C-403/98

1 — Original language: French. 3 — OJ, English Special Edition 1972 (II), p. 324. 2 — OJ 1985 L 93, p.1 4 —OJ 1991 L 218, p. 1.

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all the members derive at least 50% of their Title I of the abovementioned regula- own income from farming and associated tion in so far as they satisfy the activity and devote at least 50% of their subjective criteria set out in Arti- working time to farming and associated cle 2(1) of that regulation: activity. In all cases, the investments must be envisaged in connection with a develop- ment plan for the farm or for mutual assistance between farms, and an under- taking to keep farm accounts must be (a) farmers who cultivate their own made. In respect of land let to share- land, whether they are owners or croppers or tenant-farmers, the subsidies tenants, share-croppers and tenant- are paid to the share-cropper or tenant- farmers, whether without the farmer, or jointly to the share-cropper or agreement of the lessor or together tenant-farmer and the lessor provided that with the lessor, perpetual lease- both parties satisfy the subjective criteria holders, family members helping and also the objective criteria laid down in the farmer on a regular and per- Articles 11 and 12 of the present law. manent basis; Share-croppers and tenant-farmers may submit the development plan for the farm, even if they cannot reach an agreement with the lessor. Provided that the develop- ment plan has been approved by the (b) o w n e r s , usufructuaries and Region, it may be implemented without tenants; the consent of the lessor by giving the share-cropper or tenant-farmer the control over the implementation thereof and the rights to make improvements which Law No 11 of 11 February 1971 affords the (c) agricultural cooperatives estab- tenant.' lished in accordance with the leg- islation in force on cooperation;

3. The cooperatives referred to under (c) above, whose sole object is the man- agement of agricultural holdings, may seek to obtain the investment aid 8. The last indent of Paragraph 5(5) of that provided for under Title I of the decision provides that, in respect of legal Regulation even if only 20% of their persons, the status of farmer practising members satisfy the subjective criteria farming as his main occupation is conferred prescribed.' on those entities which fulfil the following conditions:

5. Law No 17 of the Region of Sardinia of 27 September 1992 provided for the crea- '— in the case of capital companies, at tion of a new Register of Farmers Practising least 50% of the income must be Farming as their Main Occupation, speci- derived from farming and the mana- fying that the criteria for the management ging director must devote at least 50% of the Register were to be determined by of his time to managing the agricultural the Giunta Regionale (Regional Council). holding.'

OPINION OF MR MISCHO — CASE C-403/98

Factual background per l'Assistenza Tecnica in Agricoltura (ERSAT) in order to obtain its entry in the Register of Farmers Practising Farming as their Main Occupation on the basis of 9. Azienda Agricola Monte Arcosu Article 2(5) of Regulation No 797/85 or ('Monte Arcosu') is a private limited com- Article 5(5) of Regulation No 2328/91. pany which was formed for the purpose of carrying on farming activities.

10. Monte Arcosu has acquired several holdings of agricultural land in Sardinia. 14. Since it took the view that the resolu- In the public deed of sale it stipulated that it tion of the dispute before it depended on intended to obtain the status of a farmer the interpretation of the abovementioned practising farming as its main occupation provisions, the Tribunale Civile e Penale, and therefore, for the purposes of registra- Cagliari, decided to stay proceedings and to tion, it claimed the benefit of a lower refer the following questions to the Court taxation rate. of Justice for a preliminary ruling:

19. First of all, it should be remembered that in Tenuta il Bosco, the fact that the 15. First, the Commission considers the question raised concerned only the applica- admissibility of the questions raised by the tion of registration duty in situations where national court. title relating to agricultural land is trans- ferred did not preclude the Court from replying.

16. In this respect, it notes that the refer- ring court is called upon to apply a national fiscal provision, which limits particular 20. Second, it should be noted that, in the benefits to operators having the status of case in point, the questions are worded in farmers practising farming as their main general terms and do not refer exclusively occupation for the purpose of Italian Law to fiscal legislation, which would tend to No 153 of 9 May 1975, which the Court confirm that the proceedings pending has already held is not coterminous in that before the national court do not relate to respect with Community rules. the issue of registration duties but to the actual entry in the Register.

23. The Commission is right, first of all, to draw attention to the fact that the defini- tions of 'farmer' and 'farming' are not 27. It follows that the 'companies having uniform in Community law, and that their legal personality' to which the national meaning varies according to the purpose court refers are capital companies in the legislature has in mind. The Court's respect of which the national rules applic- reply will therefore apply only for the able to the main proceedings do not purpose of implementing the regulations provide for the status of farmer practising concerning the improvement of agricultural farming as his main occupation to be structures, which, moreover, is confirmed conferred. by the wording of the aforementioned relevant provision of those regulations which clearly states that the definition of a farmer practising farming as his main occupation is provided solely for the pur- 28. That interpretation is confirmed, more- pose of those regulations. over, by the fact that the applicant in the main proceedings, who has been refused the benefit of the status of farmer practising farming as his main occupation because of the lack of provisions applicable to his 24. The Commission also provides some circumstances, is a private limited com- information concerning the subject matter pany, that is to say a capital company. of the questions raised by the referring court.

29. By its first question, the referring court 25. The national court asks whether, ask whether it is possible to 'apply the despite the silence of the Italian legislature, Community provisions in question' to the status of farmers practising farming as capital companies. That is tantamount to their main occupation may be conferred on asking whether it is possible for a national 'persons other than natural persons' and, in court to grant the status of farmer practis- particular, on 'companies having legal per- ing farming as his main occupation to those sonality'. companies, where no applicable provisions exist under domestic law.

32. Both the Commission and Monte 35. The Court thus inferred that the Com- Arcosu point out that Community legisla- munity legislation prevents a Member State tion prohibits Member States from exclud- from withholding from a capital company ing capital companies solely on the ground the status of a farmer practising farming as of their legal form. In support of this they his main occupation solely on the ground of cite Villa Banfi v Regione Toscana, 6from its legal form. which it follows that to exclude certain types of persons other than natural persons, on the basis of a purely formal require- ment, would not be consistent with the Community legislation which does not define any relevant formal requirement. 36. However, the right of such a company to be granted that status cannot be uncon- ditional since, as was stated above, the Community legislation obliges Member States to define the criteria for granting it. It is bound to follow that its full imple- mentation depends on the adoption of 33. I share that point of view. It is apparent national legislation. from the very wording of the third subpar- agraph of Article 2(5) of the Regulation that Member States have not only the right, but also the obligation to define the criteria for granting the status of farmers practising farming as their main occupation to per- 37. In the present case, the absence of sons other than natural persons. relevant national legislation laying down the requisite criteria at the time when Monte Arcosu lodged its application is not disputed.

34. In Villa Banfi, the Court had in fact already held that the Italian provisions in question did not properly implement the 38. It is therefore necessary to establish Community legislation. That legislation whether that deficiency is likely to be 'not only does not exclude legal persons remedied by the national court.

39. According to Monte Arcosu, that is which are distinguishable by their transfer- unquestionably the case. National autho- able nature. To impose special conditions rities must give effect to the Regulation on the members would therefore be unrea- which, it points out, is binding in all sonable and contrary to the very nature of a respects, under Article 189 of the EC capital company. Treaty (now Article 249 EC). Furthermore, the national authorities are obliged not to treat legal persons more unfavourably than natural persons. 43. Logic also dictates that the condition of occupational skill and competence cannot apply only to the natural person responsi- ble for carrying out the work on behalf of the company, and in particular to the person responsible for managing the com- 40. However, they need only be guided by pany. the criteria laid down in the second sub- paragraph of Article 2(5) of the Regula- tion, as the third subparagraph of Arti- cle 2(5) indeed obliges them to be. 44. Monte Arcosu further maintains that the argument it advances is borne out by the case-law of the Consiglio di Stato (Italian Council of State) and the Corte Suprema di Cassazione (Supreme Court of Cassation), and also by the measures adopted by various legislative or adminis- 41. Consequently, they must apply the trative authorities. conditions relating to the time devoted to farming and the income derived from farming to the company itself, in its capa- city as a legal person practising farming and entirely distinct from the members of 45. The Commission points out that we are which it is composed. not dealing with a situation where, in accordance with the Court's case-law, it is for the national court to set aside a national rule which is contrary to Community law. In the present case, it is a question of compensating for the absence of national rules implementing Community legislation. 42. Logic dictates such a solution because a capital company has legal personality. Therefore it has its own legal existence which is distinct from that of its members. Furthermore, as a general rule, a member 46. However, in the Commission's submis- of a capital company does not manage the sion, the implementation of Community company's affairs. Finally, the status of law presupposes a technical choice by the member is linked to his holding shares Member State, which therefore has some

49. Second, the Commission emphasises other means of achieving, in this case, an interpretation of national law which is consistent with Community law. It points 52. The Commission considers, however, out that the laws of the Region of Sardinia that by referring to national provisions have since laid down the criteria required which have subsequently defined the enti- for granting the status of farmers practising ties which may obtain the status of farmers farming as their main occupation to capital practising farming as their main occupa- companies. If the referring court were able tion, it is possible to establish the circle of to interpret that provision by giving it 'victims' of the belated implementation of retroactive effect, it could fill the gap in Community law and therefore to compen- question. Thus, it would prevent the Mem- sate the loss.

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53. The Commission concludes by stating State of any discretion as regards laying that it does not underestimate the difficul- down the criteria applicable to capital ties inherent in the solutions it proposes. companies. However, it takes the view that if they were not adopted, 'it would be necessary to accept that the direct effect of the prohibi- tion on discriminating against capital com- panies solely on the ground of their legal form — an effect recognised by the Court since Villa Banfi — remains, in the end, 58. The proposed solution is tantamount to conditional on an act of the Italian legis- applying to capital companies mutatis lature which, in the case of the Region of mutandis the criteria laid down by the Sardinia, did not materialise for more than national legislature for natural persons on twenty-six years after Directive 72/159/ the basis of Community law. EEC was adopted.'

65. It is immediately apparent that that solution is, in substance, identical to the solution I have just examined in the pre- vious paragraph, since those criteria corre- 62. It might be tempting to reply in the spond, in essence, to the criteria applying to affirmative. However, that solution would natural persons. effectively render the third subparagraph of Article 2(5) of the Regulation redundant and, as the referring court points out, it would be confronted with the difference in nature between a natural person and a capital company which, in the words of the 66. The drawbacks and difficulties in referring court, is 'a legal person quite resorting to that solution are therefore distinct from the persons of the individual identical. members', the latter being, 'as it were, concealed'.

67. Second, the Commission considers that the national court might retroactively apply the criterion which the Region of Sardinia 63. Let me now examine the solutions has since laid down for capital companies. envisaged by the Commission. Its first proposal implies suggesting to the referring court that it might transpose the criteria laid down under national law in respect of certain persons other than natural persons to the situation of capital companies. 68. In that regard, it takes the view that the referring court is obliged to investigate whether Italian law permits such an appli- cation. There is no doubt that such an obligation exists.

64. That would therefore amount to apply- ing to capital companies the rule provided for by Article 13 of Italian Law No 153 of 9 May 1975, concerning 'farmers' associa- tions', namely that 'all the members derive 69. However, the real problem lies in at least 50% of their own income from establishing what the position would be if

'the Member States' obligation arising from a directive to achieve the result envisaged by the directive and their duty under Article 5 of the EC Treaty to take all 73. However, the constraints which might appropriate measures, whether general or arise for the national court as a result of the particular, to ensure fulfilment of that application of a national principle of non- obligation is binding on all the authorities retroactivity cannot go beyond what is of Member States, including, for matters required for that principle to be observed within their jurisdiction, the courts. It under Community law. follows that, when applying national law, whether adopted before or after the direc- tive, the national court having to interpret that law must do so, as far as possible, in the light of the wording and the purpose of the directive so as to achieve the result it has in view and thereby comply with the 74. A principle of national law, even if it is third paragraph of Article 189 of the EC of a constitutional nature, must not impede Treaty'. 8 the primacy of Community law, as the Court held in Amministrazione delle Finanze dello Stato v Simmenthai. 9 8 — See, by way of example, Case C-106/89 Marleasing [1990] ECR I-4135, paragraph 8; and Case C-54/96 Dorsch Consult v Bundesbaugesellschaft Berlin [1997] ECR I-4961, paragraph 43. 9 — Case 106/77 [1978] ECR 629.

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10 —Joined Cases C-430/93 and C-431/93 Van Schijndei and 11 — See, in particular, Case 98/78 Račke v Hauptzollami Van Veen (1995) ECR I-4705; and Case C-312/93 Mainz (19791 ECR 69; and Case 99/78 Decker v Haupt­ Peterbroeck [1995] ECR I-4599. zollamt Landau (1979] ECR 101.

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82. On the other hand, failure to apply the by the national court of national rules national provisions would have the effect of implementing the Regulation cannot come depriving the operators of the opportunity into conflict with the principle of non- to benefit from that right. Thus, it would retroactivity arising from Community law. not be their legitimate expectations which would be protected but, paradoxically, the failure of the competent authorities of the Member State to introduce at the appro- priate time the measures required for Community law to be implemented.

86. For the reason set out in paragraph 73 above, a principle of non-retroactivity deriving from national law could not there- 83. We are therefore definitely not dealing fore be invoked against the national court with a situation where Community law, in either. accordance with the principles of the protection of legitimate expectations and legal certainty, would preclude any retro- active application of the national rules in issue.

90. In the Court's view, that solution was dictated by the full effectiveness of Com- munity rules and by the protection of the 95. It is indeed true that, if it had adopted rights afforded by them. the necessary provisions within the time- limit, the Member State might have relied on criteria other than those it has now chosen. The fact remains that the Member State failed, in breach of Community law, 91. The same considerations are at issue to exercise that right in due time. here.

96. It cannot therefore be conceded that the 92. It could, admittedly, be contended that, State may now rely on that failure which is in the present case, the problem of specify- contrary to the Treaty and leave the ing the beneficiaries of the Community rule operators affected to bear the consequences arises, since they must be defined by the of it. national rule from whose absence the proceedings arise.

97. In this way, the national court would be 93. In that respect, I agree with the Com- able to reconcile the protection of the rights mission's analysis according to which refer- afforded to individuals by Community law ence must be made to the national rules with respect for the discretion which that which now implement the Community law has granted to the Member State in the rule. present case.

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Conclusion