

33

7. The judicial protection afforded by the Federal Constitutional Court is based exclusively on the constitutional law of the Federal Republic of Germany and the more detailed framework set out in the Federal Constitutional Court Act (Bundesverfassungsgerichtsgesetz – BVerfGG).

34

a) Judicial review proceedings following a referral from a court always concern the review of legal provisions. It is customary in national law to distinguish between a law enacted by Parliament on the one hand and a legal instrument based on a parliamentary law on the other. Given that such a distinction is alien to Community law, every type of legal act of the Community constitutes a legal provision within the meaning of the Rules of Procedure of the Federal Constitutional Court.

35

b) A limitation to the jurisdiction of the Federal Constitutional Court arises from the fact that it can only review acts of German state authority, i.e. court decisions, administrative acts of the authorities and measures of the constitutional organs of the Federal Republic of Germany. That is why the Federal Constitutional Court considers a constitutional complaint by a German citizen directly challenging a Community regulation to be inadmissible (BVerfGE 22, 293 <297>).

36

c) When a German administrative authority enforces a Community regulation or a German court deals with such a regulation, this constitutes an exercise of German state authority. In exercising German state authority, administrative authorities and courts are bound by German constitutional law. Aside from the constitutional complaint, which can only be admissible once all legal remedies have been exhausted […], fundamental rights protection before the Federal Constitutional Court is afforded, in accordance with its Rules of Procedure, by way of referral from the courts in judicial review proceedings. This type of proceeding requires some modifications in view of the special nature of the relationship between national constitutional law and Community law set out above; in its case-law, the Federal Constitutional Court has deemed such modifications necessary for other cases, too. […] It is consistent with this case-law for the Federal Constitutional Court to limit itself, in the type of cases at issue here, to a finding that a provision of Community law may not be applied by the administrative authorities and courts of the Federal Republic of Germany if it conflicts with a fundamental right guaranteed in the Basic Law.

37

Constitutional law requires that such decision can only be taken by the Federal Constitutional Court, for the same reason that the Federal Constitutional Court has the exclusive power to declare laws void. This is also in the interest of the European Economic Community and Community law. According to the guiding principle of Art. 100(1) of the Basic Law, it falls to the Federal Constitutional Court to prevent a situation where any German court could disregard the legislator’s intent by not applying a law enacted by the legislator because the court in question considers this law to violate the Basic Law (BVerfGE 1, 184 <197>; 2, 124 <129>). Domestic statutory law is thereby protected vis-à-vis courts that might want to deny its validity on constitutional law grounds. Similar considerations apply to Art. 100(2) of the Basic Law, according to which a decision must be obtained from the Federal Constitutional Court if doubts arise as to whether a general rule of international law creates rights and duties for the individual. The core idea underlying Art. 100 of the Basic Law therefore requires that the validity of Community law in the Federal Republic of Germany be protected against infringements in the same way that national law is.

38

It must therefore be concluded: As long as the integration process of the European Communities has not progressed so far that Community law also contains an operative catalogue of fundamental rights that has been adopted by a parliament and is congruent with the fundamental rights catalogue of the Basic Law, a court of the Federal Republic of Germany, after obtaining a decision from the Court of Justice of the European Communities as required under Art. 177 of the Treaty, is permitted – and required – to refer the matter to the Federal Constitutional Court in judicial review proceedings if the court in question considers the Court of Justice’s interpretation of the relevant provision of Community law to be inapplicable on the grounds that or to the extent that it conflicts with one of the fundamental rights enshrined in the Basic Law.

II.

39

The procedural law applicable to the Federal Constitutional Court can be developed without referral of the matter to the Plenary of the Court, since this development does not contradict any decision of the First Senate of the Federal Constitutional Court.

40-41

[…]

III.

42

The challenged provisions of Community law, as interpreted by the Court of Justice, are not incompatible with a fundamental right guaranteed in the Basic Law; they do not conflict with either Art. 12 or Art. 2(1) of the Basic Law.

43

1. First, it should be noted that the forfeiture of a deposit provided for in the context of the licensing of the import and export of certain products and goods cannot be categorised as hardship imposed by the state in response to unlawful conduct that would be comparable to punishment or a fine. […]

44

2. The system contained in the challenged provisions is not only appropriate, but also indispensable at the present stage of development of the European Community, in which economic transactions cannot work without planning and effective oversight; it cannot be replaced by another system that is similarly effective and simple while also being in conformity with the market.

45

3. With regard to the fundamental right to occupational freedom (Art. 12 of the Basic Law), the principles developed in the judgment of 11 June 1958 (BVerfGE 7, 377 <397 ff.>) also apply to this case. The licensing of import and export transactions, including the payment and forfeiture of deposits, affects the practice of an occupation, which can be restricted by the legislator. However, the legislator’s discretion here is not unlimited. In the case at hand, the legislator enacted a ‘mere framework on practising’ [an occupation], ‘which does not affect occupational freedom; rather, it only determines the manner in which the occupation in question must be practised. This framework can, to a large extent, be based on considerations of expediency; such considerations can determine what conditions must be imposed on those in that occupational field in order to avert disadvantages or dangers to the general public. (...) Fundamental rights protection is limited to preventing the imposition of conditions that are inherently unconstitutional on the grounds of being too onerous and unreasonable (unzumutbar); these exceptions aside, the impairment at issue here does not have too great a negative impact on the fundamental rights holders, given that they have already taken up an occupation and the entitlement to pursue the occupation is not affected’ (BVerfGE 7, 377 <405 f.>).

46

Based on these standards, the challenged provisions do not conflict with Art. 12 of the Basic Law. This is because the provisions were enacted for compelling reasons; they serve to avert severe disadvantages for the European Economic Community, as set out by the Court of Justice in its decision. These provisions do not result in conditions that are ‘inherently unconstitutional on the grounds of being too onerous and unreasonable’. This situation is similar to the so-called Penalty case, decided by this Court on 3 February 1959 (BVerfGE 9, 137), in which the Court did not even consider a violation of Art. 12 of the Basic Law (BVerfGE 9,137 <146>).

47

4. […]

48

5. Thus, Art. 12 of the Basic Law does not preclude the application of the challenged provisions by the German authorities and courts. According to the established case-law of the Federal Constitutional Court, an independent standard of review other than Art. 12 of the Basic Law is Art. 2(1) of the Basic Law; in the present case, however, there is no scope for applying this standard (BVerfGE 9, 63 <73>; 9, 73 <77>; 9, 338 <343>; 10,185 <199>; 21, 227 <234>; 23, 50 <55 f.>).

IV.

49

This decision was taken with five to three votes with regard to B I and II; it was unanimous with regard to B III.