Opinion of the Advocate-General
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Mr President,
Members of the Court,
A - Facts
1. In 1990 classical swine fever broke out in certain regions in Belgium with a high concentration of pig farms. Both the Belgian State and the European Commission adopted measures to deal with the situation. In order to combat the swine fever the Belgian State established three zones: a protection zone around the centre of infection (I), around that a surveillance zone (II) and around the latter zone a buffer zone (III).
2. The Commission also adopted a series of measures in order to prevent the spread of swine fever to other Member States and to support the Belgian pigmeat market. The most important of those measures was a purchasing arrangement whereby the Belgian intervention agency (the BDBL), the defendant in these proceedings, bought in pigs from the contaminated zones at Community cost. The animals had to be slaughtered and processed into products for purposes other than human consumption.
3. The measures adopted by the Commission included Regulation (EEC) No 2351/90. (1) The regulation provided inter alia that pigmeat from the buffer zone (III) could, after heat treatment, be processed normally and used for human consumption (Articles 4 to 8).
4. Articles 9 and 10 concern the buying-in of pigmeat from the buffer zone (III) by the Belgian intervention agency (the BDBL) at Community cost subject to the maximum quantities and the prices laid down in the regulation. This meat was to be processed into products unfit for human consumption.
5. In accordance with that Commission regulation the BDBL issued Notice No 55.200, laying down detailed rules for contracts between the BDBL and slaughterhouses for the purchase of the meat in question and laying down the conditions which were to govern such purchases.
6. Article 1 of the notice provided that the submission of an application to purchase by a slaughterhouse entailed an undertaking by the latter to comply with the terms and conditions laid down by the BDBL. Article IX provided in addition that by making an application the slaughterhouse undertook to comply without reserve or restriction with all the obligations set out in the notice. Article XII provided, finally, that invoices concerning payment for the goods must include the lodging of a security in the amount of 110% of the asking price (including VAT) and that that security would be released once the BDBL was in possession of proof that all the conditions laid down in the notice had been met.
7. In August 1990 the BDBL concluded contracts with the plaintiff in the main proceedings, on application by the latter, for the purchase of pigmeat from the buffer zone (III). In accordance with Notice No 55.200 that undertaking lodged a security in favour of the BDBL with the second defendant, Generale Bank NV.
8. Subsequent checks by the authorities revealed that the meat supplied by the plaintiff did not meet the conditions agreed upon with the BDBL. Consequently, the BDBL requested the plaintiff to repay the money already received, failing which, so it informed the latter, the security would be forfeit. The plaintiff applied to the Belgian courts for an injunction to prevent the second defendant from releasing the security to the BDBL. It relied on the argument that the requirement to lodge a security was unlawful because there was no such requirement in the relevant Community provisions.
9. The Rechtbank van Eerste Aanleg, Brussels, thereupon referred the following questions (2) to the Court of Justice for a preliminary ruling:
"Is the Belgian State, through the intermediary of the BDBL, in breach of Commission Regulation No 2351/90 of 9 August 1990 when in Article XII of Notice No 55.200 it imposes the prior requirement that a security be lodged for payments chargeable to the European Community of the buying-in prices of pigmeat contaminated with swine fever?
1. Is it compatible with Community law for the Belgian intervention agency, in application of inter alia Article 8 of Regulation (EEC) No 729/70 of the Council of 21 April 1970, and in connection with measures adopted in order to combat swine fever, in particular the buying-in by the intervention agency of pigmeat in accordance with Commission Regulation (EEC) No 2351/90 of 9 August 1990, to impose the prior requirement that a security be lodged for payments chargeable to the European Community of the buying-in prices of pigmeat coming from the buffer zone?
2.(a) Is it compatible with the requirement of firm measures to combat swine fever and the need for strict application of the measures adopted by the Commission for the full amount of the security to be called in and to be definitively retained by the holder regardless of the extent of either the failure to comply or the irregularity, or both?
2.(b) If the Court of Justice rules that the security may not be wholly forfeit may the Belgian intervention agency, the BDBL, extrapolate from the results of samples taken in the course of checks of goods sold an overall percentage which does not meet the requirements, and on that basis require the amounts paid to be returned and consequently the security to be called in?"
B - Analysis
I. Admissibility
10. Apart from stating the claims of the parties the reference for a preliminary ruling contains no further grounds for the reference. The facts of the case may be elicited, however, from the documents referred to in the reference, so that it is possible to answer the questions. The reference is therefore admissible.
First question
11. The plaintiff in the main proceedings claims that the contracts it concluded with the BDBL concern normal measures for the support of the pigmeat market, that is to say, the purchase of pigmeat by the BDBL for destruction and processing into products unfit for human consumption. Regulation No 2351/90, pursuant to which Notice 55.200 was issued, makes no provision for lodging securities in relation to such contracts; such a procedure is provided for only in the case of contracts made with the BDBL in relation to the special aid envisaged in Articles 4 to 8 of the regulation. The security it was asked to lodge cannot therefore be based on that regulation but must be regarded, on the contrary, as an independent security which was required exclusively on the basis of Notice 55.200.
12. This case is governed by the provisions of Council Regulation (EEC) No 2759/75 of 29 October 1975 on the common organization of the market in pigmeat, (3) which contains an exhaustive set of rules. The Court has held, however, that in the case of an exhaustive set of rules the Member States no longer have the power to adopt national measures on the subject. (4)
13. Commission Regulation No 2351/90 was adopted in order to implement Regulation No 2759/75, and in particular Articles 20 and 24 thereof. It is therefore quite clearly to be regarded as an integral part of the exhaustive regulations on the common organization of the market in pigmeat. Since those exhaustive rules do not provide for the lodging of a security in cases such as the present, the BDBL ought not to have imposed in Notice 55.200 such a requirement; it has therefore exceeded its powers.
14. The obligation to lodge such a security impairs the effectiveness of Community law and prejudices rights which individuals may derive from the latter; such national measures must, according to the case-law of the Court of Justice, be declared inapplicable by the national courts. (5)
15. The reason why Regulation No 2351/90 provides for a security only with regard to the support measures provided for in Articles 4 to 8 is that they concern the processing of pigmeat which, after heat treatment, may be placed on the internal Community market and used for human consumption. In such cases the conditions under which the meat may be marketed must therefore be much stricter. The support measures provided for in Article 9 of the regulation, by contrast, relate to the buying-in of pigmeat for destruction or processing into products unfit for human consumption.
16. Finally, the plaintiff in the main proceedings submits that Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (6) contains general provisions, which are to be applied in the special context of measures to combat swine fever by means of the provisions contained in Regulations No 2759/75 and No 2351/90, which therefore constitute a lex specialis in relation to the first-named regulation.
17. The plaintiff maintains that as a consequence Community law cannot permit the BDBL to require the prior lodging of a security, as was the case in the main proceedings.
18. That argument cannot be upheld.
19. The Commission rightly argues that Regulation No 2351/90 does not contain exhaustive rules governing the buying-in of pigmeat and in particular no provisions designed to ensure that the slaughterhouses comply with their obligations; nor are the Member States expressly or impliedly prohibited from adopting specific measures themselves. It must therefore be accepted, in accordance with the case-law of the Court of Justice, that the Member States are empowered to adopt complementary measures, which, however, must first be necessary in order to ensure that Community law is implemented and secondly not jeopardize the scope and effectiveness of Community law. (7) From that point of view the Belgian rules concerning the prior lodging of a security are compatible with Community law.
20. According to Article 8(1) of Regulation No 729/70, which is a concrete expression of the principle laid down in Article 5 of the EEC Treaty, the Belgian authorities have a duty, moreover, to adopt the measures they consider necessary in order to prevent fraud in implementing the buying-in rules contained in Regulation No 2351/90. (8) The measures must be sufficiently effective, in order in particular to prevent the buying-in of pigmeat which does not come from the affected zone or which is not eligible because of its characteristics. The rules providing for the prior lodging of a security constitute an effective means and, moreover, a method frequently used in the context of the common agricultural policy which is necessary in order to comply with the duty laid down in Article 8 of Regulation No 729/70 to combat fraud.
21. Those measures were also wholly necessary, for, as the Commission explained, a report from the Fund drawn up after checks were carried out in Belgian refrigerated warehouses indicates that serious irregularities occurred which often pointed to organized fraud.
22. The first question put by the national court should therefore be answered to the effect that in the present case European Community law permits the Belgian intervention agency to require the prior lodging of a security.
Second question
23. The second question seeks essentially to ascertain whether and how the Community legal principle of proportionality is to be applied to the requirement of a security. The security is intended to ensure that the meat suppliers comply with a Community-law obligation, but it stems from an autonomous (though compatible with Community law) decision of the national legislature. The court which has made the reference asks to what extent Community law is applicable to that obligation. It must be said that in principle legal relationships which have their origin in national law are governed by national law. However, if as in the present case the nature of the legal relationship is governed by its purpose, Community law may have a role to play in that manner in interpreting and applying the contract regarding the security. It is for the national court to establish whether that is so.
24. Should that lead to the result that Community law is relevant in interpreting the legal relationship then - as the Commission and the Belgian intervention agency have rightly indicated - the case-law of the Court of Justice to the effect that the complete forfeiture of the security in the event of breach of a principal obligation is not a disproportionate sanction is applicable. (9)
25. The Commission is also right to argue that in this case two of the obligations provided for in the Belgian rules governing the buying-in of pigmeat must be regarded as principal obligations: in the first case the obligation to supply the BDBL with a product described in Article 9 of Regulation No 2351/90 and secondly the obligation to ensure that the products supplied come from the affected zones.
26. In the case of failure to comply with a secondary obligation the security may be forfeit only in part, the size of which depends on the severity of the fault. Further discussion is not possible here in the absence of more detailed information on the facts.
C - Conclusions
27. I therefore propose that the questions should be answered as follows:
(1) It is compatible with Community law for the Belgian intervention agency in implementing inter alia Article 8 of Regulation (EEC) No 729/70 of the Council of 21 April 1970 and in the context of the measures adopted in order to combat swine fever, in particular the buying-in of pigmeat by the intervention agency pursuant to Commission Regulation (EEC) No 2351/90 of 9 August 1990, to require the prior lodging of a security for the payment, financed by the European Community, of the purchase price for pigmeat coming from the buffer zone.
(2) The question to what extent national authorities are entitled to forfeit the security in whole or in part is one to be settled in accordance with domestic law. In so far as according to domestic law Community law is applicable, a distinction must be drawn between breaches of the principal and of the ancillary obligations. In the case of breach of principal obligations the security may be forfeited in full. The following are to be regarded as principal obligations: first, the duty to supply the BDBL with goods described in Article 9 of Regulation No 2351/90; secondly, the duty to supply goods from the buffer zone. In the case of breach of ancillary obligations the security may be declared forfeit only in part, to an extent commensurate with the severity of the fault.
(*) Original language: German.
(1) - OJ 1990 L 215, p. 9.
(2) - OJ C 33 of 5 February 1993.
(3) - OJ 1975 L 282, p. 1.
(4) - Case 16/83 Prantl [1984] ECR 1299.
(5) - Case 106/77 Amministrazione Delle Finanze dello Stato v Simmenthal [1978] ECR 629.
(6) - OJ, English Special Edition 1970(I), p. 218.
(7) - BayWa, paragraph 29.
(8) - Case C-8/88 Germany v Commission [1990] ECR I-2321.
(9) - See in that connection Case 122/78 Buitoni v Forma [1979] ECR 677 and Case 272/81 RU-MI v Forma [1982] ECR 4167.
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