OPINION OF ADVOCATE GENERAL GEELHOED delivered on 13 February 2003 (1)

(Reference for a preliminary ruling from the Court of Appeal (England and Wales) (Civil Division))

((Regulation (EEC) No 3950/92 – Additional levy in the milk and milk products sector – Deliveries by a producer to a purchaser – Purchaser's failure to pay the levy – Recovery from the producer))

I ─ Introduction

II ─ Legal framework

4. The rules governing the additional levy on cow's milk were introduced on 1 April 1984 by Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) No 804/68 (4) on the common organisation of the market in milk and milk products. (5) The objective of the levy, as provided in Article 5c of amended Regulation No 804/68, is to curb the increase in milk production while at the same time permitting the structural developments and adjustments required, having regard to the diversity of the situations among individual Member States, regions and collection areas in the Community. Under the regulation, every milk producer who fulfilled certain conditions was allocated a milk quota. (6) Council Regulation (EEC) No 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (7) laid down further rules. (8)

6. Under Article 1 of Regulation No 3950/92, the additional levy is to be payable by producers of cow's milk and apply to quantities of milk or milk equivalent delivered to a purchaser or sold directly for consumption during the 12-month period in question in excess of a quantity to be determined. The levy shall be 115% of the target price for milk.

7. Article 2(2) of Regulation No 3950/92 concerns deliveries: ... before a date and in accordance with detailed rules to be laid down, the purchaser liable for the levy shall pay to the competent body of the Member State the amount payable, which he shall deduct from the price of milk paid to producers who owe the levy or, failing this, collect by any appropriate means. Whereas a purchaser replaces in whole or in part one or more purchasers, the individual reference quantities available to producers shall be taken into account for the remainder of the twelve-month period in progress, less quantities already delivered and account being taken of their fat content. The same provisions shall apply where a producer transfers from one purchaser to another. Where quantities delivered by a producer exceed his reference quantity, the purchaser shall be authorised, by way of an advance on the levy payable, in accordance with detailed rules laid down by the Member State, to deduct an amount from the price of the milk in respect of any delivery by that producer in excess of his reference quantity.

8. Article 2(3) concerns direct sales. In that case the producer shall pay the levy payable to the competent body of the Member State before a date and in accordance with rules to be laid down.

─ to treat or process them, However, any group of purchasers in the same geographical area which carries out administrative and accounting operations necessary for the payment of the levy on behalf of its members shall be regarded as a purchaser. ...

─ to sell them to one or more undertakings treating or processing milk or other milk products. However, any group of purchasers in the same geographical area which carries out administrative and accounting operations necessary for the payment of the levy on behalf of its members shall be regarded as a purchaser. ...

10. The role of the purchaser is explained in the eighth recital in the preamble to Regulation No 3950/92, which reads: Whereas, in order to avoid, as in the past, long delays between collection and payment of the levy, which are incompatible with the scheme's objective, provision should be made for the purchaser, who seems in the best position to carry out the necessary operations, to be liable for the levy, and for him to be given the means to collect the levy from the producers who owe it.

11. The detailed rules of application relating to payment of the levy are laid down in Regulation No 536/93. Article 3 sets out rules for delivery to the purchaser, Article 4 for delivery direct to the consumer. Article 5(2) requires Member States to take any additional measures necessary to ensure payment of levies due to the Community within the time-limit laid down. Those include ─ pursuant to Article 7(1) of Regulation No 536/93 ─ all the verification measures necessary to ensure payment of the levy on quantities of milk and milk equivalent marketed in excess of any of the quantities referred to in Article 3 of Regulation (EEC) No 3950/92. To that end: (a) all purchasers operating in the territory of a Member State must be approved by that Member State. ...(b) producers shall be required to ensure that purchasers to whom they deliver are approved.

B ─ National legislation

12. The relevant national provisions giving effect to the EC regulation and concerning the additional levy are laid down in the Dairy Produce Quota Regulations 1997. (10)

14. Regulation 20 provides that any amount payable in respect of the levy which has remained unpaid on 1 September in any year may be recovered, together with interest, by the Intervention Board. For the purposes of the third paragraph of Article 2(2) of Regulation No 3950/92 ─ the situation where the quantity of milk delivered by the producer to the purchaser exceeds the producer's quota ─, the purchaser is authorised immediately to deduct an amount corresponding to the quantity in excess of the quota.

III ─ Facts and procedure

15. The main proceedings concern a dispute between, on the one hand, the Intervention Board and, on the other, Penycoed Farming Partnership, (12) a partnership between Jonathan Williams and Ian Parker.

16. By writ of 28 January 1999, the Intervention Board brought before the High Court of Justice, Queen's Bench Division, a claim against Penycoed for GBP 561 872.42, being levy due from the defendant for the 1997/98 milk year, together with interest. In its statement of claim of 6 May 1999, the Intervention Board set out the facts on which it relied in support of its claim. At paragraph 11 of that statement of claim, it alleged as follows: During the quota year 1997/98, the defendant was a producer of milk for the purposes of the [relevant Community and national instruments] and delivered 2 111 023 litres of milk or milk equivalent to persons who were not purchasers approved by the plaintiff.

17. As is apparent from the order for reference, the factual background to this case is a scheme whereby farmers delivered milk to Elm Farms Limited (an English company, now in liquidation, hereinafter: Elm Farms) and, from 1 January 1998 onwards, to TDM Dairy Management Incorporated (a company incorporated in Delaware, hereinafter: TDM).

18. The farmers who joined the scheme entered into arrangements with Elm Farms and TDM. Most of the participating farmers were registered holders of milk quotas but some of them, including the defendant, were not. Under those arrangements, the farmers rented out (parts of) their land and their cows to Elm Farms or TDM. The farmers who held a milk quota permitted Elm Farms and TDM to use that quota in their name. At the same time, Elm Farms and TDM agreed with the farmers that they would be paid to care for and milk the cows as agents for Elm Farms and TDM.

19. The purpose of the scheme was to enable the farmers to engage in dairy farming without requiring milk quotas to do so. The object was that the farmers would not be producers within the meaning of the additional levy regulations and that Elm Farms and TDM would not be purchasers. Elm Farms and TDM would themselves be the producers who would either have needed milk quotas or been responsible for any levy payable. The Intervention Board claimed that the scheme did not have the intended result and that the farmers remained producers and Elm Farms and TDM were purchasers. Thus milk was delivered by the farmers to Elm Farms and TDM. The farmers disputed that view of the Intervention Board.

21. Penycoed's application is, legally speaking, to be regarded as a preliminary objection of inadmissibility. By judgment of 27 June 2000, Master Eyre dismissed the preliminary objection because he considered that it should be ruled upon, not at a preliminary stage of proceedings, but during the hearing of the substance of the case. Master Eyre granted Penycoed leave to appeal to the Court of Appeal against his decision. The Court of Appeal heard the case on 25 April 2001.

22. It should be noted that the parties to the main proceedings have agreed, for the purposes of the preliminary objection of inadmissibility, that the Intervention Board's factual analysis will be deemed to be correct. Thus, in the further course of proceedings, Penycoed will be regarded as a producer and Elm Farms and TDM as purchasers to whom Penycoed made deliveries. It is also established in the proceedings that the Intervention Board has not approved Elm Farms and TDM as purchasers.

24. In addition to this case, there are 22 other cases arising out of the same or similar transactions; in 21 of them, the same point has been or might be raised by the defendant. All those cases are currently stayed by the national court, pending the decision in this case.

25. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice, written observations have been submitted by the Governments of Greece, Italy and the United Kingdom and by the Commission. On 28 November 2002 a hearing was held in this case, at which Penycoed also put forward its point of view.

IV ─ Organisation of the market in the milk sector

26. The rules governing the additional levy form part of the organisation of the market in the milk sector. For the sake of a clear understanding of the context of this case, I shall outline here a few features of that market organisation.

27. The European Union produces 122 million tonnes of milk annually. That takes place on approximately 720 000 dairy farms with 21 million dairy cows. Of that milk production, 115 million tonnes (94%) are delivered to the dairy factory; the remainder is processed on the farm. Approximately 100 million tonnes (82%) are sold within the European Union at normal market prices, well over half of it in the form of cheese; 10 million tonnes (8%) are also sold on the internal market but at a subsidised price and the remaining 12 million tonnes of milk (10%) are exported to non-Community countries in the form of milk powder, butter, butter oil, cheese and condensed milk. This takes place largely with the help of export refunds, which bridge the price gap with the level on the world market.

28. Until 1 January 2000, Regulation No 804/68 was in force. (14) The market organisation was based, pursuant to that regulation, on three principles:

(1)A system of prices, which involves fixing for each milk year a target price for milk and intervention prices for butter and skimmed-milk powder.

(2)A system of intervention. Since 1987, the possibility of intervention for butter has depended on the level of the market price in a Member State ─ intervention takes place only if the market price is below 92% of the intervention price ─ and the price paid for the butter handed over and stored is only 90% of the intervention price; in the case of skimmed-milk powder, intervention is possible only in the summer period (1 March to 31 August), and the intervention price of 100% is guaranteed only in respect of a certain quantity (109 000 tonnes on an annual basis for the whole of the European Union).

(3)A system of trade with non-Community countries. For exports of milk products to non-Community countries, export subsidies (refunds) are granted in order to bridge the price gap between the internal market and the world market. Under the WTO Agreement, the European Union has already had to reduce subsidised exports drastically between 1995 and 2001: by 36% in value and 21% in quantity.

Since 1 January 2000 ─ and thus of less relevance in this case ─ a somewhat amended regime has applied by virtue of Regulation No 1255/1999. (17) Put briefly, the target price for milk and the intervention prices have been reduced. They have been replaced by other forms of support such as premium supplements, area payments and direct income support.

V ─ Assessment

29. I am of the opinion that the referring court's three questions are so closely connected that there is no need to consider each of them separately.

31. First of all, I shall give below a brief outline of the applicable system, in so far, of course, as that is relevant to the question to be answered. I shall then turn to the observations which have been submitted in these proceedings. Then I shall describe the arguments which, in my view, can be left out of consideration. Finally, I shall come to the proposed answer to the main question as formulated.

A ─ Preliminary observations

32. The additional levy system was introduced on 1 April 1984 for the purpose of controlling milk production in the European Community. The introduction of individual milk quotas was intended to restrict milk production to existing dairy farms and to discourage the advent of new holdings. Individual milk quotas determine the amount of milk which a dairy farmer may produce without having an additional ─ prohibitive ─ levy imposed on him. The amount of that levy is currently 115% of the target price for milk.

33. Considered from the point of view of the individual dairy farmer, he has the right to produce milk to the extent of his quota. If he produces more, he is obliged to pay. In Molkereigenossenschaft Wiedergeltlingen, (18) the Court expressly says so. The additional levy must be transferred by the debtor, that is the producer, to the creditor, namely the competent body of the Member State. Those rights and obligations of the dairy farmer constitute the essence of the additional levy scheme.

34. In addition, in order to ensure that milk production is effectively curbed, the system confers a succession of administrative powers intended to ensure that the levy is actually paid. The administrative powers are for the most part laid down in the EC regulations concerning the additional levy. The Member States play a central role in the implementation of the system. The regulations give them a mandate for that purpose. The Member States are responsible inter alia for the collection of the levy. Nevertheless, the powers of the Member States' authorities in respect of collection are laid down at Community level. That is intended to ensure that the additional levy is effectively applied in all the Member States without entailing any loss of Community resources. At the same time, the intention is that application should take place uniformly so as to prevent milk production in the Member States from being influenced by improper competitive disparities.

35. For administrative reasons, it was decided that the competent authority of the Member State should collect the additional levy, not from the milk producer, but from the purchaser of the milk. As the Court points out in Molkereigenossenschaft Wiedergeltlingen, (19) the purchaser has the role of intermediary, which arises from his capacity as the person liable for the levy when the transfer is effected. It is clear from the eighth recital in the preamble that the assignment of that role to the purchaser is intended to avoid long delays in the collection of the levy. The producer is and remains the person who owes the levy.

36. The purchaser is thus assigned a role as intermediary for practical, administrative reasons. That role of the purchaser is without prejudice to the obligation of the dairy farmer to curb his milk production and to pay the levy on excess production. In its judgment in Consorzio fra i Caseifici dell'Altopiano di Asiago, (20) the Court interprets the term purchaser for the purposes of Articles 2(2) and 9(e) of Regulation No 3950/92 as including any intermediary undertaking which acquires milk from a producer under a contract, irrespective of the manner in which the latter is paid, for the purpose either of treating or processing the milk itself or of transferring it to another undertaking for treatment or processing .... That is a broad interpretation, as the Court itself expressly states in that judgment.

37. That broad interpretation by the Court is necessary because the Community legislature has conferred a monopoly position on the purchaser so far as the collection of the levy from the milk producer and the payment of the collected amount to the national authority are concerned. The legislation does not provide for any obligation for the milk producer to pay the levy to the authority, or for any power for the authority to recover the levy from the milk producer, in both cases with the exception of direct farm sales.

38. The Community legislature clearly assumes that there is always a purchaser of milk who can be held liable for the financial settlement of the additional levy owed by the milk producer. In this case, however, there is no such liable purchaser. A gap in the legislation has thus been brought to light by the actions of the parties involved.

C ─ The observations submitted

40. The United Kingdom Government submits that effective implementation of the additional levy system requires that the Intervention Board should in principle be entitled to make recovery from the producer directly, since it is the producer who is the ultimate debtor pursuant to Articles 1 and 2 of Regulation No 3950/92. Article 2(2) of Regulation No 3950/92 is intended to facilitate recovery from producers and not to impede such recovery where the purchaser fails to act as intermediary. Penycoed, Elm Farms and TDM were in breach, according to the United Kingdom Government, of the requirements of Article 7 of Regulation No 536/93. Elm Farms and TDM were unapproved purchasers and Penycoed delivered milk to those unapproved purchasers. An unapproved purchaser does not fall under Article 2(2) of Regulation No 3950/92 and therefore does not have the powers conferred on a purchaser under Article 2(2).

41. Moreover, Penycoed, Elm Farms and TDM made no attempt either to pay the levy or to collect the levy. Despite the fact that the regulation lays down no rules for such a situation, the United Kingdom Government contends that the competent body of a Member State may take action directly in such a case. That applies particularly where, as in this case, the purchaser fails to discharge his role as intermediary. However, according to the United Kingdom Government, direct action may not be taken where the producer would then have to pay levy twice or where the Intervention Board could make a double recovery.

42. The Italian Government submits that Community law does not expressly preclude direct legal action from being taken against a producer. On the contrary, the Member States are obliged to take all the verification measures necessary to ensure payment of the levy. The taking of legal action against a producer falls within those measures.

43. According to the Italian Government, the competent national body can take legal action directly against a producer where it is proven that the producer has taken no steps to pay the levy, even after he has been called upon to do so. Direct legal action by the competent authority may also take place where a purchaser is not approved. The fact that the purchaser is not approved does not exempt the producer from his obligation to pay the levy. Even where the purchaser has failed to comply with his obligations under Article 7 of Regulation No 536/93, that does not exempt the producer from his obligations. This means that the national authority must have the power to take action to avoid breaches of Community law.

44. According to the Commission, purchasers are liable to pay the levy purely for reasons of administrative efficiency. That follows from Article 2 of, and the seventh recital in the preamble to, Regulation No 3950/92. The fact that individual producers are regarded as being ultimately responsible for the levy is expressed in Article 2(2) of Regulation No 3950/92. That provision requires purchasers to recover the levy from producers. That interpretation is supported by Article 3 of Regulation No 536/93. The purpose of the levy would be undermined if it were possible for producers to evade payment of the levy by selling milk to purchasers from whom Member States do not, in practice, have any prospect of recovering the levy. Producers would also be unjustly enriched if they did not have to pay any levy.

45. The Commission submits that the purchaser is entitled to recover the levy from the producer only after he has paid it to the Member State. The purchaser has no right to pursue the producer for the levy if the producer has paid it directly to the Member State. However, the purchaser may deduct an amount from the price of all milk deliveries from that producer, as an advance on the levy payable, where the quantities delivered by a producer exceed his reference quantity. However, the Commission considers it to be clear that where an advance on the levy has been collected, the Member State (in the absence of fraud between producer and purchaser) can pursue only the purchaser for the levy.

46. According to the Commission, there are three circumstances in which Member States are permitted to recover the levy directly from producers. First, where the producer has not yet paid the levy to the purchaser, and the factual and legal circumstances of the purchaser are such that it would lead to an unreasonable outcome if the competent authority recovered the levy from the purchaser. Whether such circumstances exist in a given case is a matter for the national courts. Second, direct recovery is permitted if the purchaser is unapproved, since practical experience shows that it is very difficult to recover the levy from such a purchaser. In such a case, Regulation No 3950/92 must be interpreted as meaning that it is permitted to take direct action against the producer. Third, the levy may be recovered directly if the requirements of Article 7 of Regulation No 536/93 are not fulfilled by the purchaser, or if the purchaser has not recovered, or not attempted to recover, the levy from the producers involved.

47. In answering the questions referred for a preliminary ruling, Penycoed first examines the legal positions of the parties involved. The producer is a party liable for payment of the levy, the purchaser is the creditor and the national competent body is also a creditor. According to Penycoed, the duties which a person has under the law must be clear. Since the producer has two creditors, namely the purchaser and the national competent body, an uncertain situation has arisen for the producer.

48. Penycoed submits that the Intervention Board has no right to take direct legal action against a producer because the national body lacks the power to do so. It is the task of the legislature to rectify such a gap in the legislation. That is not the task of the Court.

49.The United Kingdom Government's argument that, in the case of delivery to an unapproved purchaser, the national competent body has the right to take direct legal action against the producer is refuted by Penycoed as follows. Penycoed finds that argument unacceptable since the additional levy system provides for other penalties where a purchaser is not approved. The regulation may not be interpreted as meaning that it is possible to take legal action directly against a producer.

50.The Greek Government also submits that the national competent body may not take any direct legal action against a producer because the person liable for the levy is the purchaser within the meaning of Article 9(e) of Regulation No 3950/92 and not the producer.

51.First: the parties in the main proceedings have ended the dispute concerning the status of the defendant itself and of Elm Farms and TDM. The proceedings before the Court can therefore be confined to the main question formulated above. The parties agree that the defendant in the main proceedings can be regarded as a milk producer. Nor is it relevant ─ at least in the proceedings before the Court ─ to examine whether Elm Farms and TDM really cannot be held liable by the national authorities. The Court can assume that there is no purchaser who can be held liable.

52.Second: the Court does not need to give an answer to the question whether the text of the Community legislation concerning the additional levy provides a legal basis for recovery of the levy by the national authority directly from the milk producer. That power is not included in Regulation No 3950/92, or in Regulation No 536/93. Nor is it in dispute whether a possible legal basis might be constituted by an additional measure as referred to in Article 5(2) of Regulation No 536/93, which a Member State can take to ensure payment of levies owed to the Community within the prescribed period. The United Kingdom has not in fact taken any measure to that effect.

53.Third: in this case no reliance may be placed on legal principles from which citizens derive protection in Community law, such as the principles of legal certainty and the protection of legitimate expectations. Even though the Community regulation concerned and the legislation on the additional levy contain no power to collect levy from the milk producer, a milk producer still may not entertain a legitimate expectation that he is allowed to produce, without a milk quota, milk on which he need pay no levy. Possible deception of the milk producer is also irrelevant. The only matter over which a milk producer may possibly have been misled is the question to whom he must pay, not the fact that he must pay.

54.Fourth: as is apparent from the national court's order for reference, the main proceedings concern a scheme the purpose of which is to enable farmers to engage in dairy farming without requiring milk quotas. There has thus been a deliberate attempt to evade the obligation to pay. However, I do not consider the element of intention relevant to the resolution of the dispute. Even in situations where those involved do not act intentionally but are able for other reasons to produce milk free of levy without holding a quota, such action is contrary to the substance and purpose of Regulation No 3950/92.

55.Fifth: Article 7 of Regulation No 536/93 provides that a purchaser to whom a milk producer delivers must be approved. It also provides that milk producers must ensure that they deliver to approved purchasers. That is an obligation which is incumbent on the milk producer and which will also have to be enforced by the Member State, but it is also unconnected with the question whether the milk producer is obliged to pay the levy directly to the national body. In other words, the question whether the milk producer is discharged from his debt if he pays to an unapproved purchaser is not in issue here. On this point I thus share the view of Penycoed. The arguments of the United Kingdom and the Commission do not convince me. Even the unapproved purchaser is a purchaser within the meaning of Article 9(e) of Regulation No 3950/92. In so far as the Commission states that it is extremely difficult to recover levy from an unapproved purchaser, I regard that as a factually correct observation which, however, may not be interpreted as therefore giving rise to a power to recover the levy directly from the producer.

56.Sixth: I also do not think it relevant in this case to examine how the purchaser's intermediary role should be characterised: is he in the first place a representative of the milk producer, who can be held liable by the competent national authority, or is he rather an agency charged with collection and thus more an extension of the competent national authority? That question ─ however interesting it may be ─ has no relevance in this case which concerns the milk producer's obligation to pay.

57.The questions referred must be answered in the light of the following facts:

─ the relevant Community legislation gives no express authority to the Member State's competent body to recover the additional levy from the milk producer, except in the case of direct delivery to the consumer, which is not relevant here;

─ the essence of the additional levy system is that the milk producer is entitled to actual payment for the milk delivered by him only in so far as the quantity of milk delivered does not exceed the individual milk quota allocated to him. In respect of the overrun, he is obliged to pay a levy of 115% of the target price for milk;

─ the payment which accrues to the milk producer is not a price which is paid on the normal basis of supply and demand. The level of that price is guaranteed by the authorities, directly by virtue of the fact that, when the market price is too low, certain milk products can be handed over to an intervention agency against payment of an intervention price, and indirectly by the limitation of the quantity of milk coming onto the market, which is inherent in the additional levy system. An artificially low supply of milk leads to a higher price;

─ a portion of the payment which the milk producer receives for the milk delivered by him is in the nature of a subsidy provided out of Community resources. That applies to milk which is handed over to the intervention agency and milk in respect of which an export refund is granted on export from the European Union;

─ in such a system, production on a dairy holding is fixed by government intervention at an artificial level, both in terms of the volume of production and in terms of the price paid for the milk delivered. That level is not determined by production capacity or market conditions. For that reason alone, an incentive arises for interested parties to evade or circumvent the rules laid down by the authorities. From the point of view of the public interest, there is therefore a need to have an effective set of instruments in order to enforce compliance;

─ in addition, the system, the purpose of which is to control milk production in the European Union, can work only if the levy payable can be both imposed and collected in all circumstances. If that is not the case, milk production cannot be uniformly controlled.

58.However, there is such a defect in the Community legislation, which encourages circumvention of the rules, as long as the national authorities responsible for implementation continue not to have any express power to enforce compliance. The Community legislation does not provide for any right to recover the additional levy directly from the milk producer.

59.Even though the authorities do not have any power to collect the levy, the milk producer does have a duty to pay it. He is obliged to pay the additional levy on the basis of the wording of Article 1 of Regulation No 3950/92, but also by virtue of the fact that he has received a payment, to which he is not entitled, for milk produced without a corresponding quota. He has thereby been unjustly enriched, as the Commission and the United Kingdom rightly point out. Moreover, non-compliance with the obligation to pay is to be regarded as an illegal activity affecting the financial interests of the Community for the purposes of Article 280 EC. Under Article 10 of Regulation No 3950/92, the levy is to be used to finance Community expenditure in the milk sector. Under Article 280 EC, the Member States are obliged to counter such illegal activity through measures which must act as a deterrent and be such as to afford the necessary protection in the Member States.

60.The Court does not have jurisdiction to rectify a defect in Community legislation, even if it is an obvious defect. The Court does have jurisdiction to declare a provision of Community law invalid, but cannot of its own motion insert another provision in its place. That task is for the Community institutions responsible for adopting legislation.

61.The question which the Court is required to answer is therefore of a different nature. Where there is no express public-law power to recover the levy, may the national authorities nevertheless derive from Community law in some other way the power to collect the amount owed to them? The further question then arises as to whether in such circumstances the authorities may, or even must, pursue the matter in the civil courts. The Member States are, after all, obliged to ensure the effective implementation of Community law.

62.In these proceedings a number of arguments have been put forward in favour of a power of collection for the national authorities (see paragraphs 40 to 46 above). The most relevant arguments relate to the importance of effective implementation of Community law. The United Kingdom Government refers to it, the Italian Government mentions the obligation of Member States to take all the necessary verification measures and the Commission devotes attention to the fact that evasion of the levy undermines the purpose of the levy. An argument of a different kind, mentioned by the Commission, relates to the unjust enrichment of the milk producer if he does not have to pay the levy due from him.

63.Both of those (categories of) arguments are central in my view also. In the absence of any express power, they may constitute the legal basis for recovery of the additional levy. In my opinion, two legal principles, which must be distinguished, are involved here. They are, in the first place, the principle of effectiveness and, in the second place, the doctrine of unjust enrichment. I shall discuss those two legal principles separately in the first instance, but draw attention now to the possible connection between them. Certainly, if a private individual is unjustly enriched at the expense of Community funds, the principle of effectiveness may require the reversal of that enrichment by a Member State.

The principle of effectiveness

64.The principle of effectiveness has been recognised in the Court's case-law with a view to safeguarding rights which citizens derive from the direct effect of Community law. That has been done inter alia in a series of judgments concerning the repayment of taxes levied in breach of Community law. The implementation of Community law, which I take also to mean the organisation of the national legal system, must not be framed in such a way that the exercise of those rights is in practice made impossible or excessively difficult.

65.In more general terms, the principle of effectiveness implies that interested parties should also be able in fact to avail themselves of the opportunities for which Community law provides. This case concerns the obverse of that proposition. What is at issue is not a directly effective right of an interested party, but a directly effective obligation of the interested party under Article 1 of Regulation No 3950/92. He owes the additional levy to the Member State in which he is established. The question now is whether the principle of effectiveness also requires a national legal system to be organised in such a way that the interested party must also settle his debt in all circumstances.

66.I take the view that this question must be answered in the affirmative in this case which concerns a financial advantage wrongfully enjoyed at the expense of the Community budget. Revenues which are contributed to the Community budget and financial advantages charged to it must be so arranged and applied as to constitute a uniform burden or to confer uniform benefits on all persons who meet the conditions specified in the Community provisions on such burdens or advantages. The principle of effectiveness also implies in this context that the administrative authorities of the Member States which are responsible for implementation must be able to collect levies and to recover financial benefits which have been unlawfully granted.

67. I would point out that there are also in general two sides to the principle of effectiveness. Citizens must not only be able to exercise the rights which Community law grants to them, but they must also be able to comply with their obligations. The principle of effectiveness implies that the policy objective envisaged by the Community legislature can be implemented in the Member States, thereby ensuring that Community law produces its full effects. That principle stems from Article 10 EC, which requires the Member States to take all appropriate measures, whether general or particular, to ensure fulfilment of their obligations under Community law. Among these is the obligation to nullify the unlawful consequences of a breach of Community law. (26)

68. Viewed from the perspective of the Member State, the principle of effectiveness thus requires that a Member State be able in all circumstances to fulfil its obligation under Community law to ensure the collection of the additional levy.

69. In the light of the foregoing, I am of the opinion that a defect in Community legislation can be rectified in circumstances to which the principle of effectiveness applies. In the given special circumstances, an answer to the questions referred for a preliminary ruling whereby the Court rectifies a defect in the Community legislation does not mean that the Court takes the place of the legislature. The Court does not substitute a different provision.

70. I consider the following circumstances to be decisive for the Court's answer:

─ it is established that the conduct of the party concerned is detrimental to the attainment of an essential objective of the Community legislation concerning the additional levy, namely the control of milk production in the Community. At the same time, the Community budget sustains a loss;

─ there is an absolutely clear defect, which is not open to any other interpretation, in the Community legislation, in which a provision specifically intended to increase the effectiveness of its implementation (Article 2 of Regulation No 3950/92) makes it possible for interested parties to circumvent their obligation. Furthermore, the Court gives a broad interpretation to the term purchaser in Article 2 precisely in order to prevent administrative difficulties;

─ the Member State has an obligation to implement Community law effectively. That obligation applies a fortiori where it is a matter of countering an illegal activity affecting the financial interests of the Community;

─ it is established that the milk producer concerned is the debtor owing the additional levy, and the amount of the debt is also established. It is likewise established that the Member State is the creditor. (27)

71. In short, the milk producer owes a debt to the European Community directly on the basis of Community law. The principle of effectiveness implies that that debt must be capable of settlement. In the absence of any powers provided for in the Community legislation, that means that national law must make available to the implementing Member State the legal remedies necessary in order actually to recover that debt. If national public law precludes recovery by the authorities of an amount owed without their being expressly empowered, the national authorities will have to be able to take recourse to private law for that purpose. Community law thus provides that in those circumstances the debt must be capable of being recovered, whilst national law determines the basis and form of the legal action.

The doctrine of unjust enrichment

72. One possible basis for recovery of the additional levy is the unjust enrichment of Penycoed. The prohibition of unjust enrichment produces its effect in Community law as a doctrine generally accepted in the national laws of the Member States in connection with the recovery of amounts unduly paid.

73. Moreover, it is settled case-law that the protection of rights guaranteed in the matter by Community law does not require an order for the recovery of charges improperly made to be granted in conditions which would involve the unjust enrichment of those entitled. The determination as to whether there is unjust enrichment is made by the national court in the light of the facts of each case. Repayment of a charge levied in breach of Community law may be resisted only where it is established that that would constitute unjust enrichment. (29)

74. What is the situation here? In this case there is of course no question of a levy having been unduly paid. On the contrary, Penycoed produced milk without holding a milk quota. It did not pay the levy owed pursuant to the main provision of Article 12 of Regulation No 3950/92 on deliveries of milk without a quota, yet received a price in respect of the milk delivered by it. That price is, as I stated in paragraph 57 above, guaranteed by the Community and is in part a subsidy. Penycoed was thereby unjustly enriched at the expense of the European Community budget.

75. I regard it as consistent with Community law for a subsidy wrongly paid to be recovered. I would point out in this regard that if the subsidy in question is paid out of the resources of the Member States, according to the Court's settled case-law the subsidy wrongly paid must always be recovered, together with interest. By repaying the aid, the recipient forfeits the advantage which it had enjoyed over its competitors on the market, and the situation prior to payment of the aid is restored. (30) That which applies to a subsidy paid out of national resources naturally also applies to a subsidy paid out of Community resources.

76. However, even in so far as the milk price paid is not to be regarded as a subsidy, there is unjust enrichment at the expense of Community resources which must be recovered. It is established that Penycoed obtained an economic advantage by receiving money to which it was not entitled. Furthermore, that was money the amount of which is guaranteed by the Community. There is also a debt to the European Community, as a consequence of which the latter sustains a loss, since it is incurred at the cost of the resources available for expenditure in the milk sector.

77. Here too, it is for national law to determine to what extent recovery on the basis of unjust enrichment is to be regarded as a public-law or a private-law action. Community law provides that recovery must take place in a case such as this.

The connection

78. In my opinion, both the principle of effectiveness and the doctrine of unjust enrichment provide a self-standing basis for the recovery of the additional levy. Should the Court not agree and instead take the view that neither of those two principles is capable of providing a self-standing legal basis, I would argue in the alternative that in a special case such as this both principles should be viewed in conjunction with one another. If a private individual enriches himself unjustly at the expense of Community funds and thereby impairs the attainment of an essential objective of a Community provision, the principle of effectiveness requires that a Member State reverse that enrichment.

VI ─ Conclusion

79. In the light of the foregoing considerations, I propose that the Court answer the questions submitted by the Court of Appeal (England and Wales) (Civil Division) as follows: Under Article 1 of Council Regulation (EEC) No 3950/92 of 28 December 1992 establishing an additional levy in the milk and milk products sector, a producer of cow's milk is obliged to pay a levy to the competent body of the Member State charged with implementing the regulation. Except in the circumstance referred to in Article 2(3) of that regulation, no power is expressly conferred on the competent body to recover the levy directly from that producer. Nevertheless, the principle of effectiveness and the doctrine of unjust enrichment require that the levy be recovered directly from the producer of cow's milk if recovery from the purchaser of cow's milk is not possible.

1 – Original language: Dutch.

2 – OJ 1992 L 405, p. 1.

3 – OJ 1993 L 57, p. 12.

4 – Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organisation of the market in milk and milk products (OJ, English Special Edition 1968(I), p. 176).

5 – OJ 1984 L 90, p. 10.

6 – The regulation uses the phrase individual reference quantities.

7 – OJ 1984 L 90, p. 10.

8 – This regulation was repealed as of 1 April 1993.

9 – Under Council Regulation (EC) No 1256/1999 of 17 May 1999 amending Regulation (EEC) No 3950/92 establishing an additional levy in the milk and milk products sector (OJ 1999 L 160, p. 73), the period of operation of the system was again extended, this time until 1 April 2008.

10 – SI 1997, 733 (published as Statutory Instrument 1997, 733).

11 – Hereinafter: the Intervention Board.

12 – Hereinafter: Penycoed.

13 – Commission Regulation (EEC) No 536/93 of 9 March 1993 laying down detailed rules on the application of the additional levy on milk and milk products (OJ 1993 L 57, p. 12).

14 – Replaced since 1 January 2000 by Regulation No 1255/99.

15 – A target price is the price which it is aimed to obtain for all the milk sold during a given milk year.

16 – Intervention prices are market support prices for products which can be surrendered in times of milk surplus, namely butter and skimmed milk powder.

17 – Council Regulation (EC) No 1255/1999 of 17 May 1999 on the common organisation of the market in milk and milk products (OJ 1999 L 160, p. 48).

18 – Judgment of the Court in Case C-356/97 [2000] ECR I-5461, in particular paragraph 31.

19 – Cited in footnote 18, paragraph 30.

20 – Case C-288/97 [1999] ECR I-2575, paragraph 28.

See in this regard, for example, the judgment in Joined Cases 117/76 and 16/77 <i>Ruckdeschel and Others</i> [1977] ECR 1753, paragraph 13.

See the Court's settled case-law on the repayment of taxes levied in breach of Community law, as most recently set out in Case C-255/00 <i>Grundig Italiana</i> [2002] ECR I-8003, paragraph 25.

As observed in my Opinion of 4 July 2002 in Case C-97/01 <i>Commission </i>v <i>Luxembourg</i> [2003] ECR I-5797, paragraph 8.

Case 265/78 <i>Ferwerda</i> [1980] ECR 617, paragraph 8.

See also paragraph 8 of <i>Ferwerda</i> (cited in footnote 24 above). The Court is referring there to the principle of effectiveness, although not explicitly.

See <i>inter alia</i> Joined Cases C-6/90 and C-9/90 <i>Francovich and Others</i> [1991] ECR I-5357, paragraph 36.

See, for example, the judgment of the Court of First Instance in Case T-171/99 <i>Corus UK</i> v <i>Commission</i> [2001] ECR II-2967, paragraph 55.

See in particular Case C-350/93 <i>Commission </i>v <i>Italy </i>[1995] ECR I-699.