Court of Justice 14-05-1998 ECLI:EU:C:1998:232

(a) The first question: the application of Articles 13 and 33 of Regulation No 3665/87

16. Articles 23 and 33 of Regulation No 3665/87 lay down respectively two different legal rules, one imposing an obligation to pay the difference between the export refund paid and that which is due, plus the supplementary payment, the other allowing a derogation in two circumstances justified by force majeure. It is clear from the order for reference that the applicants have not been required to make any supplementary payment; the only amounts in dispute in the main proceedings are the advance-paid export refunds, and the question whether the applicants can benefit from the force majeure derogation in order not to be obliged to make the supplementary payment is not in issue.

17. As the United Kingdom has pointed out, the first question reflects an attempt by the applicants to distinguish the present case from Anglo Irish Beef Processors.⁽⁸⁾ In that case a consignment of beef destined for Iraq failed to reach its destination because of the trade embargo imposed by the Umted Nations⁽⁹⁾ following that country's invasion of Kuwait. The first question of the national court was formulated by the Court as being ‘whether Regulation No 3665/87 ... must be interpreted — bearing in mind that, owing to force majeure, the goods were exported to a destination other than that originally intended — as precluding an intervention agency from withholding such proportion of the security lodged as corresponds to the amount that was not payable to the recipient, on account of the disproportionate effect of the forfeiture of the security ... or for any other reason’.⁽¹⁰⁾ The Court continued:

‘[t]he system of differentiated export refunds is intended to gain or to maintain access for Community exports to the markets of the nonmember countries concerned Since actual access to the market of destination is in principle conditional on the completion of customs formalities for the release of the goods into free circulation in the country of destination, the fact that the consignment did not reach that destination and, owing to force majeure, had to be exported to other countries rules out the possibility of its being regarded, for the purposes of the differentiated refund, as having been imported within the meaning of Article 5(1) of Regulation No 3665/87.’⁽¹¹⁾

18. In so far as a parallel can be drawn between Anglo Irish Beef Processors and the present case, the comparison is inimical rather than helpful to the applicant's case. As the Court said, ‘payment of the differentiated or non-differentiated refund is conditional not only on the product having left the customs territory of the Community but also on its having been imported into a nonmember country ...,’.⁽¹²⁾ The exporter was permitted to retain the export refunds appropriate to the eventual nonmember country of destination on the basis of the uncontested existence of force majeure and on proof of export to that country. In the present case, none of the beef was exported to a nonmember country and some never left its Member State of origin. There is no legal basis for the payment of export refunds (except for the particular case of goods which qualify for non-differentiated refunds perishing in transit) when there has been no export and, consequently, no basis for retention of such refunds paid in advance. As Advocate General La Pergola said in his Opinion in this case, repayment of the refunds ‘does not arise by way of a penalty for unlawful conduct but simply entails reimbursement of a sum unduly paid’.⁽¹³⁾

19. The Commission's adoption of Regulation No 773/96 entails no recognition of necessity to mitigate the consequences of the export ban beyond its own terms, which are fully consistent with the existing rules. Relief is granted, by analogy with cases of force majeure, in respect of the penal element of the forfeiture of security — the supplementary amount — but there is no export refund without export. As the Commission pointed out at the hearing, Regulation No 773/96 does not refer to force majeure, but is based on the Commission's power to control the level at which penalties are fixed.

20. The applicants have further argued that allowing them to retain the export refunds would only mitigate the losses they have sustained as a result of the transactions in question. However, as the United Kingdom has pointed out, there is no necessary relationship between any losses incurred through having to divert the products to another market and the amount of the export refund. More fundamentally, the setting off of traders' losses against advance-paid export refunds would be incompatible with the objective of the payment of export refunds which, as noted by Advocate General La Pergola in Anglo Irish Beef Processors, is ‘intended solely as compensation for any disparity between the Community price and the current price on other markets’.⁽¹⁴⁾

21. The question whether, in accordance with Articles 23 and 33 of Regulation No 3665/87, the exporter is obliged to repay the advance-paid export refund where beef in transit is repatriated to the Member State of export can therefore be answered briefly and in the affirmative. It is clear from Article 13 of Regulation No 805/68 that the right to an export refund only arises in respect of products which have been exported from the Community. As both the Commission and the United Kingdom have pointed out, the ‘amount actually due’ in respect of the products at issue in the main proceedings for the purpose of Article 23(1) was zero, and hence the difference between this and the amount advanced is equal to the entirety of the export refund. As regards Article 33(1), no entitlement to a refund can be proven, and the amount to be repaid is once again equal to the entirety of the export refund.

(b) The second question: entitlement to retain all or part of the export refunds by virtue of general principles of Community Law

22. The answer to the first question having established that the export refund must in the circumstances of the present case be repaid, according to Regulation No 3665/87, the second question asks whether the applicants might be entitled to retain all or part of the advance payments ‘by reason of general principles of Community law, and in particular force majeure, legitimate expectations, proportionality or equity’.

23. The applicants' arguments were stated thus in the order for reference:

‘[the] Applicants submit, inter alia: that the effect of die BSE crisis and the Commission export ban was legally and factually to close off all third countries as markets for the beef in question, that as a result they would suffer substantial losses which would be exacerbated if the export refunds were to be repaid, and that they had a legitimate expectation that the Community would not take measures preventing fulfilment of these export transactions at least without proper transitional or other measures which enabled the exporters to either retain the disputed export refunds or at least avoid a loss on the transactions in question. In this regard the Applicants submit that the Commission export ban includes goods in transit as within the prohibition; that the export bans imposed by third countries were directly related and attributable to the Commission's export ban and that the effect of the ban is, uniquely, to place exporters in a position whereby they cannot export to any third country. As such, the Applicants have become comparable to recipients of non-differentiated export refunds who, in cases offeree majeure, are entitled to retain advance-paid export refunds.’

24. At the hearing, the applicants added that in the circumstances of the present case there was no risk of abuse such as re-exportation into the Community, as no third country would accept the importation of the beef in the first place, or of unjust enrichment, as any income accruing from the disposal of the beef in the United Kingdom would be set off against the export refunds.

25. The comparison the applicants seek to make between their situation and that of recipients of non-differentiated export refunds seems to me to be entirely without merit. Indeed, it is wholly erroneous to suggest, as a general proposition, that the latter can retain export refunds in cases of force majeure,⁽¹⁵⁾ when they may only do so in the circumstances outlined in Article 5(3) of Regulation No 3665/87, to wit, when the goods have perished in transit as a result of force majeure, which does not arise in the present case. The situation of the applicants can only therefore be compared, if at all, to that of recipients of non-differentiated export refunds whose goods have not perished, but who have been unable to complete the transaction because of import bans imposed by third countries. In neither case can the exporters benefit from Article 5(3) of Regulation No 3665/87, and the general rule subjecting entitlement to an export refund to importation into a nonmember country is therefore fully applicable.

26. The applicants outlined their submission regarding force majeure at the hearing in the following terms: ‘[if], on the particular facts of a case, the strict rules operate in a manner which is clearly unfair or inequitable then the effect of those rules may be softened by virtue of the principle of equity or fairness or its emanation force majeure. It is clear from [Huygen and Others⁽¹⁶⁾ and Bonapharma⁽¹⁷⁾] that this general principle can override strict rules and can fill lacunae in those rules .... The Community has recognised that compliance with the strict rules of the export refund regime would be inequitable and unfair’.

27. Whether or not the cases cited could justify such a broad definition of the notion of force majeure and its effects, it is clear from the judgment in Huygen and Others that this concept ‘does not have the same scope in the various spheres of application of Community law [and that] its meaning must be determined by reference to the legal context in which it is to operate’.⁽¹⁸⁾ Consideration must therefore be given to force majeure in the context of the export refund system considered as a whole.

28. I do not think the Commission's recognition that the export refund rules should be partly relaxed in the special circumstances of the BSE crisis would justify the applicants' conclusion that the application of the requirement to reimburse export refunds which are not due under the applicable rules would be ‘inequitable and unfair’. The Commission has merely recognised, in effect, that traders unable to carry out their intended transaction as a result of the action taken by certain third countries following the SEAC announcement of 20 March 1996 should not be required to make a supplementary payment whether or not force majeure existed. The true analogy is with cases covered by Article 23(1) of Regulation No 3665/87 where, by reason of force majeure, either the required proof is lacking or the goods have been diverted to a destination other than that intended. In such cases, there is relief from the supplementary payment. The Commission cannot, by applying that result to the instant case, be taken to have recognised any wider principles of fairness or equity and certainly not one which goes so far as to permit the retention of refunds where there has been no export.

29. Nor do I consider that the enforcement of the requirement to repay the export refunds as against the applicants would in any case be inequitable or unfair. Indeed, as the United Kingdom has pointed out, allowing the applicants to retain all or some of the advance-paid export refunds in the present case would give them an uncovenanted benefit to which other traders who, for whatever reason, did not receive advance payment in respect of their exports to third countries are not entitled. The Court has recendy held that the export refund rules regarding cereals do not entitle a trader whose product has been destroyed in transit as a result oí force majeure to a differentiated export refund.⁽¹⁹⁾ If it is not possible from such cases to deduce a general principle that export refunds should not be repaid even when goods have perished in transit due to force majeure, it is even more clearly so in the present case where the goods not only survived but were repatriated and resold.

30. The applicants' argument regarding their legitimate expectations is expressly predicated on the notion that the imposition of the Community export ban prevented the fulfilment of their export transactions. In this regard, it is convenient to distinguish between the beef in transit at the time of the entry into force of the export ban, and that which never left the territory of the United Kingdom. As the Commission has pointed out, Decision 96/239/EC does not affect beef in transit, and in regard to this category of beef, the applicants' claim of legitimate expectation is therefore unfounded. Nor, in my view, can the applicants claim that the import bans adopted by the intended third countries of destination, whether before or after the adoption of this decision, were imposed as a result of the Community export ban; the Community is not, after all, empowered to order a third country to prohibit imports onto its territory. In any case, it seems highly probable that the third country import bans were imposed as a result of the statement of the SEAC of 20 March 1996 mentioned above,⁽²⁰⁾ and the applicants have not demonstrated the contrary. That, however, is an issue of fact for the national court.

31. The legal situation regarding the remaining beef which never left the United Kingdom is at least superficially somewhat different; here Commission Decision 96/239/EC could be seen as constituting a direct impediment to the export transactions, whether or not any third country would have been minded to allow the importation into their territory of the beef in question. That does not of course mean that the applicants had any legitimate expectation either that the Community would not adopt the export ban, or that they would be entitled to retain advance-paid export refunds or a part thereof to cover any loss they may sustain on the transaction.

32. It is, in my view, clear beyond argument that traders in agricultural products do not have a legitimate expectation that the Community institutions will refrain from acting to protect human health in regulating the market in these products. On the contrary, as the Commission pointed out at the hearing, such traders choose to operate in a ‘high-risk environment’. The Court has also observed that the ‘freedom to pursue a trade or business is not absolute, but must be viewed in relation to its social function’.⁽²¹⁾ Restrictions may always be imposed which are not disproportionate. The export ban, in so far as it, rather than restrictions imposed by third countries, is material to this case, has been held not to infringe the principle of proportionality.⁽²²⁾

33. In the particular area of human and animal health, a number of Community legislative provisions enable, and in some cases oblige, the Member States to take measures which may interfere with the normal activities of traders in agricultural produce. Thus, for example, Article 10 of Council Directive 90/425/EEC of 26 June 1990 concerning veterinary and zootechnical checks applicable in intra-Community trade in certain Uve animals and products with a view to the completion of the internal market⁽²³⁾ obliges any Member State to notify the other Member States and the Commission ‘of the outbreak in its territory ... of any zoonoses, diseases or other cause likely to constitute a serious hazard to animals or to human health ...[and to] implement the control or precautionary measures provided for in Community rules, in particular the determination of the buffer zones provided for in those rules, or adopt any other measure which it deems appropriate’. The Commission is also empowered under this provision to take interim protective measures. It follows, in my view, from these and other similar provisions in the area of human and animal health⁽²⁴⁾ that such expectations as the applicants may enjoy to engage in the export of beef are in any case subject to the obligations of the Community institutions and Member States to protect human and animal health, and that the fulfilment of the latter does not infringe any legitimate expectations of the applicants.

34. The arguments relied upon by the applicants at the hearing in relation to the proportionality of the requirement to repay export refunds which are not due amounted to little more than an affirmation that in the present case ‘the objectives of the regime would not be undermined by permitting exporters to retain the refunds’ and that, as no third country would accept the beef, there was no risk of abuse, for example through re-exportation of the beef from the designated third country of destination.

35. Whether or not these matters go to demonstrating the proportionality or otherwise of applying the reimbursement requirement in the present case, I do not find the applicants' submissions convincing. As noted above, the principal objective of the regime of differentiated export refunds is to encourage the exportation of beef to certain specified third countries; I do not see how allowing traders in the situation of the applicants to retain all or part of the advance-paid export refunds would contribute in any way to the achievement of those objectives.

36. It appears from the order for reference that the applicants' complaint is directed to the question of compensation for any loss they may have suffered as a result of the imposition of the ban. The applicants have not shown how any such claim could affect either the interpretation of the relevant legislative provisions or their validity. I am therefore of the opinion that, in the circumstances described in the second question, the exporters are not entitled to retain all or part of the export refund paid in advance.

(c) The third question: the requirement to take account of revenues derived from the disposal of the beef in the United Kingdom

37. In the light of the negative answer to the second question, the third question does not fall to be answered.

(d) The fourth question: the validity of Commission Decision 96/239/EC and Regulation No 773/96

38. Commission Decision 96/239/EC, including the specific question of whether the Commission was empowered to impose a ban on the exportation of beef from the United Kingdom to third countries, has been examined in some detail by the Court in National Farmers' Union and Others and United Kingdom v Commission,⁽²⁵⁾ in which the Court upheld the validity of the contested decision. The applicants in the present proceedings, who both intervened in the main proceedings in the former case, have not raised any ground which could call into question the Court's ruling in that case.

39. Regulation No 773/96 was adopted on the basis of Article 13 of Regulation No 805/68, which authorises the Community to cover by export refunds the difference between world market prices and those pertaining in the Community, but only ‘[to] the extent necessary to enable the products listed in Article 1 to be exported’. Providing compensation for loss, if any, by allowing exporters to retain all or part of the export refunds, would not compensate for the price differences in question and would therefore not advance the objectives of Regulation No 805/68, even if the Commission could derive a power from Article 13 of Regulation No 805/68 to award compensation for trading losses. In any case, the applicants have not raised any ground other than those considered and rejected at section IV(b) above to challenge the validity of Regulation No 773/96.