Right to judicial review of European Commission’s Regulatory Acts in the Field Agriculture: The Tate & Lyle Judgment
In the landmark judgment Tate & Lyle, the Grand Chamber of the Court of Justice (‘Court’) examined the correct interpretation of Article 263(4) TFEU. The Court held on 28 April 2015 in Case C-456/13 P T & L Sugars v Commission that the measure challenged was not a ‘regulatory act not entailing implementing measures’ and thus Tate & Lyle did not have standing to take an action. By means of this judgment, the Court ended the hopes of those who wished for a broader interpretation of Article 263(4) TFEU and for a loosening of the rules on standing by interpreting the notion of ‘regulatory act not entailing implementing measures’.
This is an agricultural case. But it has significance for judicial review of any EU measure. Like many food and agricultural cases before it, and I think of Cassis de Dijon in primis, it sets the framework for our understanding of EU law.
The Court essentially disagreed with AG Cruz Villalòn Opinion of 14 October 2014 that the measures challenged were indeed ‘regulatory acts not entailing implementing measures’ and who advised that the action should be declared admissible. The Court instead relied on its prior judgment in Telefónica v Commission[1], in the area of State aid, but more interestingly transposed the dictum of Telefónica in the area of EU administrative law relating to agriculture. The Court effectively precludes all competitors of farmers benefiting from agricultural aid schemes from challenging the Commission’s regulatory measures.
The judgment is of tantamount importance in the area of EU administrative law.
The Facts of the Case
The supply of sugar on the EU market includes sugar produced, first, by the processing of sugar beet grown within the European Union and, second, by the refining of raw cane sugar imported from non-member countries, the final product being chemically identical in each case.
The Appellants Tate & Lyle and Sadul belong to the world’s largest sugar refiner (American Sugars). The Applicants are not producers holding sugar production quotas under to the quota regime applicable in the marketing year 2010/2011 pursuant to the basic act provided by Council Regulation (EC) No 1234/2007 establishing a common organisation of agricultural markets (the Single CMO Regulation), but sugar refiners. Their business consists in importing and reselling raw sugar after refining. The possibility to import and resell the refined sugar on the EU market is influenced on the duties applicable to import of sugar from third countries.
As background, between March and April 2011, the Commission adopted the contested regulations on the basis of Article 187 of the Single CMO Regulation, the basic act providing the Commission with the authority to manage the sugar market, as exceptional measures aimed at increasing the supply of sugar on the EU market that was extraordinarily scarce in the EU because of the very high price of sugar on the world market which made it convenient for traders not to sell sugar to EU wholesalers.
The Commission designed the contested regulations as two separate groups of extraordinary measures.[2] A first set of two regulations was aimed at EU producers holder of production quotas to allow them marketing a limited additional quantity of sugar in excess of their quotas without payment of any surplus levy (‘the Zero-Surplus-Levy Regulations’. The surplus-levy is a penalty charge imposed on production in excess of the quota which is not eliminated from the EU market essentially by export). A second set of two regulations was targeted to traders (such as the Appellants) to allow them to import limited quantities of sugar at zero import duties (the Zero-Import-Duty Regulations). The Commission estimated at that time, that the release of the combined quantities on the EU market would have been sufficient to bring down the sugar price.
In Case T-279/11, the Appellants challenged the four regulations because they claim that the Commission was according to them under the sole obligation to take measures allowing imports of raw sugar to refine at zero import duties. The Applicants argued that they had standing to bring proceedings against the contested regulations under Article 263(4) TFEU as modified by the Lisbon Treaty, because the latter were either regulatory acts which are of direct concern to them and did not entail implementing measures or, in the alternative, that they are of direct and individual concern to them. The Commission submitted an inadmissibility plea arguing that the contested regulations, although being regulatory acts, were neither of individual nor of direct concern to them. Moreover, the contested regulations entailed implementing measures, within the meaning of the last prong of Article 263(4) TFEU, the Commission said.
The First Instance Judgment
On first instance, the General Court dismissed the action in its judgment of 6 June 2013 T & L Sugars and others v Commission[3] because inadmissible. It held that the contested regulations were not regulatory acts not entailing implementing measures because they did entail measures to be taken by national authorities that could be challenged in the national legal order the applicants were not individually concerned by the contested measures.
The General Court agreed with the Commission that both groups of contested regulations, the Zero-Surplus-Levy and the Zero-Import-Duty, could not produce their legal effects vis-à-vis the operators concerned without the intermediary step of implementing measures first being taken by the national authorities and accordingly entailed implementing measures.
The General Court ruled that it was apparent from the contested regulations that the measures taken at national level constituted individual decisions taken at national level, in default of which they could not affect the legal position of the natural and legal persons concerned.[4]
The General Court considered the case at hand distinguishable from the one in Microban[5] where it found that a mandatory Commission’s prohibition on marketing a chemical substance was a challengeable act not entailing implementing national measures within the meaning of Article 263(4) TFEU, and confirmed by contrast that, in the present case, the contested regulations required the adoption of national measures to produce legal effects vis-à-vis individuals and accordingly could not be categorised as acts that do not entail implementing measures.[6]
Finally, as regards the aim of Article 263(4) TFEU to enable natural and legal persons to bring an action against regulatory acts which are of direct and individual concern to them and which do not entail implementing measures, therefore avoiding a situation in which such a person would have to break the law in order to have access to justice, as it established in Eurofer[7], the General Court agreed with the Commission that even if it cannot in the present case be determined with certainty that the Appellants have a legal remedy which allows them to challenge the measures taken by the national authorities in implementing the contested regulations, the application by the Court of the condition relating to the non-existence of implementing measures, as set out in Article 263(4) TFEU, cannot be made conditional on the existence, within the legal systems of the Member States, of an effective legal remedy which makes it possible to call in question the legality of the contested European Union act.[8]
The Court of Justice’s judgment
In its opinion rendered on 14 October 2014, the Advocate General Cruz Villalòn had opined that the contested measures were regulatory acts not entailing implementing measures within the meaning of Article 263(4) TFEU and considered that the action for annulment should be declared admissible.
The Court disagreed with the Advocate General, dismissed the appeal and upheld the judgment of the General Court. The Court held that the measures challenged were not regulatory acts not entailing implementing measures and that the applicants were not individually concerned by them.
The Court began with some introductory findings. It recalled that the concept of ‘regulatory act which … does not entail implementing measures’ within the meaning of the final limb of Article 263(4) TFEU must be interpreted in the light of the objective of that provision, which is, as is apparent from its drafting history, to ensure that individuals do not have to break the law in order to have access to a court. Where a regulatory act directly affects the legal situation of a natural or legal person without requiring implementing measures, that person could be denied effective judicial protection if he did not have a direct legal remedy before the EU judicature for the purpose of challenging the legality of the regulatory act. In the absence of implementing measures, natural or legal persons, although directly concerned by the act in question, would be able to obtain a judicial review of that act only after having infringed its provisions, by pleading that those provisions are unlawful in proceedings initiated against them before the national courts.[9]
However, where a regulatory act entails implementing measures, judicial review of compliance with the EU legal order is ensured irrespective of whether those measures were adopted by the EU or the Member States. Natural or legal persons who are unable, because of the conditions governing admissibility laid down in the fourth paragraph of Article 263 TFEU, to challenge an EU regulatory act directly before the EU judicature are protected against the application to them of such an act by the ability to challenge the implementing measures which the act entails.[10]
Where responsibility for the implementation of such acts lies with the institutions, bodies, offices or agencies of the European Union, natural or legal persons are entitled to bring a direct action before the EU judicature against the implementing acts pursuant to Article 263(4) TFEU, and to plead in support of that action, pursuant to Article 277 TFEU, the illegality of the basic act at issue. Where that implementation is a matter for the Member States, those persons may plead the invalidity of the basic act at issue before the national courts and tribunals and cause the latter to request a preliminary ruling from the Court of Justice, pursuant to Article 267 TFEU.[11]
The Court recalled that whether a regulatory act entails implementing measures should be assessed by reference to the position of the person pleading the right to bring proceedings under the final limb of Article 263 (4) TFEU. It is therefore irrelevant whether the act in question entails implementing measures with regard to other persons.[12]
In the present case, the Court found that the General Court had made an error in law because the General Court did not examine whether the regulations challenged were of direct concern to the appellants: it based its finding that the action was inadmissible on the fact that those regulations entailed implementing measures within the meaning of the final limb of the fourth paragraph of Article 263 TFEU.
However, the Court went on to find that certain of the challenged regulations are not of direct concern to the appellants within the meaning of the final limb of Article 263 (4) TFEU. Thus, the error of law made by the General Court is not such as to entail the setting aside of the judgment under appeal as regards the inadmissibility of the action against those regulations.
The Court also found that the remaining regulations challenged produce their legal effects vis-à-vis the appellants only through the intermediary of acts taken by the national authorities following the submission of applications for certificates. The decisions of the national authorities granting such certificates and the decisions refusing such certificates in full or in part therefore constitute implementing measures within the meaning of the final limb of Article 263(4) TFEU.
The Court pointed out that that conclusion is not called into question by the allegedly mechanical nature of the measures taken at national level.
The Court then placed heavy emphasis on the fact that its finding was compatible with Article 47 of the Charter. According to settled case-law that article is not intended to change the system of judicial review laid down by the Treaties, and particularly the rules relating to the admissibility of direct actions brought before the EU Courts, as is apparent also from the Explanation on Article 47 of the Charter, which must, in accordance with the third subparagraph of Article 6(1) TEU and Article 52(7) of the Charter, be taken into consideration for the interpretation of the Charter.[13]
Thus, the conditions of admissibility laid down in Article 263(4) TFEU must be interpreted in the light of the fundamental right to effective judicial protection, but such an interpretation cannot have the effect of setting aside those conditions, which are expressly laid down in that Treaty.
However, judicial review of compliance with the EU legal order is ensured, as can be seen from Article 19(1) TEU, not only by the Court of Justice but also by the courts and tribunals of the Member States. The FEU Treaty has, by Articles 263 TFEU and 277 TFEU, on the one hand, and Article 267 TFEU, on the other, established a complete system of legal remedies and procedures designed to ensure judicial review of the legality of acts of the institutions, and has entrusted such review to the EU judicature.
In proceedings before the national courts, individual parties have the right to challenge before the courts the legality of any decision or other national measure relative to the application to them of a EU act of general application, by pleading the invalidity of such an act.
It follows that references on validity constitute, like actions for annulment, means for reviewing the legality of EU acts.
In that regard, it must be borne in mind that where a national court or tribunal considers that one or more arguments for invalidity of an EU act, put forward by the parties or, as the case may be, raised by it of its own motion, are well founded, it is incumbent upon it to stay proceedings and to make a reference to the Court for a preliminary ruling on the act’s validity, the Court alone having jurisdiction to declare an EU act invalid.
As regards persons who do not fulfil the requirements of Article 263 (4) TFEU for bringing an action before the EU Courts, it is for the Member States to establish a system of legal remedies and procedures which ensure respect for the fundamental right to effective judicial protection.
That obligation on the Member States was reaffirmed by the second subparagraph of Article 19(1) TEU, which states that Member States ‘shall provide remedies sufficient to ensure effective judicial protection in the fields covered by EU law’. That obligation also follows from Article 47 of the Charter as regards measures taken by the Member States to implement Union law within the meaning of Article 51(1) of the Charter.
Accordingly, the Court held that the appeal should be rejected.
The Court went on to consider a second ground of appeal: whether the contested regulations were of individual concern. It did so because pursuant to Article 263 (4) TFEU, natural or legal persons may institute proceedings against an act which is not addressed to them and entails implementing measures only if that act is of direct and individual concern to them.
It held that they were not and rejected that ground of appeal also. The Court recalled that it is settled case-law that persons other than those to whom a decision is addressed may claim to be individually concerned only if that decision affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed.
Also, the possibility of determining more or less precisely the number, or even the identity, of the persons to whom a measure applies by no means implies that it must be regarded as being of individual concern to them as long as that measure is applied by virtue of an objective legal or factual situation defined by it.
The Court then concluded that the regulations challenged did not individually distinguish the applicants. Consequently, the General Court was right to hold, in the judgment under appeal, that the applicants were not individually concerned within the meaning of Article 263(4) TFEU.
[1] Case C-274/12 P, Telefónica v Commission, judgment of 19 December 2013, not yet published.
[2] The contested regulations included: i) Commission Regulation (EU) No 222/2011 laying down exceptional measures as regards the release of out-of-quota sugar and isoglucose on the Union market at reduced surplus levy during marketing year 2010/2011 (OJ 2011 L 60, p. 6); ii) Commission Implementing Regulation (EU) No 293/2011 of 23 March 2011 fixing allocation coefficient, rejecting further applications and closing the period for submitting applications for available quantities of out-of-quota sugar to be sold on the Union market at reduced surplus levy (OJ 2011 L 79, p. 8); iii) Commission Implementing Regulation No 302/2011 of 28 March 2011 opening an exceptional import tariff quota for certain quantities of sugar in the 2010/11 marketing year (OJ 2011 L 81, p. 8); iv) Commission Implementing Regulation (EU) No 393/2011 of 19 April 2011 fixing the allocation coefficient for the issuing of import licences applied for from 1 to 7 April 2011 for sugar products under certain tariff quotas and suspending submission of applications for such licences (OJ 2011 L 104, p. 39).
[3] Case T-279/11, T&L Sugars Ltd and Sidul Açúcares, Unipessoal L v Commission, judgment of 6 June 2013, not yet published.
[4] Case T-279/11, paragraphs 43-49.
[5] Case T-262/10, Microban International Ltd and Microban (Europe) Ltd v Commission, judgment of 25 October 2011, ECR II-7697.
[6] Case T-279/11, paragraphs 52-57.
[7] Case T-381/11, Eurofer v Commission, order of 4 June 2012.
[8] Case T-279/11, see above, paragraphs 58-70.
[9] See also Case C‑274/12 P, paragraph 27.
[10] See also Case C‑274/12 P, paragraph 28.
[11] See also Case C‑274/12 P, paragraph 30, and Case C‑132/12 P, Stichting Woonpunt and Others v Commission, judgment of 27 February 2014, not yet published, paragraph 50.
[12] See Case C‑274/12 P, paragraph 30, and Case C‑132/12 P, paragraph 50.
[13] See Case C‑283/11, Sky Österreich GmbH v Österreichischer Rundfunk, judgment of 22 January 2013, paragraph 42; Case C‑426/11, Alemo-Herron and Others, judgment of 18 July 2013, paragraph 32; and Case C‑583/11 P, Inuit Tapiriit Kanatami and Others v Parliament and Council, judgment of 3 October 2013, paragraph 97.
