JUDGMENT OF THE COURT (First Chamber)

29 September 1998 (1)

(Agriculture — Common organisation of the markets — Beef — Export refunds —Beef of British origin repatriated to the United Kingdom as a result of theannouncements and decisions made in relation to 'mad cow disease‘ — Forcemajeure)

In Case C-263/97,

REFERENCE to the Court under Article 177 of the EC Treaty by the High Courtof Justice, Queen's Bench Division (England and Wales), for a preliminary rulingin the proceedings pending before that court between

The Queen

and

Intervention Board for Agricultural Produce,

ex parte First City Trading Ltd and Others,

on the interpretation of Articles 23 and 33 of Commission Regulation (EEC)No 3665/87 of 27 November 1987 laying down common detailed rules for theapplication of the system of export refunds on agricultural products (OJ 1987L 351, p. 1) and on the validity of Commission Decision 96/239/EC of 27 March1996 on emergency measures to protect against bovine spongiform encephalopathy(OJ 1996 L 78, p. 47) and of Commission Regulation (EC) No 773/96 of 26 April

1996 laying down special measures derogating from Regulations (EEC) No 3665/87,(EEC) No 3719/88 and (EEC) No 1964/82 in the beef and veal sector (OJ 1996L 104, p. 19),

THE COURT (First Chamber),

composed of: M. Wathelet, President of the Chamber, P. Jann and L. Sevón(Rapporteur), Judges,

Advocate General: N. Fennelly,

Registrar: L. Hewlett, Administrator,

after considering the written observations submitted on behalf of:

—    the United Kingdom Government, by Lindsey Nicoll, of the TreasurySolicitor's Department, assisted by David Anderson, Barrister,

—    the Commission of the European Communities, by James MacDonald Flett,of its Legal Service, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of First City Trading Ltd and Others,represented by Nicholas Green, Barrister, of the United Kingdom Government,represented by David Anderson, and of the Commission, represented by JamesMacdonald Flett, at the hearing on 26 March 1998,

after hearing the Opinion of the Advocate General at the sitting on 14 May 1998,

gives the following

Judgment

1.

    By order of 26 March 1997, received at the Court on 21 July 1997, the High Courtof Justice, Queen's Bench Division, referred to the Court for a preliminary rulingunder Article 177 of the EC Treaty four questions on the interpretation of Articles23 and 33 of Commission Regulation (EEC) No 3665/87 of 27 November 1987laying down common detailed rules for the application of the system of exportrefunds on agricultural products (OJ 1987 L 351, p. 1) and on the validity ofCommission Decision 96/239/EC of 27 March 1996 on emergency measures toprotect against bovine spongiform encephalopathy (OJ 1996 L 78, p. 47) and of

Commission Regulation (EC) No 773/96 of 26 April 1996 laying down specialmeasures derogating from Regulations (EEC) No 3665/87, (EEC) No 3719/88 and(EEC) No 1964/82 in the beef and veal sector (OJ 1996 L 104, p. 19).

2.

    Regulation (EEC) No 805/68 of the Council of 27 June 1968 on the commonorganisation of the market in beef and veal (OJ, English Special Edition 1968 (I),p. 187), in the version thereof resulting from Council Regulation (EC) No 3290/94of 22 December 1994 on the adjustments and transitional arrangements requiredin the agriculture sector in order to implement the agreements concluded duringthe Uruguay Round of multilateral trade negotiations (OJ 1994 L 349, p. 105, atp. 146), provides in Article 13(1) that, to the extent necessary to enable beef andveal products to be exported, the difference between world market prices andprices in the Community may be covered by export refunds. According to Article13(3), such refunds may vary according to destination, where the world marketsituation or the specific requirements of certain markets make this necessary.

3.

    Article 13(9) of Regulation No 805/68, as amended by Regulation No 3290/94,provides as follows:

'The refund shall be paid upon proof that:

...

—    the products have been exported from the Community, and

—    in the case of a differentiated refund the products have reached thedestination indicated on the licence or another destination for which therefund was fixed ...‘

4.

    Article 5 of Council Regulation (EEC) No 565/80 of 4 March 1980 on the advancepayment of export refunds in respect of agricultural products (OJ 1980 L 62, p. 5)provides: 'An amount equal to the export refund shall, at the request of the partyconcerned, be paid as soon as the products or goods have been brought under thecustoms warehousing or free zone procedure with a view to their being exportedwithin a set time limit.‘ Under Article 6 of that regulation, security is to be lodgedin a sum equal to the amount paid, plus an additional amount. Without prejudiceto cases of force majeure, that security is to be wholly or partially forfeited in caseswhere reimbursement has not been made when export has not taken place withinthe period prescribed or if there proves to be no right to the export refund or ifthere was a right to a smaller refund.

5.

    Regulation No 3665/87 lays down detailed rules concerning payment of exportrefunds on agricultural products.

6.

    Article 5(1) of that regulation provides that, in the specific circumstances thereinset out, payment of the differentiated or non-differentiated refund is to beconditional not only on the product having left the customs territory of theCommunity but also — save where it has perished in transit as a result of forcemajeure — on its having been imported into a third country and, where appropriate,into a specific third country within 12 months following the date of acceptance ofthe export declaration.

7.

    Articles 16 to 18 of Regulation No 3665/87, in the version thereof resulting fromCommission Regulation (EEC) No 354/90 of 9 February 1990 (OJ 1990 L 38,p. 34), lay down additional conditions for products giving rise to differentiatedrefunds, particularly as regards proof of completion of the formalities for releasefor consumption in the third country concerned.

8.

    Article 23(1) of Regulation No 3665/87, which applies to advances on refunds fordirect exports, provides as follows:

'Where the amount advanced is greater than the amount actually due in respectof the relevant export operation or an equivalent export operation, the exportershall repay the difference between the two amounts plus 15% of such difference.

Where, however, by reason of force majeure:

—    the proof to be furnished under this Regulation in order to qualify for therefund cannot be produced, or

—    the product reaches a destination other than that for which the advance wascalculated,

the additional 15% shall not be charged.‘

9.

    Article 33 of Regulation No 3665/87, as amended by Commission Regulation(EEC) No 1615/90 of 15 June 1990 (OJ 1990 L 152, p. 33), which applies toadvances on refunds where goods are processed or stored prior to export, is interms analogous to those of Article 23. It provides, in the second subparagraph ofparagraph (1), that where the amount due for the quantity exported is less thanthat paid in advance, the operator is to pay the difference between those twoamounts, plus 20%. However, in cases of force majeure, the 20% increase is notapplicable.

10.

    By Decision 96/239, the Commission prohibited, inter alia, exports of meat ofbovine animals from the United Kingdom to the other Member States or thirdcountries.

11.

    The Commission adopted measures relating to uncompleted export operations byRegulation No 773/96, as last amended by Regulation (EC) No 1349/96 of 11 July1996 (OJ 1996 L 174, p. 13).

12.

    The sixth and seventh recitals in the preamble to Regulation No 773/96 are in thefollowing terms:

'Whereas Commission Decision 96/239/EC of 27 March 1996 on emergencymeasures to protect against bovine spongiform encephalopathy, inter alia, prohibitsexports of meat of bovine animals to third countries from the United Kingdom;whereas, furthermore, the health measures adopted by the authorities of certainthird countries against Community exports of meat of bovine animals are havingserious economic effects on Community exporters; whereas the resulting situationhas seriously affected the possibilities of exporting under the conditions laid downby Regulations (EEC) No 565/80, (EEC) No 3665/87, (EEC) No 3719/88 and(EEC) No 1964/82;

Whereas, therefore, these negative consequences should be limited by adoptingspecial measures and extending certain of the deadlines laid down by the rules onrefunds in order to permit the regularisation of export operations which have notbeen completed because of the circumstances described‘.

13.

    Article 3 of Regulation No 773/96, as amended by Regulation No 1349/96, providesinter alia that the increases of 15% and 20% referred to in Article 23(1) and thesecond subparagraph of Article 33(1) respectively of Regulation No 3665/87 are notapplicable to exports carried out under licences issued by 31 March 1996, providedthat the customs formalities for release for consumption in the third countryconcerned were carried out after 20 March 1996.

14.

    Article 4(1) and (2) of Regulation No 773/96, in the version thereof resulting fromRegulation No 1349/96, provides:

'1.    At the request of the exporter, for products for which by 31 March 1996:

—    customs export formalities were completed but which were released backinto free circulation in the United Kingdom because of health measuresadopted by a third country, the exporter shall repay any refund paid inadvance and the securities relating to the operations shall be released,

—    customs export formalities were completed in the United Kingdom butwhich have not yet left the customs territory of the Community, the exportdeclaration and the export licence shall be cancelled, the exporter shallrepay any refund paid in advance and the securities relating to theoperations shall be released,

—    customs export formalities were completed but which have been destroyedby a third country as a result of measures adopted by it in relation to BSE,the exporter shall repay any refund paid in advance and, subject to thepresentation of evidence of destruction, the securities relating to theoperations shall be released,

—    customs export formalities were completed but which have been returnedto the customs territory of the Community and destroyed by the receivingMember State as a result of measures adopted by it in relation to BSE, theexporter shall repay any refund paid in advance and, subject to thepresentation of evidence of destruction, the securities relating to theoperations shall be released.

2.    At the request of the exporter, for products placed under one of thearrangements referred to in Articles 4 and 5 of Regulation (EEC) No 565/80 in theUnited Kingdom by 31 March 1996 but which are not covered by an exportdeclaration, the export licence shall be cancelled, the exporter shall repay therefund paid in advance and the securities lodged shall be released.‘

15.

    According to the order for reference, First City Trading Ltd ('FCTL‘) and MeatalSupplies Ltd ('Meatal‘), two of the applicants in the main proceedings, areengaged in the export of beef from the United Kingdom. On 27 March 1996, whenthe ban imposed by the Commission came into effect, FCTL and Meatal were inthe process of exporting 648 200 kg of beef, of which 615 200 kg was in the nameof FCTL and 33 000 kg was in the name of Meatal. Approximately 70% of theFCTL beef (432 921 kg) and all of the Meatal beef left the territory of the UnitedKingdom shortly before 27 March 1996 and was in transit on that date. That beefwas subsequently repatriated to the United Kingdom. The remaining 30% of theFCTL beef (182 279 kg) never left the territory of the United Kingdom and wasnot permitted to do so after 27 March 1996. The applicants in the mainproceedings returned the majority of the beef in question and were repaid by theirsuppliers or received credit notes for it, following payment of aid to those suppliersunder the Beef Stocks Transfer Scheme, a United Kingdom scheme designed tomitigate some of the effects which the ban had on slaughterers and cutters.

16.

    On or about the date on which Decision 96/239 was adopted, a number of thirdcountries, including all the intended destinations of the FCTL beef and the Meatalbeef, imposed bans on the importation of British beef. The Republic of SouthAfrica, the principal intended destination for the beef in question, provisionallybanned the importation of British beef on 23 March 1996. Mauritius, the intendeddestination for the next largest proportion of the beef, imposed a ban on 22 March1996.

17.

    FCTL and Meatal applied for and were granted advance payments of exportrefunds pursuant to Article 5 of Regulation No 565/80 and Chapters 2 and 3 ofTitle 2 of Regulation No 3665/87. As required by Article 6 of Regulation

No 565/80, securities were lodged. In accordance with Articles 22(1) and 31(1) ofRegulation No 3665/87, the amount of the guarantees provided exceeded by 15%or 20% (depending upon the type of export envisaged) the amount of the exportrefunds advanced to FCTL and Meatal.

18.

    In the event, none of the FCTL beef or the Meatal beef entered the territory ofany importing country. Since that normal precondition for payment of adifferentiated export refund had not been satisfied, the Intervention Board forAgricultural Produce ('the Intervention Board‘) called upon the applicants in themain proceedings to repay the refund paid in advance and, upon their refusal todo so, informed the applicants of its intention to forfeit the securities.

19.

    It is common ground that the Intervention Board is not seeking payment of thepenalties provided for in Articles 23 and 33 of Regulation No 3665/87.

20.

    On an application made on 27 August 1996, the High Court of Justice granted theapplicants leave to apply for judicial review of the Intervention Board's decision toapproach the guarantors with a view to obtaining payment of the securities in theamount of the refunds paid in advance. At the same time, the High Court grantedan interlocutory injunction restraining the Intervention Board from enforcing orseeking to enforce the guarantees. By notice of motion dated 22 October 1996 theIntervention Board applied to have the leave to move for judicial review set asideand to have the injunction discharged. In the context of those proceedings, theHigh Court decided to refer the following questions to the Court of Justice for apreliminary ruling:

'(1)    Do Articles 23 and 33 of Commission Regulation No 3665/87/EEC asamended apply to the case where by reason of force majeure goods in transitin the course of export to third countries are repatriated to the MemberState of export, or are they limited to those cases where the goods wereimported into a different third country from that which was originallydeclared by the exporter to the competent authority?

(2)    In circumstances where:

    (a)    by Commission Decision 96/239/EC of 27 March 1996 exports of beeffrom the United Kingdom to third countries were prohibited;

    (b)    bans on the importation of beef from the United Kingdom were alsoimposed by a number of third countries;

    (c)    exporters of beef were at the time of the said Decision in the processof carrying goods to third countries;

    (d)    the said exporters were forced to repatriate the beef to the UnitedKingdom;

    (e)    the exporters received advance-paid export refunds in accordance with[Council] Regulation No 565/80/EEC and Commission RegulationNo 3665/87/EEC as amended in respect of the export transactions inissue; and

    (f)    the exporters suffered losses as a result of not being able to sell thebeef on the export markets in question;

    are the exporters entitled to retain all or part of the export refund byreason of the general principles of Community law and in particular forcemajeure, legitimate expectations, proportionality or equity?

(3)    If [the] answer to Question 2 is that the exporter is entitled to retain inprinciple some or all of the export refund in question, are the exportersbound to give credit for any revenues derived from the disposal of the beefin the United Kingdom (for example where the original vendor of the beefto the exporter was bound to repossess the beef under a retention of titleclause in the original contract of sale and where the vendor repaid all or aportion of the original purchase price)?

(4)    Are either or both of Commission Decision 96/239/EC or [CommissionRegulation] No 773/96/EC unlawful to the extent that they do not providefor exporters in the circumstances referred to in Question 2 above beingentitled to retain export refunds applicable to the exports in question or anyportion thereof?‘

Question 1

21.

    By its first question, the national court is essentially asking whether Articles 23 and33 of Regulation No 3665/87, in the version thereof resulting from RegulationNo 1615/90, must be interpreted as meaning that where, as a result, in particular,of force majeure, goods do not reach their country of destination but are repatriatedto the Member State of export, the exporter is obliged to repay the export refundspaid in advance.

22.

    It is common ground that the applicants in the main proceedings are not beingrequired to pay any penalty under Articles 23 or 33 of Regulation No 3665/87. Thequestion referred must therefore be understood as relating solely to the applicants'obligation to repay the export refunds paid in advance.

23.

    The applicants in the main proceedings claimed at the hearing that they should beauthorised to retain the export refunds by way of compensation for the losssuffered by them following repatriation of the beef to the United Kingdom.

24.

    The United Kingdom Government considers that, where beef is repatriated to theMember State of export, the situation is comparable to a change of destination, inthe course of transit, to a country attracting no export refund. Consequently,Articles 23 and 33 of Regulation No 3665/87 are applicable, as are the principlesestablished by the Court in Case C-299/94 Anglo Irish Beef Processors Internationalv MAFF [1996] ECR I-1925, so that the difference between the amount of therefund paid in advance and that of the refund actually due must be repaid.

25.

    In the Commission's view, Regulation No 3665/87 clearly requires the exportrefunds to be repaid.

26.

    It should be noted in that regard that, according to Regulation No 805/68, the grantof refunds on beef and veal exports, equal to the difference between world marketprices and prices within the Community, serves to safeguard Communityparticipation in international trade in beef and veal.

27.

    According to the provisions of Regulation No 3665/87, payment of refunds isconditional, on the one hand, on the production of proof that the product has leftthe customs territory of the Community and, in the case of differentiated refunds,on its having been imported into a third country and, on the other hand, oncompletion of the formalities for its release for consumption.

28.

    Where the rate of refund varies according to the country of destination, the factthat, for reasons of force majeure in particular, the product does not reach itsintended country of destination but is imported into another third country attractinga lower rate of refund, means that the exporter is obliged to repay the differencebetween the refund in respect of the country to which the product was to havebeen exported and that relating to the country to which it was in fact exported.

29.

    Since actual access to the market of destination is in principle conditional oncompletion of the formalities for release for consumption in the country ofdestination, the fact that the product did not reach that destination and, owing toforce majeure, had to be exported to other countries rules out the possibility of itsbeing regarded, for the purposes of payment of the differentiated refund, as havingbeen imported within the meaning of Article 5(1) of Regulation No 3665/87 (seeparagraph 23 of the judgment in Anglo Irish Beef Processors International, citedabove).

30.

    The position is the same where the product is repatriated to the Member State ofexport. In such a situation, the formalities for release of the product forconsumption in the country of destination have not been completed, so that it

cannot be regarded, for the purposes of payment of the differentiated refund, ashaving been imported within the meaning of Article 5(1) of Regulation No 3665/87.

31.

    The answer to the first question must therefore be that Articles 23 and 33 ofRegulation No 3665/87, in the version thereof resulting from RegulationNo 1615/90, must be interpreted as meaning that where, as a result of, in particular,force majeure, goods do not reach their country of destination but are repatriatedto the Member State of export, the exporter is obliged to repay any export refundspaid in advance.

Question 2

32.

    By its second question, the national court asks whether the general principles ofCommunity law, and, in particular, those relating to force majeure, the protectionof legitimate expectations, proportionality or equity, entitle exporters of beef fromthe United Kingdom to retain all or part of any export refunds paid in advance incircumstances where

(a)    exports of beef from the United Kingdom to third countries have beenprohibited by Decision 96/239,

(b)    bans on the importation of beef from the United Kingdom have also beenimposed by a number of third countries,

(c)    exporters of beef were in the process of carrying goods to third countries atthe time when Decision 96/239 was adopted,

(d)    those exporters were forced to repatriate the beef to the United Kingdom,

(e)    the exporters had received, in accordance with Regulations Nos 565/80 and3665/87, advance payments of export refunds in respect of the exporttransactions in issue, and

(f)    the exporters suffered loss as a result of their inability to sell their beef onthe export markets in question.

33.

    Since the consequences of force majeure are clearly and exhaustively provided forby Regulation No 3665/87, that question must be construed as seeking to ascertainwhether, if the circumstances described by the national court constitute forcemajeure, Regulation No 3665/87 is invalid under the general principles ofCommunity law inasmuch as it does not permit exporters to retain all or part ofany export refunds paid in advance.

34.

    FCTL and Meatal submitted before the national court and at the hearing beforethis Court that their situation was analogous to that referred to in Article 5(1) of

Regulation No 3665/87, which provides that the refund is payable where the goodshave perished in transit as a result of force majeure. They sought to distinguish thepresent case from Anglo Irish Beef Processors International, in which the Court heldthat an exporter is not entitled to receive the refund at the rate applying to thecountry of destination where, as a result of force majeure, the goods do not reachthat country but are exported to a different third country. They claimed that thecircumstances of the present case were different, in that no other market existedfor British beef and the force majeure arose as a result of a Community act, andsubmitted that the decision of the Court in Anglo Irish Beef Processors Internationaldid not cover such a situation.

35.

    The United Kingdom Government submits that none of the principles referred toby the national court justifies the retention by the exporters of all or part of theexport refunds. It contends that the effects of force majeure are provided for byRegulation No 3665/87 and are limited to exemption from the obligation to pay thepenalties. The principle of the protection of legitimate expectations is notapplicable either, since there was no basis for any expectation that the positionwould be any different from that which was specified in the legislation andconfirmed by the case-law of the Court. Moreover, having regard to the properfunction of the export refund system, the obligation to repay such refunds, even inthe event of force majeure, is not contrary to the principle of proportionality. Lastly, the obligation to repay refunds paid in advance is not contrary to theprinciple of equity. On the contrary, if the applicants were allowed to retain therefunds, they would enjoy an unfair advantage by comparison with traders whochose to sell their beef on the United Kingdom market or who wished to exporttheir beef but did not apply for advance payment of refunds.

36.

    The Commission submits that Regulation No 3665/87 is clear and that neither forcemajeure nor equity is capable of altering in any way the obligation to repay exportrefunds. As to the principles of the protection of legitimate expectations and ofproportionality, it points out that the Court has already expressed its view in thatregard in its judgment in Anglo Irish Beef Processors International.

37.

    It must be observed as a preliminary point that, contrary to the submissions ofFCTL and Meatal, there are no grounds for distinguishing the present case fromthe situation on which the Court gave its ruling in Anglo Irish Beef ProcessorsInternational, either on the basis that the force majeure resulted from a Communityact or on the ground that no other market existed for beef originating in the UnitedKingdom.

38.

    It is settled case-law that the concept of force majeure must be understood asreferring to unusual and unforeseeable circumstances which were beyond thecontrol of the party by whom it is pleaded and the consequences of which could nothave been avoided even if all due care had been exercised (see, in particular,paragraph 11 of the judgment in Case 145/85 Denkavit v Belgium [1987] ECR 565).

39.

    It is therefore immaterial whether the fait du prince (act of a public authority)which may constitute such force majeure is a ban on imports of beef from theUnited Kingdom imposed by the country of destination or an export ban introducedby the Community, since both situations involve circumstances beyond theexporter's control.

40.

    By the same token, the actual concept of force majeure must not be confused withits possible consequences. The fact that, by contrast with the situation in AngloIrish Beef Processors International, where the exporter was able to export the goodsto another third country, no other market existed in the present case for the beefrefused by the country of destination is therefore irrelevant.

41.

    As to the provisions of Regulation No 3665/87 concerning force majeure, it is settledcase-law that, since the concept of force majeure does not have the same scope invarious spheres of application of Community law, its meaning must be determinedby reference to the legal context in which it is to operate (see, in particular, CaseC-12/92 Huygen and Others [1993] ECR I-6381, paragraph 30). Therefore,Regulation No 3665/87 is not contrary to the general principles of Community lawinasmuch as it specifies and limits the effects of force majeure in the field of exportrefunds.

42.

    As regards breach of the principle of proportionality, the Court held in paragraph29 of its judgment in Anglo Irish Beef Processors International that where, as a resultof force majeure, goods fail to reach their country of destination but are exportedto other third countries attracting a lower rate of refund or no refund at all,forfeiture of a part of the security equal to the difference between the amount ofthe refund paid in advance and the amount of the refund actually due, without anypenalty being imposed, is commensurate with the objective pursued by thelegislature.

43.

    There is no essential difference between a case in which goods are exported toother third countries attracting no export refund and a case in which the goods arerepatriated to the Member State of export. In both cases, the subsidised goods failto reach their intended market and cannot be sold there.

44.

    Consequently, the rule requiring export refunds paid in advance to be repaid wherethe goods are repatriated to the Member State of export is proportional to theobjective pursued.

45.

    As to breach of the principle of the protection of legitimate expectations, the Courthas also held that the provisions of Regulations Nos 565/80 and 3665/87 cannot giverise to any legitimate expectation other than entitlement to a refund subject to theconditions laid down (see paragraphs 30 to 33 of the judgment in Anglo Irish BeefProcessors International).

46.

    It should also be noted that the provisions of those regulations concerning forcemajeure were adopted precisely in order to protect traders against the prejudicialconsequences which they may suffer as a result of unusual circumstances which theycould not have foreseen. According to those provisions, exporters are exemptedfrom having to pay penalties but not from having to repay refunds paid in advance.

47.

    It follows that, in the case in the main proceedings, FCTL and Meatal could nothave had any legitimate expectation that they would be entitled to retain the exportrefunds paid in advance, even if force majeure were established.

48.

    As to the argument that it would be inequitable to require exporters to repayexport refunds paid in advance, the principle of equity cannot be regarded asallowing any derogation from the application of provisions of Community law, saveas provided for by the legislation or where the legislation is itself declared invalid.

49.

    It must be added that it is precisely if exporters were authorised to retain refundspaid in advance that they would have an unfair advantage over exporters who hadnot applied for an advance payment and who therefore received no export refund.

50.

    The answer to the second question must therefore be that Regulation No 3665/87does not contravene the general principles of Community law, in particular theprinciples of force majeure, the protection of legitimate expectations, proportionalityor equity, by prohibiting exporters of beef from the United Kingdom from retainingall or part of any export refunds paid in advance in circumstances where

(    exports of beef from the United Kingdom to third countries have beenprohibited by Decision 96/239,

(    bans on the importation of beef from the United Kingdom have also beenimposed by a number of third countries,

(    exporters of beef were in the process of carrying goods to third countries onthe date on which Decision 96/239 was adopted,

(    those exporters were forced to repatriate the beef to the United Kingdom,

(    the exporters had received, in accordance with Regulations Nos 565/80 and3665/87, advance payments of export refunds in respect of the exporttransactions in issue, and

(    the exporters suffered loss as a result of their inability to sell their beef onthe export markets in question.

Question 3

51.

    By its third question, which would arise if the exporters were held to be entitled toretain all or part of the refund, the national court asks whether they would bebound to give credit for any revenues derived from disposal of the beef in theUnited Kingdom.

52.

    In view of the answers given to the first two questions, there is no need to answerthe third question.

Question 4

53.

    By its fourth question, the national court enquires as to the validity of Decision96/239 and Regulation No 773/96, inasmuch as they do not allow exporters, in thecircumstances described in the second question, to retain all or part of the exportrefund.

Decision 96/239

54.

    The legality of Decision 96/239 was examined in the Court's judgments of 5 May1998 in Case C-157/96 National Farmers' Union and Others (not yet published in theEuropean Court Reports) and Case C-180/96 United Kingdom v Commission (notyet published in the European Court Reports).

55.

    It should be noted that the applicants in the main proceedings in this case, whowere interveners in the main proceedings in National Farmers' Union and Others,also participated, in that capacity, in the proceedings before the Court.

56.

    However, they have not in the present case put forward any submission whichdiffers from those previously considered in National Farmers' Union and Others andwhich is such as to call in question the legality of Decision 96/239.

57.

    In so far as this question is concerned, reference should therefore be made to theabovementioned judgments in National Farmers' Union and Others and UnitedKingdom v Commission.

58.

    The answer to this part of the question must therefore be that consideration ofDecision 96/239 has not disclosed any factor of such a kind as to affect its validity.

Regulation No 773/96

59.

    In the United Kingdom's view, there are no grounds for suggesting that RegulationNo 773/96 is unlawful. To permit exporters to retain refunds would be contrary tothe objective of the refund scheme. It considers, moreover, that it was open to the

Commission, in the exercise of its discretion, to omit such a measure when adoptingthe regulation in question.

60.

    The Commission is unable to see any basis on which Regulation No 773/96 couldbe regarded as inconsistent with the principles of the protection of legitimateexpectations or of proportionality. It further submits that to provide forcompensation in relation to beef which never reached its destination would beinconsistent with the export refund scheme, the objectives of RegulationNo 3665/87, the case-law of the Court and the general principle of non-discrimination.

61.

    It should be noted in that regard that, although Regulation No 773/96 lays downspecial measures derogating from Regulation No 3665/87, it does not exemptexporters from the obligation to repay export refunds paid in advance where thegoods have not been imported into, and marketed in, the third country ofdestination.

62.

    As is evident from the Court's examination of the second question, none of thegeneral principles of Community law, and in particular the principles of forcemajeure, the protection of legitimate expectations, proportionality and equity,required exporters, in the circumstances described by the national court, to beauthorised to retain all or part of any export refunds paid in advance.

63.

    Consequently, the fact that Regulation No 773/96 does not provide for the possibleretention by exporters, in the circumstances described in the answer to the secondquestion, of all or part of any export refunds paid in advance does not render itinvalid.

Costs

64.

    The costs incurred by the United Kingdom Government and by the Commission,which have submitted observations to the Court, are not recoverable. Since theseproceedings are, for the parties to the main proceedings, a step in the proceedingspending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (First Chamber),

in answer to the questions referred to it by the High Court of Justice, Queen'sBench Division, by order of 26 March 1997, hereby rules:

1.

    Articles 23 and 33 of Commission Regulation (EEC) No 3665/87 of27 November 1987 laying down common detailed rules for the applicationof the system of export refunds on agricultural products, in the versionthereof resulting from Commission Regulation (EEC) No 1615/90 of15 June 1990, must be interpreted as meaning that where, as a result of, inparticular, force majeure, goods do not reach their country of destinationbut are repatriated to the Member State of export, the exporter is obligedto repay any export refunds paid in advance.

2.

    Regulation No 3665/87 does not contravene the general principles ofCommunity law, in particular the principles of force majeure, the protectionof legitimate expectations, proportionality or equity, by prohibitingexporters of beef from the United Kingdom from retaining all or part ofany export refunds paid in advance in circumstances where

    (    exports of beef from the United Kingdom to third countries have beenprohibited by Commission Decision 96/239/EC of 27 March 1996 onemergency measures to protect against bovine spongiformencephalopathy,

    (    bans on the importation of beef from the United Kingdom have alsobeen imposed by a number of third countries,

    (    exporters of beef were in the process of carrying goods to thirdcountries on the date on which Decision 96/239 was adopted,

    (    those exporters were forced to repatriate the beef to the UnitedKingdom,

    (    the exporters had received, in accordance with Council Regulation(EEC) No 565/80 of 4 March 1980 on the advance payment of exportrefunds in respect of agricultural products and CommissionRegulation (EEC) No 3665/87, advance payments of export refundsin respect of the export transactions at issue, and

    (    the exporters suffered loss as a result of their inability to sell theirbeef on the export markets in question.

3.

    Consideration of question 4 has not disclosed any factor of such a kind asto affect the validity of Decision 96/239.

    Commission Regulation (EC) No 773/96 of 26 April 1996 laying downspecial measures derogating from Regulations (EEC) No 3665/87, (EEC)No 3719/88 and (EEC) No 1964/82 in the beef and veal sector is notrendered invalid by the fact that it prohibits exporters, in the circumstances

described in the answer to the second question, from retaining all or partof any export refunds paid in advance.

Wathelet Jann Sevón

Delivered in open court in Luxembourg on 29 September 1998.

R. Grass

M. Wathelet

Registrar

President of the First Chamber

1: Language of the case: English.