Hans Irsfeld OHG v Bundesanstalt fuer landwirtschaftliche Marktordnung. (Agriculture) [1994] EUECJ C-374/92 (1 February 1994)

Judgment 1 By an order of 17 August 1992, which was received at the Court on 1 October 1992, the Hessischer Verwaltungsgerichtshof (Higher Administrative Court, Hesse) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question concerning the interpretation of Article 4(2)(b) of Commission Regulation (EEC) No 2267/84 of 31 July 1984 providing for the grant of private storage aid fixed at a standard rate in advance in respect of carcases, half-carcases, hindquarters and forequarters of beef (Official Journal 1984 L 208, p. 31). 2 That question arose in the course of proceedings between Firma Hans Irsfeld and the Bundesanstalt fuer landwirtschaftliche Marktordnung (Federal Office for the Organization of Agricultural Markets) ("BALM"). 3 Under Article 3(2)(a) of Commission Regulation (EEC) No 1091/80 of 2 May 1980 laying down detailed rules for granting private storage aid for beef and veal (Official Journal 1980 L 114, p. 18) the storage contract to which the grant of aid is subject must provide inter alia that the storer is under an obligation to take the agreed quantity of the product into storage within the time-limits laid down and to store it for the stipulated period. 4 As it took the view that certain margins of variation from the agreed quantity ought to be permitted in order to take account of commercial practice and for practical reasons, the Commission provided in Article 3(3) of Regulation No 1091/80 that the obligation to store the agreed quantity would be considered as fulfilled if not less than 90% of that quantity had been taken into storage and properly stored. 5 The Commission later formed the view that it would be necessary to grant private storage aid specifically for beef and for that reason adopted Regulation No 2267/84. Article 1(1) of that regulation specified that applications had to be submitted between 20 August 1984 and 23 November 1984. 6 Article 3(2) of Regulation No 2267/84 provides that the storage contract may only cover unboned meat of one of the cuts referred to in Article 2(2) of the regulation, which include forequarters. 7 Article 4 of Regulation No 2267/84, however, provides as follows: "1. Subject to the provisions laid down in paragraph 2, the contractor may, before placing into store, cut or bone all or part of the products referred to in Article 2(2), provided that only the quantity for which the contract has been concluded is employed and that all the meat resulting from such operations is placed in store. 2. If the quantity stored unboned, or, if cut or boned, the quantity of unboned meat employed, is less than the quantity for which the contract was concluded and: (a) not less than 90% of that quantity, the amount of aid referred to in the second subparagraph of Article 1(1) shall be reduced proportionally; (b) less than 90% of that quantity, private storage aid shall not be paid." 8 Article 5(2) of Regulation No 2267/84 provides that entitlement to payment of the aid can be established only if the meat has remained in storage throughout the stipulated storage period. 9 Article 7(1) of Regulation No 2267/84, however, provides that on the expiry of a storage period of two months, the contracting party may, subject to certain conditions, withdraw from store all or part of the quantity of meat under contract. If this should happen, Article 7(2) provides that the amount of aid is to be reduced accordingly. 10 By a contract of 5 November 1984, Irsfeld gave the BALM an undertaking, pursuant to Regulation No 2267/84, to place in private storage for a period of nine months 100 tonnes of forequarters of beef, cut straight, within the meaning of Article 2(2), fourth indent, heading (b), of Regulation No 2267/84. 11 On 19 November 1984 Irsfeld informed the BALM that it had placed in a warehouse 77 136.8 kg of boned forequarters obtained from the cutting of 100 514 kg of unboned forequarters (a yield of 76.742%). This last consignment of meat had been handed over to the refrigerated warehouse on 8 November 1984. 12 By letter of 28 November 1984 the BALM informed Irsfeld that the contractual storage period had begun on 9 November 1984. 13 On 31 January 1985 Irsfeld requested the grant of an advance on the aid under the contract. That advance was granted by the BALM following the lodgment of a security. 14 In the course of examining the documents relating to removal from the warehouse, the BALM found that 7 572.40 kg of meat placed in storage had been removed from the warehouse by Irsfeld with effect from 8 January 1985, in other words, before the expiry of the minimum two-month storage period. The cartons prematurely withdrawn contained frozen boned beef portions "excluding thin flanks and shanks". 15 Basing itself on the documents in its possession, the BALM established that 558.77 kg of thin flanks and shanks still in storage belonged to the 7 572.40 kg of boned beef which had prematurely been removed from storage. The BALM accordingly took the view that 7 572.40 kg plus 558.77 kg could be treated as having been prematurely removed from storage, making a total of 8 131.17 kg of boned meat, which, on the basis of a yield of 76.742%, corresponded to 10 595.46 kg of unboned meat. 16 The BALM accordingly took the view that only 89 918.54 kg of unboned meat (100 514 kg minus 10 595.46 kg) had remained in storage during the minimum two-month period under the contractual requirements, which came to 89.9% of the contractual quantity and therefore less than the 90% minimum quantity laid down in the Community rules. 17 On the basis of Article 3(2) and (3) of Regulation No 1091/80, the BALM refused to pay the aid, requested reimbursement of the advance payment and declared the security forfeit in part. 18 Following the rejection of its complaint, Irsfeld brought an action before the Verwaltungsgericht (Administrative Court) Frankfurt am Main in which it argued that once the meat had been cut up the subject-matter of the contract was no longer the storage of forequarters but rather the storage of the meat obtained as a result of cutting. The quantity of meat prematurely removed from storage (7 572.40 kg) corresponded, on the basis of a yield of 76.742%, to 9 867.60 kg of unboned meat. If those 9 867.60 kg of unboned meat were deducted from the original consignment of 100 514 kg of unboned beef forequarters, it followed that 90 646.40 kg of unboned beef had remained in storage for the minimum storage period, thereby exceeding 90% of the quantity under the storage contract. 19 The Hessischer Verwaltungsgerichtshof, before which the case came on appeal, is uncertain whether, in order to establish compliance with the 90% threshold, it is necessary, in the case of boning and cutting prior to placing in storage, to consider only the portions which could constitute forequarters prior to cutting within the meaning of the storage contract, as argued by the BALM, or whether, on the contrary, as contended by Irsfeld, it is sufficient that the portions remaining in storage until the expiry of the minimum two-month storage period should correspond in weight to 90% of the contractual quantity, irrespective of whether or not the portions of meat remaining in storage can constitute whole boned forequarters. 20 The Hessischer Verwaltungsgerichtshof accordingly stayed the proceedings and referred the following question to the Court of Justice for a preliminary ruling: "On a proper construction, does Article 4(2)(b) of Regulation (EEC) No 2267/84 of 31 July 1984 (Official Journal 1984 L 208, p. 31) mean (a) that entitlement to aid is lost if the storer, having initially put into storage all the meat obtained from the boning of beef forequarters, has removed selected portions of meat from storage before the minimum storage period has elapsed, with the result that, although the portions of meat remaining in storage until the end of the storage period exceed 90% of the contractual quantity by weight, those portions remaining in storage which could still make up a complete (boned) forequarter of beef fall short of 90% of that quantity? or (b) that, in the event that selected portions of the boned forequarters of beef are prematurely removed from storage prior to the expiry of the minimum storage period, aid may always be claimed on condition that the portions of meat remaining in storage during the minimum period constitute altogether 90% of the contractual amount, irrespective of whether or not those portions make up complete (boned) forequarters of beef?" 21 It is first necessary to consider whether a trader who, like the plaintiff in the main proceedings, has, on completion of boning, stored the full amount specified in the storage contract remains entitled to the private storage aid introduced by Regulation No 2267/84 if he removes part of that amount from storage before the expiry of the minimum two-month storage period laid down by Article 7(1) of that regulation, even though such a possibility was not envisaged by Regulation No 2267/84. 22 If Article 4(2)(a) of Regulation No 2267/84 allows the contracting party to store, in the case of cutting or boning, a quantity of unboned meat of not less than 90% of the contractual quantity and to remain entitled to aid at an appropriately reduced rate, that contracting party must also be allowed, if he has stored at the outset the total quantity stipulated under the contract, as was done by the plaintiff in the main proceedings in this case, subsequently to remove up to 10% of the contractual quantity before the expiry of the minimum storage period, provided that at least 90% of the contractual quantity is placed in storage and remains there for the minimum storage period. 23 With regard to the proper interpretation of Article 4(2)(b) of Regulation No 2267/84, the Court finds that it in no way follows from that provision that the portions of meat stored after boning must be capable of constituting whole forequarters during the storage period or that the partial removal from storage of up to 10% of the contractual quantity, as permitted under that provision, must relate necessarily to whole forequarters. 24 Moreover, neither the recitals in the preamble to Regulation No 2267/84 nor the various provisions contained therein refer to the nature of the portions stored. On the contrary, the principal purpose of private storage aid is to ensure storage of as large as possible an amount of beef irrespective of the nature of the portions stored. 25 In conclusion, it follows from the sixth recital in the preamble to Regulation No 1091/80, the regulation to which Article 1(3) of Regulation No 2267/84 refers, that the exceptions provided for in Article 4(2) of Regulation No 2267/84 are designed, both in order to take account of commercial practice and for practical reasons, to leave the storer a certain margin regarding the quantities to be stored as stipulated in the storage contract. 26 As the Commission correctly emphasized, that margin given to storers would be considerably restricted if the application of that provision were to be made subject to the condition that the portions of meat brought into warehouses and kept in storage until the expiry of the minimum storage period had to be capable of constituting whole forequarters. 27 In the light of the above considerations, the reply to the question referred by the Hessischer Verwaltungsgerichtshof must be that Article 4(2)(b) of Regulation No 2267/84 must be interpreted as meaning that in the case where selected portions of boned forequarters of beef are prematurely removed from storage before the expiry of the minimum two-month storage period stipulated in Article 7(1) of Regulation No 2267/84, the storer is entitled to private storage aid in respect of beef if the portions of meat remaining in the private warehouse during that minimum storage period represent a quantity of unboned meat employed which is not less than 90% of the contractual quantity, without its being necessary that the portions remaining in storage are capable of constituting whole boned forequarters. Costs 28 The costs incurred by the Commission of the European Communities, which has 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 (Second Chamber), in answer to the question referred to it by the Hessischer Verwaltungsgerichtshof by order of 17 August 1992, hereby rules: Article 4(2)(b) of Commission Regulation (EEC) No 2267/84 of 31 July 1984 providing for the grant of private storage aid fixed at a standard rate in advance in respect of carcases, half-carcases, hindquarters and forequarters of beef must be interpreted as meaning that in the case where selected portions of boned forequarters of beef are prematurely removed from storage before the expiry of the minimum two-month storage period stipulated in Article 7(1) of Regulation (EEC) No 2267/84, the storer is entitled to private storage aid in respect of beef if the portions of meat remaining in the private warehouse during that minimum storage period represent a quantity of unboned meat employed which is not less than 90% of the contractual quantity, without its being necessary that the portions remaining in storage are capable of constituting whole boned forequarters. © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII