Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE COURT (Fourth Chamber)

6 November 1997(1)

(Regulation (EEC) No 797/85 - Different treatment of individual farmers and legal persons)

In Case C-164/96,

REFERENCE to the Court under Article 177 of the EC Treaty by the Consiglio di Stato for a preliminary ruling in the proceedings pending before that court between

Regione Piemonte

and

Saiagricola SpA

on the interpretation of Council Directive 72/159/EEC of 17 April 1972 on the modernization of farms (OJ English Special Edition 1972 (II), p. 324) and Council Regulation (EEC) No 797/85 of 12 March 1985 on improving the efficiency of agricultural structures (OJ 1985 L 93, p. 1),

THE COURT (Fourth Chamber),

composed of: H. Ragnemalm, President of the Chamber, P.J.G. Kapteyn and J.L. Murray (Rapporteur), Judges,

Advocate General: P. Léger,

Registrar: R. Grass,

after considering the written observations submitted on behalf of:

• Saiagricola SpA, by Vittorio Barosio, of the Turin Bar, and Mario Contaldi, of the Rome Bar,
  
  
• the Italian Government, by Professor Umberto Leanza, Head of the Legal Service of the Ministry of Foreign Affairs, acting as Agent, assisted by Pier Giorgio Ferri, Avvocato dello Stato,
  
  
• the Commission of the European Communities, by Eugenio de March, Legal Adviser, and Paolo Ziotti, of its Legal Service, acting as Agents,

having regard to the Report of the Judge-Rapporteur,

after hearing the Opinion of the Advocate General at the sitting on 29 May 1997,

gives the following

Judgment

1. By decision of 9 January 1996, received at the Court on 13 May 1996, the Consiglio di Stato referred to the Court for a preliminary ruling under Article 177 of the EC Treaty a question on the interpretation of Council Directive 72/159/EEC of 17 April 1972 on the modernization of farms (OJ English Special Edition 1972 (II), p. 324) and Council Regulation (EEC) No 797/85 of 12 March 1985 on improving the efficiency of agricultural structures (OJ 1985 L 93, p. 1).
   
   
2. That question was raised in proceedings between Saiagricola SpA (hereinafter 'Saiagricola'), a public limited company and the Regione Piemonte (Piedmont Region) concerning Saiagricola's application to be entered on the register of farmers practising farming as their main occupation.
   
   
3. Regulation No 797/85 sets out the basic Community rules relating to agricultural structures.
   
   
4. Article 2 of Regulation No 797/85 provides that, in order to contribute to the improvement of agricultural income and of living, working and production conditions on agricultural holdings, Member States are to introduce a system of investment aid to agricultural holdings where the farmer practises farming as his main occupation and fulfils certain conditions.
   
   
5. Article 2(5) of that regulation, which is drafted in almost exactly the same terms as Article 3(1) of Directive 72/159, provides as follows:
   
   'Member States shall, for the purposes of this regulation, define what is meant by the expression "farmer practising farming as his main occupation".
   
   This definition shall, in the case of a natural person, include at least the condition that the proportion of income derived from the agricultural holding must be 50% or more of the farmer's total income and that the working time devoted to work unconnected with the holding must be less than half of the farmer's total working time.
   
   On the basis of the criteria referred to in the foregoing subparagraph, the Member States shall define what is meant by this same expression in the case of persons other than natural persons.'
   
   
6. When Regulation No 797/87 was consolidated by Council Regulation (EEC) No 2328/91 of 15 July 1991 on improving the efficiency of agricultural structures (OJ 1991 L 218, p. 1), Article 2(5) became Article 5(5) of Regulation No 2328/91, without any amendment.
   
   
7. The Italian regions, which enjoy concurrent legislative power in agricultural matters, adopted detailed rules for the implementation of Community law relating to agricultural reform, within the framework of the principles laid down by national legislation.
   
   
8. Article 1 of Regional Law No 18 of 23 August 1982 (hereinafter 'Law No 18') of the Piedmont Region provides for the creation of a register of farmers practising farming as their main occupation on which the names of those farmers can be entered.
   
   
9. Other provisions of Law No 18 set out the criteria to be fulfilled by those farmers.
   
   
10. The Piedmont Regional Council implemented the requirements of Law No 18 by Decision No 443-6462 of 28 July 1983. Articles 2 and 3 of that decision provide that only natural persons, agricultural cooperatives set up in accordance with the provisions relating to cooperation and associations of farmers may apply to be entered on the register of farmers practising farming as their main occupation.
    
    
11. It appears from the order for reference that, by decision dated 3 June 1991, the Vercelli Provincial Commission responsible for the register of farmers practising farming as their main occupation rejected Saiagricola's application for registration on the ground that Law No 18 provides that only natural persons may be registered.
    
    
12. That decision was annulled by the Tribunale Amministrativo Regionale per il Piemonte (Piedmont Regional Administrative Court) by judgments of 6 May and 3 June 1993 on the ground that Law No 18 infringed Directive 72/159, according to which it is unlawful for Member States to recognize only natural persons as 'farmers practising farming as their main occupation'.
    
    
13. The Piedmont Region appealed to the Consiglio di Stato, which stayed proceedings and referred the following question to the Court for a preliminary ruling:
    
    '... whether, under Council Directive 72/159/EEC of 17 April 1972 and the subsequent Council Regulation (EEC) No 797/85 of 12 March 1985 and having regard to the aim of developing a common agricultural policy within a system free of discrimination between farmers, there is room for the national or regional legislature to provide for different treatment of individual farmers, even if only in relation to the introduction of a special system of identification based on a specific register set up solely for that purpose.'
    
    
14. By that question, the national court is essentially asking whether Article 2(5) of Regulation No 797/85, which is drafted in almost exactly the same terms as Article 3(1) of Directive 72/159, permits Member States which introduce a register intended to determine eligibility under the system of aids established by Directive 72/159 to refuse to register certain legal persons solely by reason of the legal form they have assumed and to introduce a special system of identification by creating a specific register intended for natural persons alone.
    
    
15. First, according to settled case-law, Community legislation does not permit Member States, which are required to define the precise scope of the expression 'farmer practising farming as a main occupation', to limit its scope to natural persons alone (see Case 312/85 Villa Banfi [1986] ECR 4039 and Case C-162/91 Tenuta il Bosco [1992] ECR I-5279).
    
    
16. Furthermore, since Directive 72/159 and Regulation No 797/85 expressly provide that legal persons fall within their scope, refusal of an application for registration solely by reason of the legal form assumed by the applicant is incompatible with Community law.
    
    
17. It follows from all the foregoing considerations that Member States have no discretion to deny the benefit of the system introduced by Directive 72/159 - and, subsequently, by Regulation No 797/85 - to farmers who satisfy the conditions laid down therein, solely by reason of the legal form they have assumed (see Villa Banfi, paragraph 9, and Tenuta il Bosco, paragraph 14, cited above).
    
    
18. The answer to the national court's question must therefore be that Directive 72/159 and Regulation No 797/85 are to be interpreted as meaning that Member States which introduce a register intended to determine eligibility under the system of aids established by Directive 72/159 are not permitted to refuse to register certain legal persons solely by reason of the legal form they have assumed or to introduce a special system of identification by creating a specific register intended for natural persons alone.
    
    Costs
    
    
19. The costs incurred by the Italian Government and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.
    
    On those grounds,

    THE COURT (Fourth Chamber),

    in answer to the question referred to it by the Consiglio di Stato by decision of 9 January 1996, hereby rules:
    
    Council Directive 72/159/EEC of 17 April 1972 on the modernization of farms and Council Regulation (EEC) No 797/85 of 12 March 1985 on improving the efficiency of agricultural structures are to be interpreted as meaning that Member States which introduce a register intended to determine eligibility under the system of aids established by Directive 72/159 are not permitted to refuse to register certain legal persons solely by reason of the legal form they have assumed or to introduce a special system of identification by creating a specific register intended for natural persons alone.
    
    
    

Delivered in open court in Luxembourg on 6 November 1997.

R. Grass

Registrar

1: Language of the case: Italian.