van Dijk v Gemeente Kampen

Agricultural land – Lease – Single payment scheme – EC having integrated administration and control system for certain aid schemes – Appellant leasing parcels of land from respondent – Appellant claiming support under income payment scheme – Whether EC rules requiring appellant to transfer payment entitlements to respondent on termination of lease — Preliminary ruling made Since 1982, the appellant had leased from the respondent several parcels of agricultural land in the Netherlands. For a number of years, he had had received compensatory payments under an EC support scheme for producers of certain crops. In 2003, he became entitled to payments in accordance with Council Regulation (EC) 1782/2003, which established an income support scheme for farmers. The lease between the parties did not contain provisions relating to the income support scheme or payment entitlementsA dispute arose between the appellant and the respondent regarding the nature and extent of the obligations under the lease. The national court held that the appellant was obliged, on the expiry of the lease, to transfer to the respondent the land and the payment entitlements in respect of that land, in return for compensation equivalent to 50% of the value of those entitlements. Moreover, the appellant was not permitted to transfer the payment entitlements without the respondent’s prior approval. The appellant appealed. The appeal court took the view that the outcome of the case depended on the interpretation of the applicable Community rules, it stayed the proceedings and made a reference to the European Court of Justice for a preliminary ruling as to whether Council Regulations (EC) 1782/2003 and (EC) 795/2004, which set out the rules for implementing the single payment scheme, or the prohibition on unjust enrichment required a lessee, in the absence of national rules, to deliver to the lessor the leased land, including payment entitlements, on the expiry of the lease. Held: A preliminary ruling was made.Community law did not require a lessee, on the expiry of the lease, either to deliver the leased land and the payment entitlements to the lessor, or to pay it compensation. It was apparent from both the objectives and the scheme of Council Regulation (EC) 1782/2003 that, in the absence of a clause to the contrary, payment entitlements remained with the lessee on the expiry of the lease. The single payment scheme constituted an income support for farmers, the objective of which was to ensure a fair standard of living for the agricultural community. The payment entitlements granted to a farmer under the single payment scheme depended on the number of hectares that he held during the reference period and the payments that he had received under earlier support schemes. In addition, there had to be a link between payment entitlements and agricultural areas in order to avoid speculative transfers leading to the accumulation of payment entitlements without a corresponding agricultural basis. By contrast, it was not apparent from article 36(1) of Regulation 1782/2003 that the payment entitlements were linked to specific parcels, in particular to those that the farmer held during the reference period. Ultimately, it was important was that the number of payment entitlements corresponded to an equivalent number of eligible hectares, and not to specific parcels. Regulation 1782/2003 expressly provided for member states, in certain circumstances, to authorise a farmer to modify his declaration with regard to the parcels corresponding to eligible areas linked to a payment entitlement on condition that he respected the number of hectares corresponding to his payment entitlements and the conditions for granting the single payment for the area concerned. In the case of a lease or similar transactions, payment entitlements could be transferred only if they were accompanied by the transfer of an equivalent number of eligible hectares. Furthermore, except in the case of transfer by actual or anticipated inheritance, payment entitlements could be transferred only to another farmer established within the same member state.The single payment scheme was aimed at farmers, namely persons who exercised an “agricultural activity” consisting of the production, rearing or growing of agricultural products or maintaining land in a good agricultural and environmental condition. However, a lessor of land was not necessarily a farmer within the meaning of Regulation 1782/2003. Accordingly, if the EC legislature had wanted payment entitlements to revert to the lessor in all circumstances on the expiry of the lease, it would have enacted a provision to that effect.Regulations 1782/2003 and 795/2004 did not oblige farmers who had leased land to transfer their payment entitlements to the lessor on the expiry of the lease. There was also no reason to suppose that the principle prohibiting unjust enrichment required a farmer, on the termination of the lease, to transfer his payment entitlements to the lessor or to pay him compensation. The right to restitution from the person enriched was conditional on there being no valid legal basis for the enrichment. Payment entitlements to a farmer would not be devoid of a legal basis if they were attributed to him in accordance with the provisions of Regulation 1782/2003. J van Mierlo (advocaat) appeared for the appellant; GF Snijders (advocaat) appeared for the respondent; C Wissels and M de Grave (acting as agents) appeared for the Netherlands Government; M Lumma (acting as agent) appeared for the German Government; E Leftheriotou and A Vasilopoulou (acting as agents) appeared for the Greek Government; F Clotuche-Duvieusart and B Burggraaf (acting as agents) appeared for the EC Commission. Eileen O’Grady, barrister