Judgment of the Court
Mr President,
Members of the Court,
1. Entitlement to a differentiated export refund is conditional on the importation of the goods in question into the country of destination. Can an exception to that condition be made in the case where goods have been destroyed in transit from the Community to the country of importation as a result of f orce majeure} That is the central issue in the question which the High Court of Justice, Queen's Bench Division, has referred to the Court for a preliminary ruling.
2. In return for the lodging of a security, the English company Tara Meat Packers (hereinafter TMP) received advance payment from the competent United Kingdom authority (the Intervention Board for Agricultural Produce) of an export refund in connection with the export of a consignment of beef to Egypt.
3. TMP brought proceedings before the High Court against the Intervention Board in which it sought a ruling that it was entitled to the export refund applicable in the case of exports to Egypt. TMP argues in particular that it follows from the relevant Community rules that in a case where the loss of goods is attributable to force majeure during transport from the Community to the country of importation, the refund should be paid as if the goods were in fact imported. The Intervention Board contends that TMP is not entitled to the export refund.
4. The High Court has referred the following question to the Court:
5. The first regulation to which the High Court refers is Regulation No 805/68 of the Council of 27 June 1968 on the common organization of the market in beef and veal. Article 18 of that regulation lays down the basic principles governing the system of export refunds. It states inter alia that the export refund is intended to offset the difference between prices within the Community and those on the world market in order to make it possible to export the products in question, and that the refund may be varied according to ... destination.
The problem involved in the case and the main submissions in law
6. It is not disputed that the goods were not imported into Egypt and that the condition governing payment of the differentiated refund was therefore in principle not satisfied. It is at the same time also not disputed that the goods were destroyed in transit from the country of export to the country of destination as a result of force majeure.
7. TMP's main contention is that in those circumstances it is entitled to a refund, inasmuch as there is no basis for the imposition of a condition for payment of the refund in addition to that generally applicable, namely, export from the Community. TMP bases its view on, inter alia, a provision in the regulation on advance payment under which the security lodged as a condition of advance payment shall, without prejudice to cases of force majeure, be forfeited in the case of failure to comply with the conditions governing refunds. More generally, TMP submits that:
8. The United Kingdom and Ireland, along with the Commission, agree that TMP is not entitled to the full refund even though importation was prevented by the destruction of the goods in transit as a result of force majeure. They also agree that this result is consistent with the objective served by the export refund system, including the objective underlying the requirement of import into the country of importation in the case of differentiated refunds, that this legal position does not constitute unjustified discrimination and that it is not at variance with the principle of proportionality.
9. However, the two Member States and the Commission disagree as to which of the rales in the implementing regulation give rise to the finding that TMP's position in law is ultimately determined by Article 20(2). The United Kingdom and Ireland take the view that the situation in this case is covered by Article 5(3) of the implementing regulation, which provides as follows:
10. The Commission, on the other hand, argues that the present situation is governed by the regulation's general rules on differentiated refunds. Article 4 of the regulation provides that:
Examination of the rules referred to
11. Let me just say at the outset that it seems clear on the face of it that the relevant regulations contain no rules which would entitle TMP to the full differentiated export refund on the ground that importation was prevented because the goods were destroyed in transit to the country of destination by reason of force majeure.
12. TMP, as I have already mentioned, refers to Article 6 in the regulation on advance payment. The first paragraph of that article imposes an obligation to lodge a security guaranteeing reimbursement of an amount equal to the refund, plus an additional amount. The second paragraph provides that:
13. The present case must be considered in the light of the fact that Article 6 of Regulation No 885/68 laying down general rules for granting export refunds on beef and veal had already introduced a fundamental distinction between non-differentiated and differentiated refunds. In principle, the sole condition for obtaining the former is, as I have already pointed out, that the goods have been exported from the Community, while the additional requirement in the case of differentiated refunds is that the goods have been imported into the country of destination for which the refund was set. This fundamental distinction is of course taken up again in the Commission's implementing regulation (see above). The general rules governing entitlement to a differentiated refund do not contain any proviso in respect of cases involving force majeure, and in my opinion the Commission's view must be upheld that the rules are to be understood as meaning that the requirement of importation also applies even if such importation is prevented by reason of the destruction of the goods in transit as a result of force majeure, and that this means that the exporter is entitled only to such refund as can be derived from Article 20.
14. As the United Kingdom and Ireland have correctly pointed out, Article 5(3), according to its wording, appears to apply to a situation such as the present. It is also correct that that provision would have the result in this case that Article 20 would be applicable and that consequently TMP would not be in a better legal position than would be the case if the position in law were to be assessed exclusively on the basis of the provisions concerning differentiated refunds in Articles 16 to 20 of the regulation.
15. I am inclined directly to uphold the views of the Commission and TMP that the legal position in this case is not covered by Article 5(3). That provision cannot be considered in isolation from the other provisions of Article 5 which enable the authorities, in situations where there is a specific risk of abuse, to depart from the general rules on non-differentiated refunds as well as from those on differentiated refunds. Article 5(3) is presumably applicable only where there has been reason in a particular situation to make use of the powers to request additional proof under Article 5(1).
16. It may in my opinion be assumed that the Community legislature did not necessarily intend to lay down any force majeure proviso in Articles 16 to 20 of the implementing regulation.
Must this interpretation be amended on the ground that it is at variance with the objectives of the refund system and with general principles of law?
17. Apart from the provision in Article 6 of the regulation on advance payment which, as I have already pointed out, is in my opinion irrelevant in this context, TMP's reading of the law is not based on any more specific rules in the relevant regulations. On the contrary, its arguments are founded on more general submissions to the effect that it would be at variance with the objectives of the refund system and with general principles of law if the rules were not interpreted as meaning that there is entitlement to a full differentiated refund in the case where importation is frustrated through loss of the goods in transit by reason of force majeure.
18. The Court has consistently held that Community rules should be given the interpretation most consistent with their objectives, and as they should as far as possible be interpreted in accordance with the general principles of Community law, there may be grounds for examining whether there is justification on that basis for interpreting the relevant rules in the manner advocated by TMP.
19. TMP argues in particular that, as a main rule, entitlement to an export refund arises when the goods have been exported from the Community and that the application of the derogating rule (namely, that entitlement to the full refund is conditional on importation of the goods into the country of destination) is justified only where it is clear that the objective behind the requirement of importation so warrants. TMP accepts to that extent that the requirement of importation has a double objective: on the one hand, to prevent abuse, and, on the other, to ensure that the goods actually gain access to the market in question (on this point, see the judgment in Dimex). TMP, however, contends that consideration of abuse is irrelevant in a situation such as the present, where there is simply no risk of abuse, and that, so far as the wish to ensure that goods gain access to the market in question is concerned, there is no reason to draw a distinction between goods entitled to a differentiated refund and those which are entitled to a non-differentiated refund in view of the fact that, in the last analysis, the Community legislature desired both groups of goods to be disposed of on the markets of nonmember countries. In the opinion of TMP, it follows from this that, regardless of whether they are entitled to differentiated or non-differentiated refunds, exporters must be treated identically in the case where their goods have been destroyed in transit as a result of force majeure. TMP thereby contends that there is unjustified discrimination between the two groups of exporters and that the legal consequences of the failure in this case to satisfy the condition of importation are disproportionate vis-à-vis the objective served by that condition.
20. TMP's arguments cannot be dismissed out of hand. The two groups of exporters are in the present case treated differently, and it is not immediately obvious that the objective differences between the two groups justify such discrimination.
21. That, however, is not a decisive factor. The arguments adduced by the Commission and the two Member States in support of the differences in treatment between the two groups of exporters, and which are first and foremost based on the objectives served by the requirement of importation (in particular, the need to ensure that goods reach the market in the country of destination), cannot be dismissed as irrelevant or lacking in substance.
Can a rule on force majeure applicable to the present situation be implied by way of analogy or in any other manner?
22. TMP argues that there are grounds for applying by analogy the force majeure proviso contained in Article 6(2) of the regulation on advance payment to the situation in the present case. It refers in this connection to the Court's judgment in Case 6/78 Union Française de Céréales v Hauptzollamt Hamburg-Jonas.
23. In my opinion, TMP's arguments in this regard cannot be accepted.
24. With regard to the judgment in the Inter-Kom case, that judgment was based on specific grounds and the relevant specific circumstances do not occur in the present case.
25. So far as the analogy with the second paragraph of Article 6 of the regulation on advance payment relied on is concerned, the force majeure proviso in that provision must in my opinion, as I have mentioned above, be understood as a general reference to specific force majeure provisos found elsewhere in the rules on advance payment.
26. There is one further reason why TMP's argument cannot find support in the Union Française judgment. Admittedly, the Court in that case decided that there were grounds for applying by analogy an express force majeure provision to a situation in many respects similar to the present. National authorities had refused to pay an accession compensatory amount to a French company which had dispatched a consignment of wheat to the United Kingdom. The consignment did not reach its destination by reason of the sinking of the transporting vessel. The compensatory amount was payable only if it could be established that the goods had been imported into the United Kingdom. The relevant rules (a 1973 Commission regulation) did not contain a proviso on force majeure. However, a rule adopted at a later date did set out such a proviso. This proviso was contained in a 1975 Commission regulation laying down rules for the application of export refunds in respect of agricultural products (that is to say, one of the predecessors of the Commission regulation of relevance to the present case) and concerned a provision which constituted an antecedent for Article 5 in the regulation here relevant.
The interpretation of Article 20 of the implementing regulation
27. Article 20(1) and (2) provides as follows:
28. For the reasons outlined above, I propose that the Court should reply to the question referred in the following terms:
1 Original language: Danish.
2 TMP, which was insured against loss of the refund, received payment of an insurance sum corresponding to the full amount of the refund and the insurers have assumed TMP's rights in the proceedings pending. Ireland, which submitted observations in the case, has pointed out that the Irish company Tara Meats (Kilbeggan) Ltd was transporting beef on the same vessel as the English company and that proceedings are pending before the Irish High Court in which the circumstances of fact and law are essentially the same as those in the present case. The Irish High Court has stayed the proceedings brought by the Irish company until the Court of Justice has delivered its ruling in the present case.
3 OJ, English Special Edition 1968 (I), p. 187.
4 OJ, English Special Edition 1968 (I), p. 237.
5 OJ 1980 L 62, p. 5.
6 OJ 1987 L 351, p. 1.
7 See Regulation No 2978/88 fixing the export refunds on beef and veal (OJ 1988 L 269, p. 37).
8 This view is supported by the twenty-fourth recital in the preamble to the Commission's implementing regulation, which states that: ... reimbursement of the amount paid in advance of export must be made if there proves to be no right to the export refund or if there was a right to a smaller refund;... the reimbursement must include an additional amount to avoid abuses; ... in cases of force majeure, the additional amount is not reimbursed.
9 This result is confirmed by Article 21(3) of the regulation, in conjunction with Article 21(4), which contains an express rule on force majeure. The proviso applies to situations in which a product is delivered, as a result of force majeure, to a destination other than that intended, and means that the exporter is entitled to the differentiated refund applicable to the altered destination.
10 See, inter alia, the judgments in Joined Cases C-90/90 and C-91/90 Neu and Others v Secrétaire d'Etat à l'Agriculture et à la Viticulture [1991] ECR I-3617 and in Case C-314/89 Rauh v Hauptzollamt Nümberg-Fürth [1991] ECR I-1647, at paragraph 17.
11 Judgment of the Court in Case 89/83 Hauptzollamt Hamburg-Jonas v Dimex Nahrungsmittel lm-und Export GmbH&Co. KG [1984] ECR 2815, at paragraph 8 of which it ruled that:... the system of variable expon refunds is intended to gain and maintain access for Community exports to the markets of the nonmember countries concerned and the variation in the refund is based on the desire to take account of the particular characteristics of each import market in which the Community wishes to play a part.
12 There is thus cogency in the arguments put forward by Advocate General Capotorti in his Opinion in the Union Française case (cited below at point 22) where he reached the conclusion that there was, in a similar situation, no basis for requiring that the condition of importation must be satisfied. Advocate General Capotorti stated inter alia that: ... proof of completion of customs formalities in the country of destination serves to counter the danger that the goods will be redirected to countries where the rate of the refund or compensatory amount is lower (and thus the further danger of reimportation into the territory where the goods originated). If, however, the goods have perished in transit there is no risk of such abuse. Accordingly if, in exceptional circumstances such as the sinking of the vessel transporting the goods, the exporter is able to prove that he sold the goods to a purchaser in the country given as the country of destination and that the goods were duly dispatched, it does not appear to me reasonable to apply at the expense of the exporter a rule having a preventive purpose, pursuit of which is rendered pointless by the circumstances of the specific case. Indeed, it is clear that exceptional circumstances are not amenable to regulation on the basis of criteria established for normal situations and conversely that the application of derogative provisions, such as those governing cases of force majeure, to exceptional situations does not hamper or disturb the normal operation of the system. It should, however, be noted that Advocate General Capotorti was examining the significance of the condition of importation from the point of view that its sole function was to provide protection against abuse.
13 [1978] ECR 1675.
14 [1988] ECR 1979.