The Queen v Minister for Agriculture, Fisheries and Food, ex parte, National Farmers' Union and Others.
Date: 1997-07-17
39 The Court notes that one of the aims of Regulation No 2988/95, as stated in the 10th recital in its preamble, is to adopt `appropriate provisions ... while respecting the acquis communautaire and the provisions laid down in specific Community rules existing at the time of entry into force of this Regulation, to prevent any overlap of Community financial penalties and national criminal penalties imposed on the same persons for the same reasons.'  Consequently, that regulation clearly applies equally to Community regulations in existence when it entered into force, including Regulation No 3887/92.
40 Since the false declaration referred to in Article 9(2) to (4) of Regulation No 3887/92 is an irregularity within the meaning of Article 1(2) of Regulation No 2988/95 and forfeiture of aid for crops constitutes an administrative penalty within the meaning of Article 2(2), Regulation No 2998/95 therefore applies to the case in the main proceedings.
41 The answer to the first question must therefore be that Article 9(2) to (4) of Regulation No 3887/92, prior to the entry into force of Regulation No 1648/95, must be interpreted as precluding any payment linked to the arable areas when the difference between the area of set-aside land declared and that determined on inspection by the competent authorities exceeds 20% and there is no false intention or serious negligence.  However, in the light of Articles 1(2) and 2(2) of Regulation No 2988/95, under which less severe penalties introduced by subsequent amendments to Community provisions must be applied retroactively, the amendments made to Article 9(4) of Regulation No 3887/92 by Regulation No 1648/95 apply to circumstances which occurred before its entry into force. Consequently, the calculation of the maximum eligible area for the compensatory payments for arable crop producers must be made, under Article 9(4) of Regulation No 3887/92, as amended by Regulation No 1648/95, on the basis of the area of set-aside land actually determined and on a pro rata basis for each crop concerned.
Question 2 and the second part of Question 4
49 As regards, first of all, the principle of proportionality, it is settled law that, in order to establish whether a provision of Community law complies with that principle, it must be ascertained whether the means which it employs are suitable for the purpose of achieving the desired objective and whether they do not go beyond what is necessary to achieve it (see, inter alia, Case 426/93 Germany v Council [1995] ECR I-3723, paragraph 42).
50 The Court has also stated on numerous occasions that, where the evaluation of a complex economic situation is involved, the Community institutions enjoy a wide measure of discretion.  In reviewing the legality of the exercise of such discretion, the Court must confine itself to examining whether it is not vitiated by a manifest error or misuse of power or whether the institution in question has not manifestly exceeded the limits of its discretion (see, to that effect, Joined Cases C-296/93 and C-307/93 France and Ireland v Commission [1996] ECR I-795, paragraph 31).
51 It emerges clearly from paragraph 10 of this judgment that Regulation No 3887/92 aims to introduce provisions which effectively prevent and penalize irregularities and fraudulent acts.  Moreover, according to the first recital to that regulation, the purpose of the integrated system is to enable the reform of the common agricultural policy to be implemented efficiently and in particular to solve the administrative problems caused by the introduction of several area-linked aid schemes.
52 It is therefore necessary to assess whether the integrated administration and control system for certain Community aid schemes is consistent with the importance of the aims so described and whether it is necessary in order to achieve them.
53 The penalty established, namely the loss of entitlement to the premium for bovine animals, is not absolute but reflects the extent of the error committed.  Although a farmer making an innocent error makes his declaration without fraudulent intent, the extent of the error involved is none the less considerable.  Given the wide measure of discretion enjoyed by the Community institutions in that area, it cannot be regarded as unjustified or disproportionate to impose in respect of such an error a dissuasive and effective penalty such as that provided for in the second subparagraph of Article 9(2) of Regulation No 3887/92.
54 In view of the specific features of the various schemes, Regulation No 3887/92 provides for sanctions graded according to the seriousness of the irregularity committed. Whilst the penalty imposed on a farmer who has made a declaration which overstates his set-aside area or forage area by more than 20% is one of the heaviest established by that regulation, even heavier penalties, namely exclusion from the aid scheme concerned for the calendar year in question for farmers who have made a false declaration as a result of serious negligence and the loss of all aid for a period of two years in the case of those who have intentionally made a false declaration, have been provided for by the third subparagraph of Article 9(2), irrespective of the extent of the overstatement found.
55 The system of penalties established by Article 9(2) to (4) of Regulation No 3887/92 for farmers whose forage area as actually determined is found to be more than 20% smaller than that declared in good faith in the `area' aid application is therefore commensurate with the objectives pursued and necessary in order to achieve them. Consequently, that provision is not contrary to the principle of proportionality, the importance of which is, moreover, noted in the ninth recital in the preamble to that regulation.
57 As the Court has repeatedly held, the principle of legal certainty is a fundamental principle of Community law which requires in particular that rules imposing charges on a taxpayer be clear and precise so that he may be able to ascertain unequivocally what his rights and obligations are and take steps accordingly (Case C-143/93 Van Es Douane Agenten v Inspecteur der Invoerrechten en Accijinzen [1996] ECR I-431, paragraph 27).
61 The Court has consistently held that the principle of non-discrimination requires that comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified (see, to that effect, Case C-56/94 SCAC v Associazione dei Produttori Ortofrutticoli [1995] ECR I-1769, paragraph 27).
62 It is clear from the second subparagraph of Article 9(2) of Regulation No 3887/92 that no area-linked aid is to be granted if, in his declaration, a farmer has overstated his set-aside or arable areas by more than 20%, or overstated his forage area by more than 20%.  Under the third subparagraph of Article 9(2), however, and as is clear from paragraph 54 of this judgment, farmers who have made a false declaration intentionally or as a result of serious negligence are in any event excluded from the aid scheme concerned for the calendar year in question and even, in the case of a false declaration intentionally made, for the following calendar year.  Those penalties are imposed whatever the extent of the difference between the areas declared and those found on inspection.