C-230/01

1 — Original language: Dutch. 4 — Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organisation of the market in milk 2 —OJ 1992 L 405, p. 1. and milk products (OJ, English Special Edition 1968(1), 3 — OJ 1993 L 57, p. 12. p. 176).

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common organisation of the market in milk alent delivered to a purchaser or sold and milk products. 5The objective of the directly for consumption during the levy, as provided in Article 5c of amended 12-month period in question in excess of Regulation No 804/68, is 'to curb the a quantity to be determined. The levy shall increase in milk production while at the be 115% of the target price for milk'. same time permitting the structural deve- lopments and adjustments required, having regard to the diversity of the situations among individual Member States, regions and collection areas in the Community'. Under the regulation, every milk producer 7. Article 2(2) of Regulation No 3950/92 who fulfilled certain conditions was allo- concerns deliveries: '... before a date and in cated a milk quota. 6 Council Regulation accordance with detailed rules to be laid (EEC) No 857/84 of 31 March 1984 down, the purchaser liable for the levy shall adopting general rules for the application pay to the competent body of the Member of the levy referred to in Article 5c of State the amount payable, which he shall Regulation (EEC) No 804/68 in the milk deduct from the price of milk paid to and milk products sector 7 laid down producers who owe the levy or, failing this, further rules. 8 collect by any appropriate means.

6. Under Article 1 of Regulation No 3950/92, the additional levy is to be 'payable by producers of cow's milk' and apply to 'quantities of milk or milk equiv- Where quantities delivered by a producer exceed his reference quantity, the purchaser 5 — OJ 1984 L 90, p. 10. shall be authorised, by way of an advance 6 — The regulation uses the phrase 'individual reference quan- tities'. on the levy payable, in accordance with 7 — OJ 1984 L 90, p. 13. detailed rules laid down by the Member 8 — This regulation was repealed as of 1 April 1993. State, to deduct an amount from the price 9 — Under Council Regulation (EC) No 1256/1999 of 17 May 1999 amending Regulation (EEC) No 3950/92 establishing of the milk in respect of any delivery by an additional levy in the milk and milk products sector that producer in excess of his reference (OJ 1999 L 160, p. 73), the period of operation of the system was again extended, this time until 1 April 2008. quantity.' I-940

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However, any group of purchasers in the same geographical area which carries out administrative and accounting operations necessary for the payment of the levy on (a) all purchasers operating in the territory behalf of its members shall be regarded as a of a Member State must be approved purchaser...'. by that Member State. ...

10. The role of the purchaser is explained (b) producers shall be required to ensure in the eighth recital in the preamble to that purchasers to whom they deliver Regulation No 3950/92, which reads: are approved... .'

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B — National legislation immediately to deduct an amount cor- responding to the quantity in excess of the quota.

12. The relevant national provisions giving effect to the EC regulation and concerning the additional levy are laid down in the Dairy Produce Quota Regulations 1997. 10

16. By writ of 28 January 1999, the Inter- vention Board brought before the High Court of Justice, Queen's Bench Division, a claim against Penycoed for GBP 561 872.42, being levy due from the defendant for the 1997/98 milk year, 14. Regulation 20 provides that any together with interest. In its statement of amount payable in respect of the levy claim of 6 May 1999, the Intervention w h i c h has r e m a i n e d u n p a i d on Board set out the facts on which it relied in 1 September in any year may be recovered, support of its claim. At paragraph 11 of together with interest, by the Intervention that statement of claim, it alleged as Board. For the purposes of the third para- follows: 'During the quota year 1997/98, graph of Article 2(2) of Regulation the defendant was a producer of milk for No 3950/92 — the situation where the the purposes of the [relevant Community quantity of milk delivered by the producer and national instruments] and delivered to the purchaser exceeds the producer's 2 111 023 litres of milk or milk equivalent quota —, the purchaser is authorised to persons who were not purchasers approved by the plaintiff'. 10 — SI 1997, 733 (published as Statutory Instrument 1997, 733). 11 — Hereinafter: 'the Intervention Board'. 12 — Hereinafter: 'Penycoed'.

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17. As is apparent from the order for farmers remained 'producers' and Elm reference, the factual background to this Farms and TDM were 'purchasers'. Thus case is a scheme whereby farmers delivered milk was delivered by the farmers to Elm milk to Elm Farms Limited (an English Farms and TDM. The farmers disputed company, now in liquidation, hereinafter: that view of the Intervention Board. 'Elm Farms') and, from 1 January 1998 onwards, to TDM Dairy Management Incorporated (a company incorporated in Delaware, hereinafter: 'TDM').

19. The purpose of the scheme was to enable the farmers to engage in dairy 21. Penycoed's application is, legally farming without requiring milk quotas to speaking, to be regarded as a preliminary do so. The object was that the farmers objection of inadmissibility. By judgment would not be producers within the meaning of 27 June 2000, Master Eyre dismissed the of the additional levy regulations and that preliminary objection because he con- Elm Farms and TDM would not be pur- sidered that it should be ruled upon, not chasers. Elm Farms and TDM would at a preliminary stage of proceedings, but themselves be the producers who would during the hearing of the substance of the either have needed milk quotas or been case. Master Eyre granted Penycoed leave responsible for any levy payable. The Inter- to appeal to the Court of Appeal against his vention Board claimed that the scheme did decision. The Court of Appeal heard the not have the intended result and that the case on 25 April 2001.

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22. It should be noted that the parties to (3) In particular, may such action be taken the main proceedings have agreed, for the where the purchaser to whom milk was purposes of the preliminary objection of delivered was (a) not approved pur- inadmissibility, that the Intervention suant to Article 7 of Commission Board's factual analysis will be deemed to Regulation No 536/93 13 and/or (b) be correct. Thus, in the further course of has not complied with any of its proceedings, Penycoed will be regarded as a obligations under Article 7 of that producer and Elm Farms and TDM as Regulation and/or (c) has not recovered purchasers to whom Penycoed made or sought to recover levy from the deliveries. It is also established in the producers concerned?' proceedings that the Intervention Board has not approved Elm Farms and TDM as purchasers.

26. The rules governing the additional levy form part of the organisation of the market (1) A system of prices, which involves in the milk sector. For the sake of a clear fixing for each milk year a target understanding of the context of this case, I price 15 for milk and intervention shall outline here a few features of that prices 16 for butter and skimmed-milk market organisation. powder.

27. The European Union produces 122 (2) A system of intervention. Since 1987, million tonnes of milk annually. That takes the possibility of intervention for butter place on approximately 720 000 dairy has depended on the level of the market farms with 21 million dairy cows. Of that price in a Member State — interven- milk production, 115 million tonnes (94%) tion takes place only if the market price are delivered to the dairy factory; the is below 92% of the intervention remainder is processed on the farm. price — and the price paid for the Approximately 100 million tonnes (82%) butter handed over and stored is only are sold within the European Union at 90% of the intervention price; in the normal market prices, well over half of it in case of skimmed-milk powder, inter- the form of cheese; 10 million tonnes (8%) vention is possible only in the summer are also sold on the internal market but at a period ( 1 March to 31 August), and the subsidised price and the remaining 12 intervention price of 100% is guaran- million tonnes of milk (10%) are exported teed only in respect of a certain quan- to non-Community countries in the form of tity (109 000 tonnes on an annual basis milk powder, butter, butter oil, cheese and for the whole of the European Union). condensed milk. This takes place largely with the help of export refunds, which bridge the price gap with the level on the world market.

export subsidies (refunds) are granted 30. In essence, the issue facing the Court in in order to bridge the price gap this case is the following. The additional between the internal market and the levy is owed by the milk producer, but must world market. Under the WTO Agree- be paid to the competent authority of the ment, the European Union has already Member State by the purchaser of milk. In had to reduce subsidised exports dras- most cases that is the dairy factory where tically between 1995 and 2001: by the milk is treated or processed. Neither the 36% in value and - 2 1 % in quantity. relevant provisions or Community law nor the national implementing provisions in the United Kingdom empower the competent authority to recover the additional levy directly from the milk producer. The main question before the Court is whether Since 1 January 2000 — and thus of less recovery direct from the milk producer is relevance in this case — a somewhat nevertheless possible in a case where the amended regime has applied by virtue additional levy cannot be recovered from of R e g u l a t i o n No 1 2 5 5 / 1 9 9 9 . 1 7 the purchaser of the milk. Put briefly, the target price for milk and The Court can confine itself to that main the intervention prices have been reduced. question and leave out of consideration They have been replaced by other forms of many of the arguments which have been support such as premium supplements, area put forward in these proceedings. payments and direct income support.

31. First of all, I shall give below a brief outline of the applicable system, in so far, of course, as that is relevant to the question to be answered. I shall then turn to the V — Assessment observations which have been submitted in these proceedings. Then I shall describe the arguments which, in my view, can be left out of consideration. Finally, I shall come to the proposed answer to the main ques- tion as formulated. A — Preliminary observations

controlling milk production in the Euro- regulations give them a mandate for that pean Community. The introduction of purpose. The Member States are respon- individual milk quotas was intended to sible inter alia for the collection of the levy. restrict milk production to existing dairy Nevertheless, the powers of the Member farms and to discourage the advent of new States' authorities in respect of collection holdings. Individual milk quotas determine are laid down at Community level. That is the amount of milk which a dairy farmer intended to ensure that the additional levy may produce without having an addi- is effectively applied in all the Member tional — prohibitive — levy imposed on States without entailing any loss of Com- him. The amount of that levy is currently munity resources. At the same time, the 115% of the target price for milk. intention is that application should take place uniformly so as to prevent milk production in the Member States from being influenced by improper competitive disparities.

33. Considered from the point of view of the individual dairy farmer, he has the right to produce milk to the extent of his quota. If he produces more, he is obliged to pay. In Molkereigenossenschaft Wiedergelt- lingen, 18the Court expressly says so. The additional levy must be transferred 'by the debtor, that is the producer, to the creditor, namely the competent body of the Member State'. Those rights and obligations of the dairy farmer constitute the essence of the additional levy scheme.

36. The purchaser is thus assigned a role as 38. The Community legislature clearly intermediary for practical, administrative assumes that there is always a purchaser reasons. That role of the purchaser is of milk who can be held liable for the without prejudice to the obligation of the financial settlement of the additional levy dairy farmer to curb his milk production owed by the milk producer. In this case, and to pay the levy on excess production. however, there is no such liable purchaser. In its judgment in Consorzio fra i Caseifici A gap in the legislation has thus been dell'Altopiano di Asiago, 20 the Court inter- brought to light by the actions of the prets the term 'purchaser' for the purposes parties involved. of Articles 2(2) and 9(e) of Regulation No 3950/92 as 'including any intermediary undertaking which acquires milk from a producer under a contract, irrespective of the manner in which the latter is paid, for the purpose either of treating or processing the milk itself or of transferring it to C — The observations submitted another undertaking for treatment or pro- cessing...'. That is a broad interpretation, as the Court itself expressly states in that judgment. 39. In essence, the answer to the main question as formulated by me under A above, which relates to the existence of a power to recover levy directly from the producer, is decisive for the various sub- missions made in these proceedings. Briefly stated, the United Kingdom and Italian Governments and the Commission propose that this question should be answered in the affirmative, whereas Penycoed and the Greek Government propose, on the contrary, an answer in the negative.

were in breach, according to the United 43. According to the Italian Government, Kingdom Government, of the requirements the competent national body can take legal of Article 7 of Regulation No 536/93. Elm action directly against a producer where it Farms and TDM were unapproved pur- is proven that the producer has taken no chasers and Penycoed delivered milk to steps to pay the levy, even after he has been those unapproved purchasers. An unap- called upon to do so. Direct legal action by proved purchaser does not fall under the competent authority may also take Article 2(2) of Regulation No 3950/92 place where a purchaser is not approved. and therefore does not have the powers The fact that the purchaser is not approved conferred on a purchaser under Article 2(2). does not exempt the producer from his obligation to pay the levy. Even where the purchaser has failed to comply with his obligations under Article 7 of Regulation No 536/93, that does not exempt the producer from his obligations. This means that the national authority must have the power to take action to avoid breaches of 41. Moreover, Penycoed, Elm Farms and Community law. TDM made no attempt either to pay the levy or to collect the levy. Despite the fact that the regulation lays down no rules for such a situation, the United Kingdom Government contends that the competent body of a Member State may take action directly in such a case. That applies par- ticularly where, as in this case, the pur- chaser fails to discharge his role as inter- mediary. However, according to the United Kingdom Government, direct action may not be taken where the producer would then have to pay levy twice or where the Intervention Board could make a double 44. According to the Commission, pur- recovery. chasers are liable to pay the levy purely for reasons of administrative efficiency. That follows from Article 2 of, and the seventh recital in the preamble to, Regu- lation No 3950/92. The fact that individual producers are regarded as being ultimately responsible for the levy is expressed in Article 2(2) of Regulation No 3950/92. 42. The Italian Government submits that That provision requires purchasers to Community law does not expressly pre- recover the levy from producers. That clude direct legal action from being taken interpretation is supported by Article 3 of against a producer. On the contrary, the Regulation No 536/93. The purpose of the Member States are obliged to take all the levy would be undermined if it were poss- verification measures necessary to ensure ible for producers to evade payment of the payment of the levy. The taking of legal levy by selling milk to purchasers from action against a producer falls within those whom Member States do not, in practice, measures. have any prospect of recovering the levy.

48. Penycoed submits that the Intervention Board has no right to take direct legal 46. According to the Commission, there action against a producer because the are three circumstances in which Member national body lacks the power to do so. It States are permitted to recover the levy is the task of the legislature to rectify such a directly from producers. First, where the gap in the legislation. That is not the task of producer has not yet paid the levy to the the Court. purchaser, and the factual and legal cir- cumstances of the purchaser are such that it would lead to an unreasonable outcome if the competent authority recovered the levy from the purchaser. Whether such circum- stances exist in a given case is a matter for 49. The United Kingdom Government's the national courts. Second, direct recovery argument that, in the case of delivery to is permitted if the purchaser is unapproved, an unapproved purchaser, the national since practical experience shows that it is competent body has the right to take direct very difficult to recover the levy from such legal action against the producer is refuted a purchaser. In such a case, Regulation by Penycoed as follows. Penycoed finds

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53. Third: in this case no reliance may be placed on legal principles from which citizens derive protection in Community 51. First: the parties in the main proceed- law, such as the principles of legal certainty ings have ended the dispute concerning the and the protection of legitimate expec- status of the defendant itself and of Elm tations. Even though the Community regu- Farms and TDM. The proceedings before lation concerned and the legislation on the the Court can therefore be confined to the additional levy contain no power to collect main question formulated above. The levy from the milk producer, a milk pro- parties agree that the defendant in the main ducer still may not entertain a legitimate proceedings can be regarded as a milk expectation that he is allowed to produce, producer. Nor is it relevant — at least in without a milk quota, milk on which he the proceedings before the Court — to need pay no levy. Possible deception of the examine whether Elm Farms and TDM milk producer is also irrelevant. The only really cannot be held liable by the national matter over which a milk producer may authorities. The Court can assume that possibly have been misled is the question to there is no purchaser who can be held whom he must pay, not the fact that he liable. must pay.

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55. Fifth: Article 7 of Regulation No 536/93 provides that a purchaser to whom a milk producer delivers must be approved. It also provides that milk pro- ducers must ensure that they deliver to E — The answer approved purchasers. That is an obligation which is incumbent on the milk producer and which will also have to be enforced by the Member State, but it is also uncon- General observations nected with the question whether the milk producer is obliged to pay the levy directly to the national body. In other words, the question whether the milk producer is discharged from his debt if he pays to an unapproved purchaser is not in issue here. 57. The questions referred must be On this point I thus share the view of answered in the light of the following facts: Penycoed. The arguments of the United Kingdom and the Commission do not convince me. Even the unapproved pur- chaser is a purchaser within the meaning of Article 9(e) of Regulation No 3950/92. In so far as the Commission states that it is — the relevant Community legislation extremely difficult to recover levy from an gives no express authority to the unapproved purchaser, I regard that as a Member State's competent body to I-952

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recover the additional levy from the subsidy provided out of Community milk producer, except in the case of resources. That applies to milk which is direct delivery to the consumer, which handed over to the intervention agency is not relevant here; and milk in respect of which an export refund is granted on export from the European Union;

58. However, there is such a defect in the — a portion of the payment which the Community legislation, which encourages milk producer receives for the milk circumvention of the rules, as long as the delivered by him is in the nature of a national authorities responsible for imple-

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mentation continue not to have any express in its place. That task is for the Community power to enforce compliance. The Com- institutions responsible for adopting legis- munity legislation does not provide for any lation. 21 right to recover the additional levy directly from the milk producer.

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milk producer if he does not have to pay must not be framed in such a way that the the levy due from him. exercise of those rights is in practice made impossible or excessively difficult. 22

63. Both of those (categories of) arguments are central in my view also. In the absence 65. In more general terms, the principle of of any express power, they may constitute effectiveness implies that interested parties the legal basis for recovery of the additional should also be able in fact to avail them- levy. In my opinion, two legal principles, selves of the opportunities for which Com- which must be distinguished, are involved munity law provides. 23 This case concerns here. They are, in the first place, the the obverse of that proposition. What is at principle of effectiveness and, in the second issue is not a directly effective right of an place, the doctrine of unjust enrichment. I interested party, but a directly effective shall discuss those two legal principles obligation of the interested party under separately in the first instance, but draw Article 1 of Regulation No 3950/92. He attention now to the possible connection owes the additional levy to the Member between them. Certainly, if a private indi- State in which he is established. The ques- vidual is unjustly enriched at the expense of tion now is whether the principle of effec- Community funds, the principle of effec- tiveness also requires a national legal tiveness may require the reversal of that system to be organised in such a way that enrichment by a Member State. the interested party must also settle his debt in all circumstances.

69. In the light of the foregoing, I am of the opinion that a defect in Community legis- lation can be rectified in circumstances to which the principle of effectiveness applies. In the given special circumstances, an answer to the questions referred for a preliminary ruling whereby the Court rec- tifies a defect in the Community legislation does not mean that the Court takes the place of the legislature. The Court does not 67. I would point out that there are also in substitute a different provision. general two sides to the principle of effec- tiveness. Citizens must not only be able to exercise the rights which Community law grants to them, but they must also be able to comply with their obligations. The principle of effectiveness implies that the policy objective envisaged by the Commu- nity legislature can be implemented in the 70. I consider the following circumstances Member States, thereby ensuring that to be decisive for the Court's answer: Community law produces its full effects. That principle stems from Article 10 EC, which requires the Member States to take all appropriate measures, whether general or particular, to ensure fulfilment of their obligations under Community law. Among these is the obligation to nullify the unlaw- ful consequences of a breach of Community law. 26 — it is established that the conduct of the party concerned is detrimental to the attainment of an essential objective of the Community legislation concerning 24 — Case 265/78 Ferwerda [1980] ECR 617, paragraph 8. 25 — See also paragraph 8 of Ferwerda (cited in footnote 24 the additional levy, namely the control above). The Court is referring there to the principle of milk production in the Community. of effectiveness, although not explicitly. 26 — See inter alia Joined Cases C-6/90 and C-9/90 Francovich At the same time, the Community and Others [1991] ECR I-5357, paragraph 36. budget sustains a loss;

71. In short, the milk producer owes a debt 73. Moreover, it is settled case-law that the to the European Community directly on the protection of rights guaranteed in the matter by Community law does not require an order for the recovery of charges 27 — See, for example, the judgment of the Court of First improperly made to be granted in con- Instance in Case T-171/99 Corns UK v Commission [2001] ECR II-2967, paragraph 55. ditions which would involve the unjust

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enrichment of those entitled. 28 The deter- petitors on the market, and the situation mination as to whether there is unjust prior to payment of the aid is restored. 30 enrichment is made by the national court That which applies to a subsidy paid out of in the light of the facts of each case. national resources naturally also applies to Repayment of a charge levied in breach of a subsidy paid out of Community Community law may be resisted only resources. where it is established that that would constitute unjust enrichment. 29

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The connection capable of providing a self-standing legal basis, I would argue in the alternative that in a special case such as this both principles should be viewed in conjunction with one another. If a private individual enriches 78. In my opinion, both the principle of himself unjustly at the expense of Commu- effectiveness and the doctrine of unjust nity funds and thereby impairs the attain- enrichment provide a self-standing basis for ment of an essential objective of a Com- the recovery of the additional levy. Should munity provision, the principle of effective- the Court not agree and instead take the ness requires that a Member State reverse view that neither of those two principles is that enrichment.

VI — Conclusion

79. In the light of the foregoing considerations, I propose that the Court answer the questions submitted by the Court of Appeal (England and Wales) (Civil Division) as follows:

'Under Article 1 of Council Regulation (EEC) N o 3950/92 of 28 December 1992 establishing an additional levy in the milk and milk products sector, a producer of cow's milk is obliged to pay a levy to the competent body of the Member State charged with implementing the regulation. Except in the circumstance referred to in Article 2(3) of that regulation, no power is expressly conferred on the competent body to recover the levy directly from that producer. Nevertheless, the principle of effectiveness and the doctrine of unjust enrichment require that the levy be recovered directly from the producer of cow's milk if recovery from the purchaser of cow's milk is not possible.'