C-74/98
ECLI:EU:C:1999:279
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DAT-SCHAUB
OPINION OF ADVOCATE GENERAL MISCHO delivered on 3 June 1999 *
Facts and relevant legal provisions an action against the Ministry before the Østre Landsret, claiming reimbursement of DKK 9 898 936.75.
1. Between 1990 and 1992 the Danish company DAT-SCHAUB amba exported beef to the United Arab Emirates and applied for and obtained refunds in respect 4. In order to tackle effectively the question of those exports. which the Østre Landsret has referred to the Court, it is necessary first to provide details of the commercial operations car- ried out by DAT-SCHAUB.
2. There came a point, however, when the Danish Ministry of Food, Agriculture and Fisheries (hereinafter 'the Ministry') began 5. The Jebel Ali Free Zone was created in to have doubts as to the justification of Dubai (United Arab Emirates). DAT- granting such refunds, doubts which it SCHAUB set up a meat processing under- communicated to the Commission. taking (Dubai Meat Packers) within the Free Zone, to which it exported its meat.
3. When the Commission informed the Ministry that not all the refunds were in 6. Upon arrival in that zone, meat originat- fact due, the Ministry set off the amount of ing in the Community was processed by the refunds paid out against the securities that undertaking before being imported lodged. DAT-SCHAUB thereupon brought either into the United Arab Emirates or into other States of the region which, like the United Arab Emirates, were members * Original language: French. of the Cooperation Council for the Arab
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States of the Gulf (hereinafter 'the GCC') SCHAUB and the Ministry, and the Com- and had set up a free trade area among mission, which submitted observations to themselves. the Court, accept that the Community provisions applying to the exports carried out by DAT-SCHAUB during the period under consideration are those of Commis- sion Regulation (EEC) No 3665/87 of 27 November 1987 laying down common detailed rules for the application of the 7. Those various operations, which were system of export refunds on agricultural quite in order according to the laws of products. 1 those States, were recorded in documents, which were also quite in order, drawn up by the local authorities. So checks were carried out both on entry into and exit from the Free Zone on the way to either the United Arab Emirates or to another GCC member country. 10. The provision of that regulation which causes a problem is Article 17, which reads as follows:
8. The only problem which arose was in connection with the Community rules on export refunds. The export documents drawn up by DAT-SCHAUB, on the basis of which the refunds were granted, gave the ' 1 . The product must have been imported United Arab Emirates as the country of in the unaltered state into the non-member destination. This was correct in that the country or one of the non-member coun- meat was actually unloaded in that State tries for which the refund is prescribed but was less evidently so as regards what within 12 months following the date of Community law means by 'country of acceptance of the export declaration. How- destination' in the context of the rules on ever, that period may be extended under the export refunds and the requirements it conditions laid down in Article 47. imposes in respect of the granting of refunds, since the meat was processed in the Free Zone before being sent partly to the United Arab Emirates and partly to other GCC countries.
2. Products shall be regarded as having been imported in the unaltered state if there is no evidence whatsoever of processing.
9. Both the parties to the proceedings before the Danish court, namely DAT- 1 — OJ 1987 L 351, p. 1.
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However: the United Arab Emirates met the condition contained in the second subparagraph of Article 17(2). The Ministry took the oppo- site view.
— a product which was processed before being imported shall be regarded as having been imported in the unaltered state if the processing took place in the 12. It was in order to be able to decide non-member country into which all the between those two submissions that the products resulting from such proces- national court referred the following ques- sing were imported. tion to the Court of Justice for a prelimin- ary ruling:
3. A product shall be considered to have been imported when it has been cleared through customs for release for consump- tion in the non-member country con- cerned.' 'Having regard to the Cooperation Agree- ment between the European Economic Community and the countries parties to the Charter of the Cooperation Council for 11. DAT-SCHAUB claimed before the the Arab States of the Gulf, approved by national court that, under the Cooperation Council Decision 89/147 of 20 February Agreement between the European Eco- 1989, must the term "non-member coun- nomic Community, of the one part, and try" in the second subparagraph of Arti- the countries parties to the Charter of the cle 17(2) of Regulation No 3665/87 laying Cooperation Council for the Arab States of down common detailed rules for the appli- the Gulf (the State of the United Arab cation of the system of export refunds on Emirates, the State of Bahrain, the King- agricultural products be construed as dom of Saudi Arabia, the Sultanate of meaning that countries parties to the Char- Oman, the State of Qatar and the State of ter are treated as one single non-member Kuwait) of the other part, approved by country, with the result that a product Council Decision 89/147/EEC of 20 Feb- which, after processing in the Jebel Ali Free ruary 1989, 2even those products resulting Zone in the United Arab Emirates, is from processing which were released for imported into and released for consump- consumption in GCC countries other than tion in another of the countries parties to the Charter is to be regarded as having been imported in the unaltered state within the 2 — OJ 1989 L 54, p. 1. meaning of Article 17 of the regulation?'
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Assessment the exported meat was processed in the Jebel Ali Free Zone where it was unloaded before the formalities for release for con- sumption were carried out either in the United Arab Emirates or in any other GCC 13. The question as worded in fact contains country. two separate questions. One concerns the way in which the second subparagraph of Article 17(2) of Regulation No 3665/87 is to be interpreted as such. The other con- cerns the differences in the way the provi- sion might be interpreted if a refund is 16. It is therefore only if the conditions being sought in respect of exports to GCC under which that processing took place can member countries, by reason of the Agree- be deemed to correspond very closely to the ment between the Community and those conditions laid down in the second sub- countries. I shall examine each of those paragraph of Article 17(2) of Regulation questions in turn. No 3665/87, so that importation after processing can be regarded as importation in the unaltered state, that DAT-SCHAUB would be entitled to the refund.
Article 17 of Regulation No 3665/87 17. The second subparagraph of Arti- cle 17(2) stipulates that processing must have taken place in the non-member coun- 1 4 . A r t i c l e 1 7 ( 1 ) of R e g u l a t i o n try into which all the products resulting No 3665/87 states that payment of a from such processing were imported. differentiated refund is dependent on the product having been imported in the unal- tered state, within a specified period, into the non-member country or one of the non- member countries for which the refund is prescribed; importation is subject to com- 18. However, it has been established that pliance with the formalities for release for after being processed the meat exported by consumption in that country. DAT-SCHAUB was imported partly into the United Arab Emirates and partly into other GCC countries, so that condition is clearly not met.
15. Clearly, the disputed exports by DAT- SCHAUB which, it should be noted, according to the documents submitted to the Danish customs authorities were inten- 19. DAT-SCHAUB is trying to convince us ded for the United Arab Emirates, do not of the contrary, of course, arguing that meet that condition, since it is accepted that since Article 17(1) of R e g u l a t i o n
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No 3665/87 refers to importation in the shall deal with later, simply stricter than unaltered state 'into the non-member coun- those applying in the case of importation in try or one of the non-member countries' it the unaltered state. should be considered that importation after processing into several non-member coun- tries in respect of which the same refund is prescribed gives entitlement to a refund in the same way as importation into just one non-member country. The plaintiff thus implies that it is due to the somewhat defective wording of Article 17 that it has Cooperation Agreement between the Eur- been deprived of refunds to which the opean Economic Community and the coun- Community legislature intended it to be tries parties to the GCC Charter entitled.
22. Does the Cooperation Agreement between the GCC countries and the Com- munity dictate, as DAT-SCHAUB claims and the national court does not rule out, 20. However, the Commission has provi- that the refund should also be paid where ded an explanation which enables us to rule products resulting from the processing of out any defective drafting. It points out that meat in the Jebel Ali Free Zone are released Regulation No 3665/87 applies to all the for consumption in a GCC country other refunds provided for under the various than the United Arab Emirates? common organisations of the markets, and submits that the regulation must there- fore cover all the cases provided for under those organisations, in particular the case, which is not covered by the common organisation for beef but which is covered by the common organisation for cereals, for 23. For this to be the case, not only must example, where differentiated refunds are DAT-SCHAUB be able to rely on that fixed on the basis not of individual coun- Agreement in order to exclude the inter- tries but of zones including several coun- pretation of Article 17 of Regulation tries of destination. No 3665/87 which its wording dictates, it must also be demonstrated that there is a conflict between that interpretation and the commitments which the Community has made to the GCC States.
21. Thus there is no inconsistency between paragraphs 1 and 2 of Article 17. The rules laid down for granting the refund where 24. The text of the Agreement makes clear importation takes place after processing that this is not the case. As both the are, for reasons relating to checking which I Ministry and the Commission point out,
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the Agreement is a framework agreement, between its Member States, their doubtless one that is important in itself, but nationals or their companies or firms, one in which the parties only undertake to establish, each within the limits of its competence, 'the broadest possible eco- nomic cooperation' in the various fields which it lists.
— the arrangements applied by the Com- munity in respect of the GCC countries shall not give rise to any discrimination between them, their nationals, or their 25. In the field of trade, it provides merely companies or firms.' that the parties will grant each other most- favoured-nation treatment, leaving the adoption of specific provisions to promote trade until a trade agreement is negotiated at a later date.
27. But, as the Ministry and the Commis- sion submit, it is not clear how the fact that the Community rules authorise payment of the export refund, where processing takes 26. DAT-SCHAUB correctly points out place before importation, only under the that Article 19 of the Agreement provides strict conditions laid down in the second that: subparagraph of Article 17(2) of Regula- tion No 3665/87 could be regarded as an infringement of that prohibition of discri- mination.
'In the fields covered by this Agreement and without prejudice to its provisions:
28. If a GCC member country other than the United Arab Emirates were to establish a free zone in which meat exported from the Community was processed, Article 17 would be applied in the same way as it is in — the arrangements applied by the GCC respect of the United Arab Emirates. The countries in respect of the Community Community authorities would not consider shall not give rise to any discrimination in that case either that the GCC countries
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constituted a single non-member country granted entitlement to the refunds it is for the purposes of that provision. claiming.
32. For the sake of completeness, I shall consider these briefly, as the Ministry and 29. Contrary to what DAT-SCHAUB the Commission did in their observations. claims, the GCC is not a common market, and this is why the Community customs rules allocate a separate identification code to each of the GCC countries. This clearly indicates that a commercial transaction undertaken with one of those countries cannot be equated with the same transac- tion with another of them. Principle of proportionality and good faith
33. DAT-SCHAUB claims that the principle of proportionality precludes the refunds 30. If one were to adhere strictly to the from being withheld, since the rate of the wording of the question referred for a refund at the time of the operations at issue preliminary ruling by the Østre Landsret, was the same for all the GCC countries. It one could halt the reasoning at the point did not therefore engage in any manœuvre where it is established that the Community in order to procure undue advantage. rules laid down in Article 17 of Regulation No 3665/87 preclude, despite the existence of the Agreement between the Community and the GCC countries, DAT-SCHAUB from receiving refunds in respect of the exports at issue in the dispute between it 34. In its submission, the Community pro- and the Ministry. visions which the Ministry relied upon against it are intended, by imposing obliga- tions in order to facilitate checks, to prevent traders from committing fraud and deriving unjustified enrichment there- from, and cannot be applied to the fullest extent where, as in the case of the opera- tions which it carried out, not only has 31. However, DAT-SCHAUB has put for- there been no loss to Community finances ward in its observations a number of but also painstaking checks have been grounds other than those put forward by carried out by the authorities of the United the national court on which it should be Arab Emirates and other GCC member
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countries which have established with cer reasoning, it would also be necessary to tainty the final destination of the goods. grant it refunds if the processed products had been re-exported from the Jebel Ali Free Zone to any other country in respect of which the amount of the refunds was, at the material time, the same as that fixed for the United Arab Emirates and the other 35. The Ministry and the Commission GCC member countries, which would be challenge this presentation of the Commu tantamount to leaving it to the traders and nity rules on differentiated refunds. They not the Community authorities to conduct refer to the case-law of the Court, which the Community's commercial policy in the has always been extremely strict with field of agricultural products. traders when it has been called on to rule on the merits and application of Commu nity rules in this field. 3
36. They stress the risks of fraud inherent 38. For my part, I consider that the Court in any transaction involving the processing of Justice cannot follow DAT-SCHAUB of exported products before they are along the course on which it wishes to take imported, that is to say released for con it. Firstly, it should be noted that invoking sumption, and point out that the adoption the principle of proportionality in order to of a system of differentiated refunds is promote an interpretation of a Community always designed to meet the Community's provision which is different from that concerns with regard to commercial policy resulting from its wording, whilst stating and the general pattern of trade, which as DAT-SCHAUB does that one does not cannot tolerate a change of destination wish to challenge the validity of that even if such a change offers no financial provision, is a fairly risky venture. advantage to the trader concerned. 4
37. The Commission points out in this regard that, according to DAT-SCHAUB's 39. Secondly, I share the Commission's view that one cannot criticise measures 3 — See in particular Case 89/83 Hauptzollamt Hamburg-jonas intended to facilitate the checks which must ν Dimex [1984] ECR 2815; Case 276/84 Metelmann ν be carried out by the Community autho Hauptzollamt Hamburg-Jonas [1985] ECR 4057; Case C-27/92 Möllmann-Fleisch ν Hauptzollamt Hamburg-Jonas rities on the ground that those checks [1993] ECR I-1701; Case C-347/93 Belgian State ν Boterlux would be excessive, or even in some cases [1994] ECR I-3933; and Case C-299/94 Anglo Irish Beef Processors International and Others ν Minister for Agri ineffective, when there is undoubtedly a culture, Food and Forestry [19961 ECR 1-1925. 4 — See Case 125/75 Milch-, Fett- und Eier-Kontor ν Haupt risk of fraud. This is the case when zollamt Hamburg-Jonas [1976] ECR 771. processing operations are carried out which
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inherently offer an opportunity for unscru- point in time even if it no longer regarded pulous traders to cause those authorities to them as being essential. lose track of the products exported.
42. It is necessary, on the contrary, to allow 40. Lastly, I consider that a minimum of the Commission to develop the rules flex- discretion should be left to the Community ibly in order to achieve as far as possible authorities when introducing checks they the objectives assigned to the common regard as essential. That is why I consider agricultural policy. that the amendments to the rules which were introduced subsequently, making them more flexible, are irrelevant as regards the way in which the operations carried out by DAT-SCHAUB between 1990 and 1992 should be dealt with. The fact that the Community legislature con- siders at a particular point in time, in the 43. It is these considerations which lead me light of experience, that it is in a position to to dismiss the arguments which DAT- relax the restrictions which the rules SCHAUB seeks to derive from the Com- impose on traders, as it did for example mission's adoption on 30 June 1993 of a in Regulation (EC) No 1384/95 5 as regards decision permitting the granting of refunds changing the country of destination in the precisely in respect of operations such as case of differentiated refunds, does not those carried out by DAT-SCHAUB mean that the earlier regulations can be between 1990 and 1992. regarded as going beyond what the princi- ple of proportionality allows.
44. When the Danish authorities advised it of the difficulties encountered by DAT- 41. It would moreover be totally against SCHAUB as a result of the arrangements the interests of those traders to adopt such which it had introduced for supplying the a line of reasoning since it would cause the GCC countries, the Commission, at the Commission, in order to avoid criticism for same time as it found that the rules its past severity, to maintain in full checks applicable indeed prohibited the granting which it had introduced at a particular of export refunds to DAT-SCHAUB in respect of the operations it had carried out, took the view that, by adopting special 5 — Commission Regulation of 19 June 1995 amending Regula- monitoring rules designed to prevent any tion No 3665/87 as regards the adjustments necessary for risk of fraud, it was possible to take into the implementation of the Uruguay Round Agreement on Agriculture (OJ 1995 L 134, p. 14). account the particular situation existing in
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the GCC countries and DAT-SCHAUB's have had the effect of giving DAT-SCHAUB interest in developing its commercial pre- an advantage over any of its competitors sence in that region. Consequently, it made who might have considered introducing it possible to grant refunds in respect of similar arrangements but refrained from products unloaded in the Jebel Ali Free doing so in order to avoid the rules Zone and processed there before being contained in Article 17 of Regulation imported into the various GCC countries. No 3665/87 being applied against them and hence the loss of the refunds. Finally, it was only adopted for a limited period so that an assessment could be made of its effectiveness.
45. According to DAT-SCHAUB, that derogation from the rules proves that the rules had previously failed to take into account, at least in its particular case, the principle of proportionality.
46. In my view, the derogation proves, 48. Finally, DAT-SCHAUB relies on the firstly, that the earlier rules did indeed have principle of good faith, which should be the implications the Ministry considered applied in its case on the ground that a them to have. Secondly, it shows that the reading of the second subparagraph of Commission, provided it is shown the need Article 17(2), especially in the light of other for adaptation in one particular case, is provisions of Regulation No 3665/87 always ready to seek to reconcile the which are applicable in the event of a strictness of general rules which are regar- change of destination of goods which have ded as being essential in order to protect qualified for a differentiated refund, could the Community interests with the interests lead an average trader to consider that of a trader whose activities are prejudiced operations of the type it carried out gave by those rules but are none the less entitlement to refunds. perfectly legitimate. 6
47. It will be noted also that the 1993 decision was not retroactive, 7 which could
6 — See, for example, Case 66/82 Fromançais ν FORMA [1983] 49. However, I think that even though the ECR 395. 7 — As regards the impossibility, in such circumstances, of provision concerned could have been making it retroactive, see judgment in Case C-34/92 GruSa drafted more clearly, it can be understood Fleisch ν Hauptzollamt Hamburg-Jonas [1993] ECR I-4147. by a reasonably prudent trader.
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Conclusions
50. I therefore propose that the Court give the following answer to the question submitted by the Østre Landsret:
Having regard to the Cooperation Agreement between the European Economic Community and the countries parties to the Charter of the Cooperation Council for the Arab States of the Gulf (the State of the United Arab Emirates, the State of Bahrain, the Kingdom of Saudi Arabia, the Sultanate of Oman, the State of Qatar and the State of Kuwait), approved by Council Decision 89/147/EEC of 20 February 1989, the term 'non-member country' in the second subparagraph of Article 17(2) of Commission Regulation (EEC) No 3665/87 of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural products may not be construed as meaning that the countries parties to the Charter are treated as one single non-member country, which would have the result that a product which, after processing in the Jebel Ali Free Zone in the United Arab Emirates, was imported and released for free circulation in another of the countries parties to the Charter would be regarded as having been imported in the unaltered state within the meaning of Article 17 of Regulation No 3665/87.
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