C-263/97

OPINION OF MR FENNELLY — CASE C-263/97

OPINION OF ADVOCATE GENERAL FENNELLY delivered on 14 May 1998 *

1. This case concerns difficulties encountered statement of the Spongiform Encephalopathy by certain exporters of British beef in the Advisory Committee (hereinafter 'the SEAC') period immediately preceding and following on 20 March 1996 identifying exposure to the imposition of an export ban on British BSE as the most probable cause of a strain of beef by Commission Decision 96/239/EC of Creutzfeldt-Jacob disease. 27 March 1996 on emergency measures to protect against bovine spongiform encephal- opathy 1 (hereinafter 'the export ban'). The applicants in the main proceedings claim that they are dispensed by virtue of certain gen- eral principles of Community law from repaying export refunds paid in advance in respect of beef which was not in fact imported into any third country.

I - 5540

THE QUEEN v INTERVENTION BOARD FOR AGRICULTURAL PRODUCE, EX PARTE FIRST CITY TRADING AND OTHERS Intervention Board for Agricultural Produce (b) bans on the importation of beef from (hereinafter 'the defendants') sought repay­ the United Kingdom were also ment of the export refund; when this was imposed by a number of third coun­ refused, the defendants made a decision for­ tries; feiting the corresponding securities.

(c) exporters of beef were at the time of 4. In the course of proceedings for judicial the said Decision in the process of review of that decision, the Divisional Court carrying goods žo third countries; of the Queen's Bench Division of the High Court of Justice, London, referred the fol­ lowing questions to the Court:

(d) the said exporters were forced to repa­ triate the beef to the United Kingdom;

'1. D o Articles 23 and 33 of Commission Regulation N o 3665/87/EEC as amended apply to the case where by reason of force majeure goods in transit in the course of export to third countries are (e) the exporters received advance-paid repatriated to the Member State of export, export refunds in accordance with or are they limited to those cases where [Council] Regulation N o 565/80/EEC the goods were imported into a different and Commission Regulation N o third country to that which was origi­ 3665/87/EEC as amended in respect nally declared by the exporter to the of the export transactions in issue; competent authority? and

2. In circumstances where: (f) the exporters suffered losses as a result of not being able to sell the beef on the export markets in question;

'[1.] To the extent necessary to enable the products listed in Article 1 to be exported ... the difference between [world market] prices and prices in the Community may be covered by export refunds.

4. Are either or both of Commission Deci- sion 96/239/EC or [Commission Regula- tion] N o 7 7 3 / 9 6 / E C unlawful to the extent that they do not provide for exporters in the circumstances referred to in Question 2 above being entitled to retain export refunds, applicable to the 3 — OJ, English Special Edition, First Series 1968 (I), p. 187, as exports in question or any portion amended most recently prior to the imposition of the export ban by Commission Regulation (EC) N o 2417/95, O J 1995 thereof?' L 248, p. 39.

I - 5542

I - 5543

OPINION OF MR FENNELLY — CASE C-263/97

have been exported from the Community'. for direct exports ('advance-paid exports'), Article 5(3) reads in relevant part: while Articles 24 to 33 provide for advances of refunds where goods are processed or stored prior to export ('pre-financed exports'). The security which must be lodged in each case is equal to the advance payment plus a 'If the product, after leaving the customs ter- supplementary payment of 15% (advance- ritory of the Community, has perished in paid exports) or 20% (pre-financed exports). transit as a result of force majeure, the amount paid shall be:

— in the case of a refund which varies according to destination, the part thereof 10. In particular, Article 23(1) of that Regu- specified in Article 20, lation, which applies to refunds in respect of direct exports, provides as follows:

— in the case of a refund which does not so vary, the total amount thereof.'

'Where the amount advanced is greater than the amount actually due in respect of the rel- 8. Article 20 of Regulation N o 3665/87 in evant export operation or an equivalent export turn allows part-payment of differentiated operation, the exporter shall repay the differ- refunds on proof that the product has left the ence between the two amounts plus 15% of customs territory of the Community, in dero- such difference. gation from the rule in Article 17 which requires importation into a non-member country within 12 months of the acceptance of the export declaration before such pay- ment can be made. This part 'shall be equal to the amount of the refund which the exporter would receive if his product reached a desti- nation for which the lowest rate of refund Where, however, by reason oí force majeure: had been fixed, the non-fixing of a rate being regarded as the lowest rate'.

12. Commission Regulation (EC) N o 773/96 of 26 April 1996 laying down special mea- sures derogating from Regulations (EEC) 11. Article 33, which applies to refunds where N o 3665/87, (EEC) N o 3719/88 and (EEC) goods are processed or stored prior to export, N o 1964/82 in the beef and veal sector 6 (here- provides as follows: inafter 'Regulation N o 773/96') seeks to limit the negative consequences both of the export ban and of health measures adopted by a number of third countries following the SEAC announcement of 20 March 1996 by allowing the régularisation of uncompleted export oper- '[1.] Where entitlement to a refund and/or ations in this sector. Article 4(1) provides: monetary compensatory amount is proved in respect of products or goods permitted under the provisions of this chapter, the sum due shall be set off against the amount paid in advance. In cases where the amount due for the exported quantity is higher than that which has been paid in advance, the differ- ence shall be paid to the person concerned. 'At the request of the exporter, for products for which by 31 March 1996:

Where the amount due for the quantity exported is less than that paid in advance, in particular where paragraph 2 is applied, the competent authority shall initiate without — customs export formalities were completed delay the procedure laid down in Article 29 but which were released back into free of Regulation (EEC) N o 2220/85 with a view circulation in the United Kingdom because to payment by the operator of the difference of health measures adopted by a third between those two amounts, plus 20%. country, the exporter shall repay any refund paid in advance and the securities relating to the operations shall be released,

13. Written and oral observations were sub- mitted by the United Kingdom of Great Britain and Northern Ireland and the Com- 15. The applicants argue that in adopting mission; the applicants submitted oral obser- Regulation N o 773/96 the Commission rec- vations. ognised the necessity for special measures to mitigate some of the effects of the export ban. In their view, the special measures are inad- equate, in that they do not sufficiently take account of the position of those such as the applicants, who are unable to comply with the export refund regime because of the export ban, and that the Regulation should have 14. The United Kingdom and the Commis- provided proper and reasonable transitional sion are ad idem in contending that under the measures. In accordance with the principles applicable provisions on export refunds, the of fairness and equity, legitimate expectations applicants are not entitled to retain the advance and proportionality, they argue that they payment. They are both of the view that, as should be able to retain the advance-paid the amount due was zero, the entirety of the export refunds, minus any revenues they have advance payment, but no supplementary pay- received from the disposal of the beef in the ment, is due, the United Kingdom on the basis of Regulation N o 3665/87, the Com- United Kingdom. mission on the basis of Regulation N o 773/96. Both reject the reliance on general principles advanced as an alternative basis for the entitle- ment to retain the payment, and hence con- 7 — Case C-180/96, cited in footnote 2 above.

THE Q U E E N v INTERVENTION BOARD FOR AGRICULTURAL PRODUCE, EX PARTE FIRST CITY TRADING A N D OTHERS IV — Analysis embargo imposed by the Umted Nations following that country's invasion of Kuwait. The first question of the national court was formulated by the Court as being 'whether Regulation N o 3665/87 ... must be interpreted — bearing in mind that, owing to force (a) The first question: the application of Arti- majeure, the goods were exported to a desti- cles 13 and 33 of Regulation No 3665/87 nation 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: 16. Articles 23 and 33 of Regulation N o 3665/87 lay down respectively two dif- ferent 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 pay- ment; the only amounts in dispute in the main proceedings are the advance-paid export refunds, and the question whether the appli- cants can benefit from the force majeure dero- '[t]he system of differentiated export refunds gation in order not to be obliged to make the is intended to gain or to maintain access for supplementary payment is not in issue. Community exports to the markets of the non-member 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 17. As the United Kingdom has pointed out, majeure, had to be exported to other coun- the first question reflects an attempt by the tries rules out the possibility of its being applicants to distinguish the present case from regarded, for the purposes of the differenti- Anglo Irish Beef Processors. 8 In that case a ated refund, as having been imported within consignment of beef destined for Iraq failed to reach its destination because of the trade

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 non-member country ..,'. 12 The exporter was permitted to retain the export refunds appropriate to the eventual non-member country of destination on the basis of the uncontested existence of 20. The applicants have further argued that force majeure and on proof of export to that allowing them to retain the export refunds country. In the present case, none of the beef would only mitigate the losses they have sus- was exported to a non-member country and tained as a result of the transactions in ques- some never left its Member State of origin. tion. However, as the United Kingdom has There is no legal basis for the payment of pointed out, there is no necessary relationship export refunds (except for the particular case between any losses incurred through having of goods which qualify for non-differentiated to divert the products to another market and refunds perishing in transit) when there has the amount of the export refund. More fun- been no export and, consequently, no basis damentally, the setting off of traders' losses for retention of such refunds paid in advance. against advance-paid export refunds would be As Advocate General La Pergola said in his incompatible with the objective of the pay- Opinion in this case, repayment of the refunds ment of export refunds which, as noted by 'does not arise by way of a penalty for Advocate General La Pergola in Anglo Irish unlawful conduct but simply entails reim- Beef Processors, is 'intended solely as com- bursement of a sum unduly paid'. 13 pensation for any disparity between the Com- munity price and the current price on other markets'. 14

THE QUEEN v INTERVENTION BOARD FOR AGRICULTURAL PRODUCE, EX PARTE FIRST CITY TRADING AND OTHERS 21. The question whether, in accordance with force majeure, legitimate expectations, pro- Articles 23 and 33 of Regulation N o 3665/87, portionality or equity'. 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 affir- mative. It is clear from Article 13 of Regu- lation N o 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 23. The applicants' arguments were stated Kingdom have pointed out, the 'amount actu- ally due' in respect of the products at issue in thus in the order for reference: the main proceedings for the purpose of Article 23(1) was zero, and hence the differ- ence 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. '[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 (b) The second question: entitlement to retain that they had a legitimate expectation that the all or part of the export refunds by virtue of Community would not take measures pre- general principles of Community Law venting 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 Com- 22. The answer to the first question having mission's export ban and that the effect of the established that the export refund must in the ban is, uniquely, to place exporters in a pos- circumstances of the present case be repaid, ition whereby they cannot export to any third according to Regulation N o 3665/87, the country. As such, the Applicants have become second question asks whether the applicants comparable to recipients of non-differentiated might be entitled to retain all or part of the export refunds who, in cases offeree majeure, advance payments 'by reason of general prin- are entitled to retain advance-paid export ciples of Community law, and in particular refunds.'

24. At the hearing, the applicants added that importation into a non-member country is in the circumstances of the present case there therefore fully applicable. 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. 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 compli- ance with the strict rules of the export refund 25. The comparison the applicants seek to regime would be inequitable and unfair'. 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 circum- stances outlined in Article 5(3) of Regulation N o 3665/87, to wit, when the 27. Whether or not the cases cited could jus- goods have perished in transit as a result of tify such a broad definition of the notion of force majeure, which does not arise in the force majeure and its effects, it is clear from present case. The situation of the applicants the judgment in Huygen and Others that this can only therefore be compared, if at all, to concept 'does not have the same scope in the that of recipients of non-differentiated export various spheres of application of Community refunds whose goods have not perished, but law [and that] its meaning must be determined who have been unable to complete the trans- by reference to the legal context in which it action because of import bans imposed by is to operate'. 18Consideration must therefore third countries. In neither case can the be given to force majeure in the context of exporters benefit from Article 5(3) of Regu- the export refund system considered as a lation N o 3665/87, and the general rule sub- whole. jecting entitlement to an export refund to

THE QUEEN v INTERVENTION BOARD FOR AGRICULTURAL PRODUCE, EX PARTE FIRST CITY TRADING AND OTHERS 28. I do not think the Commission's recogni- their exports to third countries are not enti- tion that the export refund rules should be tled. The Court has recendy held that the partly relaxed in the special circumstances of export refund rules regarding cereals do not the BSE crisis would justify the applicants' entitle a trader whose product has been conclusion that the application of the require- destroyed in transit as a result oí force majeure ment to reimburse export refunds which are to a differentiated export refund. 19 If it is not not due under the applicable rules would be possible from such cases to deduce a general 'inequitable and unfair'. The Commission has principle that export refunds should not be merely recognised, in effect, that traders unable repaid even when goods have perished in to carry out their intended transaction as a transit due to force majeure, it is even more result of the action taken by certain third clearly so in the present case where the goods countries following the SEAC announcement not only survived but were repatriated and of 20 March 1996 should not be required to re-sold. make a supplementary payment whether or not force majeure existed. The true analogy is with cases covered by Article 23(1) of Regu- lation N o 3665/87 where, by reason of force majeure, either the required proof is lacking or the goods have been diverted to a destina- tion other than that intended. In such cases, there is relief from the supplementary pay- ment. The Commission cannot, by applying that result to the instant case, be taken to have recognised any wider principles of fair- ness or equity and certainly not one which goes so far as to permit the retention of 30. The applicants' argument regarding their refunds where there has been no export. legitimate expectations is expressly predicated on the notion that the imposition of the Community export ban prevented the fulfil- ment 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 appli- cants' claim of legitimate expectation is there- 29. N o r do I consider that the enforcement fore unfounded. Nor, in my view, can the of the requirement to repay the export refunds applicants claim that the import bans adopted as against the applicants would in any case be by the intended third countries of destina- inequitable or unfair. Indeed, as the United tion, whether before or after the adoption of Kingdom has pointed out, allowing the appli- this decision, were imposed as a result of the cants to retain all or some of the advance- Community export ban; the Community is paid export refunds in the present case would give them an uncovenanted benefit to which other traders who, for whatever reason, did 19 — Case C-109/95 Astir v Greek State[1997] ECR I-1385. Set not receive advance payment in respect of also Case C-321/91 Tara Meat Packers [1993] ECR I-2811.

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 33. In the particular area of human and animal mean that the applicants had any legitimate health, a number of Community legislative expectation either that the Community would provisions enable, and in some cases oblige, not adopt the export ban, or that they would the Member States to take measures which be entitled to retain advance-paid export may interfere with the normal activities of refunds or a part thereof to cover any loss traders in agricultural produce. Thus, for they may sustain on the transaction. example, Article 10 of Council Directive 90/425/EEC of 26 June 1990 concerning vet- erinary 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 terri- tory ... of any zoonoses, diseases or other

32. It is, in my view, clear beyond argument that traders in agricultural products do not 21 — Case C-183/95 Affish v Rijksdienst voor de Keuring van Vee en Vlees [1997] ECR I-4315, paragraph 42. 22 — Case C-180/96 United Kingdom v Commissiont cited in footnote 2 above, paragraph 106. 23 — OJ 1990 L 224, p. 29, as amended, notably by Directive 20 — Paragraph 2 of the present Opinion. 92/118/EEC of 17 December 1992, OJ 1993 L 62, p. 49.

34. The arguments relied upon by the appli- cants at the hearing in relation to the propor- tionality of the requirement to repay export refunds which are not due amounted to little 36. It appears from the order for reference more than an affirmation that in the present that the applicants' complaint is directed to case 'the objectives of the regime would not the question of compensation for any loss be undermined by permitting exporters to they may have suffered as a result of the retain the refunds' and that, as no third imposition of the ban. The applicants have country 'would accept the beef, there was no not shown how any such claim could affect risk of abuse, for example through either the interpretation of the relevant legis- lative provisions or their validity. I am there- fore of the opinion that, in the circumstances 24 — The legislative framework of protective measures against described in the second question, the exporters BSE is set out in the introductory sections of the judgments are not entitled to retain all or part of the in National Farmers' Union and Others and United Kingdom v Commission, cited in footnote 2 above. export refund paid in advance.

I - 5553

OPINION OF MR FENNELLY — CASE C-263/97

(c) The third question: the requirement to take ceedings, who both intervened in the main account of revenues derived from the disposal proceedings in the former case, have not raised of the beef in the United Kingdom any ground which could call into question the Court's ruling in that case.

(1) Articles 2 3 a n d 33 of C o m m i s s i o n R e g u l a t i o n ( E E C ) N o 3665/87 of 27 N o v e m - b e r 1987 laying d o w n c o m m o n detailed rules for t h e application of t h e s y s t e m

25 — Cases C-157/96 and C-180/96, cited in footnote 2 above.

I - 5554

THE QUEEN v INTERVENTION BOARD FOR AGRICULTURAL PRODUCE, EX PARTE FIRST CITY TRADING AND OTHERS of export refunds on agricultural products should be interpreted as applying where goods in transit in the course of export to third countries are repatriated to the Member State of export;

(2) 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 by virtue of general principles of Community law;

(3) In the light of the answer to the second question, the third question does not fall to be answered;