Organisationen Danske Slagterier agissant pour Jydske Andelsslagteriers Konservesfabrik AmbA (Jaka); v Landbrugsministeriet. (Agriculture) [1991] EUECJ C-338/89 (7 May 1991)

Judgment 1 By order of 8 September 1989, which was received at the Court on 31 October 1989, the OEstre Landsret (Eastern Regional Court) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a number of questions on the interpretation of Articles 36 and 37 of Commission Regulation (EEC) No 3183/80 laying down common detailed rules for the application of the system of import and export licences and advance-fixing certificates for agricultural products (Official Journal L 338, p. 1). 2 Those questions arose in proceedings between the Organisationen Danske Slagterier (Danish Abattoirs' Association, hereinafter referred to as "the ODS") as agent for the Jydske Andelsslagteriers Konservesfabrik AmbA (Jutland Cooperative Abattoirs' Cannery AmbA, hereinafter referred to as "Jaka") and the Landbrugsministeriet (Ministry of Agriculture, hereinafter referred to as "the Ministry") concerning the Ministry' s refusal to extend the period of validity of an export licence including advance fixing of the refund. 3 According to Article 36(1) of Regulation No 3183/80, "Where as a result of force majeure importation or exportation cannot be effected during the period of validity of the licence or certificate, the titular holder shall, on application to the competent authority in the Member State in which the licence or certificate was issued request either that the period of validity of the licence or certificate be extended or that the licence or certificate be cancelled. The titular holder of the licence or certificate shall furnish proof of the circumstances relied upon as constituting force majeure." Paragraph 4 of the same article provides that the competent authority referred to in paragraph 1 is to decide if the circumstances relied upon constitute force majeure. 4 Article 37(1) of the same Regulation is worded as follows: "Where the circumstances relied upon constitute force majeure, the competent authority of the Member State in which the licence or certificate was issued shall decide either that the obligation to import or export be cancelled, the security being released, or that the period of validity of the licence or certificate be extended for such period as may be considered necessary in view of the circumstances invoked. Such extension may be granted after the period of validity of the document has expired. The decision of the competent authority can be other than that requested by the titular holder. Where a request for cancellation of a licence which includes advance fixing, or of an advance fixing certificate, has been received more than 30 days after expiry of the period of validity of the licence or certificate, the competent authority may decide, instead of cancellation, to extend the validity period if the advance fixed rate, after any adjustments thereto, is, when a refund, less than the current rate, or, when a levy, higher than the current rate." 5 Jaka produces and exports, in particular, tinned cooked ham, made from raw materials normally supplied to it by three Danish abattoirs (hereinafter referred to as "the abattoirs") which are, at the same time, the members of that company. Jaka regularly makes use of certificates fixing in advance the refunds on its exports outside the Community. 6 On 25 February 1985, Jaka applied to the Ministry for an advance-fixing certificate for 700 tonnes of ham-based produce. The certificate was issued on 4 March and was valid until 31 May 1985. 7 On 13 and 21 February 1985, before application was made for that certificate, the national association of Danish trade unions had issued the statutory first and second notices of a strike set to take place on 4 March 1985, in view of the negotiations for the renewal of the collective bargaining agreements which expired on 1 March 1985 and which affected some 80% of employed workers in Denmark. 8 The mediator appointed by the State called for the suspension of the strikes which had been announced and conducted talks with the employers' and union organizations until 21 March. The negotiations having failed, the strikes began on 24 March 1985. Even though Jaka and the abattoirs were not concerned by the negotiations or by the strikes, the strikes did affect transport to and from the abattoirs and the cleaning of the abattoirs and this led to their closure and a suspension of deliveries. Jaka was thus forced to suspend operations on 1 April 1985 and was not able to resume production until 15 April and then only gradually. 9 In the period following 15 April, Jaka could not produce in time the quantity of tinned produce necessary to fulfil the exportation obligations under the certificate set to expire on 31 May 1985. It appears from an expert' s report prepared pursuant to the main proceedings that Jaka' s production capacity would have been sufficient to do so if the strike had not occurred, but that once it had taken place and having regard to its other sales commitments Jaka was only able to produce the tinned products covered by the certificate by 5 July 1985 at the earliest. 10 On 3 June 1985 Jaka applied for an extension of the period of validity of the certificate until 12 July. Its application was refused by the Ministry on 14 June on the ground that the strike could not have had such long-lasting effects. However, following what was subsequently recognized as an error, the obligations under the advance-fixing certificate were cancelled and the security released. On 26 July 1985 Jaka completed the exportation of the tinned produce which was the subject-matter of the certificate. 11 Following the dismissal of Jaka' s complaint addressed to the Ministry, the ODS, acting on behalf of Jaka, brought an action before the OEstre Landsret for a declaration that the exportations in question had been prevented owing to force majeure, that the Ministry was required to extend the period of validity of the certificate in question and that the exportations carried out in July 1985 therefore gave the right, with regard to Jaka, to the payment of the refunds fixed in advance. 12 It was in those circumstances that the OEstre Landsret stayed the proceedings and referred the following question to the Court for a preliminary ruling: "1. Should Articles 36 and 37 of Commission Regulation (EEC) No 3183/80 be interpreted as meaning that there is a case of force majeure when supplies of raw materials to an undertaking which has obtained a certificate of advance fixing are halted owing to a lawful strike in another undertaking if, when the undertaking applied for the licence or certificate, a notice had been issued that a strike would begin during the period of validity of the certificate, but it was possible that the strike would not affect the undertaking because, for example, there was a chance that negotiations might be resumed, and result in the signing of an agreement, that the strikes might be postponed, that the transport of animals to the undertaking and the onward transport of its products might be treated as excepted from the strike, or that legal intervention against the strike might take place? 2. Are there, in respect of Articles 36 and 37, limits in time as to how long a strike that has been discontinued can be regarded as having the effect of force majeure where an undertaking' s capacity at the time when the strike began and subsequently thereafter is fully utilized, when it is not possible to make either covering purchases for the needs of the undertaking' s production during the strike period or covering purchases in the form of finished goods during the strike period and in the period thereafter? 3. Can guidelines be derived from the pertinent EEC provisions as to which factors should be accorded weight by the competent authority when it has to decide in a situation of force majeure pursuant to Article 37 whether an obligation to export should be cancelled and the security released, or whether the period of validity of a certificate of advance fixing should be extended as requested by the exporter? 4. Is the competent authority entitled to exercise discretion as regards the weight to be accorded to the various factors which, in the answer to Question 3, are to be regarded as significant?" 13 Reference is made to the Report for the Hearing for a fuller account of the legal framework and the background of the case, the course of the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court. 14 As a preliminary point, it should be pointed out that it is apparent from the papers before the Court that the security lodged by Jaka was released as a result of an error on the part of the Danish authorities and that, according to the explanations given at the hearing, Danish law does not allow a discretionary decision of the administration to be modified in a way that would be disadvantageous to an individual, so that the decision to release the security may not be called in question. Since, however, no question has been asked about the effects of the release of the security or about whether Community law precludes a national rule such as that described at the hearing, it is not necessary to consider those points. The first question 15 In order to answer the first question, it should be recalled that the Court has consistently held that, since the concept of force majeure does not have the same content in the various spheres of application of Community law, the meaning of the concept must be determined with reference to the legal framework within which it is intended to take effect. 16 As regards, in particular, the provisions of Articles 36 and 37 of Regulation No 3183/80, the Court has already held that, even though the concept of force majeure is not limited to absolute impossibility, it nevertheless implies that the non-performance of the act in question is due to abnormal and unforeseeable circumstances beyond the control of the person invoking force majeure whose consequences could not have been avoided in spite of the exercise of all due care (see in particular the judgment of 10 July 1990 in Case C-334/87 Greece v Commission [1990] ECR I-2829). 17 A strike taking place in undertakings other than that of the titular holder of the import licence must be regarded as a circumstance beyond the control of the person concerned in so far as that person could have no influence on the events giving rise to the strike. 18 With regard, on the other hand, to the other conditions laid down in the Court' s case-law, it should be pointed out that a strike which was preceded by the required statutory notice and in respect of which it was announced that it could spread to sectors affecting the activities of the holder of the licence does not constitute an abnormal and unforeseeable event. 19 With reference to the facts and circumstances underlying the main proceedings, the ODS argues that the issuing of a first and a second strike notice in connection with the negotiations on the renewal of the collective bargaining agreements in Denmark is not sufficient for a strike to be considered probable since the issuing of the notice is merely a matter of routine and is necessary because negotiations rarely end until the very last moment before the agreement in force expires. 20 In view of the information provided at the hearing, however, it must be considered that that circumstance is not capable of turning a strike affecting large sectors of the national economy or its effects on the holder of the licence into an abnormal and unforeseeable occurrence. Indeed, it appears that, whilst the unions have always issued a strike notice during the last 13 series of negotiations for the renewal of collective bargaining agreements in Denmark, in three out of those 13 cases the notice has actually been followed by a strike. 21 Similarly, the possibility mentioned by the national court that the strike would have no effects on the undertaking concerned, because, for example, negotiations might be resumed, the strike postponed or an exception made for the transport of animals or foodstuffs, is not decisive. As the Court ruled in its judgment in Case 4/68 Firma Schwarzwaldmilch GmbH v Einfuhr-und Vorratsstelle fuer Fette [1968] ECR 377, an event is abnormal when it would have been considered improbable by a prudent businessman exercising due care. Such is not the case when the elimination of the effects of a strike, which is foreseeable in itself, depends on the occurrence of other events which are beyond the control of the trader concerned and incalculable in nature, as is shown by the Danish trade union practice described in these proceedings. 22 Moreover, it is necessary to point out, as the Advocate General has done in paragraphs 23 and 24 of his Opinion, that, in a case such as that before the national court, the trader was in a position to avoid the consequences of the strike by not applying for an export licence including advance fixing of the refund and by obtaining the refunds at the rate in force on the day of exportation. 23 The argument advanced by the ODS, according to which such a solution would in fact prevent Danish exporters from taking advantage of the possibility of applying for advance fixing of the refunds, has no force. The Court has consistently held (see the judgment in Case 316/86 Hauptzollamt Hamburg-Jonas v Firma P. Kruecken [1988] ECR 2213 ) that that possibility was introduced to promote legal certainty in transactions which economic operators must be able to carry out on terms known to them and to give the latter a guarantee of equivalence between the world price and the Community price. The purpose of a comprehensive guarantee of that kind is to protect economic operators from unfavourable developments which were unforeseeable at the time the contract was concluded, without, however, allowing them, save in exceptional circumstances, to secure a profit from a favourable trend. Whilst economic operators obtain considerable advantages in that way from the system of advance fixing, it is justified that they should also bear the risks arising from it. 24 Consequently, a trader who, in view of the particular circumstances of his own undertaking, the market situation or even economic or social events beyond his control, is not in a position to undertake to carry out the planned exportation can be expected to refrain from requesting the advance fixing of the refund. If, on the other hand, he decides to apply for that advantage, he lays himself open, should it not be possible to carry out the exportation, to the consequences laid down in the Community rules and in particular to the loss of the security. The entire scheme of export licences for agricultural products is accordingly based on the assumption that in certain cases producers and traders may be prevented from applying for advance fixing owing to circumstances beyond their control, provided that they are not unusual and unforeseeable. 25 The answer to the first question submitted by the OEstre Landsret must therefore be that Articles 36 and 37 of Commission Regulation (EEC) No 3183/80 must be interpreted as meaning that there is no force majeure where supplies of raw materials to an undertaking which has obtained an advance-fixing certificate are halted owing to a lawful strike in other undertakings if, when the undertaking applied for the certificate, a notice had already been issued that a strike would begin during the period of validity of the certificate but it was possible that the strike would not take place or would not affect the undertaking in question. 26 In view of the answer given to the first question, the other questions submitted by the national court are nugatory. Costs 27 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court. On those grounds, THE COURT, in answer to the question submitted to it by the OEstre Landsret, by order of 8 September 1989, hereby rules: Articles 36 and 37 of Commission Regulation (EEC) No 3183/80 of 3 December 1980 laying down common detailed rules for the application of the system of import and export licences and advance-fixing certificates for agricultural products must be interpreted as meaning that there is no force majeure where supplies of raw materials to an undertaking which has obtained an advance-fixing certificate are halted owing to a lawful strike in other undertakings if, when the undertaking applied for the certificate, a notice had already been issued that a strike would begin during the period of validity of the certificate but it was possible that the strike would not take place or would not affect the undertaking in question. © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII