C-354/88

OPINION OF MR JACOBS - JOINED CASES C-354/88, C-355/S8 AND C-356/88

O P I N I O N O F M R A D V O C A T E GENERAL JACOBS delivered on 29 M a r c h 1990 *

My Lords, be more than we are entitled to expect from the legislative draftsman and simplicity may be an unattainable ideal in a field so complex as the common organization of the 1. This Opinion relates to three cases in market in pigmeat, yet none the less a little which a Dutch court, the College van clarity would be greatly appreciated, Beroep voor het Bedrijfsleven, has requested because it would facilitate the work of the a preliminary ruling on the validity and Court and promote legal certainty. interpretation of certain provisions of the Community legislation governing entit- lement to export refunds for pigmeat. 4. Article 15 of Council Regulation (EEC) No 2759/75 on the common organization of the market in pigmeat (Official Journal 2. The plaintiffs in the main proceedings 1975 L 282, p. 1) provides that: are undertakings that exported various consignments of pigmeat to non-member countries in the period between February 1983 and March 1986. They claim that, '(1) To the extent necessary to enable the under the applicable Community legislation, products [covered by the common they are entitled to export refunds in respect organization] to be exported on the of those consignments. The defendant, the basis of quotations or prices for those Produktschap voor Vee en Vlees, refuses to products on the world market, the grant refunds on the ground that the meat difference between those quotations or in question did not satisfy a condition that prices and prices within the Community was introduced into the legislation as from may be covered by an export refund. 1 February 1983, regarding the proportion of muscle tissue to bone.

6. The definition of a number of products covered by the common organization of the (b) . . . market was amended by Anicie 2 of Commission Regulation (EEC) No 3602/82 fixing coefficients for calculating levies on (c) "Fore-ends", for the purposes of pigmeat products other than pig carcasses, subheadings 02.01 A III (a) 3 . . . the amending the Annex to Council Regulation anterior (cranial) part of the half- (EEC) No 950/68 on the Common carcass without the head, including Customs Tariff and repealing Regulation bones, with or without foot, shank, (EEC) No 747/79 (Official Journal 1982 rind or subcutaneous fat. L 376, p. 23). In particular, Article 2(2) of Regulation No 3602/82 provided that:

The fore-end is separated from the rest of the half-carcass so that it includes, at 'The parts of the cuts defined in para- most, the fifth dorsal vertebra. graphs 1(a), (b), (c) and (d) fall within the same subheadings only if they contain the muscle tissue and the bones in natural The upper (dorsal) part of the proportion to the entire cuts.' fore-end, whether or not containing the blade-bone and attached muscles (neck-end in fresh or collar in salted condition), is considered a cut of the For the purposes of the present cases it may loin, when it is separated from the be noted that the cuts referred to included lower (ventral) part of the fore -end, at 'fore-ends' and 'shoulders' (tariff sub- most by a cut just below the vertebral heading 02.01 A III (a) 3) and 'loins' column; (tariff subheading 02.01 A III (a) 4).

(d) "Shoulders", for the purposes of 7. In accordance with Article 17(1) of subheadings 02.01 A III (a) 3 . . . the Regulation No 2759/75, the aforesaid lower part of the fore-end whether or

2. legs and parts thereof

3. fore-ends or shoulders; parts thereof B. The parts of the cuts defined under 2. A (b), (c), (d) and (e) fall within the same subheadings only if they contain muscle 4. loins and parts thereof tissue and bones in natural proportion to the entire cuts.'

5. bellies and parts thereof Regulation No 3602/82 came into force on 1 February 1983. 6. other:

8. The list of products on which export refunds are granted was amended by ex (aa) boned or boneless: Commission Regulation (EEC) N o 263/83 of 28 January 1983 fixing the export refunds on pigmeat (Official Journal 1983 L 30, p. 72). That regulation also came into

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11. In Case C-356/88 the plaintiff in the main proceedings is Kühne en Heitz BV. Between the beginning of February 1983 13. Accordingly, the defendant decided that and the end of March 1986 it exported export refunds were not payable in respect approximately 158 consignments of pigmeat of pigmeat that did not satisfy the aforesaid from the Netherlands to various destinations condition regarding the proportion of outside the Community. On the relevant muscle tissue to bone. It notified the three forms it described the meat as failing under undertakings of its decision not to pay tariff subheading 02.01 A III (a) 4. refunds in respect of a number of the consignments and to require the repayment of amounts that had already been paid. In Case C-354/88 it also demanded the repayment of monetary compensatory 12. In all three cases the defendant decided amounts. The three undertakings appealed that some or all of the consignments of against those decisions to the College van pigmeat had been incorrectly classified Beroep voor het Bedrijfsleven.

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OPINION OF MR JACOBS — JOINED CASES C-354/88, C-355/88 AND C-356/88

'(1) Is the first subparagraph of Article 2(2) of Regulation (EEC) No 3602/82 valid? The question of interpretation

(2) If so, what criteria should be used to determine the natural proportion of 18. Sleegers and Kühne en Heitz (who, muscle tissue and bone in the entire unlike Roermond, submitted written obser- cuts, referred to in the provision cited vations and were represented at the hearing) in Question 1?' both state that the pigmeat exported by them took the form of riblets, which are a part of the shoulder. They both maintain that they did not remove the muscle tissue from the riblets once they had separated Preliminary remarks them from the whole cut. They point out that the proportion of muscle tissue to bone in the riblets can never be the same as in the whole cut for the obvious reason that the ribs are a particularly bony part of the 16. Although the questions submitted by the whole cut. One does not need to be a national court refer expressly to Article 2(2) master butcher to realize that there is some

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21. Faced with such ambiguity, the Court's normal approach would be to seek to 19. The opposite view is advanced by the interpret the provisions in the light of their Commission, which maintains that the purpose. In the present case that is requirement is satisfied only when the unusually difficult because we do not know proportion of muscle tissue to bone in the what purpose the Commission had in mind part correspond to the proportion existing when it decided to amend the relevant legis- in the whole cut. The Commission lation with effect from February 1983. recognizes that the proportions can vary Ordinarily, one would look to the preamble because the composition of the whole cut to a legislative measure in the hope of can vary. Additional Note 2 A (d) to finding some guidance as to the legislature's Chapter 2 of the Common Customs Tariff purpose. Such a step would not be very provides, for example, that the shoulder is fruitful in the present case because the 'the lower part of the fore-end whether or preambles to the regulations in issue say not containing the blade-bone and attached very little about the purpose pursued by the muscles, including bones, with or without legislature. The preamble to Regulation foot, shank, rind or subcutaneous fat'. The No 263/83 simply states, in the second Commission therefore accepts that the recital, that Regulation No 3602/82 has 'natural proportions' cannot be expressed as 'defined other products of the pigmeat a single percentage for each cut; instead sector [i.e. products other than pig upper and lower limits must be established carcasses] and amended the wording of the for each cut and the requirement would be subheadings concerned' and that 'the list of satisfied if the proportions occurring in the pigmeat products for which the export parts fell within those limits. refund is granted should be adapted accordingly'. Regulation No 3602/82, which was of course primarily concerned with import levies rather than export refunds, states in the fourth recital that 'more detailed descriptions of the other 20. Thus the Court is faced with two main products in the pigmeat sector [i.e. radically different views as to the correct products other than pig carcasses]

should . . . be introduced in order to ensure 23. The Commission does not in fact the proper application of the levies on the contend that the purpose of the new products concerned'. requirement introduced in 1983 was to combat some sort of fraud or indeed to prevent refunds from being paid on consignments of pigmeat that are of particularly low value. The Commission's Agent informed the Court at the hearing that the legislation was amended in order to achieve a 'customs-technical clarification of the nomenclature'. The need was felt for a further refinement of the tariff subheadings for pigmeat. The amendment was effected primarily in relation to the system of import levies, but it was realized that it would have 22. Those statements do not indicate why repercussions on the system of export the Commission felt it necessary to refunds. In particular, it was realized that introduce a new requirement, as from riblets would no longer qualify for refunds. February 1983, concerning the proportion According to the Commission's Agent, a of muscle tissue to bone. Why then did the conscious decision was taken to the effect Commission decide to amend the relevant that it was no longer necessary to grant legislation? At first sight, one might think refunds on riblets because they were selling that the reason was to combat some sort of well enough on export markets without the fraud or malpractice whereby the exporter benefit of refunds. That clearly excludes any removes the muscle tissue from the cut and suggestion that the reason for not granting claims an export refund on what would in refunds on riblets is that they are of low effect be a worthless consignment of bones. value on account of their high proportion of If such was the legislature's purpose, it bone. might justify a strict interpretation of the regulations in issue, in accordance with a principle well established in the case-law of the Court: see, for example, Joined Cases 146/81, 192/81 and 193/81 BayWa v BALM [1982] ECR 1503, at p. 1529, paragraph 10, and Case 11/76 Netherlands v Commission [1979] ECR 245, at p. 279, paragraph 9. However, even if such a principle of interpretation were applied, there would be no reason to exclude from the benefit of export refunds riblets or any other part of a cut presented in a standard 24. I do not find the Commission's expla- form, customary to the trade, with the usual nations very convincing. It is not clear from amount of muscle tissue attached to it. Nor the relevant regulations that the would it be logical to exclude from the Commission really directed its mind to the benefit of refunds a part of a cut that has question whether riblets should qualify for a particularly high proportion of muscle export refunds. If it did address such a tissue. However, that would be the question and came to the conclusion that inevitable consequence of the interpretation riblets, or indeed any other part of a pig's advocated by the Commission. It is not just carcass, should no longer qualify for particularly bony parts that are excluded; refunds, it could (and should) have made particularly meaty parts suffer the same fate. express provision to that effect in clear

26. The result of this curious legislative technique is an ambiguous rule which we cannot interpret in the light of its purpose (ii) the part in question, for example the because we do not know what purpose the riblets, although normally containing a legislature was pursuing. In the circum- lower percentage of muscle tissue than stances all that we can do is to attempt to the whole cut, could be separated from interpret the legislation in a manner that the whole cut in such a way as to accords with common sense and logic and ensure that enough muscle tissue is thus ensure that, in its practical application, attached to it to bring the proportion the results of the legislation are not perverse of muscle tissue to bone into line with or irrational. those occurring in the whole cut. Conversely, in the case of a part that would normally have too low a percentage of bone, some of the muscle tissue normally attached to it could be removed; 27. I am not convinced that the interpre- tation proposed by the Commission satisfies that test. If applied in practice, it would have a number of consequences that can only be described as illogical. I have already (iii) because the permissible methods of alluded to one of them when I pointed out presenting the whole cut vary that the interpretation advocated by the considerably, the gap between the

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OPINION OF MR JACOBS — JOINED CASES C-354/88, C-355/88 AND C-356/88

' . . . Community legislation must be certain and its application foreseeable by those subject to it. That requirement of legal certainty must be observed all the more 29. None of that strikes me as very logical. strictly in the case of rules liable to entail In particular, I cannot see why the legis- financial consequences, in order that those lature would wish to lay down a rule the concerned may know precisely the extent of effect of which would be to disqualify from the obligations which they impose on them'. the benefit of refunds riblets cut normally, but to grant refunds on riblets cut with an abnormally large chunk of muscle tissue attached to them. The proportions of muscle tissue and bone in such a cut may well correspond to those of the whole cut but they could hardly be described as 31. The purpose of the system of export 'natural proportions'. Nor does it seem refunds is to enable pigmeat to be exported entirely logical that the permissible range from the Community to non-member between the upper and lower limits should countries, where prices are generally lower vary considerably as a result of the different (see the eighth recital in the preamble to compositions in which the whole cuts may Regulation No 2759/75). That purpose can be presented in accordance with Article 2(1) only be accomplished if exporters are able of Regulation No 3602/82. It seems to determine, with a reasonable degree of somewhat arbitrary that a part of a whole certainty, at the time when they negotiate cut should have a better chance of qual- contracts with purchasers from non-member ifying for a refund simply because the whole countries, whether the meat in question will cut is itself defined more loosely. qualify for export refunds. T h e vicissitudes

of international trade are great enough of the advantages of that interpretation is without exporters being subjected to the that it cures the defects that could otherwise uncertainty caused by having to comply be said to vitiate the provisions — namely, with requirements as vague and imprecise as uncertainty, arbitrariness and illogicality. the requirement at issue in the present cases Since, therefore, most of the grounds on would be if it were interpreted in the which the validity of the provisions could be manner proposed by the Commission. The challenged cease to apply if the interpre- relevant legislation must be construed in tation that I have proposed is adopted, I such a way that the criteria laid down by it shall deal relatively briefly with the question are clear enough to enable an intelligent of validity. exporter, exercising due diligence and relying on his professional knowledge, to determine whether he will be entitled to export refunds. That test would not be satisfied if the legislation in issue were inter- preted in the manner proposed by the Commission. 34. One of the criticisms levelled against the requirement in question is that it is contrary to the principle of equality of treatment and the principle of the uniform application of Community law. It is argued that the proportions of muscle tissue to 32. By comparison, the interpretation bone vary considerably as a result of a suggested by the plaintiffs in the main number of factors, including differences in proceedings is clear, logical, easy to apply in the composition of the whole cut, practice and free of the arbitrariness that differences in the method of dividing up the seems to characterize the Commission's whole cut into parts and differences due to interpretation. Moreover, it would not, so the age, breed, sex and diet of the animal in far as I can see, open the door to fraud. The question. Commission has not, in any event, suggested that such would be the case. I therefore conclude that the requirement regarding the proportion of muscle tissue to bone should be regarded as being satisfied where the whole cut is divided into parts in a manner habitual to the trade and the 35. I cannot see that that particular muscle tissue attached to those parts is not criticism is justified, even if the interpre- removed. tation proposed by the Commission is adopted. It may well be the case that a six-month old boar fed on skimmed-milk powder in a Jutland piggery differs considerably from a three-year old sow raised on a diet of acorns on the plains of The question of validity La Mancha. But that is of no consequence. Pieces of pigmeat that come from the first type of animal will satisfy the 'natural proportions' criterion if they contain muscle tissue and bone in the natural proportions 33. If the provisions in question are inter- occurring in a typical representative of that preted in the manner that I have proposed, type of animal. No one would suggest that their validity cannot really be in doubt. One they should be compared with the second

39. I conclude therefore that if the provisions in question were interpreted in the manner suggested by the Commission, there would be grave doubts about their validity. That is a further reason for construing them in the manner that I have proposed, in accordance with the maxim ut magis res valeat quam pereat: compare, for example, Joined Cases 201/85 and 202/85 Klensch v Secrétaire d'État [1986] ECR 3477, at p. 3510, paragraph 21.

40. I propose that the questions referred by the College van Beroep voor het Bedrijfsleven should be answered as follows:

'(1) Additional Note No 2 B to Chapter 2 of the Common Customs Tariff, introduced by Article 3 of Regulation (EEC) No 3602/82, must be inter- preted as meaning that the requirement laid down therein is satisfied where the whole cut is divided into parts in a manner habitual to the trade and the muscle tissue attached to those parts is not removed.

(2) Consideration of the questions raised has disclosed no factor of such a kind as to affect the validity of the aforesaid provision as so interpreted.'

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