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Judgment of the Court (Sixth Chamber) of 10 March 1992.

Criminal proceedings against Thomas Edward Lomas and others.

References for a preliminary ruling: Crown Court Maidstone and Crown Court Leeds - United Kingdom.

Common organization of the market in sheepmeat and goat meat - Clawback - Method of calculation - Validity.

Joined cases C-38/90 and C-151/90.

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Judgment of 10 March 1992, Lomas and others (C-38/90 and C-151/90, ECR 1992 p. I-1781) ECLI:EU:C:1992:116

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Criminal proceedings against Thomas Edward Lomas and others.

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Keywords

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1. Agriculture - Common organization of the markets - Sheepmeat and goatmeat - Variable slaughter premium - Equivalent amount charged upon exportation to another Member State ("clawback") - Detailed rules of calculation no guarantee of equivalence - Illegality - Obligation on the part of the Member State concerned to require traders to provide information necessary for the charging of the "clawback", and to impose penalties for non-compliance

(Council Regulation No 1837/80, as amended by Regulation No 871/84, Art. 9(3); Commission Regulation No 1633/84, Art. 4(1) and (2))

2. Preliminary ruling - Assessment of validity - Declaration that a regulation is invalid - Effect - Temporary limitation - Derogation by the Court

(EEC Treaty, Art. 174, second para, and Art. 177; Commission Regulation No 1633/84, Art. 4(1) and (2))

Summary

1. The incomplete state of the common organization of the market in sheepmeat and goatmeat, which is due in particular to the fact that a support measure, namely the variable slaughter premium, is reserved for producers of a specific region and is liable to improve their competitive position, may call for corrective measures to restore equality between producers in all regions so far as their competitive position is concerned, in particular by charging an amount equivalent to the aforesaid premium ("clawback") upon exportation outside the region concerned of products in respect of which the premium had been granted. The detailed rules for charging the clawback must be such as to ensure that the clawback neutralizes the effect of the premium on departure from the region concerned of the products which benefited from that support measure, without that system working either to the advantage or to the disadvantage of producers in that region.

For that reason, Article 9(3) of Regulation No 1837/80, as amended by Regulation No 871/84, must be construed as requiring the recovery, upon exportation of the products which benefited from the slaughter premium, of an amount exactly equal to that granted by way of the premium. Article 4(1) of Regulation No 1633/84, adopted by the Commission on an enabling basis in order to ensure its application, permits the charging, by way of the clawback, of an amount based on the rate of the premium fixed for the week during which exportation takes place, whereas the premium actually granted is based on the rate fixed for the week during which the animal was first placed on the market, with the result that in most cases the amount of the premium is not exactly equal to that of the clawback. That is why Article 4(1) is not valid, just as Article 4(2) is invalid in so far as it requires a security to be lodged in order to cover the amount due pursuant to Article 4(1).

The invalidity of Article 4(1) and (2) concerns, however, only the detailed rules for calculating the amount of the clawback and does not affect the actual principle of charging the clawback. Accordingly, the Member State concerned is not relieved of the obligation to ensure compliance with such provisions of Regulation No 1633/84 as are valid and are intended to make the charging of the clawback possible; that State is obliged, in particular, to require the production of documents relating to export operations and to impose effective penalties where false statements are made in such documents.

2. If it were possible for the invalidity of Article 4(1) and (2) of Regulation No 1633/84 - which relate, under the common organization of the market in sheepmeat and goatmeat, to the system of charging the clawback - to be relied upon in support of claims concerning the charging of the clawback in respect of periods prior to the date of the judgment establishing such invalidity, it would give rise to significant financial consequences and serious organizational difficulties as a result of the reopening of accounts long since closed and the need for the clawback to be recalculated in respect of the past.

In those circumstances, overriding considerations of legal certainty preclude legal situations which have produced all their effects in the past from being called in question.

However, it is necessary to derogate from that principle in favour of traders or those entitled through them who have asserted their rights before the date of the judgment by initiating proceedings or by making an equivalent complaint under the applicable national law.

Parties

In Joined Cases C-38/90 and C-151/90,

REFERENCE to the Court under Article 177 of the EEC Treaty by by the Crown Court at Maidstone in Case C-38/90, and by the Crown Court at Leeds in Case C-151/90, for a preliminary ruling in the criminal proceedings before that court against

Thomas Edward Lomas (Case C-38/90),

Robert Leslie Fletcher (Case C-151/90),

Jeremy Nicholas Pritchard (Case C-151/90),

North Riding Lamb Ltd (Case C-151/90),

on the validity of Article 4(1) and (2) of Commission Regulation (EEC) No 1633/84 of 8 June 1984 laying down detailed rules for applying the variable slaughter premium for sheep and repealing Regulation (EEC) No 2661/80 (Official Journal L 154, p. 27),

THE COURT (Sixth Chamber),

composed of: F.A. Schockweiler, President of the Chamber, G.F. Mancini, C.N. Kakouris, M. Díez de Velasco and J.L. Murray,

Advocate General: G. Tesauro,

Registrar: H.A. Ruehl, Principal Administrator,

after considering the written observations submitted on behalf of:

- Mr Lomas, the defendant in the main proceedings in Case C-38/90, by Conor Quigley and Steven Kay, Barristers of Gray' s Inn, instructed by Burstows, Solicitors,

- Mr Fletcher, Mr Pritchard and North Riding Lamb Ltd, the defendants in the main proceedings in Case C-151/90, by Michael Mettyear of Wilberforce Chambers, Hull, and Conor Quigley, Barristers,

- the United Kingdom, by J.E. Collins of the Treasury Solicitor' s Department, Queen Anne' s Chambers, acting as Agent, assisted by Gerald Barling QC,

- the Commission of the European Communities, by Peter Oliver, a member of its Legal Service, acting as Agent,

having regard to the Report for the Hearing,

after hearing the Opinion of the Advocate General at the sitting on on 13 December 1991,

gives the following

Judgment

Grounds

1 By two orders of 20 December 1989 and 5 April 1990, which were received at the Court on 12 February 1990 and 15 May 1990 respectively, the Crown Court at Maidstone and the Crown Court at Leeds referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions on the validity of Article 4(1) and (2) of Commission Regulation No 1633/84 of 8 June 1984 laying down detailed rules for applying the variable slaughter premium for sheep and repealing Regulation No 2661/80.

2 The questions were raised in proceedings between the Crown on the one hand, and on the other a company established in the United Kingdom which exports sheep and sheepmeat from that Member State, executives of that company, and an executive of another company which is also established in the United Kingdom and carries on the same trade.

3 The documents forwarded to the Court by the national courts indicate that the defendants in the main proceedings have been charged in criminal prosecutions brought by the Crown for delivering to United Kingdom customs officers forms containing incorrect statements concerning the weight of lambs or lamb carcases exported from the United Kingdom to other Member States.

4 It appears from the orders for reference that the criminal proceedings brought against the defendants cannot succeed unless it is established that there was a valid enactment in pursuance of which the Commissioners of Customs and Excise obtained from the defendants certain statements which proved to be false.

5 In the proceedings before the national courts, the defendants maintained that the prosecutions were unfounded. In their view, the relevant enactment is Regulation No 1633/84, Article 4(1) and (2) of which is invalid inasmuch as it goes beyond the limits of the powers conferred on the Commission by Council Regulation (EEC) No 1837/80 of 27 June 1980 on the common organization of the market in sheepmeat and goatmeat (Official Journal L 183, p. 1), as amended by Council Regulation (EEC) No 871/84 of 31 March 1984 (Official Journal L 90, p. 35).

6 Regulation No 1837/80, as amended by Regulation No 871/84, established a common organization of the market in sheepmeat and goatmeat which provides for several types of market support mechanism. That common organization is incomplete, however, because it establishes in the sheepmeat sector a number of regional markets instead of a single market, and because one of the support measures, the variable slaughter premium for sheep, is restricted to producers in region 5 (the United Kingdom).

7 That premium may be granted when the market price is less than 85% of the basic price, in the amount fixed each week by the Commission. The animals in respect of which the premium has been granted must, within 21 days of the date on which they were first placed on the market with a view to their slaughter, either be slaughtered in region 5 or exported outside that region. In order to avoid any disturbances in trade resulting from the application of the slaughter premium, Article 9(3) of Regulation No 1837/80, as amended by Regulation No 871/84, provides that the Commission is to take the necessary measures to ensure the charging, upon exportation from region 5 of products in respect of which the premium has been granted, of "an amount equivalent to the premium actually granted", hereinafter referred to as "the clawback".

8 On the basis of Article 9 of Regulation No 1837/80, the Commission adopted Regulation No 1633/84, which provides in Article 4(1) that the amount to be charged on departure from region 5 of products in respect of which the variable slaughter premium has been granted is to be equal to the amount of the premium fixed for the week during which exportation of the products in question took place. According to Article 4(2), the United Kingdom is under an obligation to lodge a security, to be fixed at a level which covers the amount due pursuant to paragraph (1), and which is to be released as soon as that amount has been paid.

9 In the proceedings before the national courts, the defendants maintained, in support of their contention that Article 4(1) and (2) of Regulation No 1633/84 was invalid, that Article 9(3) of Regulation No 1837/80 as amended by Regulation No 871/84 authorized the Commission merely to adopt legislation to permit the recovery upon exportation of the exact amount of the slaughter premium actually paid in respect of each animal, so as to neutralize the effect of the premium on departure from region 5 of products in respect of which that support measure had been granted.

10 According to the defendants in the main proceedings, Article 4 of Regulation No 1633/84 provides for a different amount to be charged inasmuch as it specifies that the amount of the clawback is to be equal to that of the premium fixed for the week during which exportation of the products in question took place. Since the slaughter premium, which is fixed each week by the Commission, is paid at the rate in force for the week in which the animal was first placed on the market and the animals in respect of which the premium has been granted must be slaughtered or exported within 21 days of the date on which they were first placed on the market with a view to their slaughter, it follows, in the defendants' submission, that the amount charged upon exportation generally differs from the amount of the premium actually granted.

11 Taking the view that the disputes called for an assessment of the validity of the Community legislation at issue, the Crown Courts at Maidstone and Leeds stayed the proceedings and requested the Court to give a preliminary ruling on the following questions:

"1. Are paragraphs (1) and (2) of Article 4 of Commission Regulation No 1633/84 of 8 June 1984 invalid in that they are ultra vires the power conferred on the Commission by Article 9 of Council Regulation No 1837/80 of 27 June 1980 (as amended)?

2. If the answer to Question 1 is 'yes' , what are the definitive or temporal effects of the invalid parts of the regulation?

3. If the answer to Question 1 is 'yes' , can the United Kingdom be said to be authorized or required under Community law

- to require the production of documentation in relation to export transactions subjected to charges under the abovementioned Article 4 of Regulation No 1633/84?

- to prosecute for false statements in such documentation in a case such as the one in issue in the national proceedings in which the national enactment under which the prosecution is brought depends upon the existence of Community rights or obligations?"

12 By order of the Court of 4 June 1991, Case C-38/90 and Case C-151/90 were joined for the purposes of the oral procedure and the judgment.

13 Reference is made to the Report for the Hearing for a fuller account of the facts of the cases, the course of the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

Question 1

14 In order to ascertain whether Article 4(1) and (2) of Regulation No 1633/84 was adopted in the exercise of the power conferred on the Commission by Article 9(3) of Regulation No 1837/80, as amended by Regulation No 871/84, according to which the Commission is to take the necessary measures to ensure the charging, upon exportation from the United Kingdom of products in respect of which the slaughter premium has been granted, of "an amount equivalent to the premium actually granted", reference must be made to the aim of the clawback system.

15 In that regard the Court has already held (see Case 106/81 Kind v EEC [1982] ECR 2885 and Case 61/86 United Kingdom v Commission [1988] ECR 431) that although any charging of a sum of money upon exportation to another Member State constitutes in principle, no matter how that charge is described, an obstacle to the free movement of products within the Common Market, the charging of such a sum may nevertheless be justified in an organization of the market which has not yet been completely unified where it is intended to offset inequalities arising from the fact that that organization has not yet been fully achieved, in order to enable products covered by the organization to circulate on equal terms without thereby artificially distorting competition between producers in different regions.

16 Consequently, as the Court stated in those cases, the incomplete state of the common organization of the market in sheepmeat and goatmeat, which is due in particular to the fact that one of the support measures, the variable slaughter premium, is reserved for producers of a specific region and is liable to improve their competitive position, may call for corrective measures to restore equality between producers in all regions so far as their competitive position is concerned, in particular by charging the clawback upon exportation outside the region concerned of products in respect of which the premium has been granted.

17 Accordingly, the clawback must be charged in such a way as to ensure that it neutralizes the premium on departure from the region concerned of the products which benefited from that support measure, without working to the advantage of producers in that region, as would be the case if the amount charged by way of the clawback were lower than that of the premium granted, or affecting their competitive position, as would be the case if the clawback were higher than the premium.

18 It follows that the clawback is not to be regarded as a charge having an effect equivalent to a customs duty, or the variable slaughter premium as an export premium, only in so far as the clawback is intended to offset exactly the impact of the variable slaughter premium, by enabling products from the region in which that premium was granted to be exported to other Member States without disturbing their markets. Accordingly, Article 9(3) of Regulation No 1837/80, as amended by Regulation No 871/84, must be construed as requiring the recovery, upon exportation of the products which benefited from the slaughter premium, of an amount exactly equal to that granted by way of the premium.

19 The system provided for by the Commission in Regulation No 1633/84, whereby the slaughter premium is granted at the rate fixed for the week during which the animal was first placed on the market, while the sheep in respect of which the premium has been paid must be exported within 21 days of the date on which they were first placed on the market and the amount charged by way of the clawback is equal to the amount of the premium fixed for the week during which exportation took place, leads to the result that the amount of the clawback normally differs from that of the premium if the placing of the animal on the market for the first time and its exportation do not take place during the same week.

20 In those circumstances, Article 4(1) of Regulation No 1633/84 is not valid, inasmuch as it permits the charging, by way of the clawback, of an amount which in most cases is not exactly equal to that of the slaughter premium actually granted and thus goes beyond the limits of the power conferred on the Commission by Article 9(3) of Regulation No 1837/80, as amended by Regulation No 871/84. Similarly, Article 4(2) is invalid in so far as it requires a security to be lodged in order to cover the amount due pursuant to Article 4(1).

21 The practical difficulties which the Commission and the United Kingdom claim would preclude the implementation of a system of charging the clawback which provides for the amount of the premium to be exactly equal to that of the clawback cannot alter that conclusion.

22 It follows from the foregoing considerations that the answer to the first question submitted by the Crown Courts at Maidstone and Leeds is that Article 4(1) of Regulation No 1633/84 is invalid inasmuch as, by providing for the charging, by way of the clawback, of an amount which in most cases is not exactly equal to that of the slaughter premium actually granted, the Commission exceeded the powers conferred on it by Article 9(3) of Regulation No 1837/80, as amended by Regulation No 871/84. Accordingly, Article 4(2) of Regulation No 1633/84 is also invalid in so far as it requires a security to be lodged in order to ensure that the amount due pursuant to Article 4(1) is charged.

Question 2

23 With regard to the consequences of the declaration that Article 4(1) and (2) of Regulation No 1633/84 is invalid, it should be pointed out at once that, as the Court has consistently held (see, for example, Case 4/79 Providence Agricole de la Champagne v ONIC [1980] ECR 2823; Case 112/83 Produits de Maïs v Administration des Douanes et Droits Indirects [1985] ECR 719; and Case 41/84 Pinna v Caisse d' Allocations Familiales de la Savoie [1986] ECR 1), where it is justified by overriding considerations of legal certainty the second paragraph of Article 174 of the Treaty, which is applicable by analogy also to a reference under Article 177 of the Treaty for a preliminary ruling on the validity of a measure adopted by the Community institutions, confers on the Court a discretion to decide, in each particular case, which specific effects of a regulation that has been declared void must be regarded as definitive.

24 In accordance with that case-law (see Providence Agricole de la Champagne and Pinna, cited above), the Court has made use of the possibility of limiting the temporal effect of a declaration that a Community measure is invalid where, owing to overriding considerations of legal certainty involving all the interests at stake in the cases concerned, the charging or payment of sums of money on the basis of that measure in respect of the period prior to the date of the judgment could not be called in question.

25 In cases in which the Court has made use of that possibility, it also considered (see Produits de Maïs and Pinna, cited above) that it was for the Court to decide whether an exception to that temporal limitation of the effect of its judgment could be made in favour of the party which brought the action before the national court or in favour of any other trader who took similar steps before the declaration of invalidity or whether, conversely, a declaration of invalidity applicable only to the future constituted an adequate remedy even for traders who took action at the appropriate time with a view to protecting their rights.

26 With regard more specifically to the question submitted by the national courts, it should be pointed out first that even though the main proceedings do not relate to claims for repayment of the amounts of the clawback in excess of the corresponding premiums, as the question of the validity of the system of charging the clawback was raised by the defendants before the national courts only with a view to defeating the charges made against them, the invalidity of Article 4(1) and (2) of Regulation No 1633/84 nevertheless calls in question sums already paid by way of the clawback and therefore affects the system of charging the clawback as a whole.

27 Next, it should be noted that if it were possible for the invalidity of Article 4(1) and (2) of Regulation No 1633/84 to be relied upon in support of claims concerning the charging of the clawback in respect of periods prior to the date of this judgment, it would give rise to significant financial consequences and serious organizational difficulties as a result of the reopening of accounts long since closed and the need for the clawback to be recalculated in respect of the past.

28 In those circumstances, overriding considerations of legal certainty preclude legal situations which have produced all their effects in the past from being called in question in these proceedings.

29 However, it is necessary to derogate from that principle in favour of traders or those entitled through them who have asserted their rights in due time.

30 Accordingly, the answer to the second question submitted by the national courts must be that the declaration that Article 4(1) and (2) of Regulation No 1633/84 is invalid may not be relied upon with effect from a date prior to that of this judgment, except by traders or those entitled through them who initiated proceedings or made an equivalent complaint under the applicable national law before that date.

Question 3

31 In order to answer this question, it should be noted first of all that since Article 9(3) of Regulation No 1837/80, as amended by Regulation No 871/84, provides in principle for the charging of the clawback on departure from region 5 of the products in respect of which the slaughter premium has been granted and specifies the amount of the clawback, only the detailed rules for applying that provision must in accordance with Article 9(4) of those regulations be adopted by the Commission.

32 Next, it should be pointed out that Article 5 of Regulation No 1633/84, which lays down detailed rules for applying the variable slaughter premium for sheep, provides as follows:

"1. The United Kingdom shall take all necessary steps to ensure compliance with the provisions of this regulation.

2. The United Kingdom shall, where necessary, take the necessary steps to ensure recovery of an amount equal to the premium which has been paid.

3. The competent authorities in the United Kingdom shall take all the necessary steps to ensure that implementation of the arrangements for the variable premium does not result in irregular movements of products and does not cause any deflection of trade between that Member State' s two regions.

In particular, the competent authorities in the United Kingdom shall require the operators concerned to notify to departments empowered by the said authorities for that purpose the quantities and description of the products referred to in Article 1(a) and (c) of Regulation (EEC) No 1837/80 which have to be consigned from region 5 where the premium is granted to another region, either direct or via another region or Member State."

33 Finally, it must be emphasized that Article 4(1) and (2) of Regulation No 1633/84, which is declared invalid by this judgment, concerns only the detailed rules laid down by the Commission for calculating the amount of the clawback and the lodging of a security intended to ensure payment of the clawback calculated on the basis of that provision.

34 It follows from the foregoing that the invalidity of Article 4(1) and (2) of Regulation No 1633/84 does not affect the principle of charging the clawback and does not therefore relieve the United Kingdom of the obligation to ensure compliance with such provisions of Regulation No 1633/84 as are valid and are intended to make the charging of the clawback possible. Accordingly, the United Kingdom is obliged, in particular, to require exporters of sheep and/or sheepmeat to provide the national authorities with information of the kind at issue in the proceedings pending before the national courts and to ensure that such information reflects the actual state of affairs.

35 In those circumstances, the answer to the third question submitted by the national courts must be that the United Kingdom is obliged by Community law to require the production of documents relating to operations involving the export of sheep or sheepmeat subject to payment of the clawback and to impose effective penalties on traders who make false statements in such documents.

Decision on costs

Costs

36 The costs incurred by United Kingdom and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

Operative part

On those grounds,

THE COURT (Sixth Chamber),

in answer to the questions referred to it by the Crown Courts at Maidstone and Leeds, by orders of 20 December 1989 and 5 April 1990, hereby rules:

1. Article 4(1) of Commission Regulation (EEC) No 1633/84 of 8 June 1984 laying down detailed rules for applying the variable slaughter premium for sheep and repealing Regulation (EEC) No 2661/80 is invalid inasmuch as, by providing for the charging, by way of the clawback, of an amount which in most cases is not exactly equal to that of the slaughter premium actually granted, the Commission exceeded the powers conferred on it by Article 9(3) of Council Regulation (EEC) No 1837/80 of 27 June 1980 on the common organization of the market in sheepmeat and goatmeat, as amended by Council Regulation (EEC) No 871/84 of 31 March 1984. Accordingly, Article 4(2) of Regulation No 1633/84 is also invalid in so far as it requires a security to be lodged in order to ensure that the amount due pursuant to Article 4(1) is charged;

2. The declaration that Article 4(1) and (2) of Regulation No 1633/84 is invalid may not be relied upon with effect from a date prior to that of this judgment, except by traders or those entitled through them who initiated proceedings or made an equivalent complaint under the applicable national law before that date;

3. The United Kingdom is obliged by Community law to require the production of documents relating to operations involving the export of sheep or sheepmeat subject to payment of the clawback and to impose effective penalties on traders who make false statements in such documents.

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