Report of the Judge-Rapporteur in Case C-365/92

I — Facts and procedure

1. Legal background

Commission Regulation (EEC) No 714/89 of 20 March 1989 laying down detailed rules applying to the special premium for beef producers (OJ 1989 L 78, p. 38) (hereinafter the Regulation) established, inter alia, a system of premiums granted, upon application, for animals whose fattening is almost completed. Article 11(2) of the Regulation provides that the producer must declare in his application that the animals concerned are at least 12 months old at the date of lodging of the application, that he is keeping them on his holding for at least one month and that the animals will be slaughtered or exported to third countries before 3 September 1989.

Article 8(1) of the Regulation provides:

Article 9(1) to (4) of the Regulation provides as follows:

2. The dispute in the main proceedings

Mr Henrik Schumacher, the plaintiff in the main proceedings and the owner of an agricultural holding in Mellinghausen (Federal Republic of Germany), applied by letter of 25 April 1989 — which reached the defendant on 27 April 1989 — for the grant of a special premium for beef producers for a total of 32 fattened male cattle at least 12 months old, which were to be slaughtered before 3 September 1989.

The defendant informed him by letter of 3 May 1989 that the period for inspection (the period for keeping the animals on the holding) would end on 27 May 1989. The plaintiff subsequently produced statements of animals sent for slaughter on 5 June 1989 (3 bulls), on 20 June 1989 (20 bulls) and on 17 August (4 bulls), a total of 27 animals. For the five remaining animals he sent the defendant, by letter of 5 October 1989, a declaration of slaughter dated 29 September 1989, showing the delivery for slaughter of five animals on 25 September 1989.

The defendant subsequently refused the application for the premium in its entirety on the ground that five of the animals mentioned in the application had not been slaughtered before 3 September 1989.

The plaintiff's objection was unsuccessful and he then brought an action claiming that he was at least entitled to the special premium for the 27 cattle slaughtered before the time-limit. According to him, on 2 September 1989, the five remaining animals were not yet ready to be slaughtered because they were ill.

The defendant argued essentially that the time-limit provided for in Article 11(2) of the Regulation had to be observed if the application was not to be time-barred, without any possibility of exception. According to the defendant, Article 11(2) of the Regulation constitutes, as a whole, a derogation which was introduced in order to allow the benefit of the system of premiums in respect of animals whose fattening was almost completed. Because of that special feature and the simplified identification allowed for those animals, the applicant for the premium must make a number of precise declarations specified in the article, including one that the animals will be slaughtered or exported to a third country before 3 September 1989. According to the defendant, observance of those undertakings forms a part of the essential obligations of the recipient of the subsidy, the infringement of which may entail loss of the whole of the subsidy.

In its analysis of the case, the Verwaltungsgericht Hannover (Administrative Court, Hanover) considers that the only obstacle to the plaintiff's right to a special premium for 27 cattle is Article 9(1) of the Regulation.

In that regard, the court of reference, finding that the undertaking made by the plaintiff in his application for the premium, in accordance with Article 11(2) of the Regulation, to slaughter the animals or export them to a third country before 3 September 1989 was fulfilled in respect of 27 animals only, pointed out that the partial failure to observe that undertaking might lead to the loss of the whole of the premium pursuant to Article 9(1), cited above.

According to the court of reference, Article 9(1) applies to applicants for premiums under Article 11(2) of the Regulation. It also considers that the conditions for the application of Article 9(1) of the Regulation are met in this case. The number of animals actually eligible, appearing from inspection of the documents sent by the plaintiff (27 animals), is less than the number for which the application for a premium was lodged (32 animals). In this respect, the national court considers that the concept of inspection in Article 9(1) of the Regulation includes not only on-farm inspections involving the examination of documents kept on the holding, but also the checking of documents supplied by the applicant for the premium for the purpose of proving that he fulfils the required conditions. It considers that that follows from Article 8(1) of the Regulation, which distinguishes between administrative checks and on-farm inspections concerning inter alia both the correctness of the declarations required and the observance of the undertakings made by the producer. The inspection to be undertaken by the competent authority regarding the evidence of slaughter or export, which resulted in this case in the detection of the difference between the number of animals actually eligible and the number mentioned in the application, thus constitutes an administrative check within the meaning of Article 8(1) and thus at the same time an inspection within the meaning of Article 9(1) of the Regulation.

In the opinion of the national court, the difference is not attributable to natural circumstances affecting the herd. It is true that the illness of certain cattle concerned by the application may be considered a natural circumstance, but it is not sufficient to establish that it was on account of an illness of the said animals that the plaintiff was not in a position to comply with the time-limit of 2 September 1989 for slaughter.

According to the national court, Article 9(3) of the Regulation does not apply since the conditions for force majeure are not present. Force majeure requires an unusual and unforeseeable event, independent of the will of the recipient of the service and appearing inevitable even though all due care has been exercised. In its opinion, the facts of this case do not present any feature sufficient to show such an event, since the plaintiff did not expressly point out to his father, who was entrusted with looking after the holding during his absence from mid-August to mid-September, that the time-limit for slaughtering the animals was 2 September 1989. In any event, the plaintiff also failed to inform the defendant within 10 days.

The Verwaltungsgericht likewise considers that Article 9(4) of the Regulation does not apply to the plaintiff, if only because the difference between the number of animals eligible and the number declared is greater than 5%, namely five out of 32, or some 15%.

Consequently, according to the court of reference, Article 9(1) of the Regulation excludes the plaintiff's right to any premium, even for the 27 fattened cattle which were slaughtered and otherwise fulfilled the conditions for obtaining the premium.

The national court is doubtful, however, as to the compatibility of that provision with the principle of proportionality, inasmuch as it provides for forfeiture of the whole of the premium in the event of the failure to observe, even in part, the period prescribed by Article 11(2). It considers that according to the case-law of the European Court of Justice, the legislature is certainly entitled to provide for the total loss of the aid in the event of failure, or even partial failure, to observe an essential obligation, but there is a breach of the principle of proportionality where the infringement of a secondary obligation is penalized with the same severity as the failure to observe a primary obligation. In this regard, it doubts whether the observance of the time-limit for slaughter (until 2 September inclusive) prescribed by the second subparagraph of Article 11(2) of the Regulation constitutes an essential obligation of the producer.

On the basis of those considerations, the national court decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

3. Procedure before the Court

The order for reference was lodged at the Court Registry on 18 October 1992.

Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by the Commission of the European Communities, represented by U. Wölker, of its Legal Service, acting as Agent.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided pursuant to Article 104(4) of the Rules of Procedure, with the express agreement of the parties, that the procedure should not include an oral part.

II — Summary of the written observations submitted to the Court

As regards the first question, the Commission considers that Article 9(1) of the Regulation applies to the applications for special premiums referred to in Article 11(2) of the Regulation. In its opinion, Article 11 provides for certain derogations, without however precluding applications under the general system, as that would create an undesirable legal vacuum. The Commission therefore considers that that question should be answered in the affirmative.

Regarding the second question, the Commission is of the opinion that the concept of inspection under Article 9(1) of the Regulation also includes the checking of documents produced by the applicant. It considers that this follows not only from Article 8(1) of the Regulation but also from the fact that otherwise it would frequently be impossible to check the date of slaughter. The Commission therefore considers that the second question also should be answered in the affirmative.

According to the Commission, the third question must also be answered in the affirmative. In this respect it points out that the number of animals actually eligible in this case is only 27, since as regards the five remaining animals, the period for slaughter prescribed by the third indent of Article 11(2) of the Regulation has not been complied with. In the Commission's view, the plaintiff cannot rely upon Article 9(2) or (3), if only because of the failure to make a written declaration within 10 days. Likewise, a mere reduction of the premium under Article 9(4) cannot, in its opinion, be considered, since the difference between the number of animals eligible and the number declared in the application is greater than 5%, namely 15.6%.

Regarding the fourth question, the Commission considers that Article 9(1) of the Regulation passes the test of proportionality, to which it should be submitted, in particular, from the point of view of the period prescribed by the third indent of Article 11(2) of the Regulation.

In order to substantiate that opinion, the Commission first observes that the said period is to be explained, first, by the fact that by the time of the lodging of the application, the fattening of the animals referred to in the provision in question must be almost completed and the animals should have reached a relatively advanced age for fattened cattle (at least 12 months under the first indent of Article 11(2)). Secondly, this is a transitional scheme, in which it is desirable to terminate all the transactions relating to it as soon as possible.

The Commission next points out that the pressure on the producer is minimal since he has enough time (from three to five months depending on the date of lodging the application) to have the animals slaughtered or to export them to a third country. In addition, he has an interest both in not letting the animals get too old, and in obtaining the special premium as soon as possible.

The Commission emphasizes, furthermore, that it is appropriate to take account of the fact that there is no question of a hidden obligation in any of the rules, the producer having expressly undertaken to fulfil the obligation in his application for a premium.

The Commission also states that in referring to paragraphs 2 and 4 Article 9(1) takes account of the principle of proportionality in many respects. In fact, Article 9(1) does not, in any way, bring about the loss of the whole of the special premium in the event of mere failure to comply with the time-limit for slaughter of a single animal. In this respect, the Commission refers, first, to paragraphs 2 (natural circumstances affecting the herd) and 3 (cases oí force majeure). In the Commission's view, those provisions take account — subject to an appropriate duty to provide information — of all the typical circumstances which may lead to a partial failure to comply with the prescribed final date for slaughter and which do not stem from mere negligence on the part of the producer. In addition, it is appropriate, in its opinion, to mention the favourable provision in paragraph 4, under which the premium is wholly lost only where at least 5% of the animals referred to in an application for the premium have not been slaughtered within the period prescribed; in other cases, the premium less 20% is paid for the number of eligible animals.

In the Commission's opinion, that system is comparable to those on which the Court ruled in Case 9/85 Nordbutter v Germany [1986] ECR 2831 and in Case C-345/88 Bundesamt für Ernährung und Forstwirtschaft v Butterabsatz Osnabrück-Emsland [1990] ECR I-159. The Commission points out that in those cases, the reduction of aid and its total forfeiture where certain time-limits for declarations were exceeded were held by the Court to be in accordance with the principle of proportionality.

Finally, the Commission refers to an opinion of the Commission of the European Communities referred to in the order for reference. It points out that that was merely an opinion of the Commission's officers which could not bind the Commission, still less the Court, and that that opinion, in so far as it differs from the position put forward in the Commission's written observations in this case, does not reveal any breach of the principle of legitimate expectation. In particular, it adds that that opinion, which dates back to 1987, relates to a system other than the one in this case, which dates from 1989.

The Commission therefore proposes that the following answers should be given to the questions referred to the Court for a preliminary ruling:

1 Language of the case: German.

2 See footnote 1 in the judgment in this case.