Judgment of the Court (Third Chamber) of 9 November 1995. - The Queen v Minister of Agriculture, Fisheries and Food, ex parte Country Landowners Association. - Reference for a preliminary ruling: High Court of Justice, Queen's Bench Division, Divisional Court - United Kingdom. - Common organization of the markets in sheepmeat and goatmeat and in beef and veal - Grant of transferable premium rights to producers - Compensation for landowners. - Case C-38/94.



European Court reports 1995 Page I-03875



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

++++

1. Agriculture ° Common organization of the markets ° Sheepmeat and goatmeat ° Annual premium payable per ewe ° Beef and veal ° Premium for maintaining suckler cow herds ° Introduction of a system of premium rights linked to producers and transferable ° Detailed implementing rules ° Obligation of the Member States to introduce a mechanism for compensating detriment caused to owners of agricultural land ° None ° Property right ° Infringement ° None

(EC Treaty, Art. 5; Council Regulations Nos 805/68, Art. 4e(5), and 3013/89, Art. 5a(4)(f); Commission Regulations Nos 3567/92, Arts 13 and 15, and 3886/92, Arts 39 and 55)

2. Agriculture ° Common organization of the markets ° Sheepmeat and goatmeat ° Annual premium payable per ewe ° Beef and veal ° Premium for maintaining suckler cow herds ° Introduction of a system of premium rights linked to producers and transferable ° Commission implementing regulation limiting the power granted to the Member States to adopt measures for resolving problems arising in contractual relationships as a result of the transferability of premium rights ° Validity

(Council Regulations Nos 805/68, Art. 4e(5), and 3013/89, Art. 5a(4)(f); Commission Regulations Nos 3567/92, Arts 13 and 15, and 3886/92, Arts 39 and 55)

Summary

1. Neither Articles 13 and 15 of Regulation No 3567/92 laying down detailed rules for the application of the individual limits, national reserves and transfer of rights provided for in Regulation No 3013/89 on the common organization of the market in sheepmeat and goatmeat nor Articles 39 and 55 of Regulation No 3886/92 laying down detailed rules for the application of the premium schemes provided for in Regulation No 805/68 on the common organization of the market in beef and repealing Regulations No 1244/82 and No 714/89, nor any general principle of Community law require Member States to introduce a mechanism for compensating detriment caused to owners of agricultural land by the introduction of a system of premium rights linked to producers of sheepmeat, goatmeat or beef and veal, even where premium rights are transferred by producers who do not own the land on which they farm.

No such obligation can, in particular, be derived from the principle of protection of the right to property because, even if it has an adverse impact on the capital value of land as a result of the transfer of premium rights by producers who do not own the land on which they farm, the introduction of a system of premium rights linked to producers does not impair the right to property inasmuch as advantages allocated under a common market organization cannot be regarded as a right derived from the assets or occupational activity of the persons concerned, the attribution or transfer of which should be accompanied by an obligation to pay compensation on the part of one of the parties to a lease.

2. Neither Articles 13 and 15 of Commission Regulation No 3567/92 laying down detailed rules for the application of the individual limits, national reserves and transfer of rights provided for in Regulation No 3013/89 on the common organization of the market in sheepmeat and goatmeat nor Articles 39 and 55 of Commission Regulation No 3886/92 laying down detailed rules for the application of the premium schemes provided for in Regulation No 805/68 on the common organization of the market in beef, which confine the power granted to the Member States to adopting measures for resolving problems arising in contractual relationships which were in existence when the regulations entered into force, are inconsistent with the Council regulations, Regulations No 3013/89 and No 805/68 respectively, which they implement and which contain no such limitation.

Where contractual relations are concluded after the regulations entered into force, the parties may take into account the consequences of the said premium systems and make contractual provision for any resultant problems.

Parties

In Case C-38/94,

REFERENCE to the Court under Article 177 of the EC Treaty by the Divisional Court of the Queen' s Bench Division of the High Court of Justice for a preliminary ruling in the proceedings pending before that court between

The Queen

and

Minister of Agriculture, Fisheries and Food,

ex parte Country Landowners' Association

on the interpretation and validity of Articles 13 and 15 of Commission Regulation (EEC) No 3567/92 of 10 December 1992 laying down detailed rules for the application of the individual limits, national reserves and transfer of rights provided for in Council Regulation (EEC) No 3013/89 on the common organization of the market in sheepmeat and goatmeat (OJ 1992 L 362, p. 41), and Articles 39 and 55 of Commission Regulation (EEC) No 3886/92 of 23 December 1992 laying down detailed rules for the application of the premium schemes provided for in Council Regulation (EEC) No 805/68 on the common organization of the market in beef and repealing Regulations (EEC) No 1244/82 and (EEC) No 714/89 (OJ 1992 L 391, p. 20),

THE COURT (Third Chamber),

composed of: J.C. Moitinho de Almeida (Rapporteur), acting as President of the Chamber, C. Gulmann and H. Ragnemalm, Judges,

Advocate General: G. Cosmas,

Registrar: L. Hewlett, Administrator,

after considering the written observations submitted on behalf of:

° the Country Landowners' Association, by Dawson & Co., Solicitors,

° the United Kingdom, by Lucinda Hudson, of the Treasury Solicitor' s Department, acting as Agent, assisted by Kenneth Parker QC and Eleanor Sharpston, Barrister,

° the French Government, by Catherine de Salins, Deputy Director of the Legal Affairs Directorate at the Ministry for Foreign Affairs, and Jean-Louis Falconi, Secretary for Foreign Affairs in the same Directorate, acting as Agents,

° the Commission of the European Communities, by Thomas van Rijn, Legal Adviser, and Xavier Lewis, of its Legal Service, acting as Agents,

having regard to the Report for the Hearing,

after hearing the oral observations of the Country Landowners' Association, represented by Richard Gordon QC, the United Kingdom, represented by Lindsey Nicoll, of the Treasury Solicitor' s Department, acting as Agent, assisted by Kenneth Parker and Eleanor Sharpston, and the Commission, represented by Thomas van Rijn and Peter Oliver, of its Legal Service, at the hearing on 30 March 1995,

after hearing the Opinion of the Advocate General at the sitting on 15 June 1995,

gives the following

Judgment

Grounds

1 By order of 12 January 1994, received at the Court on 28 January 1994, the Divisional Court of the Queen' s Bench Division of the High Court of Justice referred to the Court for a preliminary ruling under Article 177 of the EC Treaty five questions concerning the interpretation and validity of Articles 13 and 15 of Commission Regulation (EEC) No 3567/92 of 10 December 1992 laying down detailed rules for the application of the individual limits, national reserves and transfer of rights provided for in Council Regulation (EEC) No 3013/89 on the common organization of the market in sheepmeat and goatmeat (OJ 1992 L 362, p. 41, hereinafter "Regulation No 3567/92"), and Articles 39 and 55 of Commission Regulation (EEC) No 3886/92 of 23 December 1992 laying down detailed rules for the application of the premium schemes provided for in Council Regulation (EEC) No 805/68 on the common organization of the market in beef and repealing Regulations (EEC) No 1244/82 and (EEC) No 714/89 (OJ 1992 L 391, p. 20, hereinafter "Regulation No 3886/92").

2 The questions were raised upon an application by the Country Landowners' Association ("CLA") for judicial review of the way in which Statutory Instrument 1993 No 1626 Agriculture (the Sheep Annual Premium and Suckler Cow Premium Regulations 1993) had implemented the regulations mentioned above.

3 The common organization of the markets in sheepmeat and goatmeat and in beef and veal were amended in 1992 in order to limit access to the annual premium paid to producers of sheep and goats and to the suckler cow premium by means of a system of allocating individual quotas.

4 Thus Article 5a, added by Council Regulation No 2069/92 of 30 June 1992 (OJ 1992 L 215, p. 59) to Council Regulation (EEC) No 3013/89 of 25 September 1989 on the common organization of the market in sheepmeat and goatmeat (OJ 1989 L 289, p. 1, hereinafter "Regulation No 3013/89"), provides:

"1. An individual limit per producer is hereby introduced in respect of the grant of the premium provided for in Article 5.

...

4. (a) The right to premium attaches to producers who have been granted the premium in respect of the 1991 marketing year and who have also applied for a premium, under the 1992 marketing year.

(b) When a producer sells or otherwise transfers his holding, he may transfer all his premium rights to the person who takes over his holding.

He may also transfer, in whole or in part, his rights to other producers without transferring his holding. According to the procedure provided for in Article 30, the Commission may draw up specific rules relating to the minimum number which could form the subject of the partial transfer.

In the case of a transfer without transfer of the holding, a part of the premium rights transferred, not exceeding 15%, shall be surrendered without compensation to the national reserve of the Member State where his holding is situated for free distribution to new entrants or other priority producers referred to in Article 5(b)(2).

(c) Member States:

° must take the necessary measures to avoid premium rights being moved away from sensitive zones or regions where sheep production is especially important for the local economy,

° may provide either that the transfer of the rights without transfer of the holding is carried out directly between the producers or that it is carried out through the intermediary of the national reserve.

...

(f) The Commission shall lay down the detailed rules for implementing this paragraph in accordance with the procedure provided for in Article 30 ... enabling Member States to resolve specific problems linked to the transfer of premium rights by producers who do not own the areas on which their holdings are situated."

5 Article 5b, added by the same regulation, provides:

"1. Each Member State shall establish an initial national reserve equal to at least 1% and at most 3% of the sum of the individual limits applicable to producers whose holdings are situated in its territory. The national reserve shall also receive the entitlements pursuant to Article 5a(4)(b)."

6 Article 13 of Regulation No 3567/92, in which the Commission adopted detailed rules for the application of Regulation No 3013/89, provides:

"Member States, if necessary, shall take appropriate transitional measures with a view to finding equitable solutions to problems which might arise in contractual relationships existing at the time this Regulation enters into force between producers who do not own all the land they farm, in the event of a transfer of premium rights or of other actions having equivalent effect. Such measures may only be taken in order to resolve the difficulties connected with the introduction of a premium rights system linked to the producer and must in any event respect the principles governing that link."

7 Article 15 of that regulation provides:

"Member States shall adopt all other suitable measures necessary to ensure that the system of individual limits is applied properly. They shall inform the Commission thereof."

8 Article 4e(5) of Regulation No 805/68 of the Council of 27 June 1968 on the common organization of the market in beef and veal (OJ, English Special Edition 1968 (I), p. 187, hereinafter "Regulation No 805/68"), as amended by Council Regulation (EEC) No 2066/92 of 30 June 1992 (OJ 1992 L 215, p. 49), is essentially identical to Article 5a(4)(f) of Regulation No 3013/89, whilst Articles 39 and 55 of implementing Regulation No 3886/92 are similar to Articles 13 and 15 of Regulation No 3567/92.

9 Before the national court the CLA maintains that those regulations, which allocate production quotas solely to producers and allow them to transfer the quotas to another holding or to another producer, have an adverse impact on the value of land used for sheep and goat rearing or suckler cow production. Article 13 of Regulation No 3567/92 and Article 39 of Regulation No 3886/92 thus require the Member States to introduce a compensation mechanism for the losses so arising, which the United Kingdom has failed to do.

10 The Minister of Agriculture, Fisheries and Food ("the Minister") considers, however, that the regulations in question only authorize the Member States to adopt measures to resolve problems of landowners resulting from the transfer of quotas or of other actions having equivalent effect, and in that regard the necessary measures were taken. Thus, the proportion of any quota transferred separately from the holding divertible to the national reserve was fixed at the maximum permitted level of 15%; priorities were established within categories of claims on the national reserve in favour of producers who were taking over a holding from which the departing producer had removed the quota; and a safeguard mechanism was created in order to prevent quotas from being taken away from particularly sensitive areas.

11 In those circumstances, the national court stayed the proceedings and pursuant to Article 177 of the Treaty referred the following questions to the Court of Justice for a preliminary ruling :

"1. Is Article 13 of Commission Regulation (EEC) No 3567/92 and/or Article 39 of Commission Regulation (EEC) No 3886/92 to be interpreted as enabling and/or requiring a Member State to introduce a compensation mechanism for the owners of agricultural land only where there is a detriment to landowners consequent upon a transfer of premium rights away from the landowner' s holding by the tenant-producer?

2. Is Article 13 of Commission Regulation (EEC) No 3567/92 and/or Article 39 of Commission Regulation (EEC) No 3886/92 to be interpreted as enabling and/or requiring a Member State to introduce a compensation mechanism for the owners of agricultural land in circumstances where there is a specific problem

(i) related to the transferability, or

(ii) arising on or after the transfer

of premium rights away from the landowner' s holding by the tenant-producer caused by the introduction and allocation of quotas to tenant-producers resulting in the creation of an asset in the hands of tenant-producers?

3. Is Article 15 of Commission Regulation (EEC) No 3567/92 and/or Article 55 of Commission Regulation (EEC) No 3886/92 to be interpreted as conferring upon Member States separate powers and/or obligations, beyond those conferred by Article 13 of Commission Regulation (EEC) No 3567/92 and/or Article 39 of Commission Regulation (EEC) No 3886/92, to introduce a compensation scheme for landowners?

4. Does Article 5a(4)(f) of Council Regulation (EEC) No 3013/89, as inserted by Council Regulation (EEC) No 2069/92, and/or Article 4e(5) of Council Regulation (EEC) No 805/68, as inserted by Council Regulation (EEC) No 2066/92, affect the interpretation and/or validity of Article 13 of Commission Regulation (EEC) No 3567/92 and/or Article 39 of Commission Regulation (EEC) No 3886/92 and/or Article 15 of Commission Regulation (EEC) No 3567/92 and/or Article 55 of Commission Regulation (EEC) No 3886/92?

5. Depending on the answers to questions 1, 2, 3 or 4, what are the principles that Member States must apply in devising such a compensation scheme?"

The first three questions

12 By its first three questions the national court asks whether Articles 13 and 15 of Regulation No 3567/92 and Articles 39 and 55 of Regulation No 3886/92 require Member States to introduce a compensation mechanism for the loss suffered by the owners of agricultural land owing to the introduction of a system of premium rights linked to the producers of sheepmeat, goatmeat or beef and veal, in particular where the premium right is transferred by producers who do not own the land on which they farm.

13 According to the national court, the Minister acknowledges that the allocation to tenant-producers of quotas which are freely transferable by them has an adverse impact on the capital value of the land used for sheep rearing and suckler cow production. The question is therefore whether Community law requires compensation to be paid for such loss.

14 No general principle of law upheld by the Community legal system, in particular, the principle of protection of the right to property, requires that such compensation be paid. The Court held in Case C-2/92 Bostock [1994] ECR I-955 that advantages such as reference quantities allocated under a common market organization cannot be regarded as a right derived from the assets or occupational activity of the persons concerned so that their attribution or transfer cannot be accompanied by an obligation to pay compensation on the part of one of the parties to a lease. The same is true of individual quotas on the basis of which the premium is allocated and which are linked to the tenant producers by the rules in question.

15 Nor can any obligation on the Member States to provide for a mechanism to compensate for the detriment suffered by the owners of land used for sheep rearing or suckler cow production be derived from the regulations relating to the common market organizations in question.

16 First, Article 5a(4)(f) of Regulation No 3013/89 and Article 4e(5) of Regulation No 805/68 concern only the special problems linked to the transfer of premium rights by producers who do not own the land on which their holdings are situated and not those linked, in a more general way, to the reduction in the value of their land caused by the introduction of the new premium system.

17 The same applies to the Commission' s implementing regulations. Thus, Article 13 of Regulation No 3567/92 authorizes the Member States to take, if necessary, appropriate transitional measures "in the event of a transfer of premium rights". It is true that the last part of that article states that "[s]uch measures may only be taken in order to resolve the difficulties connected with the introduction of a premium rights system linked to the producer". However, the measures in question are those referred to in the first part of the article, which relates expressly to the case of transfer of premium rights.

18 Secondly, the provisions in question do not require the Member States to provide for a mechanism for compensating detriment to landowners caused by the transfer of premium rights. They are allowed only to adopt measures for resolving particular problems linked to transfers of premium rights and to lay down principles with which those measures must comply.

19 It is for each Member State to assess the need for such measures, having regard in particular to the national arrangements for implementing the rules in question and the national rules governing the legal relationship between landlord and tenant.

20 As regards Article 15 of Regulation No 3567/92 and Article 55 of Regulation No 3886/92, these provisions merely lay down that the Member States are to adopt all other suitable measures necessary to ensure that the system of individual limits is applied properly and to inform the Commission thereof. They give effect to Article 5 of the Treaty and cannot in themselves require a compensation mechanism to be adopted for compensating any detriment suffered by landowners as a result of the introduction of the quota system in question.

21 The reply to the first three questions must accordingly be that neither Articles 13 and 15 of Regulation No 3567/92 nor Articles 39 and 55 of Regulation No 3886/92, nor any general principle of Community law require Member States to introduce a mechanism for compensating detriment caused to owners of agricultural land by the introduction of a system of premium rights linked to producers of sheepmeat, goatmeat or beef and veal, even where premium rights are transferred by producers who do not own the land on which they farm.

Fourth question

22 In view of the reply to the first question, the fourth question should be treated as simply asking whether Articles 13 and 15 of Regulation No 3567/92 and Articles 39 and 55 of Regulation No 3886/92 are valid, having regard to Article 5a(4)(f) of Regulation No 3013/89 and Article 4e(5) of Regulation No 805/68 which constitute their respective legal bases.

23 The only difference between the provisions of the Commission' s implementing regulations at issue and those of the Council regulations which constitute their legal basis, is the scope of the measures which the Member States are authorized to adopt. Whilst the Council regulations make no distinction, the Commission regulations confine the power granted to the Member States to adopting measures for resolving problems arising in contractual relationships which were in existence when they entered into force.

24 As the Commission has pointed out, problems related to the introduction of the premium system are likely to arise only in contractual relationships already in existence when the regulations entered into force. When contractual relations are concluded at a later date, the parties may take into account the possibility that premium rights might be transferred without a transfer of the holding.

25 In any event, the applicant in the main proceedings itself admits that compensation measures should be limited to existing contractual relationships.

26 The answer to the fourth question must therefore be that consideration of Articles 13 and 15 of Regulation No 3567/92 and of Articles 39 and 55 of Regulation No 3886/92 has disclosed no factor of such a kind as to affect their validity.

Fifth question

27 In view of the replies given to the preceding questions, there is no need to answer the fifth question.

Decision on costs

Costs

28 The costs incurred by the United Kingdom, the French Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings 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 answer to the questions referred to it by the Divisional Court of the Queen' s Bench Division of the High Court of Justice by order of 12 January 1994, hereby rules:

1. Neither Articles 13 and 15 of Commission Regulation (EEC) No 3567/92 of 10 December 1992 laying down detailed rules for the application of the individual limits, national reserves and transfer of rights provided for in Council Regulation (EEC) No 3013/89 on the common organization of the market in sheepmeat and goatmeat nor Articles 39 and 55 of Commission Regulation (EEC) No 3886/92 of 23 December 1992 laying down detailed rules for the application of the premium schemes provided for in Council Regulation (EEC) No 805/68 on the common organization of the market in beef and repealing Regulations (EEC) No 1244/82 and (EEC) No 714/89, nor any general principle of Community law require Member States to introduce a mechanism for compensating detriment caused to owners of agricultural land by the introduction of a system of premium rights linked to producers of sheepmeat, goatmeat or beef and veal, even where premium rights are transferred by producers who do not own the land on which they farm.

2. Consideration of Articles 13 and 15 of Regulation No 3567/92, cited above, and of Articles 39 and 55 of Regulation No 3886/92, cited above, has disclosed no factor of such a kind as to affect their validity.