C-63/00

SCHILLING AND NEHRING

OPINION OF ADVOCATE GENERAL LÉGER delivered on 27 September 2001 1

1. For the purposes of the common agri­ down in the second sentence of cultural policy, Council Regulation (EEC) Article 10(2) of Regulation No 3887/92 2 No 3508/92 and Commission Regulation depends upon the interpretation to be given (EEC) No 3887/92 3established a system to the first sentence of that provision. of checks on the conditions for granting aids and premiums. The Commission Regu­ lation requires aid applications to include various particulars needed for the compet­ ent authorities to process applications. The check on the correctness of the particulars supplied may, where the declarant farmer is at fault, be followed by the imposition of penalties intended to prevent and penalise irregularities and fraud. 4 I — Facts and main proceedings

3. This case arises out of two main pro­ ceedings.

The farmer lodged a complaint, unsuccess­ lodged three days before the animals were fully, and then appealed to the Verwal­ shipped. For the same reason, it reduced tungsgericht (Administrative Court) Stade the total premium granted in respect of the (Germany), which, in its judgment of other animals by 40 %, relying on 14 December 1995, upheld the grounds Article 10(2)(a) of Regulation No 3887/92. for refusal only as regards the fourth bull, because (the court found) the farmer had not proved that the minimum weight upon slaughter had been reached. It also deter­ mined that the refusal could not lead to a reduction under Article 10(2)(a) of Regu­ lation No 3887/92 of the premium sought The farmer brought an action in the for the other three animals. Verwaltungsgericht (Germany), which ruled that the premium had been properly refused for the animals exported but that that fact did not justify the further reduc­ tion in the premium on the other animals. The Verwaltungsgerichtshof Baden-Würt­ temberg confirmed that judgment and Land Baden-Württemberg appealed on a point of law to the Bundesverwaltungsgericht. The Bezirksregierung Lüneburg appealed against the judgment to the Niedersäch­ sische Oberverwaltungsgericht (Higher Administrative Court) (Germany). Its appeal was dismissed by judgment of 11 February 1999 and it appealed on a point of law to the Bundesverwaltungs­ gericht (Germany). II — The relevant provisions

6. Regulation No 3508/92 established an integrated system of administration and control for certain schemes of Community 5. The second set of proceedings was aid granted under the common agricultural brought by Land Baden-Württemberg, Ger­ policy. many, against another farmer, Mr Schil­ ling. On 14 May 1993, he applied for the grant of a special premium for male bovine animals in respect of 23 animals which had already been slaughtered in January of that year, and for four bulls sold on 14 April 1993 to a buyer in Italy. The competent 7. Regulation No 3887/92 lays down authority rejected the application made for detailed rules for this system, in particular the exported animals on the ground that as regards the aid applications to be com­ the premium application had not been piled by farmers, the checks to establish

(b) in other cases: 'If the number of animals declared in an aid application exceeds that found during checks the aid shall be calculated on the number of animals found. However, except in cases of force majeure and after para­ — by the percentage corresponding to the difference found if this is not 5 — OJ, English Special Edition 1968 (I), p. 187. more than 5%,

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— by 20% if the difference found is and more than 5% but not more than 10%,

— in the case of a false declaration made intentionally, from the same aid scheme for the following calendar year. — by 40% if the difference found is more than 10% but not more than 20%.

If a farmer has been unable to comply with his retention undertaking as a result of force majeure he shall retain his right to a If the difference found is more than premium in respect of the number of 20% no aid shall be granted. animals actually eligible at the time when the case of force majeure occurred.

In addition, the following subparagraph was inserted before the final subparagraph 'Must there be a reduction in the unit of Article 10(2): amount of aid under the second sentence of Article 10(2) even where the discrepancy presupposed in the first sentence between the number of animals declared and the number found during checks is not attribu­ table to incorrect information given by the 'If the compensatory allowance provided applicant but to the fact that the authority 7 for in Regulation (EEC) No 2328/91 is does not accept that the conditions for the calculated on the basis of livestock units the grant of premiums are satisfied in regard to determining of the number present and the certain animals?' sanctions provided for above shall apply on the basis of the number of livestock units corresponding to the number of animals declared and found.'

IV — Article 10 ( 2 ) of Regulation No 3887/92 III— The question referred for prelimi- nary ruling

11. By this question, the Bundesverwal­ 10. In the two actions pending before it, tungsgericht is asking essentially whether the Bundesverwaltungsgericht considered the first sentence of Article 10(2) of Regu­ lation No 3887/92 must be construed as meaning that the words 'animals found 7 —Council Regulation No 2328/91 of 15 July 1991 on during checks' refer to animals meeting the improving the efficiency of agricultural structures (OJ 1991 L 218, p. 1). conditions for granting aid, with the result

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that the reduction in the unit amount of aid 15. In this case, the interpretation of the prescribed in the second sentence must be second sentence (and the subparagraphs imposed where some of the animals following) of Article 10(2) of Regulation declared by the farmer do not meet those No 3887/92 is not at issue, as the question conditions. referred does not concern assessment of the level of reduction.

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be reduced if the competent authority finds tion in aid is a miscount: it may not be used that the number of animals declared to reduce the aid where, although the exceeds the number of animals found. number of 'animals found' is the same as the number of 'animals declared', they do not meet the conditions for granting aid. The wording of the first sentence of Article 10(2) of Regulation No 3887/92 therefore catches only a small proportion of the irregularities and fraud which the By 'number of animals found', I believe, we Regulation is seeking to eliminate. have to understand 'animals counted'. Thus, the text must be interpreted as requiring the aid to be reduced if the check shows that the number of animals declared by the farmer exceeds the number of animals counted by the competent auth­ orities at the farm. To interpret the text thus in a strictly 'arithmetical' way confines 22. In the present case, the traditional the instances where aid is reduced to those method of interpretation is not much help where farmers have made an application in determining what, from the wording of for aid on animals that they do not or no the provision or the purpose of Regulation longer have. No 3887/92, is to guide the interpretation of the first sentence of Article 10(2) of the Regulation.

20. One of the principal purposes of Regu­ lation No 3887/92 is effective monitoring of compliance with the provisions on 8 Community aid. To that end, the Com­ It does appear that, since this is an article munity legislature considered that provi­ which is in itself completely unambiguous sions should be adopted to prevent and but which contradicts the purpose of the penalise irregularities and fraud effec­ 9 Regulation of which it is a part — that tively. purpose being equally clearly stated — it is pointless to interpret it in the light of its purpose.

28. I have stated that here the provision is clear and precise. Thus, strictly as regards interpretation, it needs no confirmation or 26. Reference is often made to the purpose elucidation requiring us to consider the of Community legislation in order to con­ purpose of the legislation of which it is a firm the wording of the provision con­ part. cerned. This is intended to support the meaning of a provision which, although not always totally clear and unambiguous, 11 — For example, see the judgments in Case C-390/96 Lease generally leaves a little room for doubt. Plan [1998] ECR I-2553, paragraph 28, in Case C-355/96 Silhouette International Schmied [1998] ECR I-4799, Recourse to the wording and recourse to the purpose of Community rules are thus p aragraph 22 and in Case C-286/95 P Commission v ICI 2000] ECR I-2341, paragraph 60. 12 — In Case 803/79 Roudolff [1980] ECR 2015, the Court ruled that 'Where the text of a provision is ambiguous it should be interpreted in the light of the intention and purpose of the regulations of which it forms part'. For an 10 — Judgment in Case C-74/98 DAT-SCHAUB [1999] ECR instance of a provision where the ambiguity of the wording I-8759, paragraph 31. In paragraph 32 of the same requires the use of criteria other than purpose (on that judgment, the Court gives an exegetical interpretation of occasion, the principle of strict interpretation of restric­ another paragraph of the same provision. For a further tions), see the judgment in Case C-6/98 ARD [1999] ECR example, this time regarding social security, see the I-7599, at paragraphs 29 to 31. judgment in Case C-335/95 Picard [1996] ECR I-5625, 13 — See, for example, the concepts of 'customer belonging to at paragraphs 18 to 20 where, after citing one provision that area' in connection with a commercial-agency from a Community regulation, the Court concludes that contract (in Case C-104/95 Kontogeorgas [1996] ECR that regulation 'unambiguously lays down' the principle of I-6643, paragraphs 25 to 27), or 'exceptional cases' Community law relevant to its considerations. Lastly, in constituting derogations from the principle of separate the judgment in Case C-172/89 Vandemoortele v Com- evaluation of the asset and liability items in a company's mission [1990] ECR I-4677, paragraph 13, it held that the balance sheet (in Case C-275/97 DE + ES Bauunterneh- rules in question did not lend themselves to interpretation mung [1999] ECR I-5331, paragraphs 31 and 32) and of and that the conditions for imposition of the penalty which 'taxation', as regards rules on indirect taxation of capital the disputed rules prescribed were clear enough not to formation (in Case C-206/99 SONAE [2001] ECR I-4679, leave room for any other reading. paragraphs 22 to 26).

31. This contradiction must be resolved using the principle stemming from the consistent case-law of the Court that, where it is necessary to interpret a provi­ sion of secondary Community law, it must as far as possible be interpreted in terms of 34. It is only outwardly that this case-law is its conformity with the provisions of the restricted to tax and customs matters. The Treaty and the general principles of Com­ term 'taxpayer' may lead one to believe munity law. 15 that the only charges which are of uncer­ tain legality on the grounds that they are not clearly defined are tax or customs obligations — but that is not the case. The judgment in National Farmers' Union and Others shows that this case-law applies 32. We should therefore prefer the inter­ in situations where entitlements are lost as pretation that is most consistent with the a result of inaccurate declarations in the principle of legal certainty, that is, the agricultural sphere. The case-law therefore interpretation required by the actual word­ applies to reductions in agricultural pre­ ing of Article 10(2) of Regulation miums and to the consequences for the No 3887/92: the meaning which is clear

16 — See, for example, Case C-177/96 Banque Indosuez and 14 — See, for example, Case C-129/94 Ruiz Bernáldez [1996] Others [1997] ECR I-5659, paragraph 27 and Case ECR I-1829, paragraph 19, Case C-434/97 Commission v C-354/95 National Farmers' Union and Others [1997] France [2000] ECR I-1129, paragraph 21 and Case ECR I-4559, paragraph 57. C-437/97 EKW and Wein & Co. [2000] ECR I-1157, 17 — Case C-325/91 France v Commission [1993] ECR I-3283, paragraph 41. paragraph 26. 15 — See, for example, Case C-98/91 Herbrink [19941 ECR 18 — Banque Indosuez and Others, paragraph 27, and National I-223, paragraph 9. Farmers' Union and Others, paragraph 57.

39. We should be mindful of the scale of the consequences, for the farmers con­ cerned, which follow from the interpre­ 36. In this respect, the Court regards the tation of Article 10(2) of Regulation principle of legality in relation to crime and No 3887/92. This provision describes the punishment as an integral part of the circumstances in which a farmer may suffer principle of legal certainty. From these reductions in the aid applied for. But it is two closely-related principles stems the apparent that, even with the smallest principle that a provision of criminal law reduction in aid laid down by the provi­ may not be applied extensively to the sion, such reductions also affect the amount detriment of the defendant. 20 of the aid for the 'animals found', that is to say, those animals which give entitlement to payment of aid or which would at least have given entitlement to full payment had 22 there been no irregularity.

41. The Court's case-law on interpreting the rules of secondary Community law in accordance with the general principles of the Community law must therefore apply here. 44. The recent expressions of concern by the Community institutions regarding the quality of drafting confirm the need to ensure that a rule is clearly and precisely expressed. For the same reason, where the actual wording of the provisions in dispute is unambiguous, we should abide by that 42. The tenor of the principle of legal 23 wording; otherwise, if the discrepancy certainty is clear, particularly as regards between the wording and the purpose of the necessary features of the legal basis for the regulation is considered to be too great any penalty. In Vandemoortele v Commis- and therefore likely to hinder its appli­ sion the Commission had withheld part of cation, the provision in dispute should be the amount due to a tenderer in payment of rewritten. That indeed is what did happen food aid on the grounds of delay in when, in Regulation (EC) No 1678/98, the delivery. The relevant provision of Com­ Commission modified Article 10(2) of munity law provided for the withholding of Regulation No 3887/92, to bring it into part of that amount only where the goods 24 line with the purpose of the Regulation. or packaging did not correspond to the requirements, and the Commission's decision was therefore annulled. 23 — On this, see the various institutional initiatives cited in Blanchet, T., 'Transparence et qualité de la législation', in RTD eur., 33 (4), Oct-Dec 1997, p. 915 et seq. 24 — Commission Regulation (EC) No 1678/98 of 29 July 1998 (OJ 1998 L 212, p. 23). The first sentence of Article 10(2) reads thus: 'If the number of animals declared in an aid application exceeds that established during administrative or on-the-spot checks carried out in accordance with Article 6(6), the aid shall be calculated on the number of eligible animals established'. Article 6(6) of Regulation No 3887/92, as modified by Regulation No 1678/98, defines on-the-spot checks as comprising, in particular, a 43. To comply with the principle of legal check that the total number of animals present on the holding, and eligible for the scheme concerned, cor­ certainty as so applied, the first sentence of responds to the number of such eligible animals entered Article 10(2) of Regulation No 3887/92 in the register.