CELEX: 61986CJ0296
Beef and veal
Disposal of intervention stocks for export
Security
Force majeure

Grounds
1 BY A JUDGMENT DATED 22 APRIL 1986, WHICH WAS RECEIVED AT THE COURT ON 27 NOVEMBER 1986, THE HIGH COURT OF IRELAND REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY THREE QUESTIONS CONCERNING, ON THE ONE HAND, THE INTERPRETATION OF COMMISSION REGULATION ( EEC ) NO 2173/79 OF 4 OCTOBER 1979 ON DETAILED RULES OF APPLICATION FOR THE DISPOSAL OF BEEF BOUGHT IN BY INTERVENTION AGENCIES AND REPEALING REGULATION ( EEC ) NO 216/69 ( OFFICIAL JOURNAL 1979, L 251, P . 12 ) AND, ON THE OTHER, THE CONCEPT OF FORCE MAJEURE AND THE PRINCIPLE OF PROPORTIONALITY .
2 THOSE QUESTIONS WERE RAISED IN PROCEEDINGS BROUGHT BY FIVE ASSOCIATED IRISH COMPANIES ( HEREINAFTER REFERRED TO AS "THE PLAINTIFFS ") AGAINST THE IRISH MINISTER FOR AGRICULTURE ( HEREINAFTER REFERRED TO AS "THE DEFENDANT ") WHO ON 1 MAY 1983 DECLARED FORFEIT A SECURITY FURNISHED BY THE PLAINTIFFS IN RESPECT OF THE PURCHASE OF 20 TONNES OF BOXED BONELESS BEEF FROM INTERVENTION STOCKS HELD BY THE DEPARTMENT OF AGRICULTURE .
3 ON 23 JULY AND 29 SEPTEMBER 1982, THE PLAINTIFFS ENTERED INTO CONTRACTS WITH THE DEFENDANT FOR THE PURCHASE OF A TOTAL OF 166 TONNES OF MEAT WITH A VIEW TO EXPORTING IT TO A NON-MEMBER COUNTRY . THEY ENTRUSTED THE EXPORT OPERATION TO A SIXTH ASSOCIATED COMPANY, WHICH CONCLUDED A CONTRACT OF CARRIAGE WITH ANOTHER IRISH COMPANY; THE LATTER THEN SUBCONTRACTED THE CONTRACT OF CARRIAGE TO AN ENGLISH COMPANY .
4 THE CONSIGNMENT OF 20 TONNES IN RESPECT OF WHICH THE SECURITY WAS DECLARED FORFEIT WAS IN A CONTAINER WHICH WAS STOLEN FROM THE ENGLISH COMPANY' S DEPOT AT UXBRIDGE . THE HIGH COURT STATES IN ITS JUDGMENT THAT THE THEFT AND THE CONSEQUENT NON-EXPORTATION OF THE MEAT WERE DUE TO A COMBINATION OF FRAUD AND NEGLIGENCE ON THE PART OF THE DIRECTORS OR EMPLOYEES OF THE ENGLISH COMPANY .
5 IN THE PROCEEDINGS BEFORE THE HIGH COURT, THE PLAINTIFFS CHALLENGED THE DEFENDANT' S DECISION, CLAIMING THAT THE CIRCUMSTANCES CONSTITUTED A CASE OF FORCE MAJEURE AND ALLEGING A BREACH OF THE PRINCIPLE OF PROPORTIONALITY . CONSIDERING THAT THE DISPUTE THUS RAISED PROBLEMS OF INTERPRETATION OF COMMUNITY LAW, THE HIGH COURT STAYED THE PROCEEDINGS AND SUBMITTED THE FOLLOWING QUESTIONS TO THE COURT :
"( 1 ) ( A ) IS ARTICLE 16 ( 3 ) OF REGULATION NO 2173/79 TO BE INTERPRETED SO AS TO INCLUDE THE EXCEPTION IN CASES OF FORCE MAJEURE CONTAINED IN ARTICLE 16 ( 2 ) SO THAT AN INTERVENTION AGENCY IS REQUIRED, IN CASES WHERE A FAILURE TO COMPLY WITH A CONTRACTUAL OBLIGATION AROSE AS A RESULT OF A FORCE MAJEURE, NOT TO FORFEIT ANY PART OF THE SECURITY THEREIN REFERRED TO?
( B ) ALTERNATIVELY, DO THE GENERAL PRINCIPLES OF COMMUNITY LAW REQUIRE AN INTERVENTION AGENCY TO INTERPRET ARTICLE 16 ( 3 ) AS MEANING THAT WHERE A FAILURE TO COMPLY WITH A CONTRACTUAL OBLIGATION AROSE FROM FORCE MAJEURE IT SHOULD NOT FORFEIT ANY PART OF THE SECURITY REFERRED TO THEREIN?
( 2 ) IF THE ANSWER TO EITHER PART OF QUESTION ( 1 ) IS IN THE AFFIRMATIVE DOES A CASE OF FORCE MAJEURE ARISE WHERE A FAILURE TO EXPORT A PRODUCT RESULTS FROM : ( I ) THE FRAUD, OR ( II ) THE NEGLIGENCE OR ( III ) A COMBINATION OF FRAUD AND NEGLIGENCE OF AN INDEPENDENT TRANSPORT CONTRACTOR EMPLOYED BY THE EXPORTER TO TRANSPORT THE PRODUCT OUT OF THE COMMUNITY?
( 3 ) ( A ) WHEN EXERCISING ITS DISCRETION TO FORFEIT A SECURITY IN WHOLE OR IN PART OR NOT AT ALL GIVEN BY ARTICLE 16 ( 3 ) OF THE SAID REGULATION IS THE INTERVENTION AGENCY OBLIGED TO TAKE INTO ACCOUNT THE PRINCIPLE OF PROPORTIONALITY AS DEVELOPED IN THE JURISPRUDENCE OF THE COURT OF JUSTICE?
( B ) IF THE ANSWER TO ( A ) IS IN THE AFFIRMATIVE WHERE AN OBLIGATION TO EXPORT A QUANTITY OF BEEF PURCHASED FROM AN INTERVENTION AGENCY IS SUPPORTED BY THE SECURITY REFERRED TO IN THE SAID REGULATION, IS THE PRINCIPLE OF PROPORTIONALITY PROPERLY APPLIED WHEN THE INTERVENTION AGENCY FIXES THE AMOUNT OF THE SECURITY TO BE FORFEITED BY REFERENCE TO THE TONNAGE WHICH THE EXPORTER HAD FAILED TO EXPORT?
( C ) IF THE ANSWER TO ( A ) AND ( B ) IS IN THE AFFIRMATIVE IS THE PRINCIPLE INFRINGED WHEN AN INTERVENTION AGENCY, IN DECIDING TO FORFEIT THE SECURITY IN WHOLE OR IN PART OR NOT AT ALL, FAILS TO TAKE INTO ACCOUNT IN ADDITION TO THE FACTOR REFERRED TO AT ( B ):
( I ) THE EXTENT ( IF ANY ) OF THE MORAL BLAME ATTACHED TO THE EXPORTER FOR THE FAILURE TO EXPORT;
( II ) THE FACT THAT THE FAILURE TO EXPORT AROSE FROM FORCE MAJEURE ( IF SUCH BE THE CASE );
( III ) THE FACT ( IF SUCH BE THE CASE ) THAT NO LOSS WAS SUFFERED TO COMMUNITY FUNDS BY THE FAILURE TO EXPORT;
( IV ) THE PROFIT WHICH MIGHT HAVE BEEN MADE ON A RESALE WITHIN THE COMMUNITY OF THE UNEXPORTED GOODS?"
6 REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR A FULLER ACCOUNT OF THE FACTS OF THE CASE, OF THE COMMUNITY PROVISIONS AND OF THE OBSERVATIONS SUBMITTED TO THE COURT, WHICH ARE MENTIONED OR DISCUSSED HEREINAFTER ONLY IN SO FAR AS IS NECESSARY FOR THE REASONING OF THE COURT .
THE FIRST QUESTION
7 IN ITS OBSERVATIONS, THE COMMISSION STATES THAT, IN ALL PROBABILITY, THE SALES AT ISSUE WERE CARRIED OUT UNDER COMMISSION REGULATION ( EEC ) NO 1929/82 OF 13 JULY 1982 ( OFFICIAL JOURNAL 1982, L 209, P . 34 ) AND NO 2267/82 OF 12 AUGUST 1982 ( OFFICIAL JOURNAL 1982,L 243, P . 9 ) ON THE SALE AT A PRICE FIXED AT A STANDARD RATE IN ADVANCE OF BONED BEEF HELD BY THE FRENCH AND IRISH INTERVENTION AGENCIES AND INTENDED FOR EXPORT .
8 THOSE REGULATIONS PROVIDE THAT THE SALE IS TO TAKE PLACE IN ACCORDANCE WITH COMMISSION REGULATION ( EEC ) NO 985/81 OF 9 APRIL 1981 LAYING DOWN DETAILED RULES ON THE SALE OF FROZEN BEEF AND VEAL FOR EXPORT FROM INTERVENTION STOCKS AND AMENDING REGULATION ( EEC ) NO 1687/76 ( OFFICIAL JOURNAL 1981, L 99, P . 38 ). REGULATION NO 985/81 CONTAINS A NUMBER OF DEROGATIONS FROM REGULATION NO 2173/79, WHICH IS MENTIONED BY THE NATIONAL COURT . IN PARTICULAR, ARTICLE 3 ( 2 ) PROVIDES THAT THE SECURITY IS TO BE RELEASED UPON THE FURNISHING OF THE PROOF PROVIDED FOR IN ARTICLE 12 OF COMMISSION REGULATION ( EEC ) NO 1687/76 OF 30 JUNE 1976 LAYING DOWN COMMON DETAILED RULES FOR VERIFYING THE USE AND/OR DESTINATION OF PRODUCTS FROM INTERVENTION ( OFFICIAL JOURNAL 1976, L 190, P . 1 ).
9 ARTICLE 11 OF REGULATION NO 1687/76 AUTHORIZES THE MEMBER STATES NOT TO REQUIRE THE PROOF PROVIDED FOR IN ARTICLE 12 IN CASES WHERE THE GOODS HAVE NOT REACHED THEIR DESTINATION AS A RESULT OF FORCE MAJEURE, PROVIDED THAT CERTAIN OTHER CONDITIONS ARE ALSO FULFILLED . BY CONTRAST WITH ARTICLE 16 ( 3 ) OF REGULATION NO 2173/79, THE PROVISION REFERRED TO BY THE NATIONAL COURT, THE CORRESPONDING PROVISIONS OF REGULATION NO 1687/76 THEMSELVES THUS PROVIDE FOR AN EXCEPTION TO BE MADE IN CASES OF FORCE MAJEURE .
10 IT FOLLOWS THAT IF THE SALES IN QUESTION TOOK PLACE UNDER REGULATIONS NOS 1929/82 AND 2267/82, A HYPOTHESIS WHICH THE NATIONAL COURT ALONE MUST VERIFY, BUT WHICH, AS APPEARS FROM THE DOCUMENTS BEFORE THE COURT, IS THE MOST PROBABLE, IT IS NOT APPROPRIATE TO GIVE A REPLY TO THE FIRST QUESTION .
THE SECOND QUESTION
11 AS REGARDS THE CONCEPT OF FORCE MAJEURE, THE COURT HAS CONSISTENTLY HELD THAT, WHILST THAT CONCEPT DOES NOT PRESUPPOSE ABSOLUTE IMPOSSIBILITY, IT NEVERTHELESS REQUIRES THE NON-PERFORMANCE OF THE ACT IN QUESTION TO BE DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF THE PERSON CLAIMING FORCE MAJEURE, WHICH ARE ABNORMAL AND UNFORESEEABLE AND OF WHICH THE CONSEQUENCES COULD NOT HAVE BEEN AVOIDED DESPITE THE EXERCISE OF ALL DUE CARE ( SEE, MOST RECENTLY, THE JUDGMENT OF 27 OCTOBER 1987 IN CASE 109/86 IOANNIS THEODORAKIS VIOMIKHANIA ELEOU AE V THE GREEK STATE (( 1987 )) ECR 4319 ).
12 IT FOLLOWS THAT A TRADER WHO, ON PURCHASING THE GOODS, ENTERED INTO A CONTRACTUAL OBLIGATION TO EXPORT THEM CANNOT ESCAPE THAT OBLIGATION BY CLAIMING FORCE MAJEURE WHERE THE GOODS ARE STOLEN AS A RESULT OF FRAUD OR NEGLIGENCE ON THE PART OF HIS OWN EMPLOYEES .
13 IN A CASE CONCERNING THE MISAPPROPRIATION OF A CONSIGNMENT OF BUTTER FROM INTERVENTION STOCKS PURCHASED FOR THE PURPOSE OF EXPORTATION ( JUDGMENT OF 13 DECEMBER 1979 IN CASE 42/79 MILCH -, FETT - UND EIERKONTOR GMBH V BUNDESANSTALT FOER LANDWIRTSCHAFTLICHE MARKTORDNUNG (( 1979 )) ECR 3703 ), THE COURT HELD THAT IF THE FIRST PURCHASER DECIDES TO RESELL THE PRODUCT TO A THIRD PARTY FOR THE PURPOSE OF EXPORTATION HE THEREBY ASSUMES, WITH REGARD TO THE AGRICULTURAL INTERVENTION AGENCY, ALL THE RISKS WHICH A DILIGENT TRADER CAN AND SHOULD REASONABLY FORESEE IN THE CONTEXT OF THAT TRANSACTION, INCLUDING THAT OF MISAPPROPRIATION OF THE PRODUCT THROUGH THE FRAUDULENT CONDUCT OF A DULY AUTHORIZED AGENT OF THE THIRD-PARTY PURCHASER . THE SAME RULE APPLIES WHERE THE FIRST PURCHASER ENTRUSTS THE EXPORTATION OF THE GOODS TO A THIRD PARTY AND THAT THIRD PARTY CONCLUDES A CONTRACT OF CARRIAGE FOR THAT PURPOSE WITH A FOURTH UNDERTAKING . IN SUCH A CASE, THE PURCHASER MUST THEREFORE BE ANSWERABLE TO THE INTERVENTION AGENCY FOR ANY UNLAWFUL CONDUCT OR NEGLIGENCE ON THE PART OF THOSE OTHER TWO UNDERTAKINGS . SUCH CIRCUMSTANCES CANNOT BE REGARDED AS UNFORESEEABLE IN CONTRACTUAL RELATIONS AND ARE THEREFORE AN INHERENT PART OF THE COMMERCIAL RISK .
14 IT FOLLOWS THAT THE PURCHASER MUST ALSO BE ANSWERABLE FOR THE CONDUCT OF AN INDEPENDENT CONTRACTOR TO WHOM THE TRANSPORT OF THE GOODS WAS SUBCONTRACTED, EVEN IF, BY TAKING THAT COURSE OF ACTION, THE FIRST CARRIER WAS IN BREACH OF HIS OWN CONTRACTUAL OBLIGATIONS .
15 IT MUST THEREFORE BE STATED IN REPLY TO THE HIGH COURT' S SECOND QUESTION THAT THE FAILURE OF A PURCHASER OF BEEF HELD IN INTERVENTION STORAGE AND INTENDED FOR EXPORTATION TO FULFIL HIS OBLIGATION TO EXPORT IT, AS A RESULT OF FRAUD OR NEGLIGENCE OR A COMBINATION OF FRAUD AND NEGLIGENCE ON THE PART OF AN INDEPENDENT CARRIER TO WHOM THE TRANSPORT OF THE GOODS WAS SUBCONTRACTED, DOES NOT CONSTITUTE A CASE OF FORCE MAJEURE WITHIN THE MEANING OF ARTICLE 11 OF COMMISSION REGULATION ( EEC ) NO 1687/76 .
THE THIRD QUESTION
16 THE SALES COVERED BY REGULATIONS NOS 1929/82 AND 2267/82 FORM PART OF THE ENDEAVOUR TO AVOID, ON THE ONE HAND, PROLONGED STORAGE OF MEAT HELD IN INTERVENTION AND, ON THE OTHER, THE DISPOSAL OF SUCH MEAT ON AN ALREADY OVER-SUPPLIED COMMUNITY MARKET . FOR THOSE REASONS, THE MEAT IN QUESTION WAS SOLD AT SUBSTANTIALLY REDUCED PRICES BUT ON THE CONDITION THAT IT WAS TO BE EXPORTED FROM THE COMMUNITY . IT IS EXPRESSLY STATED IN THE PREAMBLES TO THOSE REGULATIONS THAT IT WAS NECESSARY TO PROVIDE FOR THE LODGING OF A SECURITY SUFFICIENTLY HIGH TO GUARANTEE THE EXPORT OF THE MEAT . IT FOLLOWS THAT THE SECURITY IN QUESTION WAS PRECISELY TO ENSURE FULFILMENT OF A PRINCIPAL OBLIGATION INCUMBENT ON THE PURCHASER, NAMELY THAT OF EXPORTING THE MEAT FROM THE COMMUNITY .
17 THE COURT HAS CONSISTENTLY HELD THAT IF AN OBLIGATION MUST BE REGARDED AS A PRINCIPAL OBLIGATION WHOSE OBSERVANCE IS OF FUNDAMENTAL IMPORTANCE TO THE PROPER FUNCTIONING OF A COMMUNITY SYSTEM, FAILURE TO COMPLY WITH THAT OBLIGATION MAY BE PUNISHED BY TOTAL FORFEITURE OF THE SECURITY, WITHOUT THERE BEING ANY BREACH OF THE PRINCIPLE OF PROPORTIONALITY ( SEE, MOST RECENTLY, THE JUDGMENT OF 27 NOVEMBER 1986 IN CASE 21/85 A . MAAS & CO . NV, V BUNDESANSTALT FOER LANDWIRTSCHAFTLICHE MARKTORDNUNG (( 1986 )) ECR 3537 ).
18 IT FOLLOWS THAT THE ACTION TAKEN BY THE INTERVENTION AGENCY CONCERNED IN DECLARING FORFEIT, PURSUANT TO ARTICLE 13 ( 5 ) OF REGULATION NO 1687/76, ONLY THE PART OF THE SECURITY CORRESPONDING TO THE CONSIGNMENT WHICH THE PURCHASER DID NOT EXPORT IN BREACH OF HIS OBLIGATION WITHOUT SUCH BREACH RESULTING FROM A CASE OF FORCE MAJEURE, DOES NOT CONTRAVENE THE PRINCIPLE OF PROPORTIONALITY . IN THAT CONNECTION, CONSIDERATIONS RELATING TO THE MORAL BLAME ATTACHING TO THE EXPORTER, THE LOSS SUFFERED BY COMMUNITY FUNDS AND THE PROFIT WHICH MIGHT HAVE BEEN MADE ON A RESALE WITHIN THE COMMUNITY, ARE IRRELEVANT .
19 IT MUST THEREFORE BE STATED IN REPLY TO THE HIGH COURT' S THIRD QUESTION THAT, WHERE THE FULFILMENT OF AN OBLIGATION TO EXPORT A QUANTITY OF BEEF PURCHASED FROM AN INTERVENTION AGENCY IS GUARANTEED BY THE SECURITY REFERRED TO IN REGULATION NO 1687/76, THE PRINCIPLE OF PROPORTIONALITY IS PROPERLY APPLIED IF THE INTERVENTION AGENCY DETERMINES THE AMOUNT OF THE SECURITY TO BE DECLARED FORFEIT BY REFERENCE TO THE TONNAGE WHICH WAS NOT EXPORTED . EXCEPT IN THE CASE OF FORCE MAJEURE, THAT PRINCIPLE DOES NOT REQUIRE THE INTERVENTION AGENCY TO TAKE INTO CONSIDERATION OTHER CIRCUMSTANCES SUCH AS THE MORAL BLAME ATTACHING TO THE EXPORTER, THE LOSS SUFFERED BY COMMUNITY FUNDS OR THE PROFIT WHICH MIGHT HAVE BEEN MADE ON A RESALE WITHIN THE COMMUNITY .
Decision on costs
COSTS
20 THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES, WHICH HAS SUBMITTED OBSERVATIONS TO THE COURT, ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE, IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS ARE CONCERNED, IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE NATIONAL COURT, THE DECISION ON COSTS IS A MATTER FOR THAT COURT .
Operative part
ON THOSE GROUNDS,
THE COURT ( SECOND CHAMBER )
IN ANSWER TO THE QUESTIONS SUBMITTED TO IT BY THE HIGH COURT OF IRELAND BY JUDGMENT OF 22 APRIL 1986, HEREBY RULES :
( 1 ) THE FAILURE OF A PURCHASER OF BEEF HELD IN INTERVENTION STORAGE AND INTENDED FOR EXPORTATION TO FULFIL HIS OBLIGATION TO EXPORT IT, AS A RESULT OF FRAUD OR NEGLIGENCE OR A COMBINATION OF FRAUD AND NEGLIGENCE ON THE PART OF AN INDEPENDENT CARRIER TO WHOM THE TRANSPORT OF THE GOODS WAS SUBCONTRACTED, DOES NOT CONSTITUTE A CASE OF FORCE MAJEURE WITHIN THE MEANING OF ARTICLE 11 OF COMMISSION REGULATION ( EEC ) NO 1687/76 OF 30 JUNE 1976 LAYING DOWN COMMON DETAILED RULES FOR VERIFYING THE USE AND/OR DESTINATION OF PRODUCTS FROM INTERVENTION .
( 2 ) WHERE THE FULFILMENT OF AN OBLIGATION TO EXPORT A QUANTITY OF BEEF PURCHASED FROM AN INTERVENTION AGENCY IS GUARANTEED BY THE SECURITY REFERRED TO IN REGULATION NO 1687/76, THE PRINCIPLE OF PROPORTIONALITY IS PROPERLY APPLIED IF THE INTERVENTION AGENCY DETERMINES THE AMOUNT OF THE SECURITY TO BE DECLARED FORFEIT BY REFERENCE TO THE TONNAGE WHICH WAS NOT EXPORTED . EXCEPT IN THE CASE OF FORCE MAJEURE, THAT PRINCIPLE DOES NOT REQUIRE THE INTERVENTION AGENCY TO TAKE INTO CONSIDERATION OTHER CIRCUMSTANCES SUCH AS THE MORAL BLAME ATTACHING TO THE EXPORTER, THE LOSS SUFFERED BY COMMUNITY FUNDS OR THE PROFIT WHICH MIGHT HAVE BEEN MADE ON A RESALE WITHIN THE COMMUNITY .