CELEX: 62003CJ0409
Export refunds
Beef
Special emergency slaughtering
Regulation (EEC) No 3665/87
Article 13
Sound and fair marketable quality
Marketability in normal conditions

1       This reference for a preliminary ruling concerns the interpretation of Article 13 of Commission Regulation (EEC) No 3665/87
of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural
products (OJ 1987 L 351, p. 1).
2       The questions referred for a preliminary ruling arose in a dispute between the Société d’exportation de produits agricoles
SA (hereinafter ‘SEPA’) and Hauptzollamt Hamburg-Jonas (Hamburg-Jonas Principal Customs Office; hereinafter ‘the Hauptzollamt’)
concerning the refusal to grant export refunds for beef from animals which had undergone special emergency slaughtering and
which SEPA had exported to non-member countries.

Legal background

Community legislation
3       The ninth recital in the preamble to Regulation No 3665/87 states that:
‘[P]roducts should be of a quality such that they can be marketed on normal terms’.
4       Article 13 of the same regulation provides:
‘No refund shall be granted on products which are not of sound and fair marketable quality, or on products intended for human
consumption whose characteristics or condition exclude or substantially impair their use for that purpose.’
5       Regulation No 3665/87 was replaced, with effect from 1 July 1999, by Commission Regulation (EC) No 800/1999 of 15 April 1999
laying down common detailed rules for the application of the system of export refunds on agricultural products (OJ 1999 L 102,
p. 11), which provides in Article 11(1):
‘Refunds shall be granted only on products which … are in free circulation within the Community …’.
6       The first, second and third subparagraphs of Article 21(1) of the same regulation are worded as follows:
‘(1) No refund shall be granted on products which are not of sound and fair marketable quality on the date on which the export
declaration is accepted.
Products shall be deemed to meet the requirement laid down in the first subparagraph if they can be marketed on the Community’s
territory in normal conditions under the description appearing in the refund application and if, where such products are intended
for human consumption, their use for that purpose is not excluded or substantially impaired by reason of their characteristics
or condition.
The conformity of the products with the requirements laid down in the first subparagraph shall be examined in accordance with
the standards or practices in force in the Community.’
7       Article 2(n) of Council Directive 64/433/EEC of 26 June 1964 on health problems affecting intra-Community trade in fresh meat
(OJ, English Special Edition 1963-1964, p. 185), as amended and consolidated by Council Directive 91/497/EEC of 29 July 1991
(OJ 1991 L 268, p. 69; hereinafter ‘Directive 64/433’), provides the following definition:
‘“[S]pecial emergency slaughtering” means: any slaughtering ordered by a veterinary surgeon following an accident or serious
physiological and functional problems. Special emergency slaughtering may take place outside the slaughterhouse where the
veterinary surgeon considers that transport of the animal would be impossible or would subject the animal to unnecessary suffering.’
8       Article 6(1) of that directive is formulated as follows:
‘Member States shall ensure that:
…
(e)      animals having undergone special emergency slaughtering may only be authorised for human consumption on the local market and
only if the following conditions have been fulfilled …’.

National legislation
9       Paragraph 13 of the German Law on Meat Hygiene of 19 January 1996 (Fleischhygienegesetz, BGBl. 1996 I, p. 59) is formulated
as follows:
‘Paragraph 13 – Slaughter in cases of sickness
(1) Animals which
1. have to be slaughtered on special emergency grounds; or
2. excrete pathogens,
shall be slaughtered only in special slaughterhouses (“isolation slaughterhouses”). After each slaughter in an isolation slaughterhouse,
the premises and machinery used shall be cleaned and disinfected.
(2) Meat derived from sick animals slaughtered in that way shall be marketed as food only by sales agencies of the aforementioned
slaughterhouses which are specially authorised and supervised for that purpose by the competent authority and it must be particularly
identified as such.
…
(4) The Federal Minister is authorised to adopt legislation, by means of an ordinance approved by the Bundesrat, to the extent
required for the protection of consumers or for the implementation of legal acts of the institutions of the European Communities
in the following matters:
1.      minimum hygiene rules for isolation slaughterhouses required to avoid any risk of the spread of pathogens;
2.      labelling of the meat concerned;
3.      minimum hygiene rules for sales agencies and for their authorisation and supervision, as well as the requirements and procedure
for obtaining or suspending their authorisation;
4.      minimum hygiene rules for the storage, transport and sale, by the sales agencies, of meat from sick animals slaughtered under
the conditions previously described;
5.      minimum hygiene rules for emergency slaughtering and for the sale of meat from such slaughtering.’
10     The provisions of the said law were implemented by the Meat Hgyiene Ordinance (Fleischhygieneverordnung, BGBl. 1997 I, p. 1138),
Paragraph 10 of which provides that meat obtained from isolation slaughterhouses ‘can be sold … only through approved sales
agencies and only to end consumers’.

The facts of the main case and the questions referred for a preliminary ruling
11     SEPA, a French undertaking, exported meat to non-member countries from German isolation slaughterhouses in which sick animals
had been slaughtered as well as animals which had to be slaughtered urgently on special emergency grounds (for example, following
an accident). It was granted refunds for such exports until October 1997.
12     In November 1997 SEPA submitted an export declaration for a shipment of frozen beef from animals which had been slaughtered
in such slaughterhouses, in respect of which it applied to the Hauptzollamt for the grant of refunds. SEPA’s application was
refused on the grounds that the product was not of ‘sound and fair marketable quality’ within the meaning of Article 13 of
Regulation No 3665/87, as the distribution  channel of meat slaughtered in such circumstances was strictly limited under German
legislation.
13     The action which SEPA brought against the refusal before the Finanzgericht Hamburg (Hamburg Finance Court) was rejected on
the grounds that the conditions for the grant of an export refund had not been fulfilled. The court took the view that the
meat was not of ‘fair marketable quality’ because the trade in meat from isolation slaughterhouses was subject to special
restrictions under German law.
14     In so far as the isolation slaughterhouses had veterinary certification confirming the fitness of the meat for human consumption
and fulfilled the requirements of German meat hygiene legislation, and as other hygiene certificates had also been drawn up
in order to comply with customs’ formalities, SEPA applied to the Bundesfinanzhof (Federal Finance Court) for a review on
a point of law of the decision of the Finanzgericht Hamburg.
15     Having taken the view that resolution of the dispute called for an interpretation of Community law, the Bundesfinanzhof decided
to stay proceedings and refer the following questions to the Court for a preliminary ruling:
‘(1)      Does the concept of “fair marketable quality” in Article 13 of … Regulation … No 3665/87 … require that the manufacture and
distribution of the products in question be subject only to generally valid legal conditions as they apply to any product
of that type, and does it consequently disqualify from the grant of an export refund a product to which special restrictions
apply, in particular as regards its production, treatment or distribution, such as, for example, the ordering of a specific
inspection as to fitness for human consumption or a restriction to certain distribution channels?
(2)      Does the concept of “fair marketable quality” in Article 13 of  Regulation No 3665/87 require that the product to be exported
be of average quality, and does it therefore disqualify from the grant of an export refund a product of inferior quality,
which, however, usually appears under the description of the object of trade given in the refund application?  Is that also
the case where the inferior quality has in no way affected the completion of the commercial transaction?’

Questions referred for a preliminary ruling

The first question
Observations submitted to the Court
16     SEPA notes that the only condition for the grant of an export refund is the issue of a health certificate in respect of the
product. According to SEPA, ‘fair marketable quality’ is to be assessed in relation to the objective characteristics inherent
in the product itself, which exist regardless of the question of ‘unrestricted distribution’ or of a ‘channelling of distribution’.
Consequently, restriction to certain distribution channels should not limit a product’s marketability. SEPA emphasises that,
for the purpose of Article 13 of Regulation No 3665/87, the fact that it is possible to market the product on the local market
is sufficient for it to be of ‘marketable quality’. In addition, SEPA states that the principles of equal treatment and legal
certainty, which are particularly important in relation to the Community refund system, require that onerous rules be clear
and precise to enable a person entitled to a refund to ascertain unequivocally what his rights and obligations are and take
steps accordingly.
17     The Hauptzollamt, which did not lodge written observations, argued at the hearing that even if meat from animals which have
undergone special emergency slaughtering is not as such of inferior quality but is considered fit for consumption after veterinary
inspection, from a legal point of view, it can only be sold on the local market and through specific sales agencies. As a
result of relevant Community and German legislation, the possibility of marketing such meat is very limited; it is therefore
neither saleable nor marketable for the purposes of Article 13 of Regulation No 3665/87. As regards the relevant market, possible
outlets, competition and the rules relating to meat, there are so many differences between that meat and meat which enters
distribution networks without restrictions that the only similarity is the fact that meat is involved. It submits, moreover,
that Article 13 is intended not only to protect health, but also to limit export refunds to those products which merit them
in some way.
18     The Hellenic Republic takes the view that ‘normal conditions’ for the marketing of agricultural products may constitute the
framework of situations regulated by rules which are generally applicable to the production and distribution of those products
and which apply to all products of the same category, as well as by special restrictions on, in particular, the production,
treatment and distribution of certain products. The generally applicable rules and the special restrictions together make
up the criteria to which agricultural products must conform in respect of the requisite ‘fair marketable quality’, so that
the question of making a distinction on the basis of ‘normal [marketing] conditions’ does not arise.
19     According to the Commission of the European Communities, ‘sound and fair marketable quality’ means that the product must be
capable of being marketed in normal conditions. It considers that meat, such as that in issue in the main proceedings, which
comes from isolation slaughterhouses does not fulfil that criterion because the trade in it is limited. The Commission therefore
maintains that, although the fitness of such a product for human consumption is not in dispute, it does not fulfil the requirement
of ‘sound and fair marketable quality’ since it cannot be marketed in normal conditions.
Findings of the Court
20     By that question, the referring court seeks to establish whether or not, having regard to the factual background to the case
in the main proceedings, Article 13 of Regulation No 3665/87 is to be interpreted as meaning that meat fulfilling the hygiene
criteria, the marketing of which for human consumption within the European Community is restricted by Community rules to the
local market because it comes from animals which have undergone special emergency slaughtering, can be regarded as being of
‘sound and fair marketable quality’, as required for the grant of export refunds.
21     Article 13 of Regulation No 3665/87 provides that no refund is to be granted on products which are not of ‘sound and fair
marketable quality’, or on products intended for human consumption, whose characteristics or condition exclude or substantially
impair their use for that purpose.
22     On that point the Court has held, in relation to Commission Regulation No 1041/67/EEC of 21 December 1967 on detailed rules
for the application of export refunds on products subject to a single price system (OJ, English Special Edition 1967, p. 323),
that the requirement of ‘sound and fair marketable quality’ constitutes a general, objective condition for the grant of a
refund, whatever the requirements as to category and quality laid down by the regulations fixing the amounts of refund for
each product. A product which could not be marketed within the Community under normal conditions and under the description
given in the claim for the grant of a refund would not meet these requirements as to quality (see Case 12/73
Muras
[1973] ECR 963, point 12).
23     That interpretation is adopted in the ninth recital in the preamble to Regulation No 3665/87, which states that  products
are required to be of a quality such that they can be marketed on normal terms (see Case C-235/97
France
v
Commission
[1998] ECR I‑7555, paragraph 77).
24     Furthermore, the Court has held that whilst, in the absence of a Community rule providing a definition of ‘sound and fair
marketable quality’, it is for the Member States to adopt relevant provisions that are more precise, such national provisions
may not conflict with the general scheme of the applicable Community rules which require a quality such as to permit marketing
on normal terms (see, in particular, Cases C-371/92
Ellinika Dimitriaka
[1994] ECR I‑2391, point 23, and
France
v
Commission
, cited above, points 76 and 77).
25     Consequently the Member States have the power to adopt more precise national provisions relating to the Community law definition
of ‘sound and fair marketable quality’ but their rule-making power is limited by Community legislation, in particular by the
criteria laid down in Article 13 of Regulation No 3665/87, as interpreted in the light of the ninth recital in the preamble
to that regulation.
26     The fact that the marketability of the product ‘in normal conditions’ is an inherent aspect of ‘sound and fair marketable
quality’ is however clearly apparent from the rules relating to export refunds for agricultural products inasmuch as, from
Regulation No 1041/67 onwards, all the relevant regulations have adopted the concept of ‘sound and fair marketable quality’
as well as the criterion of the product’s marketability ‘on normal terms’ and subsequently ‘in normal conditions’ as requirements
for a product’s eligibility for an export refund.
27     As far as Regulation No 800/1999 is concerned, it must be pointed out that the first and second subparagraphs of Article 21(1)
provide that no refund is to be granted on products which are not of ‘sound and fair marketable quality’ on the date on which
the export declaration is accepted, and that products are to be deemed to meet that requirement ‘if they can be marketed on
the Community’s territory in normal conditions’. It must be noted that, by using the terms mentioned above, that provision,
which came into force after the events in issue in the main proceedings, has not therefore amended but, on the contrary, has
confirmed the existing legal position.
28     As regards the phrase ‘to market in normal conditions’, the proposition that special restrictions on the production, treatment
and distribution of products constitute the framework of regulated situations and are thus part of ‘normal conditions’ cannot
be accepted, as it removes all substance from the latter term. To follow that reasoning would mean to accept that any product
capable of being the subject of a legal commercial transaction should be treated as ‘marketable in normal conditions’.
29     It is appropriate in that regard to cite Directive 64/433, which provides in Article 6(1)(e) that the Member States are to
ensure that meat from  animals having undergone special emergency slaughtering may only be authorised for human consumption
on the local market and only if various additional conditions have been fulfilled.
30     Meat such as that in issue in the main proceedings, the production, treatment and distribution of which is significantly restricted,
even if it fulfils the hygiene criteria and is the object of a commercial transaction cannot be regarded as being ‘marketable
in normal conditions’.
31     Furthermore, it would seem inconsistent in any event to support the exportation of those products to non-member countries
when, within the Community, they can only be marketed locally.
32     It follows from the foregoing that the answer to the first question must be that Article 13 of Regulation No 3665/87 must
be interpreted as meaning that meat fulfilling the hygiene criteria, the marketing of which for human consumption within the
European Community is restricted by Community rules to the local market because it comes from animals which have undergone
special emergency slaughtering, cannot be regarded as being of ‘sound and fair marketable quality’, as required for the grant
of export refunds.

The second question
33     By its second question, the national court asks, in substance, whether or not Article 13 of Regulation No 3665/87 is to be
interpreted as meaning that an exported product which is usually marketed can be regarded as being of ‘sound and fair marketable
quality’, as required for the grant of export refunds, if its quality is inferior to the average quality of that type of product.
34     In view of the answer given to the first question, it is unnecessary to answer the second question.

Costs
35     Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs
of those parties, are not recoverable.
On those grounds, the Court (First Chamber) hereby rules:
Article 13 of Commission Regulation (EEC) No 3665/87 of 27 November 1987 laying down common detailed rules for the application
of the system of export refunds on agricultural products must be interpreted as meaning that meat fulfilling the hygiene criteria,
the marketing of which for human consumption within the European Community is restricted by Community rules to the local market
because it comes from animals which have undergone special emergency slaughtering, cannot be regarded as being of ‘sound and
fair marketable quality’, as required for the grant of export refunds.
[Signatures]
*
Language of the case: German.