Judgment of the Court (Third Chamber) of 18 April 1989. - Kurt Drewes v Bezirksregierung Lüneburg. - Reference for a preliminary ruling: Bundesverwaltungsgericht - Germany. - Non-marketing premiums for milk. - Case 358/87.



European Court reports 1989 Page 00891



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

++++

1 . Agriculture - Common organization of the markets - Milk and milk products - Non-marketing premiums for milk - Conditions for granting and written undertakings by the producer - Definition - Requirements linked to procedure for checking compliance - Excluded

( Council Regulation No 1078/77, Arts 2 and 11(1 ); Commission Regulation No 1307/77, Art . 8(1 ) )

2 . Agriculture - Common organization of the markets - Milk and milk products - Non-marketing premiums for milk - Procedures for checking the use made of animals - Compulsory marking and registration of livestock - Partial failure to do so - Consequences

( Commission Regulation No 1307/77, Arts 7 and 8(3 ) )

Summary

1 . The term "undertakings" used in Article 11(1 ) of Regulation No 1078/77 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds, and the term "obligations" used in Article 8(1 ) of Regulation No 1307/77 laying down rules for the application of that system, must be interpreted, in the case of a non-marketing premium, as referring only to the undertakings and obligations upon which Article 2 of Regulation No 1078/77 makes the grant of the premium conditional, to the exclusion of any other requirements relating in particular to the procedures for checking compliance with the obligations deriving from the system of premiums .

2 . Article 8(3 ) of Regulation No 1307/77, pursuant to which entitlement to the non-marketing premium for milk is forfeited for animals in respect of which it is not proved pursuant to Article 7 of the same regulation that they were used for the purposes for which they were intended, must be interpreted as referring also to cases in which a few animals were not marked and registered and identity cards were not issued for them .

Parties

In Case 358/87

REFERENCE to the Court under Article 177 of the EEC Treaty by the Bundesverwaltungsgericht for a preliminary ruling in the proceedings pending before that court between

Kurt Drewes

and

Bezirksregierung Lueneburg

on the interpretation and validity of certain provisions of Council Regulation ( EEC ) No 1078/77 of 17 May 1977 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds ( Official Journal 1977, L 131, p . 1 ) and Commission Regulation ( EEC ) No 1307/77 of 15 June 1977 laying down rules for the application of the system of premiums for the non-marketing of milk and milk products and the conversion of dairy herds ( Official Journal 1977, L 150, p . 24 ),

THE COURT ( Third Chamber )

composed of : F . Grévisse, President of Chamber, J . C . Moitinho de Almeida and M . Zuleeg, Judges,

Advocate General : F . Jacobs

Registrar : B . Pastor, Administrator

after considering the observations presented on behalf of

Kurt Drewes, by H . H . Speckhan, Rechtsanwalt,

the Government of the Federal Republic of Germany, by M . Seidel and H . J . Horn, acting as Agents,

the French Government, by E . Belliard and Géraud de Bergues, acting as Agents,

the Council of the European Communities, by A . Brautigam, acting as Agent,

the Commission of the European Communities, by D . Booss, acting as Agent,

having regard to the Report for the Hearing and further to the hearing on 26 January 1989,

after hearing the Opinion of the Advocate General delivered at the sitting on 26 January 1989,

gives the following

Judgment

Grounds

1 By order of 22 October 1987, which was received at the Court on 30 November 1987, the Bundesverwaltungsgericht ( Federal Administrative Court ) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty four questions on the interpretation and validity of certain provisions of Council Regulation ( EEC ) No 1078/77 of 17 May 1977 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds ( Official Journal 1977, L 131, p . 1 ) and Commission Regulation ( EEC ) No 1307/77 of 15 June 1977 laying down rules for the application of the system of premiums for the non-marketing of milk and milk products and the conversion of dairy herds ( Official Journal 1977, L 150, p . 24 ).

2 The questions were raised in proceedings brought by Kurt Drewes, a farmer, against the Bezirksregierung Lueneburg ( District Administration of Lueneburg, hereinafter referred to as "the Bezirksregierung ") concerning a premium for non-marketing paid under the abovementioned regulations .

3 Mr Drewes applied to the Bezirksregierung for the grant of a non-marketing premium for seven head of dairy cattle which he had had marked .

4 By a decision of 4 April 1978, the Bezirksregierung approved the application and fixed the quantity of milk qualifying for a premium as 13 666 litres . Mr Drewes gave notice that he was ceasing deliveries of milk as from 1 September 1978 and, by decision of 12 October 1978, the Bezirksregierung granted him the first instalment of the premium, the total amount of which had been fixed as DM 9 327.26 .

5 In a declaration dated 6 November 1980, Mr Drewes indicated that he possessed five female bovine animals aged at least six months . Two had been marked, but three had not since they were kept in loose housing and it had not been possible to catch them . Those three animals were sold by Mr Drewes without having been marked in January and February 1981 .

6 By decision of 30 November 1981, the Bezirksregierung cancelled its decisions of 4 April and 12 October 1978 on the ground that Mr Drewes had not complied with the conditions for eligibility for the premium, in so far as he had not marked the whole of his dairy herd during the period of five years to which the undertakings related . The Bezirksregierung informed Mr Drewes that at least three animals had not been marked and as a result the whole premium was forfeit . Consequently, the Bezirksregierung demanded from Mr Drewes repayment of the first instalment of the premium which had already been paid .

7 Mr Drewes brought an action for the annulment of that decision before the competent administrative court . He claimed essentially that the administration had no right to demand repayment of the whole premium paid, and that the latter should only be reduced in the proportion which the three unmarked animals bore to the whole herd on the holding .

8 In order to enable it to appraise that argument, the Bundesverwaltungsgericht, before which an appeal had been brought on a point of law, stayed the proceedings and submitted the following questions to the Court of Justice for a preliminary ruling :

"( 1 ) Pursuant to the first sentence of Article 11(1 ) of Council Regulation ( EEC ) No 1078/77 of 17 May 1977, non-marketing premiums already paid are to be recovered in cases where certain undertakings have not been fulfilled . Is the term 'undertakings' to be interpreted

( a ) as referring only to the undertakings ( conditions ) associated with the non-marketing premium in Article 1 and 2 of that regulation,

( b ) or, if not, as including the rules for checking compliance with those obligations laid down pursuant to Article 7(e ) of that regulation in Article 7 in conjunction with Article 2(2)(b ) of Commission Regulation ( EEC ) No 1307/77 of 15 June 1977, in particular the marking and registration of animals and the issue of identity cards for them?

( 2 ) Under Article 8(1 ) of Commission Regulation ( EEC ) No 1307/77 of 15 June 1977, sums already paid in respect of premiums are to be recovered where certain obligations are not complied with . Is the term 'obligations' to be interpreted, in the case of non-marketing premiums, as referring only to the undertakings ( conditions ) provided for in Article 2 of Regulation ( EEC ) No 1078/77?

( 3 ) Is the rule laid down in Article 8(3 ) of Commission Regulation ( EEC ) No 1307/77 of 15 June 1977 in respect of the failure of an applicant 'to provide proof in accordance with Article 7 that the animals have been used for the prescribed purposes' to be interpreted as covering cases in which individual animals were not marked and registered and identity cards were not issued for individual animals?

( 4 ) In the event that the answer to Question 1(b ) is in the affirmative and the answer to Question 3 is accordingly in the negative :

In so far as the first sentence of Article 11(1 ) of Regulation No 1078/77 provides for the withdrawal of the entire premium even in the event of an inadvertent failure to mark and register a single female bovine animal acquired for fattening after the approval of the premium, regardless of whether or not compliance with the undertakings ( conditions ) referred to in Article 2 of that regulation is proved by other means, is it compatible with the principle of proportionality as applied in Community law?"

9 Reference is made to the Report for the Hearing for a fuller account of the facts, the relevant Community provisions, the course of the procedure and 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

10 In its first question, the national court asks essentially whether the term "undertakings" contained in Article 11(1 ) of Council Regulation No 1078/77 must be interpreted, with respect to a non-marketing premium, as referring only to those undertakings with which, pursuant to Article 2 of that regulation, the grant of the premium is associated or whether it must be interpreted as also referring to the procedures for checking compliance with those undertakings, such as the marking and registration of the herd .

11 In order to answer that question, it must first be borne in mind that, with a view to restoring the balance in the market in milk and milk products, Regulation No 1078/77 introduced inter alia a system of premiums for the non-marketing of milk and milk products . Article 2(2 ) of that regulation makes the grant of the premium conditional upon "a written undertaking by the producer" that, for the non-marketing period of five years, he will not dispose of milk or milk products from his holding, whether for a consideration or free of charge . The producer also undertakes not to allow the holding to be used by others for dairy farming, not to lease his dairy cattle and not to dispose of them except for slaughter or for export .

12 Article 7 of Regulation No 1078/77 provides for the adoption, in accordance with the management committee procedure, of "rules for verifying that undertakings arising from the grant of the premium have been fulfilled" ( paragraph ( e ) ). It was on the basis of that provision that the Commission adopted Regulation No 1307/77 laying down rules for the application of the system of premiums, of which Article 7 establishes the procedures for checking compliance with the obligations under the scheme .

13 It is in the context of the above rules that it is necessary to assess the scope of Article 11(1 ) of Regulation No 1078/77, pursuant to which "the Member States shall ... take the measures necessary for the recovery of premiums already paid, in cases where the undertakings provided for have not been fulfilled ".

14 The participants in the proceedings agree that the abovementioned provision, which requires recovery of the premiums paid in their entirety, applies only where the producer does not comply with the conditions for eligibility for the premium, namely the conditions laid down in Article 2 of Council Regulation No 1078/77 . On the other hand, that provision does not apply where other obligations, deriving in particular from the Commission' s implementing rules, have not been satisfied .

15 That view must be upheld . The very wording of the provisions in question shows that the term "undertakings" used in Article 11(1 ) of Regulation No 1078/77 refers, in the case of non-marketing premiums, to the "written undertaking" mentioned in Article 2(2 ) of the same regulation . It must therefore be taken to relate only to those undertakings which, under Article 2 of Regulation No 1078/77, constitute a precondition for the grant of the premium, to the exclusion of all other requirements relating in particular to the procedures for checking compliance with the undertakings mentioned in Article 7 of Commission Regulation No 1307/77 .

16 The strict interpretation thus adopted is borne out by the requirements of the principle of proportionality . As the Court held in its judgment of 22 September 1988 in Case 199/87 Jensen v Landbrugsministeriet (( 1988 )) ECR , the essential legal basis for the grant of and definitive entitlement to the premium is the actual abandonment of any marketing of milk and milk products throughout the relevant five-year period, with the result that any failure, even partial, to fulfil such an undertaking renders unjustified and removes the legal basis for the grant of and continuing entitlement to the premium .

17 It must be acknowledged that failure to fulfil the obligation not to market imposed by Article 2 of Regulation No 1078/77 is capable of undermining the objective of the premium scheme, namely the reduction of surpluses of milk and milk products, to such an extent that it justifies recovery, in their entirety, of the amounts already paid, whereas failure to comply with any of the checking procedures provided for in Article 7 of Regulation No 1307/77 can have such an effect only to the extent to which the checking in question is thereby prevented . The latter kind of non-compliance therefore justifies recovery of the amounts paid only to that extent .

18 It must therefore be stated in reply to the first question that the term "undertakings" in Article 11(1 ) of Council Regulation No 1078/77 of 17 May 1977 must be interpreted, in the case of a non-marketing premium, as referring only to the undertakings associated with the grant of the premium by virtue of Article 2 of that regulation .

The second question

19 In its second question, the national court essentially asks whether the term "obligations" used in Article 8(1 ) of Commission Regulation No 1307/77 must be interpreted, in the case of a non-marketing premium, as referring only to the conditions set out in Article 2 of Council Regulation No 1078/77 .

20 Pursuant to Article 8(1 ) of Regulation No 1307/77, the Member States are required to take all necessary steps to recover the sums already paid in respect of the premium "where the recipient of a premium fails to prove to the satisfaction of the competent authority that he has complied with the obligations laid down in Article 2 ... of Regulation ( EEC ) No 1078/77 ".

21 It need merely be stated that it is apparent from the perfectly clear wording of that provision that, in the case of non-marketing premiums, recovery of the amounts paid is required only where compliance with the conditions laid down in Article 2 of Regulation No 1078/77 has not been demonstrated . The provision in question cannot therefore be interpreted, in a manner which is at variance with its wording, as requiring recovery in other circumstances, in particular where the checking procedures laid down in Article 7 of Regulation No 1307/77 have not been complied with .

22 It must therefore be stated in reply to the second question that the term "obligations" in Article 8(1 ) of Commission Regulation No 1307/77 of 15 June 1977 must be interpreted, in the case of a non-marketing premium, as referring only to the conditions set out in Article 2 of Regulation No 1078/77 .

The third question

23 The third question is intended essentially to determine whether Article 8(3 ) of Commission Regulation No 1307/77 must be interpreted as referring also to cases in which a few animals were not marked and registered and identity cards were not issued for them .

24 It must be borne in mind that under Article 2(2)(b ) of Regulation No 1307/77, the competent authority is to "mark and register the holding' s dairy herd and issue for the animals concerned the identity cards provided for in Article 7 ". Article 7 of the same regulation gives details regarding the content, issue and use of identity cards . A card is prepared for each duly marked and registered bovine animal so as to enable compliance with the obligations under the premium scheme to be checked ( Article 7(1 ) ). It must be filled in on each change of ownership; it must also be filled in in the event of export, slaughter or death of a bovine animal, and the proof of such events may be provided only by production of the original of the identity card, duly completed ( Article 7(5 ) to ( 9 ) ). That is the frame of reference for Article 8(3 ) of Regulation No 1307/77, which provides as follows : "Where the applicant fails to provide proof in accordance with Article 7 that the animals have been used for the prescribed purposes, entitlement to the premium shall be forfeited in respect of those animals for which such proof is not furnished ".

25 All the participants to the proceedings who have submitted observations on this point agree that marking and registration of the animals are essential preconditions for the preparation of identity cards . Consequently, failure to accomplish those two formalities would render it impossible to prove that the animals in question had been used for the intended purposes and therefore, pursuant to Article 8(3 ) of Regulation No 1307/77, entitlement to the premium would be forfeited in respect of those animals which had not been duly marked and registered .

26 That view must be upheld . The generality of the expression "used for the prescribed purposes" contained in Article 8(3 ) of Regulation No 1307/77 indicates that that provision refers to all circumstances in which the proof required by Article 7 of the same regulation, which is intended to establish that the animals in question have been used in conformity with the requirements laid down by the Community rules, has not been furnished . That provision must therefore be regarded as also covering non-compliance with the requirements of marking and registration of animals, which are preconditions for the issue of identity cards, the latter constituting the only means of proving that the animals have been used in the prescribed manner .

27 That interpretation is confirmed by a comparison of Article 8(3 ) of Regulation No 1307/77, on the one hand, and Article 8(1 ) of the same regulation and Article 11(1 ) of Regulation No 1078/77, on the other . It follows from the answers given to the first and second questions that neither of the latter two provisions covers failure to mark and register the herd, as required by Regulation No 1307/77 . Consequently, the effect of an interpretation of Article 8(3 ) of Regulation No 1307/77 other than the interpretation adopted above would be to release producers from any obligation to reimburse, even in part, sums already paid by way of premiums . A restrictive interpretation of that kind would be likely to reduce the effectiveness of the premium scheme .

28 It follows that the answer to the third question must be that Article 8(3 ) of Commission Regulation No 1307/77 of 15 June 1977 must be interpreted as referring also to cases in which a few animals were not marked and registered and identity cards were not issued for them .

The fourth question

29 In view of the answers given to the first three questions, the fourth question does not call for an answer .

Decision on costs

Costs

30 The costs incurred by the German and French Governments and by the Council and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable . Since 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 ( Third Chamber ),

in reply to the questions submitted to it by the Bundesverwaltungsgericht, by order of 22 October 1987, hereby rules :

( 1 ) The term "undertakings" in Article 11(1 ) of Council Regulation No 1078/77 of 17 May 1977 must be interpreted, in the case of a non-marketing premium, as referring only to the undertakings associated with the grant of the premium by virtue of Article 2 of that regulation .

( 2 ) The term "obligations" in Article 8(1 ) of Commission Regulation No 1307/77 of 15 June 1977 must be interpreted, in the case of a non-marketing premium, as referring only to the conditions set out in Article 2 of Regulation No 1078/77 .

( 3 ) Article 8(3 ) of Commission Regulation No 1307/77 of 15 June 1977 must be interpreted as referring also to cases in which a few animals were not marked and registered and identity cards were not issued for them .