Action brought on 22 January 2020 — United Kingdom v Commission

(Case T-37/20)

(2020/C 95/48)

Language of the case: English

Parties

Applicant: United Kingdom of Great Britain and Northern Ireland (represented by: Z. Lavery, Agent and T. Buley, Barrister)

Defendant: European Commission

Form of order sought

The applicant claims that the Court should:

— annul Commission Implementing Decision (EU) 2019/1835, (1) in so far as it excludes from European Union Financing certain expenditure incurred by the United Kingdom’s accredited paying agencies under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) for the stated reason of weakness in the definition of Active Farmer — connected companies; and

— order the Commission to pay the United Kingdom’s costs.

Pleas in law and main arguments

In support of the action, the applicant relies on one plea in law, alleging error in the interpretation of Article 9(2)(A) of the Regulation 1307/2013 (2).

The United Kingdom contends seven arguments in support of this plea:

— First of all, the Commission erred in its interpretation of the language of Article 9(2)(A). It does not preclude payment to a claimant merely because the claimant is part of a larger group of companies, some other member of which group undertakes activities on the negative list.

— Secondly, the applicant argues the language of that provision is not capable of having the meaning ascribed to it by the Commission. As a matter of syntax, it is clear that what is prohibited is that the group should itself operate the activity in question. This condition is not met where the claimant for the direct payment is a company which (in and of itself) meets the definition of farmer in Article 4(1)(a), but which does not (in and of itself) operate a relevant activity.

— Thirdly, the United Kingdom’s interpretation is reinforced by the fact the wording in Article 9(2)(A) mirrors that in Article 4(1)(a) defining the notion of ‘farmer’. A ‘farmer’ may comprise either (a) a single (natural or legal) person who exercises an agricultural activity, or (b) a group of such persons. In the latter case, the single ‘farmer’ within the meaning of Article 4(1)(a) will be comprised in a collective of natural or legal persons. The phrase should not be read as introducing a ‘connected entities’ element in Article 4(1)(a), therefore such meaning should not be given to Article 9(2)(a).

— Fourthly, the phrase ‘groups of natural or legal persons’ appears elsewhere in the Regulation, however the Commission does not seem to consistently interpret it in the line of its interpretation of Article 9(2)(a). The United Kingdom argues that the critical phrase must plainly be interpreted uniformly throughout Regulation 1307/13.

— Fifthly, the United Kingdom also argues that there is a further linguistic problem with the Commission’s interpretation. The reference to ‘natural’ person in the critical phrase is redundant. Indeed, it would be sufficient to refer only to ‘groups of legal persons’. A natural person can never be owned by another natural or legal person, nor can they be associated with some other such person in the way that one company can be connected with another company.

— Sixthly, wider purposive or teleological considerations support the United Kingdom’s position and undermine hat of the Commission. Indeed, Recital 10 reads that direct payments should not be made to ‘natural or legal persons unless such persons can demonstrate that their agricultural activity is not marginal’. This approach is entirely consonant with the UK’s interpretation of Article 9(2)(A), and contrary to that of the Commission.

— Lastly, Article 9(2)(C) permits an exception to the prohibition in Article 9(2)(A) where the claimant (whether a single person or a group) falls within points (a) to (c). Provides the claimants are able to prove their agricultural activity is ‘not insignificant’ they fall under (b). It is therefore clear that there is no legislative intention to exclude payments to persons who undertake activities on the negative list per se.

(1) Commission Implementing Decision (EU) 2019/1835 of 30 October 2019 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ 2019 L 279, p. 98).

(2) Regulation (EU) No 1307/2013 of the European Parliament and of the Council of 17 December 2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy and repealing Council Regulation (EC) No 637/2008 and Council Regulation (EC) No 73/2009 (OJ 2013 L 347, p. 608).