In 1984, as one of a number of measures intended to control excess milk production in the Community, the Council adopted a regulation basing the annual quantity of milk to be produced by each agricultural holding on the quantity delivered in the course of a year known as a 'reference year'.

Certain producers who had not produced milk in the course of the relevant year, as a result of compliance with an undertaking not to market milk signed under a Council regulation of 1977, were consequently prevented from producing milk.

In 1988 the Court declared invalid the regulation adopted in 1984. Then, in 1989, the Council allocated to producers a quota equivalent to 60% of the quantity delivered in the year preceding that in which the non-marketing undertaking became operative. That regulation was, in turn, declared invalid. The Council finally granted the producers the right to produce the entire quantity delivered in the year preceding that in which the undertaking came into operation.

In a 1992 judgment, known as the Mulder II judgment, the Court ordered the institutions to pay compensation to producers for the damage they had suffered as a result of their having been totally prevented from producing milk. However, the limitation of production to 60% did not carry with it any right to compensation. In the wake of that judgment, more than 500 actions for compensation were brought before the Court of Justice and the Court of First Instance.

However, a number of the "SLOM III" producers, whose situation did not come within the scope of those rules, had resumed farming on a second agricultural holding, previously covered by an undertaking not to market milk entered into by the former owners. They were therefore prevented from producing milk on those second holdings by virtue of the 1984 regulation, and that prohibition was maintained by a provision of the 1989 Council regulation.

That provision too was declared invalid, but the producers concerned were not able to resume the full production to which they were entitled until the end of 1992.

Having been prevented entirely from engaging in production on their second holdings between the time when the 1984 regulation became applicable to them and 1992, the applicants brought actions for compensation against the Community.

In the judgment delivered today, in a case which involves the same legal problems as those dealt with in more than one hundred other cases, the Court of First Instance has developed the reasoning of the Court of Justice in the Mulder II judgment, comparing the situation of the SLOM III producers to that of those producers who were totally prevented from producing milk.

The Council and the Commission have thus been order to pay the applicants compensation for the damage suffered by them. Contrary to the institutions' contention, the aim of the rule in question - namely restriction of excess milk production - could not justify a limitation which took no account of the specific circumstances of each of the producers, who were excluded from production for a very long period, and were required to make an unforeseeable sacrifice which went beyond the normal economic risks inherent in their activity.

Moreover, the Court of First Instance reaffirmed its earlier decisions concerning application of the rule imposing a five-year limitation period laid down in Article 43 of the Statute of the Court to the producers' entitlement to compensation.

The Court of First Instance has determined the periods for which compensation is payable and has invited the parties to report to it as to the compensation claimed.

Solely for media use - Unofficial document not binding on the Court of First Instance.

For further information, or to obtain a copy of the judgment, please visit our internet site http://www.curia.eu.int or contact Tom Kennedy - Telephone 00352 4303 3355.