Opinion of Advocate General Rantos delivered on 9 March 2023

1. Regulation No 1698/2005

5. Regulation No 1698/2005⁽⁵⁾ was repealed by Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013.⁽⁶⁾

6. Article 36(a)(v) of Regulation No 1698/2005 provided that support under the section ‘Improving the environment and the countryside’ is to concern measures targeting the sustainable use of agricultural land through animal welfare payments.

7. Article 40 of that regulation provided:

‘1.

Animal welfare payments provided for in Article 36(a)(v) shall be granted to farmers who make on a voluntary basis animal welfare commitments.

2.

Animal welfare payments cover only those commitments going beyond the relevant mandatory standards … and other relevant mandatory requirements established by national legislation and identified in the programme.

These commitments shall be undertaken as a general rule for a period between five and seven years. …

3.

The payments shall be granted annually and shall cover additional costs and income foregone resulting from the commitment made. Where necessary, they may cover also transaction cost.

Support shall be limited to the maximum amount laid down in [Annex I].’

8. Under Article 74(1) of that regulation:

‘Member States shall adopt all the legislative, statutory and administrative provisions … in order to ensure that the [European Union’s] financial interests are effectively protected.’

2. Regulation No 1974/2006

9. Regulation No 1974/2006 was repealed by Commission Delegated Regulation (EU) No 807/2014 of 11 March 2014 supplementing Regulation (EU) No 1305/2013 of the European Parliament and of the Council on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and introducing transitional provisions.⁽⁷⁾ However, Regulation No 1974/2006 continued to apply to operations implemented pursuant to programmes approved by the European Commission under Regulation No 1698/2005 before 1 January 2014.

10. Under Article 1 of Regulation No 1974/2006:

‘This Regulation lays down detailed rules for the application of [Regulation No 1698/2005] as regards principles and general rules for rural development support, specific and common provisions for rural development measures, and eligibility and administrative provisions, except provisions on controls.’

11. Article 44 of that regulation provided:

‘1.

Where all or part of a holding of the beneficiary is transferred to another person during the period for which a commitment given as a condition for the grant of assistance runs, that other person may take over the commitment for the remainder of the period. If the commitment is not taken over, the beneficiary shall reimburse the assistance granted.

2.

Member States may choose not to require the reimbursement referred to in paragraph 1 in the following cases:

1. where a beneficiary who has already honoured a significant part of the commitment concerned definitively ceases agricultural activities and it is not feasible for a successor to take over the commitment;

2. where the transfer of a part of the holding of a beneficiary occurs during a period of extension of the commitment in accordance with the second subparagraph of Article 27(12) and the transfer does not concern more than 50% of the area covered by the commitment before the extension;

3. where the holding of a beneficiary is entirely or partly transferred to an organisation having the main objective of nature management in view of conservation of the environment, provided that the transfer aims at a permanent change of land use into nature conservation and that this is associated with a significant benefit to the environment.

3.

In the event of minor changes to the situation of a holding, Member States may take specific measures to ensure that the application of paragraph 1 does not lead to inappropriate results as regards the commitment entered into.

A reduction in the area of the holding of up to 10% of the area under commitment shall be considered as a minor change for the purpose of the first subparagraph.’

12. Article 45(4) of that regulation stated:

‘Where a beneficiary is unable to continue to comply with commitments given because the holding is reparcelled or is the subject of public land-consolidation measures or of land-consolidation measures approved by the competent public authorities, Member States shall take the measures necessary to allow the commitments to be adapted to the new situation of the holding. If such adaptation proves impossible, the commitment shall expire and reimbursement shall not be required in respect of the period in which the commitment was effective.’

13. Article 47 of that regulation provided:

‘1.

Member States may recognise, in particular, the following categories of force majeure or exceptional circumstances in which they will not require the partial or full reimbursement of aid received by the beneficiary:

1. death of the beneficiary;

2. long-term professional incapacity of the beneficiary;

3. expropriation of a large part of the holding if that could not have been anticipated on the day on which the commitment was given;

4. a severe natural disaster seriously affecting land on the holding;

5. the accidental destruction of livestock buildings on the holding;

6. an epizootic disease affecting all or part of the farmer’s livestock.

2.

Cases of force majeure or exceptional circumstances shall be notified in writing by the beneficiary, or any person entitled through or under him to the competent authority, together with relevant evidence to the satisfaction of that authority, within 10 working days from the date on which the beneficiary, or the person entitled through or under him, is in a position to do so.’

1. Admissibility

35. The APIA and the Romanian Government consider that the second question, like the third, must be declared inadmissible on the ground that it relates to the interpretation of Article 44(2) of Regulation No 1974/2006 although this is of no assistance in resolving the dispute in the main proceedings. More specifically, those parties argue that, in so far as that provision provides that Member States ‘may choose’⁽²²⁾ not to require the reimbursement referred to in paragraph 1 of that article and the fact that the Romanian legislature has chosen not to provide for that possibility under national law, the application of that provision is not likely to have an effect on the outcome of the dispute in the main proceedings, the beneficiary of the aid thus being required to repay the aid under Article 44(1) of that regulation.

36. In that regard, I would point out that, in the procedure laid down by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, first, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted by the national court concern the interpretation of a rule of EU law, the Court of Justice is, in principle, bound to give a ruling. Furthermore, the Court may refuse to rule on a question referred for a preliminary ruling by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it.⁽²³⁾ Second, in the same procedure providing for cooperation, it is for the Court to provide the national court with an answer which will be of use to it and enable it to decide the case before it. To that end, the Court should, where necessary, reformulate the questions referred to it. The Court may also find it necessary to consider provisions of EU law which the national court has not referred to in its questions.⁽²⁴⁾

37. In the present case, whilst the second question, as worded, expressly refers only to Article 44(2) of Regulation No 1974/2006, an optional provision for Member States which has not been included under Romanian law, I note, first, that the referring court, in its question, also referred to the principle of proportionality, which is one of the general principles of EU law;⁽²⁵⁾ second, that it is apparent, by implication, from the grounds of its request for a preliminary ruling that the referring court is also asking about the relationship of Article 44(2) with paragraph 1 thereof; and, third, that the Tribunalul Bucureşti (Regional Court, Bucharest) excluded the application of Article 44(2) not on account of the lack of ‘transposing measures’, but rather due to the fact that the substantive conditions were not met.⁽²⁶⁾

38. In the light of the foregoing considerations, and having regard to the case-law cited in point 36 above, I propose that the second question be found to be admissible, whilst reformulating it as referring, in essence, to the combined interpretation of Article 44(1) and (2)(a) of Regulation No 1974/2006.

2. Substance

39. According to the referring court, the interpretation of those provisions in the light of the principle of proportionality is necessary having regard to two circumstances:

• first, the fact that the APIA imposed on Groenland Poultry an obligation to reimburse the total amount of the aid received, including the aid in respect of the first and second years of the commitment, which had not been paid to Groenland Poultry but to the previous operators (namely Avicola Crevedia and Abator Avicola Crevedia), Groenland Poultry having actually received amounts only in respect of the third and fourth years of the commitment and such amounts corresponding to less than 20% of the total aid to be reimbursed;⁽²⁷⁾ and,

• second, the fact that the commitment was honoured for four of the five years thereof, and the fact that the cessation of activities, that is to say the failure to carry on activities in the fifth year of the commitment was – most likely – due to reasons beyond the control of Groenland Poultry, namely the termination of the lease of the premises which was not attributable to it.

40. The question therefore arises as to whether, in accordance with the principle of proportionality, Article 44 of Regulation No 1974/2006 must be interpreted in such a way that the APIA should have requested, as Groenland Poultry argues, only partial recovery of the amounts received under the commitment and, in particular, only the amounts received by Groenland Poultry.

41. In that regard, in the first place, with respect to the wording of Article 44(1) of Regulation No 1974/2006, it should be borne in mind that, according to that provision, ‘where … a holding of the beneficiary is transferred to another person during the period for which a commitment given as a condition for the grant of assistance runs, that other person may take over the commitment for the remainder of the period. If the commitment is not taken over, the beneficiary shall reimburse the assistance granted’.⁽²⁸⁾

42. That provision thus lays down the general rule that the person who takes over the holding of the beneficiary of the aid, and who also takes over the commitment given by the beneficiary, replaces the latter with regard to all the commitments and obligations in respect of the remaining period. Accordingly, and contrary to what Groenland Poultry argues, I take the view that that provision regulates, in a clear and precise manner, the legal effects of the reimbursement obligation which arises from the transfer of the holding, by laying down the principle according to which the transferee of such a transfer which also voluntarily takes over the multiannual commitment is required, in its capacity as ‘beneficiary’,⁽²⁹⁾ to reimburse the aid received in the event of a new transfer of the holding to another person during the period for which the commitment was given, unless the latter in turn takes over the commitment for the remaining period.

43. As the Commission points out, in line with the logic of Article 44(1) of Regulation No 1974/2006, in cases involving transfer of a holding, the transferor may also transfer its multiannual commitments. Accordingly, if the transferor chooses not to do so or if it is ‘not feasible’ to find a transferee (within the meaning of Article 44(2)(a) of that regulation⁽³⁰⁾), the transferor is required to reimburse the aid granted in full, thus being released from its obligations. Likewise, the transferor is exempt from those obligations if the transferee in turn takes over the multiannual commitments, in which case the transferee becomes the beneficiary of the aid until the end of the period for which the commitments were given, including all advantages and responsibilities resulting therefrom.⁽³¹⁾

44. In the second place, with regard to the context of Article 44(1) of Regulation No 1974/2006, it should be noted that, although that provision lays down the principle that, in the context of a holding transfer, it is the person honouring the commitment who is considered to be the beneficiary and is therefore required to reimburse the aid received, paragraphs 2 and 3 of that article set out exceptions to that principle, by allowing Member States to choose not to require reimbursement. More specifically, paragraph 2(a), which is the relevant scenario in the present case, creates an exception to the obligation for reimbursement where the ‘beneficiary who has already honoured a significant part of the commitment concerned definitively ceases agricultural activities and it is not feasible for a successor to take over the commitment’. As an exception to the general reimbursement obligation on the part of the beneficiary of the aid laid down in paragraph 1, the situations set out in paragraphs 2 and 3 must be interpreted narrowly.⁽³²⁾

45. However, in the circumstances of this case, it is common ground that the option provided for in Article 44(2) of Regulation No 1974/2006 has not been included in Romanian law, so that, in all cases involving the failure to take over the commitment when transferring the holding during the period for which the multiannual commitment was given, the beneficiary is still required, pursuant to Article 44(1) of that regulation, to reimburse in full the aid received and, by the same token, in the light of the principle of effectiveness, the Romanian authorities are required to recover the aid concerned, as there is no legal basis justifying non-recovery of aid. Therefore, in view of the facts of the dispute in the main proceedings, as set out in the order for reference, I consider that Groenland Poultry cannot rely on that exception in order to avoid the reimbursement of all of the aid received, including that paid to previous beneficiaries.

46. In the third place, with regard to the purpose of Article 44(1) of Regulation No 1974/2006, it should be noted that the textual interpretation of that provision, set out above, also permits the initial objective for which the aid has been received to be attained, that is to say, to promote animal welfare. First of all, as the Commission states, for the purposes of that objective, it is essential that the multiannual commitment be honoured in its entirety, since only an extended period guarantees the achievement of the objective of that aid.⁽³³⁾ It is therefore important that, if the commitment is transferred to another beneficiary, all the debts and liabilities be attached to the beneficiary which takes over the commitment. The commitment must be honoured throughout the period, otherwise it diverges from the objective pursued and the beneficial effect in respect of the animals is lost.

47. Next, account should also be taken, in that regard, of the fact that the commitment relates to animal husbandry and promotes animal welfare. The transferee which takes over the commitment, together with the assets and liabilities thereof, also takes on the full commitment in respect of previous years. Since the transferor has already invested the aid received for the welfare of the animals and for the benefit of the animals in its holding, thus improving the situation of the holding transferred to the transferee, the latter, as the beneficiary, indirectly benefits from the earlier investments and receives the remainder of the payment. If the second beneficiary is unable to honour the commitment throughout the period for which it was given, it must also bear all the negative aspects associated with such a commitment, by being required to reimburse the animal welfare payments received, including the payments received by the first beneficiary. That obligation to reimburse any aid received in the event of the termination of the commitment thus encourages the beneficiary to do everything possible to honour that commitment.

48. Lastly, from the point of view of the effective protection of the European Union’s financial interests by the Member States,⁽³⁴⁾ it is important to ensure that EU funds can be recovered effectively if payment thereof has been made in breach of EU law. However, in a case such as the present one, it would be easy to circumvent the rule laid down in Article 44(1) of Regulation No 1974/2006 if the first beneficiary of the aid transferred its commitment to another beneficiary and if the latter immediately abandoned the multiannual commitment before its term, without financial consequences for either of them. With this in mind, the obligation to recover all of the aid received under the commitment is also dictated by the provisions of Regulation (EU) No 1306/2013,⁽³⁵⁾ Article 58(1)(e) of which requires Member States to take the measures necessary to ensure effective protection of the financial interests of the Union and, in particular, to recover undue payments.

49. That conclusion cannot be called into question by any arguments based on the infringement of the principle of legal certainty or the principle of proportionality.

50. First, so far as concerns the principle of legal certainty, I take the view that Article 44(1) of Regulation No 1974/2006 is entirely consistent with that principle, since it is clear therefrom that, on termination of the commitment, it is for the ‘beneficiary of the aid’, within the meaning of that regulation, to reimburse all of the aid received, irrespective of whether it is the transferor or the transferee of the commitment. In other words, when taking over the commitment, the transferee is aware that, once it acquires the status of ‘beneficiary’, it must reimburse all the amounts received if the commitment is no longer honoured. In such circumstances, the new beneficiary, being fully aware of the risk and financial stakes linked to taking over the commitment, and having ‘monetised’ the commitment during the negotiation of the transfer contract, can, therefore, either refuse the commitment, do everything in its power to honour the commitment or try to transfer the holding and the commitment to a new transferee, if it considers it is unable to honour the commitment.

51. Second, as for the principle of proportionality, I consider that the obligation for the second beneficiary to reimburse all the animal welfare payments received is proportionate, in so far as, for the reasons set out above, Article 44(1) of Regulation No 1974/2006 and the logic underlying that article are sufficiently clear and unconditional thus allowing the transferee to know, at the time of the conclusion of the agreement, that if it chooses to take over the commitments, and if it does not honour the multiannual commitment after the transfer of the holding, it may be required to reimburse all the aid, including the aid received previously by the transferor. The proportional nature of the rule stems from the fact that, pursuant to Article 44(1), the transferor of the holding may choose not to take over the multiannual commitment (as is apparent from the wording of that provision ‘that other person may take over the commitment for the remainder of the period’ (emphasis added)). Furthermore, and in any event, Article 44 does not preclude the parties from agreeing, in the transfer agreement, on their respective liabilities in the event that the last beneficiary waives the animal welfare commitment, giving rise to an action by the transferee against the transferor, on the basis of national law, before the national courts. However, in order to guarantee the effectiveness of Article 44(1) of Regulation No 1974/2006, such contractual clauses can be used only in exercise of the right of subrogation, after all the aid received has been reimbursed. Lastly, in so far as the reimbursement obligation derives from relevant provisions of EU law, without leaving Member States any discretion, apart from Article 44(2) and (3), I consider that the principle of proportionality cannot be called into question.

52. In the light of the foregoing, I propose that the answer to the second question referred for a preliminary ruling should be that Article 44(1) and (2)(a) of Regulation No 1974/2006 must be interpreted as meaning that in a situation in which, during the period for which a commitment given as a condition of the grant of assistance runs, the holding of a beneficiary is transferred, in whole or in part, to another person who voluntarily takes over that commitment and who subsequently definitively ceases agricultural activities, that second beneficiary must, in principle, irrespective of the fact that the latter has already honoured a significant part of that commitment, reimburse the aid received under that commitment as a whole, including the amounts received by previous beneficiaries of the aid, unless the Member State concerned has chosen not to require that reimbursement under the exceptions referred to, in particular, in Article 44(2)(a) of that regulation.

1. Admissibility

54. For the reasons already set out in points 35 to 38 of this Opinion, I propose that the third question be declared admissible.

2. Substance

55. As noted in points 41 to 43 of this Opinion, Article 44 of Regulation No 1974/2006 lays down, in paragraph 1 thereof, the general rule applicable to situations in which the beneficiary ceases its agricultural activities: ‘if the commitment is not taken over, the beneficiary shall reimburse the assistance granted’, and, in paragraph 2(a) thereof, one of the exceptions to that general rule applicable to specific situations in which a farmer ‘definitively ceases agricultural activities’ for reasons other than cases of force majeure or exceptional circumstances as referred to in Article 47 of that regulation (and will be analysed in the context of the first question referred for a preliminary ruling).

56. That exception applies if two conditions are met: namely, first, the transferring beneficiary has already honoured a significant part of the commitment concerned and, second, it is not feasible for a successor to take over the commitment. The referring court is seeking guidance from the Court on the interpretation of the second condition, laid down in Article 44(2)(a) of that regulation.

57. More specifically, the referring court notes that that provision appears to require the submission of evidence to that effect by the beneficiary which claims actually to be in such a situation, and not abstract evidence, which may be impossible to produce, of the absence of any successor interested in taking over the commitment. In that regard, the referring court states that Groenland Poultry produced evidence demonstrating that Vitali was interested in taking over the commitment but that the latter did not obtain the sanitary and veterinary authorisations necessary for taking over the agricultural activity, despite the agreement of the committee of Agroli Group’s creditors to lease the production facilities.

58. In that regard, it should first of all be observed that the wording of Article 44(2)(a) of Regulation No 1974/2006 refers to ‘a successor to take over the commitment’, that is to say, ‘any successor’, and does not refer to a single specific successor (emphasis added). Thus, if the EU legislature had wished to emphasise the impossibility for the successor of the holding to take over the commitment, it would simply have stated that it is not feasible for the successor to take over the commitment. Therefore, in order to rely on that exception, I take the view that it is not sufficient that the taking over of the commitment by a successor may prove impossible on account of a difficulty specific to that successor in particular, but that objective circumstances prevented the beneficiary from ‘saving’ the commitment, that is to say that it was not objectively possible to transfer the commitment.

59. It seems to me that that interpretation can also be corroborated by the contextual analysis set out in point 44 of this Opinion, according to which the rule set out in Article 44(2)(a) of Regulation No 1974/2006 constitutes an exception to the rule laid down in Article 44(1) of that regulation and must therefore be interpreted narrowly.

60. Lastly, in the present case, I note that, whilst it is for the referring court to assess whether objective circumstances could have prevented the transfer of the commitment from Groenland Poultry to Vitali, on the basis of the information provided by that court, the taking over of the commitment appears to be ‘feasible’, given that the successor had the intention of taking over the commitment but that only the impossibility of obtaining the administrative authorisation, that is to say a particular situation specific to that sole successor, precluded it.

61. In the light of the foregoing, I propose that the answer to the third question referred for a preliminary ruling should be that Article 44(2)(a) of Regulation No 1974/2006, where it states that ‘it is not feasible for a successor to take over the commitment’, must be interpreted as referring to a situation in which it is not feasible for a successor to take over the commitment on account of objective circumstances which preclude the commitment from being honoured and which are not linked to particular or specific circumstances unique to that potential successor.