CELEX: 61994CC0299
Language: en
Date: 1996-01-18
Title: Opinion of Mr Advocate General La Pergola delivered on 18 January 1996. # Anglo-Irish Beef Processors International and others v Minister for Agriculture, Food and Forestry. # Reference for a preliminary ruling: High Court - Ireland. # Differentiated export refunds - Force majeure - Additional security - Release of security - Resolution of the UN Security Council. # Case C-299/94.

OPINION OF ADVOCATE GENERALLA PERGOLA delivered on 18 January 1996  (1)
         Case C-299/94 Anglo Irish Beef Processors International and OthersvMinister for Agriculture, Food and Forestry(Reference for a preliminary ruling from the High Court of Ireland)
            ((Differentiated export refunds – Force majeure – Additional security – Release of the security – Resolution of the UN Security Council))
            
      
         
      1.  The questions submitted by the High Court of Ireland, by order of 25 July 1994, concern the interpretation and validity 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 
      
         			(2)
         		 and Council Regulation (EEC) No 2340/90 of 8 August 1990 preventing trade by the Community as regards Iraq and Kuwait. 
      
         			(3)
         		
      2.  The case in which those questions arose may be summarized as follows.Anglo Irish Beef Processors International (
      Anglo Irish Beef) is a group of Irish undertakings engaged in the beef trade.  Pursuant to Regulation No 3665/87, 
      
         			(4)
         		 it had obtained from the competent Irish authority, the Minister for Agriculture, Food and Forestry (
      the Minister), advance payment of a  
      differentiated export refund in respect of the sale to Iraq of a consignment of beef.  It is useful at this point to explain in what sense the refund
      is defined in the regulation as differentiated.  The amount of the refund depends on the destination of the goods and is adjusted
      accordingly to reflect the market price there.  The essential purpose underlying that rule is to facilitate the sale of Community
      products on the markets of non-member countries, compensating the exporter for any disparity between the Community market
      price and the price elsewhere, which is generally lower.  The refund payable upon the exportation of products to Iraq was
      considerable.In accordance with the Community rules in force, Anglo Irish Beef had provided a bank guarantee in the Minister's favour equal
      to the amount of the advance payment, together with a further 20% of that amount.  That guarantee is required as security,
      since the exporter is paid the amount of the refund in advance, specifically in order to ensure that reimbursement of that
      amount is made to the authority concerned if it should later be found that  
      the conditions for granting the refund are not fulfilled (see the 22nd recital in the preamble to Regulation No 3665/87) or that  
      there was a right to a smaller refund (Article 6, Regulation No 565/80).As was stated in the order for reference, the beef was still in transit and, to be exact, had only reached Turkey when an
      embargo was placed on trade with Iraq, following its invasion of Kuwait.  That embargo had been imposed by Resolution No 661
      of the United Nations Security Council of 6 August 1990 and, additionally, by Council Regulation (EEC) No 2340/90, which was
      adopted on 8 August 1990 but was applicable retrospectively with effect from 7 August 1990.On account of the embargo, the Turkish authorities prevented the ship carrying Anglo Irish Beef's cargo from reaching Iraqi
      territory.  Attempts were made in vain to sell the beef in countries subject to the same export refund rate as Iraq.  Finally,
      the consignment was sold on other markets, for which the export refund applicable was lower than the amount already advanced
      to Anglo Irish Beef.  The Minister accordingly asked Anglo Irish Beef to reimburse the difference unduly paid, refusing to
      release the bank guarantee until it had discharged its obligation to make reimbursement.  On the other hand, since it was
      common ground that the circumstances preventing delivery of the beef to Iraq constituted  
       force majeure , the Minister, in accordance with the regulation mentioned above, waived payment of the additional 20%.
      
      3.  Anglo Irish Beef thereupon brought proceedings before the High Court of Ireland, challenging the Minister's claim for reimbursement
      and seeking release of the security in full.  The national court accordingly referred the following questions to the Court
      of Justice for a preliminary ruling: 
      
      
      ─
         Can Commission Regulation (EEC) No 3665/87 be interpreted in such a manner as to prohibit the drawing down on the security
         provided by the exporter in the above circumstances whether by reason of  
         force majeure or by reason of the disproportionate effect which the drawing down of the security would have in comparison to the circumstances
         relied upon as justifying such a drawing down or otherwise? 
      
      
      
      ─
         If Commission Regulation (EEC) No 3665/87 cannot be interpreted in the above manner is it void in whole or in part because
         of this? 
      
      
      
      ─
         Can Council Regulation (EEC) No 2340/90 be interpreted as covering goods in transit to Iraq and if so is it void in whole
         or in part because of its treatment of goods in transit in the present circumstances?
      
       Question 1
      
      4.  In order to answer the first question, it is plainly necessary to refer to the findings ─ which must be accepted as definitive
      for the purposes of these proceedings ─ of which the national court has apprised the Court in the present case.  The first
      fact to be considered is that the beef in respect of which the export refund was granted did not reach the destination specified
      in the application, but was sold in other countries, which were subject to a lower refund rate.  The exporter therefore received
      a higher amount than was due under the regulation.  It is also clear from the order for reference that the circumstances which
      prevented the beef from reaching its intended destination indisputably constitute  
       force majeure .That is the situation.  The national court asks whether the intervention agency may withhold such proportion of the security
      lodged as corresponds to the amount that was not payable to the recipient, bearing in mind that, owing to  
       force majeure , the beef was exported to a destination other than that originally intended.In my view, the solution is to be found in Article 33(5) of Regulation No 3665/87, which provides:  
      Where, as a result of a case of  
       force majeure , the amount of the refund [
       payable ] is smaller than the amount paid in advance, the security forfeited shall be equal to the difference between ... the amount
      of the refund advanced and ... the amount of the refund actually due. 
      
         			(5)
         		  Where, however, there is no  
       force majeure , the relevant provision would be Article 33(3)(a)(iii), in accordance with which  
      the security forfeited shall be equal to the reduction of the refund ... plus 20%.Thus, in the circumstances described in the order for reference, the intervention agency may take steps to retain the guarantee
      provided in its favour by the exporter, subject to the limits set by Article 33(5) on the amount to be forfeited.  This being
      a case of  
       force majeure , however, it may not lay claim to the additional 20%.For the purposes of these proceedings, it is wholly irrelevant whether the beef was prevented from reaching its declared destination
      by  
       force majeure  or by some fault on the part of the exporter: the latter is required in any event to repay such part of the refund as was
      not actually due to him, without prejudice to the fact that ─ where, by contrast with the present case, there is no  
       force majeure  ─ he must also pay the additional 20% provided for as a safeguard against fraud.  As the Court itself has stated, moreover,
      traders are not entitled  
      to a differentiated refund for exports ... to a non-member country in a case where the goods exported were destroyed as a
      result of  
       force majeure  after leaving the customs territory of the Community and prior to importation ... into the non-member country of destination. 
      
         			(6)
         		
      5.  I now turn to the other aspect of Question 1.  It is necessary to ascertain whether, in the circumstances described above,
      Regulation No 3665/87 may be interpreted as precluding forfeiture of the security by the relevant authority, in view of the
      allegedly disproportionate effects otherwise foreseeable to the detriment of the exporter.According to Anglo Irish Beef, that question must be answered in the affirmative.  I disagree.  First, as was mentioned in
      the order for reference, forfeiture of the security is restricted to the amount unduly paid and therefore does not cover,
      as Anglo Irish Beef seems to suggest, the whole amount of the refund paid in advance.  If that is the case, I am at a loss
      to identify the disproportionate effect.  As I pointed out above, the intention underlying the export refunds ─ which has
      been emphasized by the Court in other judgments 
      
         			(7)
         		 ─ is to facilitate the sale of Community products on world markets.  To that end, exporters are paid a sum of money which
      is intended solely as compensation for any disparity between the Community price and the current price on other markets. 
      The refund rate is  
      differentiated, precisely in that it is calculated by reference to the various prices charged in the country of destination.  That is why
      it is essential that the products in question actually reach their declared destination: 
      
         			(8)
         		 if they were sold on a different market, where the price is higher and for which the refund rate is accordingly lower, the
      transaction would result in the unjust enrichment of the trader in question.  That is to say, he would profit from the higher
      selling price and, at the same time, retain the higher rate of refund to which, however, he would not be entitled.  That said,
      it is plain that the refund scheme, far from contravening the principle of proportionality, actually applies it: the amount
      paid by the intervention agency is equal to the difference between the Community price for the product exported and the price
      charged in the country of destination.  Thus the means adopted ─ differential payment in advance ─ is suitably proportional
      to the objective pursued by the Community legislature.  When a case of  
       force majeure  arises, and the trader concerned is compelled to export his products elsewhere than the original destination, his right to
      the refund remains intact and is not affected by any penalty, except that its exercise must take into account the disparity
      between the Community price and the price which is charged on the market to which the product has actually been exported.
       That alone is the rationale behind the regulation.  The rules laid down seek its comprehensive and logical implementation.
      
      6.  Anglo Irish Beef also purports to invoke a general principle according to which, if the  
       force majeure  which prevented the exports from reaching their declared destination was brought about by Community action, the exporter
      is entitled to retain the advance payment of the refund in full.  That argument is not persuasive.  In the first place, it
      is predicated on the erroneous assumption that the exports failed to reach their destination on account of the embargo imposed
      by the Community institutions by means of Regulation No 2340/90.  However, it is clear from the order for reference that the
      cargo was detained in Turkey by the Turkish authorities, acting ─ it must be assumed ─ in observance of the embargo imposed
      by the United Nations and, in any event, not in compliance with the regulation mentioned above.  Consequently, it is wrong
      to conclude that the  
       force majeure  involved here was attributable to conduct on the part of the Community institutions.  That is not all.  Anglo Irish Beef
      has failed to take into account the true nature of the exporter's obligation to repay the difference between the amount received
      and the amount to which he is lawfully entitled.  That obligation does not arise by way of a penalty for unlawful conduct,
      but simply entails reimbursement of a sum unduly paid.  In other words, it is an obligation whose purpose is merely to bring
      about restitution; it is not related to any  criterion of guilt or responsibility on the part of the party so obliged and
      must therefore be discharged even if the cargo failed to reach the declared destination on account of  
       force majeure .  Although the regulation provides for cases of  
       force majeure , it is only to relieve exporters in those circumstances of the liability which they would incur each time they sold products
      on markets other than that originally specified.  Provided the circumstances amount to  
       force majeure , there is no need, as I pointed out above, for the additional 20% to be repaid to the intervention agency.  Exporters are
        accordingly exempted from that requirement, which may also be seen as a penalty measure.  However, that does not mean that
      exporters are entitled to retain the whole amount paid to them in advance.  No such right is envisaged by Community law, nor
      could it be, given the nature of the system and the essential purpose of the refund.  Where the goods are not exported to
      the place specified by the exporter, the  
      refund can only refer to the difference between the Community price and the current price on the market where the goods have actually
      been sold.  There are therefore no grounds for maintaining that, in making provision for cases of  
       force majeure , the Community rules must confer on the exporter the right to retain the entire amount.  That would be incompatible with
      the rationale behind all the legislation under consideration.
       Question 2
      
      7.  The second question asks whether, since Regulation No 3665/87 cannot be interpreted as precluding forfeiture of the security
      in the event of  
       force majeure , it should for that reason be considered invalid.  Anglo Irish Beef adduces two arguments in support of that view: breach
      of the principle of proportionality and frustration of the exporter's legitimate expectations.  I have already explained why
      the first argument should be dismissed.  As regards the frustration of legitimate expectations, Anglo Irish Beef seeks to
      substantiate that allegation by asserting that exporters rely on being able to retain in any case ─ and especially in the
      event of  
       force majeure  ─ the amount of the refund paid in advance. 
      
         			(9)
         		  However, I am unable to discern a basis for that point of view.  Any moderately prudent trader has only to read the regulation
      to realize that the right to retain the full refund paid in advance and consequently to release of the security is necessarily
      contingent upon the goods actually reaching their declared destination.  Article 33(2) of Regulation No 3665/87 provides that
       
      the release in full of the security shall be subject to the production of proof that ... (b) the products concerned give entitlement
      to a refund equal to or higher than the amount determined in accordance with Article 29(3).  Furthermore, the fifth recital in the preamble to Regulation No 565/80 expressly states that security is to be lodged in
      order  
      to guarantee the reimbursement of a sum not less than the amount paid where it is subsequently established that there was
      no right to the export refund or that the products or goods ... were not actually exported from the Community within the time-limits
      laid down.  The relevant rules are those set out above and they cannot arouse any legitimate expectation other than the right to a
      refund, subject, obviously, to the limits within which that right was conferred.
       Question  3
      
      8.  By its third question, the national court asks the Court to ascertain whether Regulation (EEC) No 2340/90, which imposed the
      trade embargo, extends to goods which have already been dispatched and are in transit to Iraq.  If the answer is in the affirmative,
      the national court asks whether the regulation is invalid, wholly or in part, precisely because it extends not only to products
      due to be exported but also to those which are already in the process of being exported.In the pleadings of Anglo Irish Beef, the claim to retain the full amount of the refund is based on the assumption that the
      resolution of the United Nations left the Community free to exempt from the embargo goods already in transit to Iraq.  Hence
      the conclusion that Regulation No 2340/90 is vitiated on grounds of illegality precisely because, in adopting a regulation
      to implement the system established by the United Nations, the Council of the European Communities failed to use its discretion
      to accommodate by means of its regulation the needs of exporters.  To be more precise, the rules laid down by the Community
      are said to be invalid, in that they give rise to discrimination.  According to Anglo Irish Beef, their discriminatory character
      may be inferred from the unjustifiable difference in treatment between, on the one hand, goods in transit from Iraq and the
      importers of those goods and, on the other, goods already in transit to Iraq and the exporters of those goods, the latter
      class of goods alone being affected by the embargo.  That argument is adduced as a basis for the assertion that, if the regulation
      had been drafted in such a way as to meet the needs of Anglo Irish Beef and countless other exporters in the same circumstances,
      the Minister would not have any grounds at present for demanding the reimbursement at issue.The Council, the Commission, the Irish Government and the United Kingdom have all challenged the merits of that assertion,
      essentially on the ground that Regulation No 2340/90 faithfully implements the United Nations resolution, which was binding
      upon the Community and its Member States.It seems to me, however, that there is a significant aspect to this question which should be considered first.  I would recall,
      for the sake of clarity, that the national court has submitted two regulations for review by the Court: Regulation No 2340/90,
      which concerns the embargo, is relevant to the present dispute only in so far as it envisages a situation involving  
       force majeure  for the purposes of the other regulation (No 3665/87).  It is the latter regulation which governs the case before the national
      court.  Under that regulation, recognition of the rights asserted by Anglo Irish Beef in the main proceedings is unconditionally
      predicated on the requirement that the goods must have reached the destination for which the exporter had received advance
      payment of the refund.In this case, that requirement has not been met and, for that overriding reason, the claims of Anglo
      Irish Beef no longer have any basis in Community law.  However, this is a case of  
       force majeure , governed by the relevant provisions of the applicable regulation.  These have already been identified: the amount of the
      refund is not payable to Anglo Irish Beef in full but is differentiated; in order for the security to be released, the exporter
      must pay the intervention agency any difference between the price fixed by reference to the original destination of the goods
      and the current price on the market which the goods have actually reached.  For the purposes of these proceedings, therefore,
      the only relevant factor is the operation of  
       force majeure , which objectively prevented the goods from reaching the declared destination; for the settlement of the dispute, it is quite
      simply the fact of the embargo itself which matters, not the provisions, whatever they may be, of Regulation No 2340/90. 
      What would the practical consequences have been if, by means of that regulation, the Community had derogated from the UN resolution
      in order to exempt from the embargo, as Anglo Irish Beef advocates, products already exported and still in transit?  It would
      certainly have been impossible to enforce such a system in relation to any non-member countries which, in pursuance of the
      UN resolution or of their own volition, wished nevertheless to prevent the movement of products bound for Iraq.  That is,
      in effect, the case here.  Anglo Irish Beef's cargo was detained by order of the Turkish authorities, quite independently
      of any Community provisions regarding the embargo.   The conclusion which must be drawn is therefore plain to see.  Verification
      of the alleged invalidity of Regulation No 2340/90 would not affect in any way the application in these proceedings of the
      provisions laid down by Regulation No 3665/87, as described above, in cases of  
       force majeure .  The third question submitted by the national court is, in other words, purely hypothetical.  The Court has always refused
      to address preliminary questions of that kind. 
      
         			(10)
         		  In my view, that wise and consistent criterion in the case-law should also be adhered to in the present case.
        Conclusion
      In the light of the foregoing considerations, therefore, I am of the opinion that the questions referred to the Court of Justice
      by the High Court of Ireland, should be answered as follows:
      (1) Where, on the basis of Article 33(5) 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, an exporter receives an export refund
      and, owing to  
       force majeure , the goods are sold, not at the declared destination, but in countries in respect of which a lower rate of refund has been
      fixed, the security to be forfeited is equal to the difference between the amount of the refund advanced and the amount of
      the refund actually due. 
      
      (2) Consideration of Regulation (EEC) No 3665/87 on the basis of the information provided in the order for reference has disclosed
      no factor of such a kind as to affect its legality. 
      
       1 –
         
            Original language: Italian.
      
      2 –
         
         OJ 1987 L 351, p. 1.
      
      3 –
         
         OJ 1990 L 213, p. 1.
      
      4 –
         
         The sector in question is governed by the regulation cited above, as last amended by Commission Regulation (EEC) No 354/90
            of 9 February 1990 (OJ 1990 L 38, p. 34), in conjunction with Council Regulation (EEC) No 565/80 of 4 March 1980 on the advance
            payment of export refunds in respect of agricultural products (OJ 1980 L 62, p. 5), as last amended by Council Regulation
            (EEC) No 2026/83 (OJ 1983 L 199, p. 12).
         
      
      5 –
         
         Emphasis added.
      
      6 –
         
         Case C-321/91  
             Tara Meat Packers  [1993] ECR I-2811, paragraph 19.
         
      
      7 –
         
         Case 89/83  
             Dimex  [1984] ECR 2815, paragraphs 8 and 9.
         
      
      8 –
         
         See  
             Dimex , paragraph 16.
         
      
      9 –
         
         According to Anglo Irish Beef, that assertion holds true  
             a fortiori  where it is the Community itself which prevents the goods from reaching their destination.  On that point, however, I need
            only repeat the following observation: the national court makes it clear that the goods were detained in Turkey by the Turkish
            authorities on account of the United Nations embargo.  In that respect, Regulation No 2340/90 is irrelevant.
         
      
      10 –
         
         Case C-18/93  
             Corsica Ferries  [1994] ECR I-1783, paragraph 14, and the case-law cited therein.