Since 1982, Mr van Dijk had leased from the Dutch Municipality of Kampen (pictured right) a number of parcels of agricultural land totaling 34 hectares, 2 acres and 36 centiares. The lease between the two parties did not contain any clauses relating to the income supported scheme or payment entitlements.
For a number of years Mr van Dijk had received, on the basis of Regulation 1765/92 and Regulation 1251/1999, compensatory payments under the supported scheme for producers which was linked to the production of certain crops. Following the entry into force of Regulation 1782/2003, he was granted entitlement to payment under Arts 33(1), 38 and 43(1) and (2)(a) of that regulation.
A dispute arose between Mr van Dijk and the Gemeente Kampen regarding the nature and the extent of the obligations under the lease. The referring court essentially asked whether Community law required a lessee, on the expiry of the lease, to deliver to the lessor the leased land along with the payment entitlements accumulated thereon or relating thereto, or to pay him compensation.
The Court held that it was apparent from both the objectives and the scheme of Regulation 1782/2003 that payment entitlements remained with the lessee on the expiry of the lease. According to the Court, what ultimately matters was that, for the grant of the aid, the number of a farmer’s payment entitlements corresponded to an equivalent number of eligible hectares, and not to specific parcels. Article 44(4) of Regulation 1782/2003 also expressly provided for the possibility for the Member States, in duly justified circumstances, to authorize a farmer to modify his declaration in relation to the parcels corresponding to the eligible area linked to a payment entitlement, on condition that he respected the number of hectares corresponding to his payment entitlements and the conditions for granting the single payment for the area concerned.
Second, Art. 46 provided for the possibility to transfer payment entitlements in accordance with the objective referred to in recital 30 in the preamble to Regulation 1782/2003. In particular, Art. 46(2) provided that payment entitlements without land might by transferred only by definitive transfer.
By contrast, in the case of a lease or similar types of transactions, payment entitlements might be transferred only if the payment entitlements transferred were accompanied by the transfer of an equivalent number of eligible hectares. That rule laid down in Art. 46(2) of Regulation 1782/2003 sought to avoid speculative transfers leading to the accumulation of payment entitlements without a corresponding agricultural basis, in accordance with the objective laid down in recital 30 in the preamble to that regulation.
Art. 46(1) of Regulation 1782/2003 also stated that, except in the case of transfer by actual or anticipated inheritance, payment entitlements might only go to another farmer established within the same Member State. The Court noted that, under Art. 33(1)(a) of Regulation 1782/2003 in conjunction with Art. 2(a) and (c) thereof, the single payment scheme was aimed at farmers, namely persons who exercise an “agricultural activity’, consisting of the production, rearing or growing of agricultural products or maintaining the land in good agricultural and environmental condition.
The Court held that a lessor of land, however, was not necessarily a farmer within the meaning of Art. 2(a) of Regulation 1782/2003. According to the Court, if the Community legislature had wanted payment entitlements to revert back to the lessor in all circumstances on the expiry of the lease, it would have enacted a provision to that effect.
Therefore, according to the Court, Regulation 1782/2003 and 795/2004 did not contain any obligation on farmers who had leased land to transfer their payment entitlements to the lessor on the expiry of the lease.
The Court held that, in accordance with the principles common to the laws of the Member States, the right to restitution from the person enriched was conditional upon there being no valid legal basis for the enrichment at issue (Case C‑47/07 P Masdar (UK) v Commission ).
It could not be considered that the payment entitlements which a farmer enjoyed were devoid of any legal basis in so far as they were attributed to him in accordance with the provisions of Regulation 1782/2003.
Therefore, the Court concluded that Community law did not require a lessee, on the expiry of the lease, to deliver to the lessor the leased land, including the payment entitlements accumulated thereon or relating thereto, or to pay him compensation.
Text of Judgment