Case C-56/13 Érsekcsanádi Mezőgazdasági Zrt: EU measures, national measures and the right to damages

The judgment of the Court of Justice in Case C-56/13 Érsekcsanádi Mezőgazdasági Zrt illustrates the reach and the limits of EU law and its principles, in particular the right to compensation.

To see those limits, you need a little patience to go through the salient facts.

A Hungarian undertaking, the appellant in the main proceedings,  leased from February 2006 to December 2006 a turkey-rearing enclosure in Nagybaracska (Hungary) and planned to use the leased site for two fattening cycles for reared turkeys. Shortly after the lease started, in February 2006, a deceased mute swan infected with the H5N1 virus was found on the outskirts of Nagybaracska, 50 metres away from the leased site.

The Commission reacted quickly and took measures for the control of highly pathogenic avian influenza, by adopting, on 15 and 17 February 2006 respectively, Decisions 2006/105 and 2006/115.

The competent Hungarian authority – the respondent in the main proceedings – for its part ordered the establishment of a protection zone, which also extended to the administrative territory of Csátalja and Nagybaracska, and prescribed other measures such as a prohibition on the movement of poultry within the protection zone. Those local measures were adopted in February 2006 under the existing national legislative framework. The order imposing the protection zone was lifted in April 2006.

The Hungarian authority, the respondent in the main proceedings, rejected,  on 23 February 2006, the appellant’s application for permission to keep turkeys in the rearing enclosure at Nagybaracska.  A little later, the appellant claimed damages against the Hungarian authority seeking compensation in full for the damage it had sustained as a result of the establishment of the protection zone and the rejection of its application to keep the turkeys in question in that protection zone.

After a bit of fuss and litigation, the applicant received compensation amounting to HUF 3 509 879 (approximately EUR 12 000), while its claim for the amount representing loss of profits was rejected.

That was not enough for the applicant who brought an action against the Hungarian authority, claiming that it had no power to introduce a ban preventing the turkeys from being brought to the leased site and that it was therefore obliged to pay the appellant the compensation in respect of loss of profits which had not been awarded in the administrative compensation procedure. The applicant lost at first instance and appealed to the referring court, the Szeged Court of Appeal. That Court of Appeal fired off a volley of eight questions to the Court of Justice about the compatibility of the national measures with EU law, whether there was an obligation to provide for compensation in EU law, whether there was a breach of the Charter of Fundamental Rights if there was no compensation system, and whether it was possible to obtain an amicus curiae brief from the Commission on the progress of infringement proceedings brought against Hungary.

The Court of Justice started off its judgment by remarking that the outbreak of avian influenza in this case was identified in a wild bird, a dead swan. However, Directives 92/40 and 2005/94 according to Article 1 of each of them are limited in scope  to establishing preventive measures and control measures in the event of a suspected or actual outbreak, within a holding, of avian influenza in poultry or other captive birds. Thus, those directives do not apply to the present case since an outbreak of avian influenza in a wild bird, the isolated nature of which calls for less restrictive measures, does not fall within the scope of those directives.

It then held that there was no need to answer the questions referred about obtaining an amicus curiae brief from the Commission. According to settled case-law, the Court may refuse to rule on a question referred for a preliminary ruling by a national court where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (Case C‑379/98 PreussenElektra EU:C:2001:160, paragraph 39 and the case-law cited).  Since Directive 2005/94 is not applicable in the present case, the interpretation of EU law that is sought for the purpose of ascertaining whether the Commission should provide clarification in respect of infringement proceedings brought against Hungary concerning transposition of that directive is of no relevance in view of the decision which the referring court is required to take.

The Court went on to find that the Hungarian measures were compatible with EU law. But that need not concern us.

Of more general interest is the Court’s judgment on the right to claim damages.

The Court begins that part of the judgment by holding that Decisions 2006/105 and 2006/115 do not include any provision establishing a system of compensation for damage caused to individuals by the implementation of the measures for the control of avian influenza provided for by those decisions. Nor could they, adds the Court, as those decisions are implementing acts adopted under Article 9(3) and (4) of Council Directive 89/662/EEC of 11 December 1989 concerning veterinary checks in intra-Community trade with a view to the completion of the internal market (OJ 1989 L 395, p. 13) and Article 10(3) and (4) of Council Directive 90/425/EEC of 26 June 1990 concerning veterinary and zootechnical checks applicable in intra-Community trade in certain live animals and products with a view to the completion of the internal market (OJ 1990 L 224, p. 29), and it cannot be inferred from either the wording or the purpose of those directives, which were the basis on which the decisions were adopted, that the Commission has any competence conferring on it power to establish a system of compensation.

The Court adds that in the context of its broad discretion in the field of agricultural policy, full or partial compensation is appropriate for owners of farms on which animals have been destroyed and slaughtered. None the less, the existence, in EU law, of a general principle requiring compensation to be paid in all circumstances cannot be inferred from that fact ( Joined Cases C‑20/00 and C‑64/00 Booker Aquaculture and Hydro Seafood EU:C:2003:397, paragraph 85). Moreover, the Court emphasises that the national measures at issue in the main proceedings in this case are less severe than the destruction and slaughter measures in Booker Aquaculture and Hydro Seafood (EU:C:2003:397).

TheCourt went on to consider the system established by the national legislature for providing compensation for damage caused by the adoption of the measures at issue in the case before it is compatible with the freedom to conduct a business, the right to property and the right to an effective remedy, as guaranteed by the Charter of Fundamental Rights.

The Court finds that, under the national legislation in issue in the main proceedings, an economic operator, who is obliged to cooperate in connection with an epidemiological measure, is entitled to compensation for loss caused by that cooperation, with the exception of loss of profits. It notes that, since there is no basis in EU law for an obligation to pay compensation, a national measure such as that in issue before the referring court, which provides for the State concerned to pay compensation in respect of actual damage and costs, with the exception of loss of profit, does not fall within the scope of EU law but is exclusively a matter for the national legislature.  According to settled case-law, the preliminary ruling procedure laid down in Article 267 TFEU is based on a clear separation of functions between national courts and tribunals and the Court of Justice, and the latter is empowered only to rule on the interpretation or the validity of the acts of EU law referred to in that provision. Thus, it is not for the Court to rule on the interpretation of provisions of national law or to decide whether the referring court’s interpretation of them is correct (Case C‑418/11 Texdata Software EU:C:2013:588, paragraph 28 and the case-law cited).

Furthermore, under Article 51(1) of the Charter, which governs its field of application, the provisions of the Charter are addressed to the Member States only when they are implementing EU law. That provision confirms the Court’s settled case-law, according to which the fundamental rights guaranteed in the legal order of the European Union are applicable in all situations governed by EU law, but cannot be applied outside such situations. Where a legal situation does not come within the scope of EU law, the Court does not have jurisdiction to rule on it and any provisions of the Charter relied upon cannot, of themselves, form the basis for such jurisdiction ( Case C‑617/10 Åkerberg Fransson EU:C:2013:105, paragraphs 17, 19 and 22, and the order in Case C‑258/13 Sociedade Agrícola e Imobiliária da Quinta de S. Paio EU:C:2013:810, paragraphs 18 to 20).

Consequently, the Court of Justice does not have jurisdiction to rule on the legality of a provision of national law such as that at issue in the main proceedings — which does not provide for full compensation, including in respect of loss of profit, for damage sustained as a result of the adoption, in accordance with EU law, of national protection measures against avian influenza — in the light of the right to an effective remedy, the right to property and the freedom to conduct a business.


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