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THE FACTS
The applicant, EEG-Slachthuis Verbist Izegem N.V., is a public limited company under Belgian law which specialises in livestock slaughter and has its head office in Izegem (Belgium). It was represented before the Court by Ms R. Geelen and Mr L. Cornelis, lawyers practising in Brussels.
The facts of the case, as submitted by the parties, may be summarised as follows.
1. The Law of 24 March 1987 on animal health and the royal decree of 11 December 1987
Section 32 (2) (since repealed) of the Law of 24 March 1987 on animal health provided for the setting-up of an animal health and production fund (“the fund”) attached to the Ministry of Agriculture. Its purpose was to contribute towards the financing of compensation, subsidies and other benefits in connection with combating animal diseases and improving animal hygiene and health and the quality of livestock and livestock products. The Law also stipulated that the fund would be financed in particular by compulsory contributions payable by individuals and companies engaged in the production, processing, transport, preparation, sale or marketing of livestock. The amounts and procedures for collection of the contributions were to be laid down by royal decree.
In order to give effect to this statutory provision, a royal decree on compulsory contributions to the animal health and production fund was enacted on 11 December 1987, entering into force on 1 January 1988. Article 2 of the royal decree set the initial amount of the compulsory contribution at 315 Belgian francs (BEF) (approximately 7.80 euros (EUR)) per slaughtered bovine animal, BEF 105 (approximately EUR 2.60) per slaughtered calf and BEF 20 (approximately EUR 0.50) per slaughtered pig. These amounts were subsequently amended by royal decrees dated 8 April 1989, 23 November 1990, 15 May 1995, 25 February 1996 and 13 March 1997.
2. Origins and consequences of the European Commission Decision of 7 May 1991
In late 1986 the European Commission decided to conduct an overall review of the charges payable in the agriculture and fisheries sectors in the Member States and the use made of the resulting revenue, in particular in the form of aid. In order to obtain the information, it sent out a standard letter to all the Member States during 1987. In response, the Belgian authorities informed the Commission of the measures introduced by the Law of 24 March 1987 and the royal decree of 11 December 1987.
On 7 May 1991 the European Commission issued a decision in which it found that the aid financed by the compulsory contributions under the royal decree of 11 December 1987 was incompatible with the common market within the meaning of Article 92 (current Article 87) of the Treaty establishing the European Community (“the EC Treaty”). Under the terms of that Article, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is incompatible in principle with the common market, in so far as it affects trade between Member States. In this particular case, the incompatibility arose out of the fact that the compulsory contributions were payable also in respect of animals imported from other Member States but were used exclusively to fund aid to Belgian breeders. The Commission took the view that the system in question should therefore be abolished, in so far as products imported from other Member States also attracted the compulsory contribution at the stage of slaughter.
In the body of the decision the Commission further noted that the Belgian authorities had not notified it in advance of their plans to introduce the system established by the Law of 24 March 1987 and the royal decree of 11 December 1987. They had therefore acted in breach of Article 93(3) (current Article 88(3)) of the EC Treaty, which requires Member States to inform the Commission of any plans to grant or alter aid so that it may examine their compatibility with the common market, and which prohibits the Member State concerned from putting its proposed measures into effect until the Commission has taken a final decision.
According to the settled case-law of the Court of Justice in Luxembourg, the prohibition on putting the proposed measures into effect referred to in the final sentence of Article 93(3) has direct effect and gives rise to rights for individuals which the national courts must safeguard (see in particular the following judgments of the Court of Justice of the European Communities (CJEC): judgment of 11 December 1973, Case 120/73, Gebrüder Lorenz GmbH v. Federal Republic of Germany and Land Rheinland/Pfalz; judgment of 21 November 1991, Case C-354/90, Fédération nationale du commerce extérieur des produits alimentaires et Syndicat national des négociants et transformateurs de saumon v. French Republic; judgment of 11 July 1996, Case C-39/94, Syndicat français de l'Express international (SFEI) and others v. La Poste and others). The Court of Justice has also held that “the Commission's final decision does not have the effect of regularizing ex post facto the implementing measures which were invalid because they had been taken in breach of the prohibition laid down by the last sentence of Article 93(3) of the Treaty, since otherwise the direct effect of that prohibition would be impaired and the interests of individuals, which ... are to be protected by national courts, would be disregarded.” According to the Court of Justice, “any other interpretation would have the effect of according a favourable outcome to the non‑observance by the Member State concerned of the last sentence of Article 93(3) and would deprive that provision of its effectiveness” (see CJEC judgment of 21 November 1991, Case C-354/90, Fédération nationale du commerce extérieur des produits alimentaires et Syndicat national des négociants et transformateurs de saumon v. French Republic, and judgment of 11 July 1996, Case C-39/94, Syndicat français de l'Express international (SFEI) and others v. La Poste and others).
3. Judgment C-17/91 of the Court of Justice of the European Communities and judgment of the Turnhout Court of First Instance of 10 February 1994 in the case of G. Lornoy N.V. and Others
After proceedings were brought before it by several companies engaged in the trading of calves and seeking reimbursement by the Belgian State of the compulsory contributions they had made to the fund which they considered to be contrary to Articles 12, 13 and 95 of the EC Treaty, the Turnhout Court of First Instance referred a number of questions to the Luxembourg Court of Justice for a preliminary ruling. The questions were aimed essentially at ascertaining
(i) whether Articles 12 and 13, 30 et seq., 92 and 95 of the Treaty precluded the introduction of a compulsory contribution which constituted a parafiscal charge levied on domestic and imported products alike, in accordance with the same collection procedures, and paid into a fund which operated solely for the benefit of domestic production, and
(ii) whether the provisions in question had direct effect.
In its judgment of 16 December 1992 the Court of Justice replied in substance that
(i) a compulsory contribution constituting a parafiscal charge, applied under the same conditions as regards its collection to both domestic and imported products, the revenue from which was used for the benefit of domestic products only, constituted a charge having an effect equivalent to customs duties prohibited by Article 12 of the Treaty, if the advantages accruing from it wholly offset the burden borne by those products;
(ii) if those advantages only partly offset the burden borne by domestic products, such a charge constituted discriminatory taxation prohibited by Article 95 of the Treaty;
(iii) depending on the use to which the revenue was put, a parafiscal charge of that kind could also constitute State aid incompatible with the common market if the conditions for the application of Article 92 of the Treaty were met, that being a matter for the Commission to determine in accordance with the procedure laid down for that purpose in Article 93 of the Treaty;
(iv) the provisions of Articles 12, 13 and 95 of the Treaty gave rise to rights for individuals which the national courts were obliged to uphold; it was also for the national courts to safeguard the rights of individuals where, in introducing the charge, the Member State concerned failed to comply with its obligations under Article 93(3) of the Treaty, and where a Commission decision under Article 93(2) of the Treaty found the levying of the charge as a method of financing State aid to be incompatible with the common market.
Following this judgment by the Court of Justice, the Turnhout Court of First Instance found that the compulsory contributions to the fund constituted discriminatory taxation prohibited by Article 95 of the EC Treaty. In a judgment of 10 February 1994 it ordered the Belgian State to repay to the applicants the amounts they had paid in respect of such contributions. The State appealed.
4. Section 185 of the Law of 21 December 1994 laying down social and other provisions, amending section 32 of the Law of 24 March 1987
Section 32 of the Law on animal health was amended by section 185 of the Law of 21 December 1994 laying down social and other provisions.
The new system thus introduced stipulated that the royal decrees relating to the compulsory contributions were to be ratified by the legislature within one year of their publication in the Belgian Official Gazette. The royal decree of 11 December 1987 on compulsory contributions to the animal health and production fund, as amended by the royal decrees of 8 April 1989, 23 November 1990 and 19 April 1993, was ratified by means of the above‑mentioned section 185 of the Law of 21 December 1994, with retrospective effect from 1 January 1988. However, the ratification related only to contributions paid in respect of domestic animals. With regard to imported animals, on the other hand, the legislature, seeking to give effect to the European Commission Decision of 7 May 1991 and the judgment of the Court of Justice of 16 December 1992, provided for contributions paid since 1 January 1988 to be reimbursed. To obtain reimbursement, the claimants had to prove that (1) the compulsory contributions paid had related to imported animals, (2) they had not taken measures to pass the contributions back to the producer, or such measures had been cancelled and (3) they had paid all the compulsory contributions due in respect of domestic animals.
As in the case of the Law of 24 March 1987, the Belgian legislature did not inform the European Commission before enacting the Law of 21 December 1994 of its intention to alter the existing system of aid.
5. Application for reimbursement lodged by the applicant company on 17 February 1995
On 17 February 1995 the applicant company brought an action against the Belgian State before the Brussels Court of First Instance seeking the reimbursement of BEF 57,127,902 (approximately EUR 1,400,000), corresponding to the compulsory contributions it had paid into the animal health and production fund between 1 January 1988 and the beginning of 1994.
The applicant company, arguing that the contributions were contrary to the EC Treaty, applied for reimbursement on the basis of the provisions governing sums wrongly paid or, in the alternative, on the basis of the State's liability in tort.
According to the information available to the Court, the case is still pending before the Brussels Court of First Instance.
6. Judgment of the Antwerp Court of Appeal of 7 November 1995 in the case of G. Lornoy N.V. and Others
In a judgment of 7 November 1995 the Antwerp Court of Appeal declared unfounded the appeal by the Government against the judgment of the Turnhout Court of First Instance of 10 February 1994.
In its judgment the Court of Appeal considered in particular that the Government had been wrong to assert that the European Commission had found the system of aid to be incompatible with the Treaty only with regard to the charging of contributions in respect of animals imported from other Member States. On the contrary, in the view of the Court of Appeal, the Commission decision had found the system as a whole to be incompatible with the Treaty, as an essential component of the system, namely the parafiscal charges levied on imported animals, was incompatible with the common market.
With regard to the new system introduced by the Law of 21 December 1994 the Court of Appeal found that, in so far as it entailed altering the system of aid for the purposes of Article 93 (3) of the EC Treaty, it should have been notified to the Commission in advance. As the requirement to inform the Commission had not been met, no valid basis existed for implementing the new system.
The Government appealed against the judgment on points of law.
7. The Law of 23 March 1998 establishing a budgetary fund for the health and quality of animals and animal products
In 1998 the system was amended once more. Section 32 of the Law of 24 March 1987 was repealed and replaced by an autonomous law of 23 March 1998. The animal health and production fund was re‑named the “budgetary fund for the health and quality of animals and animal products”.
Section 5 of the Law of 23 March 1998 provided for the fund to continue to be financed in particular by compulsory contributions from individuals and companies engaged in the production, processing, transport, preparation, sale and marketing of animals and animal products.
Section 6 stipulated that, in the future, the amount of the contributions and the procedures for collection would be laid down by royal decree, it being understood that they would not be charged in respect of imported or exported animals.
With regard to the past, however, the amount of the contributions payable by abattoirs was laid down by section 14 of the Law, which reproduced word for word the content of the royal decrees of 11 December 1987, 8 April 1989, 23 November 1990, 15 May 1995, 25 February 1996 and 13 March 1997 on compulsory contributions to the animal health and production fund for each of the periods covered by the respective decrees. In addition, section 23 of the Law of 23 March 1998 stipulated that, unlike most of the provisions of the law, which would enter into force on the day of its publication in the Official Gazette, section 14 would apply retrospectively from 1 January 1988, the date of entry into force of the royal decree of 11 December 1987. Section 17, meanwhile, provided for automatic compensation of the difference between the amounts due under section 14 and those paid under the royal decrees on compulsory contributions to the animal health and production fund.
However, like the Law of 21 December 1994, section 14 of the Law of 23 March 1998 made an explicit distinction between domestic animals and imported animals. It stipulated that, in the case of the latter, the compulsory contributions which had been paid from 1 January 1988 onwards under the royal decree of 11 December 1987, as amended by the royal decrees of 8 April 1989, 23 November 1990, 19 April 1993, 15 May 1995, 25 February 1996 and 13 March 1997, would be reimbursed to claimants who could provide proof that the compulsory contributions they had paid related to imported animals, that they had not taken any measures to pass those contributions back to the producer, or that such measures had been cancelled, and that they had paid all the contributions payable in respect of domestic animals, including exported slaughtered animals and exported productive livestock.
Unlike the earlier legislation, a draft of the Law of 23 March 1998 was notified in advance to the European Commission. In a letter of 9 August 1996 the Commission informed the Belgian Government that it had no objections to raise in respect of the proposed aid measures.
Under the consolidated Law on the Conseil d'Etat of 12 January 1973, the Legislation Section of the Conseil d'Etat issued an opinion on 4 March 1997 relating in particular to the compatibility of the draft Law with the Convention. On that occasion, the Conseil d'Etat issued a reservation as to the validity of the draft rules. The relevant passages of its opinion read as follows:
“It appears ... that the Belgian State is involved in a dispute with a number of parties who seek the reimbursement of contributions paid. The case gave rise to a request for a preliminary ruling by the Court of Justice. In that connection, the Court ruled first that a charge applied under the same conditions as regards its collection to both domestic and imported products, but the revenue from which was used for the benefit of domestic products only, constituted a prohibited charge having an effect equivalent to customs duties. The Court further ruled that a charge of that kind could constitute State aid incompatible with the common market, and that, if the European Commission was not informed in advance of such aid, individuals could seek to have it declared null and void by the domestic courts as a result.
The Antwerp Court of Appeal recently delivered judgment in the same case. According to the Court of Appeal, the rules contained in section 32 (2) of the Law of 24 March 1987 on animal health were defective, even after they had been amended by the Law of 21 December 1994, on account of the fact that they had not been notified to the European Commission. The court also found that the defects were such that the above-mentioned statutory provision could not serve as a valid legal basis for any implementing measures. The Belgian State was therefore ordered to reimburse certain amounts which had been paid under the royal decrees enacted to give effect to the above-mentioned statutory provision.
The Belgian State has appealed against that judgment on points of law.
As the case is still pending, it is not for the Conseil d'Etat to adopt a position on the scope of the Court of Appeal judgment and whether it was correct.
Should it transpire that the draft rules are decisive for the eventual outcome of the case, it would be appropriate to conclude that the Belgian State influenced the proceedings to its own advantage through the intervention of one of the organs of State.
According to the case-law of the European Court of Human Rights, interference by the legislature in pending proceedings may be in breach of the principle of equality of arms between the parties if it is aimed at influencing the outcome of the proceedings. Such interference may also give rise to a violation of Article 6 § 1 of the European Convention for the Protection of Human Rights and Fundamental Freedoms.
For that reason, the Conseil d'Etat wishes to issue a reservation as to the validity of the draft rules.”
The Government responded as follows to the observations of the Conseil d'Etat, in the explanatory memorandum to the draft Law:
“In its opinion, the Conseil d'Etat states that 'such interference may also give rise to a violation of Article 6 § 1 of the European Convention for the Protection of Human Rights and Fundamental Freedoms'.
It should be noted that the European Commission approved the preliminary draft Law which ... was notified to it in advance in accordance with Article 93 (3) of the EC Treaty.
The case-law of the European Court of Human Rights referred to by the Conseil d'Etat cannot be applied to sections 14 to 18 of the draft Law. The authorities have no intention of interfering in ongoing proceedings or of preventing a court from ruling on a particular issue. However, for budgetary reasons, they are obliged to limit the negative financial impact of judicial decisions which would require the Belgian State to repay very considerable sums of money.
The system provided for by sections 14 to 18, which is partly retrospective, can be considered to be reasonable in view of the need to ensure the proper functioning of the fund in the general interest. The budgetary impact of having to repay the amounts concerned would imperil the funding of animal health policy...
In order to prevent such an outcome, the authorities must act by laying down retrospective provisions in a general law.”
8. Judgment No. 17/2000 of 9 February 2000 of the Administrative Jurisdiction and Procedure Court
On 30 October 1998 the applicant company, in common with other companies engaged in the livestock trade, lodged an application with the Administrative Jurisdiction and Procedure Court seeking to have sections 14 and 23 of the Law of 23 March 1998 set aside.
In support of its application, it submitted in particular that the provisions in question were in breach of Articles 10 and 11 of the Constitution, taken in conjunction with Articles 144, 145 and 159 of the Constitution, with Article 6 § 1 of the European Convention on Human Rights, with Article 1 of Protocol No. 1, with the principle of legal certainty and with the general legal principle of the non-retrospective application of legislation.
In enacting sections 14 and 23, the legislator had replaced the provisions of a royal decree with a retrospective statutory rule. In the view of the applicant company, that amendment prevented courts and tribunals before which proceedings had been brought from ruling on the lawfulness of the royal decree under Article 159 of the Constitution, which stated in particular that courts and tribunals could apply decrees only if they were in accordance with the law. The result, in the view of the applicant company, was an unjustified difference in treatment between those citizens to whom the provisions applied and the rest of the population, with the former being deprived of the judicial safeguards contained in Articles 144, 145 and 159 of the Constitution.
In its judgment No. 17/2000 of 9 February 2000 the Administrative Jurisdiction and Procedure Court dismissed the applications.
More specifically, the submissions based on a violation of Articles 10 and 11 of the Constitution, taken in conjunction with Article 6 § 1 and 14 of the European Convention on Human Rights, Article 1 of Protocol No. 1 and the general principles of the non-retrospective application of legislation and the separation of powers, were dismissed on the following grounds:
“B.3.1 By applying the contributions payable by slaughterhouses retrospectively..., the legislature infringed their right to a fair hearing, equality of arms and access to a court in a discriminatory manner, as they were deprived of the possibility of alleging before the courts a violation of Article 88 (3) (former Article 93 (3)) of the EC Treaty, or of securing the enforcement of judicial decisions finding that the above provision had been violated by section 32 (2) and (3) of the Law of 24 March 1987 on animal health.
B.3.2 Article 88 (3) (former Article 93 (3)) of the EC Treaty requires Member States to inform the Commission of any plans to grant or alter aid, so that their compatibility with the common market can be examined.
The same provision prohibits the Member State concerned from putting the proposed measures into effect until the Commission has taken a final decision. Aid measures which are implemented prematurely, and a fortiori those implemented without the Commission having been informed, are unlawful.
B.3.3 On no account may the impugned provisions result in the challenging of final judicial decisions. Were they to pursue such an aim, they would be in breach of Articles 10 and 11 of the Constitution by depriving a category of persons of the benefit of final judicial decisions, something which cannot be justified in any circumstances.
It is true that the provisions in question are liable to influence proceedings currently in progress before the ordinary courts. However, they do not make it impossible for the applicants to allege a violation of Article 88 (3) (former Article 93 (3)) of the EC Treaty. The court further observes that the second complaint, in case number 1452, alleges a violation of provisions of the Constitution taken in conjunction with Articles 87 and 88 (former Articles 92 and 93) of the EC Treaty.
The court notes that the aid measures provided for by the Law of 24 March 1987 were implemented without prior notification to the Commission and that the corresponding contributions should therefore in principle be reimbursed. However, that finding does not mean that the provisions currently at issue violate Articles 87 and 88 (former Articles 92 and 93) of the EC Treaty, as they were notified to the Commission in time and were found to be compatible with the common market.
It should also be observed that the applicants are not challenging the aid measures as such, only the use to which the contributions designed to fund those measures are put.
The failure to comply with the requirement to inform the Commission of aid measures in advance does not create an inviolable right to permanent exemption from payment of the contributions in question, including those based on a new instrument whose compatibility with the EC Treaty and the Constitution is beyond dispute. That instrument would be unconstitutional only if it was itself in breach of Articles 10 and 11 of the Constitution taken in conjunction with the provisions relied on by the applicants.
B.4 The principle of the non-retrospective application of legislation is a safeguard aimed at preventing legal uncertainty. It requires the content of laws to be foreseeable and accessible so that individuals can foresee, to a reasonable degree, the consequences of a particular measure when it is taken.
Applying a provision retrospectively can be justified only if it is essential in order to achieve an aim which is in the public interest, such as the proper functioning or continuity of the public service. Should it transpire, moreover, that applying a provision retrospectively influences the outcome of one or more sets of judicial proceedings in a particular way or prevents the courts from ruling on a particular point of law, the principle in question requires that exceptional circumstances must exist justifying such intervention by the legislature, which restricts, for a particular section of the population, the judicial safeguards afforded to every citizen.
B.5 Sections 14, 15 and 23 of the Law of 23 March 1998 do not conflict with the provisions of European law on State aid, as the legislature has abolished the contributions which were levied on imported animals. They do not create legal uncertainty, as they reproduce the content of the royal decree of 11 December 1987 on compulsory contributions to the animal health and production fund. While it is true that the impugned provisions apply retrospectively, they do not contain any new provisions which depart from those contained in the above-mentioned royal decree, with the result that they merely consolidate provisions whose scope was known to the persons concerned. The latter could have expected the measure to be retained once the requirement to inform the Commission had been met. The impugned Law was notified to the European Commission in accordance with Article 88(3) (former Article 93(3)) of the EC Treaty, and the Commission, in a letter of 9 August 1996, informed the Government that 'having examined the Law pursuant to Articles 87 to 89 (former Articles 92 to 94) of the Treaty', it had no objection to its introduction. Furthermore, since the European Commission Decision of 7 May 1991, it had already been established that the aid referred to in the royal decree of 11 December 1987 was incompatible with the common market only 'in so far as products imported from other Member States also attracted the compulsory contribution at the stage of slaughter'.
B.6 The impugned contributions are an important source of financing for the fund for the health and quality of animals and animal products. The legislature was entitled to take the view that it was in the public interest, and in particular in the interest of public health, to maintain the measure, which has been in existence since 1987 and is vital to the health and quality of animals and animal products.
B.7 As regards the possibility that the impugned provisions may influence the outcome of ongoing proceedings, the fact, noted at B.3.3 above, that the Commission unreservedly found the Law of 23 March 1998 to be compatible with the common market, together with the overriding importance of public health, justify the intervention by the legislature in the present case.
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B.10 As the applicants have a legitimate expectation that the courts will find some of the contributions paid on the basis of the Law of 24 March 1987 and of the implementing decrees to be unlawful, the claim to recovery of the contributions may be regarded as a possession within the meaning of the Convention provision relied on by the applicants
However, the impugned Law does not deprive the applicants of their property, as, by repealing the legal basis for those contributions, it acknowledges that they were wrongly paid. The fact that it provides for repayment of the difference between those claims and the contributions due on the basis of the provisions at issue cannot be regarded as being in breach of Article 1 of Protocol No. 1, as the contributions have not been found to be contrary to Articles 10 and 11 of the Constitution, taken in conjunction particularly with Article 6 of the Convention. Accordingly, the impugned Law strikes a fair balance between the general interest and the interest of the applicants, as it amounts to controlling the use of property in a way which was arguably necessary in order to secure the payment of taxes or other contributions within the meaning of Article 1 of Protocol No. 1.”
9. Judgment of the Court of Cassation of 19 January 2001 dismissing the Government's appeal against the judgment of the Antwerp Court of Appeal of 7 November 1995 in the case of G. Lornoy N.V. and Others
In a judgment of 19 January 2001 the Court of Cassation dismissed an appeal by the Government against the judgment of the Antwerp Court of Appeal of 7 November 1995.
The relevant passages of the Court of Cassation judgment read as follows:
“The domestic courts are required to uphold the rights of individuals alleging a violation of the prior notification requirement, by drawing all the inferences, in accordance with their national law, as regards the validity of measures implementing the aid in question and the recovery of the financial support granted in breach of that provision.
The Commission's decision regarding the compatibility of national aid with the conditions laid down in Article 87 (former Article 92) of the Treaty does not cover the unlawfulness of implementing measures which violate the prohibition imposed by Article 88 (3) (former Article 93 (3)) of the EC Treaty.
Having observed that the new system was not notified to the Commission, the judgment found, without breaching the relevant legal provisions and the general legal principle referred to in the grounds of appeal, that, in accordance with Article 88 (3) (former Article 93 (3)) of the EC Treaty, the penalty for breach of the regulations made it impossible for the Member State concerned to implement the system of aid introduced by the original Law of 24 March 1987 on animal health and the royal decrees implementing that Law.
...
In accordance with Article 88 (3) (former Article 93 (3)) of the EC Treaty, the Commission must be informed in good time of any plans to grant or alter aid.
As regards (new) aid which Member States may intend to grant, a preliminary procedure exists, in the absence of which no aid can be considered properly granted.
According to the judgment of the Court of Justice of 17 June 1999 in Case C‑295/97, the prior notification requirement applies not only to the granting of aid but also to its alteration. That requirement must also be complied with where the Commission considers that the aid is incompatible, in whole or in part, with European law and the Member State amends the previous system by replacing it with a new system of aid.
The above requirement may be fulfilled in the manner specified by the Commission in its decision ordering the prohibited aid to be abolished. If the requirement is not met, the aid in question will once more become unlawful.
Section 32 of the Law of 24 March 1987 was amended by section 185 of the Law of 21 December 1994, more particularly in relation to the arrangements for financing the animal health and production fund. In respect of domestic animals, section 32 ratifies, with effect from 1 January 1988, the royal decrees of 11 December 1987 relating to compulsory contributions, as amended; in respect of imported animals, it orders the reimbursement of contributions paid from that date onwards, subject to certain conditions.
While it was partly intended to bring the system of aid into line with the Commission Decision of 7 May 1991, the above-mentioned legislative amendment simultaneously introduced a new basis for the contributions and replaced the old system of aid with a new one.
In its Decision of 7 May 1991 the Commission gave Belgium two months from the date on which the decision was notified in which to inform it of the measures taken to give effect to the decision.
The judgment noted that neither the original system of aid nor the alteration of that system had been notified to the Commission.
In finding that the altered system should have been notified to the Commission and that, in the absence of such notification, the sums in question had been wrongly paid, the judgment was not in breach of the legal provisions in this sphere relied on by the appellant...”
10. Judgments C-261/01 and C-262/01 of the Court of Justice of the European Communities of 21 October 2003
Other companies in turn brought proceedings against the Belgian State seeking repayment of the contributions in question. When the courts of first instance allowed the applications, the State appealed against the judgments before the Antwerp Court of Appeal. The latter decided to refer several questions to the Court of Justice of the European Communities for a preliminary ruling.
In a judgment of 21 October 2003 the Court of Justice replied in substance as follows:
(i) Article 93(3) of the EC Treaty (current Article 88(3)) must be interpreted as precluding, in circumstances such as those in the main proceedings, the levying of charges which finance specifically an aid scheme that has been declared compatible with the common market by a Commission decision, in so far as the charges were imposed retrospectively in respect of a period prior to the date of that decision;
(ii) the Commission Decision of 9 August 1996 relating to aid measure No. N 366/96 did not approve the retrospective application of the Law of 23 March 1998 on the establishment of a budgetary fund for the health and quality of animals and animal products.
COMPLAINTS
1. Relying on Article 6 § 1 of the Convention, the applicant company complained that sections 14 and 23 of the Law of 23 March 1998 establishing a budgetary fund for the health and quality of animals and animal products violated its right of access to a court and the principle of equality of arms. In enacting the Law the legislature had, in its opinion, interfered in an unacceptable manner in the proceedings of an economic nature between the company and the Belgian State. The royal decree of 11 December 1987, the lawfulness of which it had challenged, had effectively been repealed with retrospective effect from 1 January 1988, and its content - like that of the subsequent decrees – had been reproduced in section 14 of the Law, also with retrospective effect from 1 January 1988. As a result of the legislature's actions, courts before which proceedings had been brought were prevented from ruling, in accordance with Article 159 of the Belgian Constitution, on the lawfulness of the royal decree in question. Consequently, the action brought by the applicant company was deprived of any effect.
In the view of the applicant company, the approach adopted also amounted to a violation of Article 6 § 1 of the Convention taken in conjunction with Article 14. By giving the content of the royal decree of 11 December 1987 the status of a legislative provision ex post facto, the legislature had effectively introduced an unjustified difference in treatment between those citizens affected by the provision and the rest of the population, as only the former were deprived of the judicial safeguards enshrined in particular in Article 159 of the Constitution.
2. Relying on Article 1 of Protocol No. 1, the applicant company further submitted that the Law of 23 March 1998 constituted unjustified interference with its right to peaceful enjoyment of its possessions, as it abolished with retrospective effect the claim which the applicant company believed it had against the Belgian State on the basis of the unlawful nature of the royal decree of 11 December 1987.
In the view of the applicant company, the approach adopted also amounted to a violation of Article 1 of Protocol No. 1 taken in conjunction with Article 14 of the Convention. By giving the content of the royal decree of 11 December 1987 the status of a legislative provision ex post facto, the legislature was preventing courts from ruling on the lawfulness of the royal decree in question in accordance with Article 159 of the Belgian Constitution. The result was an unjustified difference in treatment between those citizens affected by the provisions in question and the rest of the population, the former being deprived of the right to secure repayment of the sums wrongly paid.
THE LAW
The applicant company submitted that the Law of 23 March 1998, which had replaced the royal decree of 11 December 1987 retrospectively, had been enacted in breach of several provisions of the Convention. It alleged first of all that there had been a violation of Article 6 § 1 of the Convention, the relevant parts of which read:
“In the determination of his civil rights and obligations ..., everyone is entitled to a fair ... hearing within a reasonable time by [a] ... tribunal...”
The applicant company further complained that there had been a violation of Article 6 § 1 taken in conjunction with Article 14 of the Convention, which reads:
“The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”
Lastly, the applicant society alleged that there had been a violation of its right to peaceful enjoyment of its possessions as secured by Article 1 of Protocol No. 1, taken alone and in conjunction with Article 14. Article 1 of Protocol no. 1 reads:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
A. Whether domestic remedies were exhausted
In response to the complaints by the applicant company, the Government raised a preliminary objection of failure to exhaust domestic remedies.
In the Government's view, the applicant company should have awaited the final outcome of the action seeking reimbursement of the contributions which it had brought before the Court of First Instance and which was still pending. Taking the view that a violation of the Convention would only be possible if the applicant company failed to secure repayment of the contributions at issue, the Government submitted that an appeal before the courts constituted the sole domestic remedy capable of determining whether the authorities had been in breach of their obligations under the Convention.
The applicant company pointed out that it had already submitted all of its complaints under the Convention to the Administrative Jurisdiction and Procedure Court. Having expressly relied on Article 6 of the Convention and Article 1 of Protocol No. 1 in its proceedings before that supreme judicial body, it considered that it had fully satisfied the requirement to exhaust domestic remedies.
The Court reiterates that the purpose of the rule requiring domestic remedies to be exhausted is to afford the Contracting States the opportunity of preventing or putting right the violations alleged against them before those allegations are submitted to the Court (see, among many other authorities, Selmouni v. France [GC], no. 25803/94, § 74, ECHR 1999‑V).
In applying the rule of exhaustion, the Court must take realistic account not only of the existence of formal remedies in the legal system of the Contracting Party concerned but also of the context in which they operate and the personal circumstances of the applicant (see, among other authorities, Beïs v. Greece, judgment of 20 March 1997, Reports of Judgments and Decisions 1997‑II, p. 569, § 32).
The Court notes that the applicant company made several submissions to the Administrative Jurisdiction and Procedure Court alleging a violation of Articles 10 and 11 of the Belgian Constitution taken in conjunction with Article 6 § 1 of the Convention and Article 1 of Protocol No. 1. As those submissions were rejected, the applicant company was entitled to believe that the Administrative Jurisdiction and Procedure Court did not consider that the impugned legislation interfered unlawfully with the rights protected by the Convention and its Protocols.
Having regard to the rank and authority of the Administrative Jurisdiction and Procedure Court in the court system of the Contracting State, it could, in the light of that court's reasoning, be assumed that any other remedy of which the applicant could have availed itself on the basis of the provisions of the Convention and its Protocols would have been bound to fail (see Pressos Compania Naviera S.A. and Others v. Belgium, judgment of 20 November 1995, Series A no. 332, p. 20, § 27).
Furthermore, the Court reiterates that an applicant who has availed himself of a remedy – such as the application to the Administrative Jurisdiction and Procedure Court in the present case – capable of redressing directly the situation complained of, is not bound to have recourse to other remedies available to him (see, in particular, Avci v. Belgium (dec.), no. 61886/00, 6 May 2004).
The Government's objection cannot therefore be allowed.
B. The merits
The applicant company first submitted that, in enacting sections 14 and 23 of the Law of 23 March 1998, the legislator had infringed its right of access to a court and the principle of equality of arms as guaranteed by Article 6 of the Convention. In its view, the two provisions in question amounted to unacceptable interference in the proceedings between it and the Belgian State. The Law prevented courts from ruling, under Article 159 of the Belgian Constitution, on the lawfulness of the repealed royal decree, thereby depriving the action brought by the applicant company of any effect. In addition, the technique employed by the legislature gave rise to a difference in treatment, of a discriminatory nature, between the persons covered by the provisions in question and the rest of the population, in violation of Article 6 § 1 taken in conjunction with Article 14 of the Convention.
The applicant company further submitted that sections 14 and 23 of the Law of 23 March 1998 amounted to unjustified interference with its right to peaceful enjoyment of its possessions guaranteed by Article 1 of Protocol No. 1, as its provisions wiped out retrospectively the claim which the applicant company believed it had against the Belgian State based on the unlawful nature of the royal decree of 11 December 1987. Lastly, the applicant company alleged a violation of Article 1 of Protocol No. 1 taken in conjunction with Article 14 of the Convention, as the impugned provisions introduced discrimination between the persons deprived of their right to repayment of the wrongly paid contributions and the rest of the population.
For their part, the Government denied that there had been a violation of Article 6 of the Convention and Article 1 of Protocol No. 1, taken alone or in conjunction with Article 14 of the Convention. The measures at issue had not been designed to intervene on the State's behalf in ongoing proceedings, nor had they had that effect. The true purpose of the legislation was to correct two legal defects in the original legislation, namely the discrimination affecting imported animals and the failure to notify the system in advance to the European Commission. The Government stressed the fact that the Law did not contain any new provisions that had not been in the original rules. They submitted that the Law in no sense reduced the scope of review by the courts, nor did it prevent the applicant company from relying before the courts on the primacy of directly applicable Community law over domestic legislation. The Government also referred to the public-health objective pursued by the legislation at issue, arguing that the system put in place did not interfere in an unreasonable manner with the rights of the persons concerned.
1. Article 6 of the Convention
The Court reaffirms that while in principle the legislature is not precluded in civil matters from adopting new retrospective provisions to regulate rights arising under existing laws, the principle of the rule of law and the notion of fair trial enshrined in Article 6 preclude any interference by the legislature – other than on compelling grounds of the general interest – with the administration of justice designed to influence the judicial determination of a dispute (see Stran Greek Refineries and Stratis Andreadis v. Greece, judgment of 9 December 1994, Series A no. 301‑B, p. 82, § 49; Papageorgiou v. Greece, judgment of 22 October 1997, Reports 1997‑VI, p. 2228, § 37; and National & Provincial Building Society, Leeds Permanent Building Society and Yorkshire Building Society v. the United Kingdom, judgment of 23 October 1997, Reports 1997‑VII, p. 2363, § 112).
The Court must therefore consider whether the measures taken by the legislature to re-establish, with retrospective effect, a statutory basis for the contributions previously payable on domestic products – in order to help finance measures to combat disease and improve the hygiene, health and quality of livestock – amounted to a violation of the equality-of-arms principle. In so doing, it will have regard to all the circumstances of the case and will subject to close scrutiny the reasons adduced by the respondent State to justify them (see Building Societies, cited above, § 107).
In the present case the applicant company brought proceedings before the Brussels Court of First Instance, on the basis of the decisions of the European Commission and the Court of Justice, seeking full repayment of the contributions in question. The legalising Act was passed before the court had ruled on the merits. The applicant had therefore not yet obtained a judgment recognising its right to repayment in full. Sections 14 and 23 of the Law of 23 March 1998 were aimed at remedying the original formal defect in respect of domestic products contained in the royal decree of 11 December 1987 and the Law of 21 December 1994. While the Law of 23 March 1998 replaced the animal health and production fund with the budgetary fund for the health and quality of animals and animal products, it reproduced the content of the initial royal decree word for word, with the exception of the substantial breach of Community law – the taxation of imported animals – which had already been corrected. On this occasion, enactment of the Law had been preceded by notification of the draft to the European Commission, which gave it the go-ahead. The measure did not therefore have the effect of calling into question past judicial decisions which had become final.
The Court notes that the present case has similarities with the Building Societies v. the United Kingdom case, cited above, in which the intervention by the legislature was justified by the “legitimate aim” of giving effect to Parliament's original intention with regard to all building societies whose accounting year ended before the beginning of the financial year, without taking account of pending judicial proceedings. The Court considered that, in instituting those proceedings, the building societies had attempted to “benefit from the vulnerability of the authorities' situation following the outcome of the Woolwich 1 litigation and to pre-empt the enactment of remedial legislation” (see Building Societies, cited above, § 109).
In the instant case the Court considers that the aim of the legislative intervention was to honour the original intentions of the legislature which, in enacting the Law of 24 March 1987, had established a fund to be financed in particular by compulsory contributions from individuals and companies engaged in the production, processing, transport, preparation, sale or marketing of animals, the amounts and procedures for collection being laid down by royal decree. That decree specified the conditions of payment governing not just the applicant company, but all individuals and companies in Belgium who produced, processed, transported, prepared, sold or marketed non-imported animals. Having identified defects in the royal decree, the legislature enacted legislation in order to fill the legal vacuum created by the original technical defect and the various decisions of the European Union institutions. The Court considers that the applicants cannot first complain of shortcomings in the legislation and then complain of the intervention by the legislature in order to remedy those shortcomings. The applicants could not reasonably have expected that the State would take no action. The intervention was foreseeable and was made on clear and compelling public-interest grounds. It did not create any particular legal uncertainty, given that, as already observed, the legislation is absolutely identical in content to the original royal decree.
As it has observed above, the Court is particularly mindful of the risks inherent in the use of retrospective legislation which has the effect of influencing the judicial outcome of proceedings to which the State is a party. In that connection it notes the finding of the Administrative Jurisdiction and Procedure Court in its judgment of 9 February 2000 (point B.3.3) that there was nothing to prevent the ordinary courts from reviewing the conformity of the new legislation with Community law given that, under Belgian law, both royal decrees and legislative provisions must comply with directly applicable international law. Moreover, a number of judgments of the Court of Justice have stated that the go-ahead from the Commission does not apply retrospectively. In the present case, the scope of judicial review was not therefore reduced substantially by the fact that the royal decree was replaced by a law, as the courts are also empowered to declare inapplicable any law found to be in breach of a rule of international law which has direct effect. The judgments of the Antwerp Court of Appeal delivered after the judgment of the Administrative Jurisdiction and Procedure Court follow this line of reasoning.
For the above reasons, the Court concludes that the applicant company cannot legitimately complain that the principle of equality of arms has been infringed.
Accordingly, this complaint is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be declared inadmissible pursuant to Article 35 § 4.
2. Article 1 of Protocol No. 1
According to the Court's case-law, Article 1 of Protocol No. 1, which in substance guarantees the right of property, comprises three distinct rules (see James and Others v. the United Kingdom, judgment of 21 February 1986, Series A no. 98, pp. 29-30, § 37). The first rule, set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of the peaceful enjoyment of property; the second rule, contained in the second sentence of the first paragraph, covers deprivation of possessions and subjects it to certain conditions; the third rule, stated in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest. The second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule.
The Court reiterates that a “debt” may constitute a “possession” within the meaning of Article 1 of Protocol No. 1 provided it is sufficiently established to be enforceable (see Stran Greek Refineries and Stratis Andreadis, cited above, p. 84, § 59).
In the present case the Court notes that the Law of 24 March 1987 had adopted the principle of compulsory contributions and had stipulated that the amounts and procedures for collection were to be laid down by statutory instrument. However, the royal decree of 11 December 1987 failed to meet one of the requirements of the Community legislation, as it provided for the same contributions to be paid in respect of domestic and imported products alike. That defect was identified both by the Court of Justice in its judgment of 16 December 1992 and by the Turnhout Court of First Instance in a judgment of 10 February 1994, which also ordered the sums paid under the royal decree to be reimbursed. The Law of 21 December 1994, enacted after those decisions, remedied the discrimination but still failed to meet the requirement of prior consultation of the European Commission. In the circumstances, the Court considers that the applicant had, at the least, a legitimate expectation that the sums paid would be reimbursed (see Pine Valley Developments Ltd and Others v. Ireland, judgment of 29 November 1991, Series A no. 222, p. 23, § 51, and S.A. Dangeville v. France, no. 36677/97, § 48, ECHR 2002‑III). A claim of that nature “constituted an asset” and therefore amounted to a “possession”.
Without its being necessary to rule on the question as to whether there may have been a deprivation of property in the present case within the meaning of the second sentence of the first paragraph of Article 1 (see Pressos Compania Naviera S.A. and Others, cited above, p. 22, § 34), the Court notes that, at the very least, there was a control of the use of property in the general interest, which comes under the rule set forth in the second paragraph of Article 1 (see Building Societies, cited above, p. 2353, § 79).
The Court does not consider it necessary to determine this issue, given that the two rules in question are not wholly unrelated and refer only to specific examples of infringement of property rights and, as such, must be interpreted in the light of the principle enunciated in the first sentence of the first paragraph. The Court will therefore examine the interference in the light of the first sentence of the first paragraph of Article 1.
For the purposes of the first sentence of the first paragraph, the Court must examine whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights (see Sporrong and Lönnroth v. Sweden, judgment of 23 September 1982, Series A no. 52, p. 26, § 69).
In determining whether this requirement is met, the Court recognises that the State enjoys a wide margin of appreciation with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement are justified in the general interest for the purpose of achieving the object of the law in question (see Chassagnou and Others v. France [GC], nos. 25088/94, 28331/95 and 28443/95, § 75, ECHR 1999‑III). Nevertheless, the Court cannot abdicate its power of review which requires it to determine whether the requisite balance was maintained in a manner consonant with the applicants' right to the peaceful enjoyment of their possessions, within the meaning of the first sentence of Article 1 of Protocol No. 1. The concern to achieve this balance is reflected in the structure of Article 1 as a whole, including the second paragraph; there must be a reasonable relationship of proportionality, therefore, between the means employed and the aim sought to be realised (see Pressos Compania Naviera S.A. and Others, cited above, p. 23, § 38).
The Court notes that in enacting the Law of 23 March 1998 with retrospective effect, the legislature sought to re-establish and reaffirm its original intention, which had been thwarted by the earlier regulatory and legislative defects. There were clear and compelling public-interest grounds for ensuring that the fund had the financial resources to enable it to operate. The applicant company did not contradict the assertion, made in the explanatory memorandum to the draft Law, that the budgetary implications of having to repay the amounts would imperil the future funding of animal health policy.
Furthermore, the retrospective legislative measure did not frustrate the applicant's hopes that the State would be ordered to repay it the contributions it had paid before its entry into force, as is clear from the judgment of the Administrative Jurisdiction and Procedure Court (see above). Domestic proceedings are still pending on this point, moreover, and the Court cannot speculate as to their outcome.
The Court therefore considers that the measures taken by the respondent State did not upset the balance which must be struck between protecting the applicant's right to repayment of the contributions already paid and the general interest in ensuring the financing of the fund.
Accordingly, this complaint is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be declared inadmissible pursuant to Article 35 § 4.
3. Article 14 of the Convention
The Court reiterates that Article 14 of the Convention has no independent existence, since it has effect solely in relation to the rights and freedoms safeguarded by the other substantive provisions of the Convention and its Protocols. However, the application of Article 14 does not presuppose a breach of one or more of such provisions and to this extent it is autonomous. For Article 14 to become applicable it suffices that the facts of a case fall within the ambit of another substantive provision of the Convention or its Protocols (see Thlimmenos v. Greece [GC], no. 34369/97, § 40, ECHR 2000‑IV).
That condition has been met in the present case, since the matters complained of by the applicant fall potentially within the scope of Article 1 of Protocol No. 1, notwithstanding the fact that the corresponding complaint was found to be manifestly ill-founded.
According to the Court's settled case-law, a distinction is discriminatory for the purposes of Article 14 if it has no objective and reasonable justification, that is if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised (see Pla and Puncernau v. Andorra, no. 69498/01, 13 July 2004, § 61). Moreover, the Contracting States enjoy a certain margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment (see Karlheinz Schmidt v. Germany, judgment of 18 July 1994, Series A no. 291‑B, § 24).
The Court observes that the discrimination complained of by the applicant was based on the fact that the retrospective nature of the law prevented the courts from reviewing the lawfulness of the royal decree in question. However, in the light of the judgment of the Administrative Jurisdiction and Procedure Court and the subsequent judgments of the Antwerp Court of Appeal, it appears that the new provisions do not restrict access to the courts definitively. Moreover, even if that were to be the case, it does not appear that the impugned interference could be regarded as disproportionate to the aim pursued, as the Court has found the complaint under Article 1 of Protocol No. 1 to be manifestly ill-founded.
Accordingly, this complaint is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be declared inadmissible pursuant to Article 35 § 4.
For these reasons, the Court unanimously
Declares the application inadmissible.
Søren nielsenChristos rozakis
RegistrarPresident
Full & Egal Universal Law Academy