C-9/97

JOKELA AND PITKÄRANTA

OPINION OF ADVOCATE GENERAL MISCHO delivered on 24 March 1998 *

1. Article 1 of Council Directive 75/268/EEC 4. Article 17(1) of Regulation No 2328/91 of 28 April 1975 on mountain and hill farming states that: 1 and farming in certain less-favoured areas authorises Member States 'in order to ensure the continuation of farming, thereby main­ taining a minimum population level or con­ serving the countryside in certain less- favoured areas' to introduce a special system 'In regions which appear on the Community of aids 'to encourage farming and to raise list of less-favoured farming areas within the farm incomes in these areas'. meaning of Directive 75/268/EEC, Member States may grant an annual compensatory allowance to assist farming activities, such allowance to be fixed according to the per­ manent natural handicaps described in Article 3 of that Directive within the limits and sub­ ject to the conditions laid down in Articles 18 and 19 of this Regulation.'

2. Article 4 states that this system includes inter alia 'the granting ... of an allowance to compensate for permanent natural handicaps'.

5. In addition, Article 18 states that:

'1 . Where Member States grant a compensa­ tory allowance, farmers with at least three 3. The conditions under which Member States hectares of usable agricultural area who under­ may take such special measures for the ben­ take to pursue a farming activity in accor­ efit of agriculture in certain less-favoured areas dance with the aims of Article 1 of Directive are set out in Article 17 et seq. of Council 75/268/EEC for at least five years from the Regulation (EEC) No 2328/91 of 15 July 1991 first payment of a compensatory allowance on improving the efficiency of agricultural shall be eligible for such an allowance ... 2 structures.

10. The two cases which form the subject of these references for a preliminary ruling con­ cern the application of that provision.

7. Paragraph 2 of Decision No 861/1995 states that the compensatory allowance is intended to ensure the continuation of farming and thereby maintain a minimum population level and conserve the viability of the countryside 11. In Case C-9/97 the appellant in the main in certain regions which are less-favoured proceedings, Raija-Liisa Jokela, is the owner from the point of view of agriculture. of a farm situated in a less-favoured area within the meaning of the rules, part of which she owns jointly with her husband. Since 1994 she has lived in Germany, in Bonn, with her husband, who is an official at the Finnish Foreign Ministry. The competent municipal 8. Paragraph 6 of the Decision sets out in authority refused to grant her a compensa­ detail the conditions for the grant of the tory allowance for 1995 on the ground that

I - 6270

JOKELA AND PITKÄRANTA

12. The appellant in the main proceedings in Case C-118/97, Laura Pitkäranta, born in 1989, inherited a farm situated in a less- favoured area within the meaning of the rules, 70 kilometres from her present place of resi­ dence. In 1995 she applied for the compensa­ tory allowance, which the competent munic­ If the answer to the above question is affir­ ipal authority refused to grant her on the mative, even partly or conditionally: ground that she did not live on the farm or within 12 kilometres of most of it, and that she herself was not a farmer. She appealed against that decision at first instance, and then on appeal to the Maaseutuelinkeinojen Vali­ tuslautakunta, which stayed proceedings and referred two questions to the Court for a pre­ liminary ruling, the first of which is the same as the first question referred in Case C-9/97. (a) is it permissible, having regard to the said provisions and the principles embodied in Article 5, the second subparagraph of Article 40(3), and indent (a) of the second paragraph of Article 42 of the EC Treaty, and in particular to the principle of equal treatment of farmers and the associated 13. That question is worded as follows: prohibition of discrimination set out there, to require a farmer who wishes to obtain the compensation for natural handicaps referred to in Paragraph 6 of the decision of the national Council of State (861/1995) and who lives outside the farm and more '1 . Is it compatible with the aims of Articles than 12 kilometres by road from its opera­ 17 and 18 of Council Regulation (EEC) tional centre, to receive at least half his

'2. Is it contrary in particular to the prin­ ciples of non-discrimination and proportion­ 16. These show that the institution concerned ality, or to other applicable principles of Com­ was established under national law, namely munity law, to exclude from the compensation Finnish Law No 1203/1992 of 4 December in question 1992, as amended by Law No 36/1995. It is made up of three members: the president and the deputy president, who are appointed for a period of five years by the President of the Republic and who hold the diploma which qualifies them to practise as judges occupying — a farmer, who lives for the greater part of their posts full-time; the third member is an the year in another Member State with expert appointed for the same period by the her husband, who is a diplomat repre­ Government; he may vary depending on the senting the Finnish State, and who is also type of case and is not a permanent member. the owner of part of the farm concerned? All the members have the same right to remain (Case C-9/97) in office as do holders of the office of judge.

I - 6272

JOKELA AND PITKÄRANTA

17. The legal basis for the role of the Maa­ occasions, there is no doubt that it is a court seutuelinkeinojen Valituslautakunta as regards or tribunal for the purposes of Article 177 of aid for rural activities is contained in Finnish the Treaty. The admissibility of the questions Law No 1336/1992. That law provides that it referred for a preliminary ruling is therefore is for the municipal rural industries authority incontestable in this particular case. to decide in the first instance on an applica­ tion for aid to be granted. In the event of refusal the party concerned is entitled to appeal against the decision to the Maaseutu­ elinkeinopiiri, whose decisions may in turn be the subject of an appeal to the Maaseutu­ The first question elinkeinojen Valituslautakunta, as has hap­ pened in the cases now referred to the Court.

I - 6273

OPINION OF MR MISCHO — JOINED CASES C-9/97 AND C-118/97

'farmers with at least three hectares of usable without living on the farm concerned. More­ agricultural area who undertake to pursue a over, the objective of the Community legis­ farming activity in accordance with the aims lature was also to maintain the social fabric of of Article 1 of Directive 75/268/EEC for at less-favoured areas. This could not be achieved least five years from the first payment of a if a farmer receiving the allowance had the compensatory allowance' option of not living on the farm in the less- favoured area.

and that

26. The Finnish Government also stresses the significance of this consideration, in particular as regards the maintenance of essential ser­ vices for the local population. Unlike the 'where a farmer gives up farming and the area French Government, it does not conclude concerned continues to be worked, he may from this that it is absolutely necessary for a be released from such undertaking'. farmer to live on the farm in order to receive the allowance.

24. Similarly, the 10th recital of the preamble to Directive 75/268, echoed in the 37th recital of the preamble to Regulation No 2328/91, 27. Mrs Jokela considers that as far as she is refers to concerned, it is possible to meet the objec­ tives of the rules, namely to pursue a farming activity in a less-favoured area, without nec­ essarily living on, or in the immediate vicinity of, the farm in respect of which the allowance is sought. In particular, she claims that the 'farmers permanently engaged in agriculture nature of the crops grown on her farm and in such areas'. the presence on the spot of members of her family enable her to ensure continuity on the farm without being there herself.

34. As the Commission has stated, a farmer may in any case, in certain circumstances, keep his farm running without necessarily 30. The legislature therefore intended, first living on it. and foremost, to halt the fall in agricultural incomes in the areas concerned in order to prevent a rural exodus which would eventu­ ally jeopardise the viability and habitation of the areas in question. 35. It must therefore follow that the answer to the question should be in the affirmative.

31. This is also clear from Article 1 of Regu­ lation No 2328/91, paragraph 1(iii) of which mentions income support as a means of main­ 36. Article 1 of Directive 75/268, quoted by taining the viability of less-favoured areas. the French Government in its arguments in

I - 6275

OPINION OF MR MISCHO — JOINED CASES C-9/97 AND C-118/97

favour of a negative answer, seems to me on itly contain a residence clause of the type the contrary also to endorse the preceding alluded to by the court making the reference. considerations.

40. As a secondary point, the French Gov­ 37. As we have seen, that provision states ernment claims that if the residence clause is that Member States are authorised to intro­ not one of the implicit requirements of the duce a special system of aids Community rules Member States are free to introduce such a clause in the national imple­ menting measures provided for in Article 18(3) of Regulation No 2328/91 cited above.

The first question, subparagraphs (a) and (b)

47. We have here a rule and an exception to that rule. The rule states that the applicant must live on the farm itself or in the imme­ 44. I think it would be appropriate to take diate vicinity of it. The exception permits a subparagraphs (a) and (b) of the first question derogation from that principle for special rea­ together since they are closely linked. sons provided that certain minimum condi­ tions are met.

45. The system introduced by Decision No 861/1995 of the Finnish Government pro­ vides in Paragraph 6, under the heading 'Resi­ 48. Thus, if the rule is compatible with Com­ dence on the farm', that a compensatory munity law, the exception must be also, allowance may be paid to a farmer if he lives according to the principle that 'he who can on the farm or within a distance of not more do most can also do least'. than 12 kilometres.

46. Paragraph 6(3), however, allows municipal 49. However, it has not been claimed by authorities to decide, for special reasons, that either the appellant or the Finnish Govern­ compensation is to be paid also to a farmer ment, or indeed by the French Government who does not satisfy the residence require­ or the Commission, that the rule was incom­ ment specified in Paragraph 6(1). In that case patible with Community law. Not at all: the it is a condition that the farmer run the farm doubts of the court making the reference 5 expressed in the first question relate solely to himself or, according to a more literal trans­ lation, that he carry on the agricultural or the point of whether Community law horticultural activity himself and makes a

56. This cannot be the case. The situations of both these categories of farmers are not com­ parable either.

52. Let us see in relation to whom persons in a similar situation to the appellants in the main proceedings could suffer discrimination.

57. As the Finnish Government has remarked, a farmer who lives on the farm or in the immediate vicinity of it contributes directly towards the objective of maintaining a min­ 53. There could not be any discrimination in imum population level in the less-favoured relation to farmers whose farms are situated area. On the other hand, a farmer who lives in a less-favoured area and who are not sub­ for a large part of the year outside the less- ject to any condition relating to residence, the favoured area does not automatically con­ running of the farm or the income obtained tribute to that objective. Conditions designed from it. These farmers cannot in fact claim to ensure a minimum link between such a

I - 6278

JOKELA AND PITKÄRANTA

person and the farm cannot therefore consti­ 61. A person who wishes to be exempt from tute an infringement of the principle of compliance with the normal rule must have a equality of treatment or of the principle of valid reason in order to escape it. That is the non-discrimination. 'special reason'. Furthermore, if the clause concerning special reasons did not appear in the text we should be faced with two possible equivalent alternatives:

65. The reference to a special reason is there­ within the margin of discretion which Article fore completely in accordance with the objec­ 18(3) of Regulation No 2328/91 gives to tives of the system of compensatory allow­ Member States for laying down such condi­ ances. tions.

66. It only remains to be seen whether the The second question concept of a 'special reason' infringes the principle of legal certainty. This principle requires that the legal rules should be clear and precise, and aims to ensure that situations and legal relationships governed by Commu­ 8 nity law remain foreseeable. 70. In both the cases in the main proceedings the second question refers to the principle of non-discrimination. It is to be assumed that the national court means the absence of arbi­ trary discrimination. Since the question is raised in the context of a special system which 67. The concept of a 'special reason' is of derogates from the ordinary law, the discrimi­ course vague and the individual does not nation concerned must be understood to con­ know a priori what types of situation might cern not just any difference in treatment, but come within that category. only differences in treatment which lack any objective justification.

68. It would be impossible however to pre­ dict all such situations in advance. Besides, it is not a condition which has to be met by all 71. This is confirmed moreover by the provi­ applicants, but a flexible clause intended to sions of the Treaty relating to the common contribute towards solving particular prob­ agricultural policy, since Article 39(2) of the lems. EC Treaty requires that account should be taken of the 'structural and natural dispari­ ties between the various agricultural regions'.

73. Mrs Jokela points out in the first place that in its original version the first indent of Paragraph 5(3) of Decision No 861/1995 of 76. Mrs Jokela also refers to freedom of move­ the Finnish Council of State contained a clause ment for workers, which is adversely affected requiring a permanent residence in Finland, by the residence requirement laid down by to which the Commission raised objections the Finnish authorities. It should be noted, under the procedure provided for in Articles however, that in this particular case 29 and 30 of Regulation No 2328/91. The Mrs Jokela, by following her husband, a dip­ indent concerned was then repealed by Deci­ lomat representing the Finnish State in another sion No 1097/1995 of the Finnish Council of Member State, is not exercising her right of State. freedom of movement within the meaning of the Treaty. Her move, as it is described in the documents in the case, has no connection with freedom of movement for Community nationals as provided for in the Treaty and in secondary legislation. 74. Mrs Jokela considers, however, that by laying down a requirement that the farmer must live not more than 12 kilometres from his farm the Finnish Government has in prac­ tice reimposed the condition of a permanent residence in Finland, since it would be impos­ sible to meet the 12 kilometre requirement 77. The fact that Mr Jokela, the husband of without living in Finland. the appellant in the main proceedings, is joint owner of part of the farm does not seem to me to have any bearing on this case since it is not claimed that he should be entitled to the allowance in any capacity.

80. In addition, she states that the Finnish authorities are wrong in considering that she does not fulfil the conditions laid down in Paragraph 6 of the Finnish Council of State decision. In particular, her place of residence is in the less-favoured area concerned, both 83. The national court should take into from the point of view of social security leg­ account in this context the fact that Para­ islation and from the point of view of the tax graph 6(3) of the Finnish Council of State's law. Moreover the condition that a temporary decision does not in fact lay down the require­ absence may not exceed six months is com­ ment of residence on the farm, and examine plied with in her case and was applied wrongly whether the provisions relating to temporary by the competent authority. The same is true absence from the farm, which are covered in with regard to the condition relating to the subparagraphs (4) and (5), refer only to per­ proportion of her income which is derived sons who have no 'special reason', that is to from her activity on the farm. say, those who come under paragraph (1).

81. None of these arguments concerns the question whether the conditions laid down 84. In Case C-118/97 the Court has been by the Finnish legislation in respect of the asked whether it is contrary to principles of grant of the compensatory allowance are in non-discrimination and proportionality, or accordance with Community law, but rather other principles of Community law, for a how those conditions are being applied by minor living permanently with her legal the competent national authorities. More par­ guardian some 70 kilometres from the eco­ ticularly, these arguments are intended to nomic centre of the farm, which is not run show that the decision of the national authori­ either by herself or by her legal guardian, to

89. In an extreme case one could arrive at the paradoxical result that an existing agricultural activity which clearly contributes towards the 86. I do not think that the exclusion of a attainment of the objectives of Directive minor because she does not run the farm 75/268 might disappear if its economic sur­ constitutes discrimination which is contrary vival depends on the grant of the compensa­ to Community law. As we have seen above, tory allowance. Member States are entitled to lay down addi­ tional conditions for granting the compensa­ tory allowance in order to ensure that it is only awarded in cases where it is in accor­ dance with the objectives of the regulation. In particular, they may in this context seek to ensure the existence of an adequate link 90. The competent authorities should there­ between the farmer and the less-favoured area, fore examine whether the national conditions by requiring for example not only that the for granting the allowance are not so rigid recipient should receive half his income from that they are counter-productive in some situ­ the farm but also that he should run the farm ations. This might be because the granting of himself. the allowance is too strictly linked to the person of the owner.

87. This said, I do not think however that 91. One can understand that this should be this is the end of the matter and I should like the case as a general rule. However, in special to make some further observations of a more circumstances such as those of an owner who general nature which apply also mutatis is married to a diplomat, or indeed those of mutandis to Case C-9/97. an owner who is a minor who is not in a

98. However, the Court has also ruled that in order for the principle of non-discrimination to be infringed like situations must have been treated differently, thereby subjecting some traders to disadvantages as opposed to others, without such differentiation being justified by 94. We should note that Article 18 of Regula­ the existence of substantial objective differ­ 9 tion No 2328/91 sutes that 'where Member ences. States grant a compensatory allowance, farmers ... shall be eligible for such an allow­ ance'. A farmer need not necessarily be the 9 — See in particular theJudgment in Case 250/83 Finsider v owner of the farm. Commission [1985] ECR 131, paragraph 8.

I - 6284

JOKELA AND PITKÄRANTA

106. Lastly, such a situation could also con­ stitute an infringement of Article 18 of Regu­ lation No 2328/91, which provides that 'where Member States grant a compensatory allow­ ance, farmers with at least three hectares of

102. It is understood that the 'special reason' clause plays an essential role since it makes it 10 — See for example Case C-358/88 Hopermann [1990] ECR possible to ensure that each case is examined I-1687. on its own merits and the risk of a spate of 11 — See for example the need for a national measure to observe the principle of proportionality, Case C-29/95 Pastoors [1997] absentee landlords can be avoided. ECR I-285.

I - 6285

OPINION OF MR MISCHO — JOINED CASES C-9/97 AND C-118/97

(a) Member States may lay down additional or limiting conditions for the grant of the compensatory allowance, for example that the farmer should receive

I - 6286

JOKELA AND PITKÄRANTA

a certain proportion of his total income from activities pursued on the farm and that the farm should be run by the farmer himself, where the person eligible for the allowance does not live on the farm, without prejudice to the principle of equal treatment for farmers and the related principle of prohibition of discrimination, or the principle of proportionality or any another principle of Community law.

(b) Since a Member State may lay down additional or limiting conditions for the grant of the compensatory allowance, it may also, for special reasons, lay down conditions which are less strict than those which it has laid down as a general rule, without prejudice to the principle of legal certainty to be observed within the Community legal order.

(2) The principle of non-discrimination and the principle of proportionality do not prevent national laws adopted in pursuance of Directive 75/268 from excluding persons in the same type of situation as the persons appearing in the main proceedings from being eligible for the compensatory allowance.