Common market — Organisation of livestock markets — Grant of transferable production quotas — Whether landlords entitled to compensation where holdings depreciated by transfer of quotas by tenants
Under article 177 of the treaty the
Queen’s Bench Divisional Court referred certain questions to the Court of
Justice. The principal questions were whether the Commission Regulations (in
particular articles 13 and 15 of Regulation No 3567/92 and articles 39 and 55
of Regulation No 3886/92) providing for sheep, goat and beef quotas require
member states to introduce a compensation mechanism for loss suffered by the
owners of agricultural land owing to the introduction of a system of premium
rights linked to producers of sheepmeat, goatmeat or beef and veal, in
particular where the premium rights is transferred by producers who do not own
the land on which they farm.
upheld by the community legal system which requires compensation to be paid.
Neither can such an obligation be derived from the regulations relating to the
common market organisations in question. It is for each member state to assess the
need for such measures having regard to the national rules governing the legal
relationship between landlord and tenant.
The following cases are referred to in
this report.
The Queen v Ministry of Agriculture, Fisheries
and Food, ex parte Bostock Case C-2/92 [1994] ECR I-955
This was a reference under article 177 of
the treaty by the Queen’s Bench Divisional Court of certain questions relating
to Commission Regulations Nos 3567/92 and 3886/92 on an application for
judicial review by the applicants, the Country Landowners’ Association, to
which the Ministry of Agriculture, Fisheries and Food was the respondent.
Richard Gordon QC (instructed by Dawson
& Co) represented the Country Landowners’ Association; Kenneth Parker QC
and Eleanor Sharpston (instructed by the Treasury Solicitor) represented the
Ministry of Agriculture, Fisheries and Food; Thomas Van Rijn and Peter Oliver
(instructed by the commission’s Legal Service) represented the commission.
The following judgment of the court was
delivered: By order of January 12 1994, received at the court on January 28
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 December 10 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 organisation of the market in sheepmeat and goatmeat (OJ
1992 L 362, p41, hereinafter ‘Regulation No 3567/92’), and articles 39 and 55
of Commission Regulation (EEC) No 3886/92 of December 23 1992 laying down
detailed rules for the application of the premium schemes provided for in
Council Regulation (EEC) No 805/68 on the common organisation of the market in
beef and repealing Regulations (EEC) No 1244/82 and (EEC) No 714/89 (OJ 1992 L
391, p20, hereinafter ‘Regulation No 3886/92’).
The questions were raised upon an
application by the Country Landowners’ Association (‘CLA’) for judicial review
of the way in which SI 1993 No 1626 Agriculture (the Sheep Annual Premium and
Suckler Cow Premium Regulations 1993) had implemented the regulations mentioned
above.
The common organisation 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.
Thus article 5a, added by Council
Regulation No 2069/92 of June 30 1992 (OJ 1992 L 215, p59) to Council
Regulation (EEC) No 3013/89 of September 25 1989 on the common organisation of
the market in sheepmeat and goatmeat (OJ 1989 L 289, p1, 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 …
premium rights by producers who do not own the areas on which their holdings
are situated.
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).
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 may, if necessary, 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.
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.
Article 4e(5) of Regulation No 805/68 of
the council of June 27 1968 on the common organisation of the market in beef
and veal (OJ, English Special Edition 1968 (I), p187, hereinafter ‘Regulation
No 805/68’), as amended by Council Regulation (EEC) No 2066/92 of June 30 1992
(OJ 1992 L 215, p49), is essentially identical to article 5a(4)(f) of
Regulation No 3013/89, while articles 39 and 55 of implementing Regulation No
3886/92 are similar to articles 13 and 15 of Regulation No 3567/92.
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.
The Minister of Agriculture, Fisheries
and Food (‘the minister’) considers, however, that the regulations in question
only authorise 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.
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) No3567/92 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?
First three questions
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.
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.
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 The
Queen v Ministry of Agriculture, Fisheries and Food, ex parte Bostock
Case C-2/92 [1994] ECR I-955 that advantages, such as reference quantities
allocated under a common market organisation, 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.
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 organisations in question.
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.
The same applies to the commission’s
implementing regulations. Thus, article 13 of Regulation No 3567/92 authorises
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.
Second, 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.
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.
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.
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
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.
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 authorised to adopt. While 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.
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.
In any event, the applicant in the main
proceedings itself admits that compensation measures should be limited to
existing contractual relationships.
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
In view of the replies given to the
preceding questions there is no need to answer the fifth question.
Costs
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.
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 January 12
1994, hereby rules:
1. Neither articles 13 and 15 of
Commission Regulation (EEC) No 3567/92 of December 10 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
organisation of the market in sheepmeat and goatmeat nor articles 39 and 55 of
Commission Regulation (EEC) No 3886/92 of December 23 1992 laying down detailed
rules for the application of the premium schemes provided for in Council
Regulation (EEC) No 805/68 on the common organisation 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.
