Facts
- Mr Mulder, a Dutch dairy farmer, joined a temporary non-marketing premium scheme introduced under the Common Agricultural Policy (CAP) to reduce milk overproduction.
- Participants halted milk marketing for a defined period and were promised that, on resumption, their quota reference quantities would be calculated on the basis of past production.
- During Mulder’s withdrawal, subsequent CAP regulations amended the calculation method, substantially lowering the reference quantities available to returning producers.
- The change effectively reduced Mulder’s milk quota, prompting him to argue that earlier measures had created a firm expectation that his original quota would be maintained.
- National proceedings led to a reference to the European Court of Justice (ECJ) in Case C-120/86 concerning the compatibility of the amended rules with EU law.
Issues
- Whether the amended CAP provisions that diminished Mulder’s quota violated the EU principle of legitimate expectations created by prior regulations.
- Whether overriding public-interest objectives within the CAP could nevertheless justify the interference with those previously conferred quota rights.
Decision
- The ECJ held that the principle of legitimate expectations applies to milk-quota schemes under the CAP.
- Farmers who temporarily withdrew from marketing in reliance on earlier regulations were entitled to expect maintenance of their reference quantities on return.
- Community institutions may depart from such assurances only for objective, compelling reasons that are necessary and proportionate to the aim pursued.
- As no adequate justification for the abrupt reduction was demonstrated, the contested measures infringed legal certainty and the legitimate expectations of affected producers.
Legal Principles
- Legitimate expectations arise when EU institutions give clear, unconditional assurances or follow consistent administrative practice upon which individuals reasonably rely.
- Protection requires lawful reliance and sufficient clarity of the assurance; once established, legal certainty safeguards the resulting rights.
- Even in policy areas susceptible to frequent adjustment, such as the CAP, measures altering vested rights must be proportionate and transparently justified.
- The institution invoking a public-interest objective bears the burden of proving that any derogation from prior assurances is necessary and proportionate.
Conclusion
The ECJ ruled that CAP producers who relied on earlier quota rules possessed enforceable legitimate expectations; Community measures reducing those quotas without convincing, proportionate justification breached EU principles of legal certainty and fairness.