ANGLO IRISH Beef Processors International (AIBP) is not entitled to expect full payment of export refunds, the Advocate General of the European Court of Justice, Mr Antonio La Pergola, has ruled. His decision relates to a consignment of beef destined for Iraq but held up by UN sanctions.
The opinion given yesterday, which has yet to be confirmed by the full court, means that a group of beef exporters is now unlikely to succeed in possible parallel High Court compensation claims against the Government over disputed subsidies of £2.5 million to £3 million for beef which was diverted from Iraq but was eventually sold elsewhere.
The High Court had sought the opinion of the European Court in Luxembourg on three points of interpretation of EU regulations. In all three the Advocate General found against AIBP, a former Larry Goodman company which had taken a test case.
The case concerns the system of "differentiated export refunds" under which the Government, acting for the EU, can make up the difference between the price of beef sold to a foreign market and the higher European Union price.
Because that difference varies considerably a separate rate is set for each country, and in this case the Iraqi refund was at the top end of the scale.
In order to assist the cash flow of firms such refunds are often paid in advance, as in this case, against a bank guarantee that some or all of the money will be returned to the authorities it, for some reason, the refund conditions, are not met.
With the imposition of sanctions by the UN in August 1990 over the invasion of Kuwait, the EU enacted an enabling regulation and some 5,000 tonnes of beef, 3,500 of it Irish, was blocked by the Turkish authorities. Sources suggest that about a fifth of the total consignment belonged to AIBP.
The bulk of the beef was subsequently sold off in markets where the applicable export refund was lower. The Government sought repayment of the difference from the bankers of AIBP and the other contractors.
AIBP argued in the High Court that it had been granted the refund for Iraq and was not obliged to repay any balance because its failure to deliver to Iraq was due to force majeure beyond its control.
Mr La Pergola pointed out that Article 33(5) of regulation 3665/87 provides: "Where as the result of a case of force majeure, the amount of the refund payable is smaller than the amount paid in advance, the security forfeited shall be equal to the difference between ... the amount of the refund advanced and ... the amount of refund actually due."
If the beef was "sold on a different market, where the price is higher and for which the refund rate is accordingly lower, the transaction would result in the unjust enrichment of the trader in question. That is to say he would profit from the higher selling price and at the same time retain the higher of refund to which, however, he would not he entitled," Mr La Pegola argued.
