62010CC0115_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
1. In this reference for a preliminary ruling, the Fővárosi Bíróság (Budapest Municipal Court) (Hungary) has referred questions concerning the interpretation of Council Regulations No 3508/92 and No 1259/1999. (2) It has done so in the context of proceedings for judicial review of an administrative decision, which were brought by Bábolna Mezőgazdasági Termelő és Fejlesztő Kereskedelmi Zrt. (‘Bábolna’) against Mezőgazdasági és Fejlesztő és Vidékfejlesztési Hivatal Központi Szerve (Office of agriculture and rural development, ‘the Hivatal’) in relation to complementary national agricultural aid granted to Bábolna for the year 2004.
I – Legal framework
2. The Act of Accession (3) provides in Article 23: ‘the Council, acting unanimously on a proposal from the Commission and after consulting the European Parliament, may make the adaptations to the provisions of this Act relating to the common agricultural policy [CAP] which may prove necessary as a result of a modification in Community [now European Union, “EU”] rules. Such adaptations may be made before the date of accession.’
3. Article 20 of that act states that ‘the acts listed in Annex II to this Act shall be adapted as specified in that Annex’. In that annex, in Chapter 6A, entitled ‘Agricultural legislation’, point 27(b) provides for an insertion in Regulation No 1259/1999 of Articles 1a to 1c. Article 1a provides for the introduction (by stages) of direct payments granted under the support schemes referred to in Article 1. Article 1b allows the new Member States to replace the payments granted under the support schemes referred to in Article 1 by a single payment, or ‘a single area payment’. Finally, Article 1c allows them the possibility, subject to authorisation by the Commission, of supplementing direct aid with national complementary aid.
4. Council Regulation (EC) No 1782/2003 (4) repealed Regulations No 3508/92 (5) and No 1259/1999 (6) as of 1 May 2004. Article 1 thereof provides that Regulation No 1782/2003 establishes inter alia: ‘[i] common rules on direct payments under income support schemes in the framework of the [CAP] which are financed by the “Guarantee” Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) listed in Annex I, except those provided for under Regulation (EC) No 1257/1999; [and ii] an income support for farmers … “Single Payment Scheme”’.
5. According to Article 2(a) of Regulation No 1782/2003: ‘“farmer” means a natural or legal person, or a group of natural or legal persons, whatever legal status is granted to the group and its members by national law, whose holding is situated within Community territory, as referred to in Article 299 [EC], and who exercises an agricultural activity.’
6. Council Decision 2004/281/EC (7) was adopted under Article 2(3) of the Treaty of Accession and Article 23 of the Act of Accession. In its Article 1(5)(a) that decision provides for the insertion in Article 1, after the second indent, of Regulation No 1782/2003 of the following indent: ‘a transitional simplified income support for farmers in the new Member States (“single area payment scheme” [SAPS])’.
7. Article 1(5)(c) of that decision provides in particular for the insertion in Regulation No 1782/2003 of an Article 143a in the following terms ‘Introduction of support schemes … In the new Member States direct payments shall be introduced in accordance with the following schedule of increments expressed as a percentage of the then applicable level of such payments in the [Union] as constituted on 30 April 2004: [i] 25% in 2004, [ii] 30% in 2005, [iii] 35% in 2006, [iv] 40% in 2007, [v] 50% in 2008, [vi] 60% in 2009, [vii] 70% in 2010, [viii] 80% in 2011, [ix] 90% in 2012, [and x] 100% as from 2013.’
8. That provision also inserted Article 143b, entitled ‘single area payment scheme’, which provides in paragraph 1: ‘the new Member States may decide not later than the date of accession to replace the direct payments during the period of application referred to in paragraph 9 with a single area payment which shall be calculated according to paragraph 2.’
9. Likewise, it inserted Article 143c, entitled ‘Complementary national direct payments [CNDPs] and direct payments’, whose paragraphs 2, 4, 6 and 7 provide inter alia:
‘2. The new Member States shall have the possibility, subject to authorisation by the Commission, of complementing any direct payments up to:
The total direct support the farmer may be granted in the new Member States after accession under the relevant direct payment including all [CNDPs] shall not exceed the level of direct support the farmer would be entitled to receive under the corresponding direct payment then applicable to the Member States in the Community as constituted on 30 April 2004.
4. If a new Member State decides to apply the single area payment scheme, that new Member State may grant complementary national direct aid under the conditions referred to in paragraphs 5 and 8.
6. The new Member State may decide on the basis of objective criteria and after authorisation by the Commission, on the amounts of complementary national aid to be granted.
7. The authorisation by the Commission shall: [i] where point (b) of paragraph 2 applies, specify the relevant CAP-like national direct payment schemes, [ii] define the level up to which the complementary national aid may be paid, the rate of the complementary national aid and, where appropriate, the conditions for the granting thereof, [and iii] be granted subject to any adjustments which may be rendered necessary by developments in the [CAP].’
II – Facts and the questions referred
10. On 28 May 2004 Bábolna lodged with the Hungarian authorities an application for a single area payment and complementary national aid linked to that payment (the CNDP). (8)
11. Subsequently, Bábolna commenced voluntary dissolution proceedings as of 1 September 2004 pursuant to Government Resolution (Kormányhatározat) 2186/2004 (VII.22.), with the aim of realignment and restructuring in preparation for a successful privatisation. (9)
12. On 17 May 2005 the Hivatal granted Bábolna’s application in part and agreed to pay a single area payment of HUF 174 410 400 (now approximately EUR 626 133) and CNDP aid of HUF 70 677 810 (now approximately EUR 253 733).
13. Later, when the Hivatal acting as the first instance administrative authority became aware that Bábolna had commenced voluntary dissolution proceedings on 1 September 2004, it amended its previous decision by decision No 1026133367 of 11 April 2006, and, at the same time, granted a single area payment of HUF 174 406 363 (now approximately EUR 626 119) and rejected the application for the CNDP aid for arable land, – ordering Bábolna to repay the sum of HUF 15 829 789 (now approximately EUR 56 829) which it had paid by way of such aid.
14. The administrative authority relied on Article 3(1)(a) of Government Decree (Kormányrendelet) 6/2004 of 22 January 2004 according to which the legal persons or companies without legal personality which may receive aid are those which are not engaged in proceedings for bankruptcy, liquidation, arrangement with creditors or voluntary dissolution.
15. Bábolna brought an action against that decision, seeking judicial review of the decision, an order that the decision be set aside in so far as it orders repayment and the maintenance in force of the original decision granting the application.
16. Before the referring court, Bábolna claims that the EU legislation applicable to the present case does not exclude from aid persons or economic operators who have commenced voluntary dissolution proceedings. The only requirement for aid is that the farm of the group of farmers must be in the territory of the EU, regardless of the legal position conferred on the applicant for aid by national law. The Hivatal disputes that interpretation.
17. According to the referring court, a preliminary ruling is necessary in order to determine whether a company operating legally in a Member State and engaged in agricultural production, but which has commenced voluntary dissolution proceedings – that is to say, wishing to cease activity in the future – has the right to receive CNDP provided it meets the requirements laid down for the EU single area payment, taking into account the fundamental principles and objectives of the CAP.
18. Consequently, given the circumstances, the referring court considers that the need has arisen to clarify whether, taking account of the objectives, nature and approach of the CAP, it is possible to regulate complementary national aid such as the CNDP in a completely autonomous way, independently of EU principles and standards. In other words, it asks whether the Member State may lay down additional requirements for the CNDPs which are narrower and more restrictive than those laid down for EU area aid.
19. Against that background, the referring court decided to stay the proceedings and to refer the following questions to the Court:
‘(1) May the conditions for [EU] aid under the CAP (EAGGF) differ from the conditions for national complementary aid, that is to say, may other, stricter rules than are applied to aid financed by the EAGGF apply to the conditions for national complementary aid?
(2) May the scope ratione personae, as regards the recipients of aid, of Article 1(4) of [Regulation No 3508/92] and Article 10(a) of [Regulation No 1259/1999] be interpreted as meaning that there are only two conditions for the recipients of aid: (a) the (individual) group of farmers (b) whose farm is situated in the territory of the [EU] will be entitled to receive aid?
(3) May the above regulations be interpreted as meaning that a farmer whose farm is in the territory of the [EU] but who wishes to cease activity in the future (after using the aid) is not entitled to aid?
(4) In the light of the above two regulations, how is the status of such a producer under national law to be interpreted?
(5) Does that status under national law extend to the legal status of a farmer (group) undergoing any form of cessation of activity? Hungarian law provides for separate legal positions (statuses) in cases of cessation of activity (bankruptcy, liquidation or voluntary dissolution).
(6) May the conditions for applications for [EU] single area payments and for complementary national aid be subject to separate rules entirely independent of one another? What is the relationship between the principles, system and objectives of both types of aid?
(7) May a group (person) be excluded from complementary national aid where they otherwise meet the requirements for area aid?
(8) Does the scope of [Regulation No 1259/1999] extend, under Article 1 thereof, to complementary national aid, bearing in mind that where the EAGGF provides finance only in part, complementary national aid provides finance as appropriate?
(9) Does a farmer whose farm, which functions legally and effectively, is in the territory of the [EU], have a right to receive complementary national aid?
(10) If national law contains specific regulations for procedures for terminating the activity of commercial companies, do those regulations have any relevance from the point of view of [EU] aid (and national aid linked to it)?
(11) Should [EU] legislation and national legislation on the functioning of the CAP be interpreted as meaning that they have to create a complex legal system which can be interpreted uniformly and which functions on the basis of a single set of principles and requirements?
(12) Should the scope of Article 1(4) of [Regulation No 3508/92] and Article 10(a) of [Regulation No 1259/1999] be interpreted as meaning that, from the point of view of aid, both the intention of the farmer to cease activity in the future and the appropriate legal regime for that intention are wholly irrelevant?’
III – Appraisal
20. As both the Hungarian Government and the Commission proposed in their observations, the questions referred should be dealt with together, not only because of their number but also because the questions overlap and are logically interconnected. However, in order to assist the reader of this Opinion I have decided to divide the questions roughly into three groups (as to the actual wording of each of the many questions I refer to point 19 above).
21. Essentially, the main question raised in the present case and the subject on which the referring court has doubts is whether CNDPs may be regulated autonomously and whether Member States may impose particular conditions for CNDPs (especially in relation to the recipients of aid) which are narrower and more stringent than those laid down for the single area payment scheme.
Questions 1, 6, 7, 9 and 11
22. First of all, the definition provided in the relevant EU rules cited above clearly states that ‘farmer’ means ‘a natural or legal person, or a group of natural or legal persons, whatever legal status is granted to the group and its members by national law, whose holding is situated within [EU] territory and who exercises an agricultural activity’. Indeed, as the Commission pointed out, it is no accident that the definition under EU law is so broad: it seeks to cover a range as broad as possible of actors in the agricultural domain, in order for the relevant EU rules to apply, for the purposes of the provisions in question, to the totality of the sector.
23. Regulation No 1782/2003 was amended, in view of the 2004 accession of the 10 new Member States, by the Council decision (10) – which introduced in that regulation a new Title IVa, consisting of three new articles: 143a, 143b and 143c, which regulate the introduction of support schemes in the new Member States.
24. Article 143a governs the system of introduction by increments (‘the phasing-in system’) to all direct payments in the new Member States. (11)
25. It follows from Article 143c(2) of Regulation No 1782/2003 that the new Member States were to have the possibility, subject to authorisation by the Commission, of complementing any direct payments under certain conditions. (12)
26. Hungary decided to replace EU direct payments with a single area payment, as referred to in Article 1(5) of the Council decision.
27. On 18 May 2004 Hungary presented its programme in relation to the CNDPs, which would complement or ‘top-up’ the area-based aid provided under the single area payment scheme. The CNDPs are financed fully from the national budget.
28. On 29 June 2004 by Decision C(2004) 2295 the Commission authorised CNDPs in Hungary in respect of the year 2004. The CNDP regime thus put in place specified the amount of the CNDPs, their rate and the conditions for their granting.
29. It should be pointed out at the outset that the relevant EU rules, and Regulation No 1782/2003 in particular, do not regulate the conditions for granting CNDPs.
30. That regulation merely states in Article 143c(6) that the new Member States may decide on the basis of objective criteria and after authorisation by the Commission, on the amounts of CNDPs to be granted. Furthermore, according to Article 143c(7), the authorisation by the Commission shall define the level up to which the CNDP may be paid, the rate of the CNDP and, where appropriate, the conditions for the granting thereof.
31. In that regard it should be recalled that the Court has held that where there is common organisation of the market in a given sector, the Member States can in principle no longer take action through national provisions adopted unilaterally. (13) Their legislative competence can only be residual and is limited to situations which are not governed by the EU rules and to cases where those rules expressly give them power to act. (14)
32. In addition, the Court ruled that ‘where there is a regulation on the common organisation of the market in a given sector, Member States are under an obligation to refrain from taking any measures which might undermine or create exceptions to it. Rules which interfere with the proper functioning of a common organisation of the market are also incompatible with such common organisation, even if the matter in question has not been exhaustively regulated by it’. (15)
33. According to the Hungarian Government, in the absence of EU rules on the conditions of eligibility for the CNDP aid, the Member States remain free to lay down conditions, taking into account the Commission’s authorisation and subject to the fundamental principles of EU law. (16) The Hungarian Government contends that that also follows from Article 143c(7) of Regulation No 1782/2003, which provides that the authorisation by the Commission shall define the conditions for the granting of aid ‘where appropriate’. Therefore, it submits that a contrario
it follows that in principle it is the Member States who define those conditions.
34. In any event, I would point out here, as did both the Hungarian Government and the Commission, that the CNDPs are not paid from EU resources (EAGGF) (17) – they are paid from the national purse of the Member States. Thus, I consider that the new Member States should be accorded a degree of discretion with regard to the definition of CNDP-eligibility conditions.
35. In that connection, the Hungarian Government submits that it follows that a Member State should be able to impose special (more stringent) conditions, restricting the circle of recipients of aid, as long as it complies with general principles of EU law. (18) In addition, the Hungarian Government submits that the criteria of eligibility for aid are not regulated in a uniform manner: some are established by EU law and others, where applicable, by national law. Therefore, it is not contrary to EU law if the conditions of eligibility for CNDP aid are not the same as those for the single area payment – with the result that a person eligible for the single area payment may not be eligible for the CNDPs.
36. In my view, one should not forget – as was recognised by both the Hungarian Government and the Commission – that the CNDPs serve essentially to compensate on an optional basis the potential negative effects of the flat-rate support in certain sectors and to mitigate to a certain extent the phasing-in mechanism.
37. Indeed, the conditions relating to the CNDPs should not lead to arbitrary discrimination between candidates already meeting the conditions for the granting of aid. Therefore, the Commission is correct when it argues that once it has authorised a national programme, the Member State may not decide to apply other additional, divergent conditions.
38. It follows that, as regards the CNDPs, the Member States may specify conditions such as the deadlines for submitting applications, amount levels, other sanctions and supplementary obligations. However, it follows from the provisions in question that the application of those conditions depends on the authorisation given by the Commission under Article 143c of Regulation No 1782/2003 and the fact remains that those conditions must be compatible with the fundamental principles of the aid regime.
39. The Commission added in that regard that the above conditions may be defined for all the CNDPs, dividing them up either by sector (milk, sheep-meat, beef and goat-meat, rice, arable crops, tobacco) or in a general manner (natural person or legal person).
40. It follows from the documents before the Court that Hungary’s national programme, as authorised by the Commission, did not contain any condition according to which aid could only be granted to legal persons or companies without legal personality which are not engaged in proceedings for bankruptcy, liquidation, arrangement with creditors or voluntary dissolution.
41. It follows from the order for reference that the national court harbours doubts whether it is compatible with EU law that a farmer receives a single area payment in accordance with rules under EU law – that is, regardless of his current legal status – but is refused the corresponding CNDPs because he is the subject of voluntary dissolution proceedings.
42. It would appear to me that the farmer in question is effectively required to comply with two different sets of rules, depending on the source of funds for agricultural support.
43. I consider that, contrary to the submissions of the Hungarian Government, CNDPs should not be treated wholly independently and should, instead, be considered as forming an integral part of the EU agricultural-aid regime.
44. In that connection, it should be pointed out that the definition of the concept ‘farmer’ in Regulations No 1259/1999, No 3508/92 and No 1782/2003 is applicable to all the legal rules in question, including those relating to the conditions for CNDPs.
45. Indeed, the EU aid and the corresponding national aid constitute in fact a single programme, characterised by common objectives and fundamental principles which are mutually compatible.
46. In that regard, it was the Hungarian Government itself which recognised that the CAP is a complex legal system which functions on the basis of a single set of fundamental principles.
47. Therefore, even though they are entitled to impose certain conditions in relation to the CNDPs, the fact remains that: (i) the Member States should respect the concept ‘farmer’; (ii) the conditions relating to the CNDPs depend on the authorisation by the Commission, (19) and finally, (iii) those conditions must, in any event, be compatible with the fundamental principles of the aid regime.
Questions 2, 4, 5 and 10
48. It is clear that some of the questions referred relate specifically to the concept ‘farmer’ in Article 1(4) of Regulation No 3508/92 and Article 10 of Regulation No 1259/1999 (and Article 2(a) of Regulation No 1782/2003, which replaced it).
49. On the one hand, the Hungarian Government admits that it follows from those provisions that the Member States may not restrict the scope of that concept by imposing a determined legal form. However, on the other hand, that government argues that ‘legal status under national law’ should not be interpreted in the sense that it includes the situation of a group of farmers and its members who are undergoing a form of cessation of activity. In that connection, the Hungarian Government also submits that the condition imposed by the national law – according to which only persons who are not undergoing any form of cessation of activity are eligible – complies with the principles of non-discrimination and proportionality.
50. In my view, with regard to the ‘legal status under national law’, ‘legal status’ is per definitionem
a ‘legal identity of a person or body such as company or partnership’. The legal status of being a farmer is, however, expressly excluded from the defining characteristics of the term ‘farmer’, provided for in the regulations cited above. As a matter of fact, a reading of the relevant provisions shows that those provisions underline the substantive features of the definition of the concept ‘farmer’ to be the fact (i) that the farmer’s ‘holding is situated within [EU] territory’ and (ii) that the farmer ‘exercises an agricultural activity’.
51. Despite the above exclusion the question remains whether ‘a method of dissolution of a farmer’ (or a group of farmers) – or his (or its) intention to cease activity in the future – is legally relevant for the purposes of granting EU aid and the corresponding national aid. That question needs to be approached by recognising that dissolving a commercial company (for instance), returning one’s licence or any other method of ceasing activity under national law are nothing more than mere methods of bringing to an end (or possibly under national rules changing) the legal identity of a farmer.
52. I am of the opinion that while such a method has not been legally completed and therefore none of the legal events bringing about the farmer’s dissolution has taken place, the farmer continues to legally exist and his legal identity is substantively untouched. Moreover, his subjective view of his business (for instance, his intention to cease activity) cannot alter anything in this regard. That is because such an intention in this context is not a circumstance provided for by law which entails a farmer’s dissolution or affects his legal status and therefore causes him to forfeit his entitlement to apply for agricultural aid.
53. In addition, if we take into account the definition of the concept ‘farmer’ in Article 1(4) of Regulation No 3508/92 and Article 10 of Regulation No 1259/1999 (and Article 2(a) of Regulation No 1782/2003, which replaced it), it cannot be deduced from the wording of that definition that the concept ‘farmer’ does not cover natural or legal persons who are legally identifiable as farmers who have initiated legal procedures designed to bring about their dissolution but who otherwise meet the defining characteristics of the aforementioned concept. Before such persons could be excluded from that concept it would be necessary expressly to designate farmers who were engaged in proceedings for bankruptcy, liquidation, arrangement with creditors or voluntary dissolution as ineligible to obtain agricultural aid such as that in the main proceedings. Such a formulation is lacking in the provisions in question and I consider that it is not possible to read that formulation into those provisions by adopting a broad interpretation of the provisions.
54. Furthermore, as follows from points 43 to 47 above (and from the considerations preceding those points), the Member States are required, in the context of the implementation of CNDPs, to take account of the definition of ‘farmer’.
55. Moreover, it follows from the fundamental principles of the aid programme that the Member States have to ensure coherence in the granting of direct payments and that they may not discriminate on the basis of the farmers’ legal status. (20)
56. I agree with the Commission that, having regard to the aim of the CNDPs (compensation for potential negative effects of the flat-rate support in certain sectors), those payments should be awarded to all farmers who are eligible for single area payments, in accordance with Regulations No 3508/92, No 1259/1999 and No 1782/2003. Any other interpretation would result in certain farmers being deprived of the advantages of the compensation regime (the CNDPs), which would lead in practice to discriminatory application. As I stated above, even though the Member States are entitled to impose certain conditions in relation to CNDPs, the fact remains that they must respect the concept ‘farmer’.
Questions 3, 8 and 12
57. In connection with what has been stated above, it is clear that the EU rules on agricultural aid do not contain any provision excluding a farmer from eligibility to receive aid on the ground that he intends to cease activity. Therefore, a farmer who had ceased activity before he received aid is still entitled to receive direct payments as long as he fulfilled, at the time of the submission of his application, the relevant conditions (21) (having said that, even the Hungarian Government recognised that the applications for aid must be assessed on the basis of legal and factual circumstances existing when the application is made).
58. I consider that a national rule according to which a company in voluntary dissolution proceedings may under no circumstances receive CNDPs is liable to have a substantial impact on the principles underlying EU agricultural support. Indeed, its practical application may in fact be accompanied by an additional restriction of eligibility for aid and may potentially impose conditions which are incompatible with EU law.
59. The Commission rightly points out that the definition in EU law – by which the EU legislature explicitly took pains to define a broad scope of applic ation by using the expression ‘natural or legal person’ – shows that that definition applies regardless of the legal status conferred on the group or its members by the national law. With regard to the agricultural support regime, the EU legislature is calling the attention of the Member States to an essential point, because it underlines that they may not restrict the range of potentially eligible farmers by invoking their legal status under national law. Indeed, it will be for the national court to verify whether or not in the case in the main proceedings Bábolna had effectively ceased its activities before it submitted its application for support.
60. To conclude, it follows from all the foregoing considerations that the CNDPs should be considered to constitute an integral part of the EU agricultural-aid regime, which is founded upon a single set of fundamental principles and has the characteristics of a particular programme.
61. Therefore, EU legislation and national legislation on the functioning of the CAP create a complex legal system which is to be interpreted uniformly and which functions on the basis of a single set of principles (that is, one which applies to all the aspects of the CAP) and requirements. The granting of EU support in the context of the CAP (the single area payments) and of the corresponding CNDPs may not be subject to different conditions, unless those conditions were authorised by a Commission decision beforehand. In its decision, the Commission authorises the principles, aims and structure of the national aid programme. A group (person) which meets the conditions for the EU single area payment may not be excluded from CNDPs, if the national programme authorised by the Commission did not contain a rule in that sense. Any farmer whose farm functions legally and effectively in the territory of the EU has a right to receive CNDPs compatible with the relevant EU law rules.
62. The concept of legal status conferred under national law, in the context of Article 1(4) of Regulation No 3508/92 and Article 10(a) of Regulation No 1259/1999, should be interpreted in a broad sense, so that the scope ratione personae is as broad as possible, without account being taken of the legal status which a given farmer possesses under the national rules. A method of dissolution of a farmer (or a group of farmers) cannot affect, in the case in the main proceedings, his legal status (for the purposes of the above articles) if the farmer operates legally and effectively when the application for aid is made, regardless of the legal procedures initiated by him to bring about his dissolution.
63. The intention of a given farmer to cease activity in the future is not relevant at the time when his eligibility for aid is to be assessed. Neither the intention of a given farmer to cease activity in the future, nor the resulting legal status are relevant for the application of Regulations No 3508/92, No 1259/1999 and No 1782/2003. Finally, Regulation No 1259/1999 is also applicable to CNDPs.
IV – Conclusion
64. Therefore, I am of the opinion that the questions referred by the Fővárosi Bíróság should be answered as follows:
– Questions 1, 6, 7, 9 and 11: European Union legislation and national legislation on the functioning of the common agricultural policy (CAP) create a complex legal system which is to be interpreted uniformly and which functions on the basis of a single set of principles (that is one which applies to all the aspects of the CAP) and requirements. The granting of EU support in the context of the CAP (single area payments) and of the corresponding complementary national direct payments (CNDPs) may not be subject to different conditions, unless those conditions were authorised by a Commission decision beforehand. In its decision, the Commission authorises the principles, aims and structure of the national aid programme. A group (person) which meets the conditions for the EU single area payment may not be excluded from CNDPs, if the national programme authorised by the Commission did not contain a rule in that sense. Any farmer whose farm operates legally and effectively in the territory of the EU has a right to receive CNDPs compatible with the relevant EU law rules.
– Questions 2, 4, 5 and 10: The concept of legal status conferred under national law, in the context of Article 1(4) of Council Regulation (EEC) No 3508/92 of 27 November 1992 establishing an integrated administration and control system for certain Community aid schemes and Article 10(a) of Council Regulation (EC) No 1259/1999 of 17 May 1999 establishing common rules for direct support schemes under the common agricultural policy, should be interpreted in a broad sense, so that the scope ratione personae is as broad as possible, without account being taken of the legal status which a given farmer possesses under the national rules. A method of dissolution of a farmer (or a group of farmers) cannot affect, in the case in the main proceedings, his legal status (for the purposes of the above articles), if the farmer operates legally and effectively when the application for aid is made, regardless of the legal procedures initiated by him to bring about his dissolution.
– Questions 3, 8 and 12: The intention of a given farmer to cease activity in the future is not relevant at the time when his eligibility for aid is to be assessed. Neither the intention of a given farmer to cease activity in the future, nor the resulting legal status are relevant for the application of Regulations No 3508/92, No 1259/1999 and Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers and amending various other Regulations. Finally, Regulation No 1259/1999 is also applicable to CNDPs.
(1) .
(2)
–	Respectively, Regulation (EEC) of 27 November 1992 establishing an integrated administration and control system for certain Community aid schemes (OJ 1992 L 355, p. 1) and Regulation (EC) of 17 May 1999 establishing common rules for direct support schemes under the [CAP] (OJ 1999 L 160, p. 113).
(3)
–	Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded (OJ 2003 L 236, p. 33).
(4)
–	Regulation of 29 September 2003 establishing common rules for direct support schemes under the [CAP] and establishing certain support schemes for farmers and amending Regulations (EEC) No 2019/93, (EC) No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) [No] 1868/94, (EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and (EC) No 2529/2001 (OJ 2003 L 270, p. 1, as corrected in OJ 2004 L 94, p. 70).
(5)
–	However, Regulation No 1782/2003 specified that Regulation No 3508/92 is to continue to apply to applications for direct payments in respect of the calendar years preceding 2005 and that references made to the repealed regulations are to be construed as being made to the new regulation.
(6)
–	Regulation No 1782/2003 repealed this regulation. However, it made clear that ‘Articles 2a and 11 of Regulation (EC) No 1259/1999 as well as, for the purpose of applying those Articles, the Annex of that Regulation shall continue to apply until 31 December 2005. Furthermore Articles 3, 4, 5 and, for the purpose of applying those Articles, the Annex of that Regulation (EC) No 1259/1999 shall continue to apply until 31 December 2004.’
(7)
–	Decision of 22 March 2004 adapting the Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded, following the reform of the [CAP] (OJ 2004 L 93, p. 1) (‘the Council decision’).
(8)
–	The Hungarian Government explained that Bábolna is a limited liability company, whose capital is majority-owned by the State; the rest of the capital is owned by a local authority.
(9)
–	Government Resolution 2295/2005 (XII.23.) and the subsequent decision of the general assembly of Bábolna ended the voluntary dissolution proceedings as of 31 January 2006.
(10)
–	In relation to that decision, see Case C‑273/04 Poland
v Council
[2007] ECR I‑8925. The Court dismissed the action brought by Poland (which was supported by Latvia, Lithuania and Hungary) contesting the extension of the phasing-in system for direct payments to farmers of the new Member States, considering that the decision in question was a necessary adaptation of the Act of Accession following reform of the CAP and did not infringe the principles of equal treatment and good faith.
(11)
–	The phasing-in mechanism was introduced inter alia because the agricultural situation in the new Member States was radically different from that existing in the old Member States. Thus it justified a gradual application of EU aid, in particular aid under direct support schemes, in order not to disrupt the necessary on-going restructuring in the agricultural sector of the new Member States.
(12)
–	The new Member States keep that possibility under Regulation No 73/2009 as well. Regulation No 1782/2003 was repealed and replaced by Council Regulation (EC) No 73/2009 of 19 January 2009 (OJ 2009 L 30, p. 16).
(13)
–	See Case 154/77 Dechmann
[1978] ECR 1573, paragraph 16.
(14)
–	See Case 48/85 Commission
v Germany
[1986] ECR 2549, paragraph 12, and Case C‑118/02 Industrias de Deshidratación Agrícola
[2004] ECR I‑3073, paragraph 19.
(15)
–	See Case C‑507/99 Denkavit
[2002] ECR I‑169, paragraph 32; Case C‑332/00 Belgium
v Commission
[2002] ECR I‑3609, paragraph 29; and Industrias de Deshidratación Agrícola, cited in footnote 14, paragraph 20.
(16)
–	The Hungarian Government refers to the same case-law as that cited in footnote 13 above.
(17)
–	With the exception perhaps of the rural-development programmes which are implemented by way of co-financing.
(18)
–	The Hungarian Government refers here to Case C‑241/07 JK Otsa Talu
[2009] ECR I‑4323, paragraph 48.
(19)
–	In accordance with Article 143c of Regulation No 1782/2003.
(20)
– 	That follows in particular from Article 143c(2) of Regulation No 1782/2003.
(21)
–	Indeed, in the case of single area payments (as opposed to agricultural support which requires the exercise of a given activity over a certain period of time, for instance, livestock farming during at least six months) the fact whether the required conditions are met is verified at the time of submission of the application.