Legal Updates

Commercial Law – Importation of Chemicals – European Law - New EC Regulations

The case of Mebrom MV v European Commission [2007] concerned the importation of pesticides. The applicant was an importer of the chemical methyl bromide into the European Union. Methyl bromide was a pesticide applied to crops by fumigation and as it depleted the ozone layer, its importation was subject to restrictions provided by Council and European Parliament Regulation (EC) 2037/2000 (“the Regulation”). The Regulation concerned substances which deplete the ozone layer.

Articles 3 and 4 of the Regulation imposed restrictions on the production, use, marketing and selling of methyl bromide. Articles 6 and 7 of the Regulation created a system of licences and quotas for the chemical’s importation and free circulation.

Each year importers applied for import quotas for the following year, and pursuant to that system the applicant had been awarded quotas from 1996 to 2004. However, in 2004, the European Commission changed the system. According to the new system, the fumigators now had to request authorisation to import or produce methyl bromide, before requesting importers, such as the applicant, to actually import the amount of methyl bromide granted under the licence.

In addition to this, importers were no longer entitled to import quotas from the 1st of January 2005 onwards, as well as being prevented from building up stocks. Accordingly, the European Commission adopted a decision refusing the applicant a quota for the year 2005.

The applicant brought an action to annul that decision in the Court of First Instance of the European Communities. It submitted the following arguments:

• Firstly, that the European Commission had misapplied the legal framework established in the Regulation;
• Secondly, that the Regulation obliged the European Commission to grant it a quota; and
• Thirdly, that the new system would oblige current importers to close their businesses, since they would be excluded from the new system of importation, which would be at odds with the freedom to pursue a trade.

The action was dismissed.

Firstly, in view of the restrictions on the production, use and placing on the market of methyl bromide imposed by Articles 3 and 4 of the Regulation, it followed from the overall scheme of the Regulation that the purpose of Articles 6 and 7 was to ensure that the importation of methyl bromide did not go beyond what was strictly necessary for the critical uses specifically identified.

The European Commission's interpretation of Articles 3, 4, 6 and 7 of the Regulation achieved the following:

• No longer any allocation of import quotas to importers; and
• Limiting imports of methyl bromide on a case by case basis, thus preventing importers from building up stocks.

The interpretation therefore gave practical effect to those provisions and ensured that they were applied coherently and in a manner that corresponded to the overall scheme and the objectives of the Regulation. The overall objectives of the Regulation sought to limit the production and use of methyl bromide in order to protect the ozone layer.

It followed that the European Commission was not obliged under the Regulation to award an import quota in 2005 to the applicant as an importer. It was also held that the new system established by the European Commission constituted a lawful application of Articles 3, 4, 6 and 7 of the Regulation that was compatible with those provisions.

Secondly, according to settled authority the right to freedom to pursue a trade or profession was not absolute but should be viewed in relation to its social function. Its exercise might therefore be restricted, provided that such restrictions corresponded to objectives of general interest pursued by the European Community. It is also important that the trade or profession did not constitute, with regard to the aim pursued, a disproportionate and intolerable interference which infringed upon the very substance of the rights thus guaranteed.

In this case, the new system introduced by the European Commission simply changed the circumstances in which methyl bromide was imported and did not mean that the applicant was obliged to cease trading. Furthermore, it did not lead to a distortion of the competition in the market, since importers were not prevented from competing with fumigators for the importation and sale of methyl bromide.

Even if the new system were to be regarded as a restriction, the general public interest pursued by the European Community was the protection of the ozone layer and any restriction there might be was justified by the fact that it was imposed in application of the Regulation, with which it was consistent. It could not be regarded as disproportionate, intolerable or as infringing upon the very substance of that right since the applicant could continue to pursue its previous economic activities, albeit in a different way.

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© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.