In Case C-70/23 Mesto Rimavská Sobota the CJEU held on 21 November on an important trigger for many an EU product- and import /export related environmental regulation. In the case at issue the context is the EU Timber Regulation 995/2010 also known as ‘EUTR’. The EUTR in essence aims to prevent illegally harvested timber from being lawfully marketed. [Of note is that the EUTR has been replaced by the EU Deforestation Regulation – EUDR 2023/1115. Entry into force of the EUDR was to be postponed by a year at the time of writing].
The core issue in the case was the concept of ‘operator’. It is the operator who needs to ensure there is an adequate due diligence system in place in the supply chain. Article 2(c) EUTR states that an ‘operator’ means
any natural or legal person that places timber or timber products on the market.
Article 2(b) of the Timber Regulation further explains that ‘placing on the market’ means
the supply by any means, irrespective of the selling technique used, of timber or timber products for the first time on the internal market for distribution or use in the course of a commercial activity, whether in return for payment or free of charge.
In the case at issue a Slovak municipality had tendered access to its wood, including the right to harvest a specified amount of trees. Harvesting was to be carried out under the supervision of employees of the municipality, however they were not actually felling the trees. Was the municipality the ‘operator’? Or was it the contractor?
The CJEU’s judgment is in essence one of statutory construction. It is settled case-law that to interpret a provision of EU law, one needs to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part.
At para 26 the Court points out that Article 2(c) of the EUTR defines, the concept of ‘operator’ as any natural or legal person that places timber or timber products on the market. Article 2(b) in turn as noted defines the notion of ‘placing on the market’ as covering ‘the supply by any means, irrespective of the selling technique used, of timber or timber products for the first time on the internal market for distribution or use in the course of a commercial activity, whether in return for payment or free of charge’.
At para 28 the Court holds that the term ‘supply’ in Article 2(b) “must, according to its usual meaning, be understood as referring to the transfer of ownership of a quantity of timber or timber products.” That in my opinion is a bit of an interpretative shortcut. Even in its ordinary meaning, ‘supply’ arguably is a broader category than ‘transfer of ownership’. The Court’s take is impacted by the fact that ‘standing trees’ are not included as ‘timber and timber‘ products’ in relevant Annex.
The Court continues some of that focus on ownership and its transfer, this time with emphasis on the first time such ownership is transferred, holding ‘ a natural or legal person must be regarded as being an ‘operator’, ‘placing on the market’ ‘timber and timber products’, within the meaning of Article 2(a) to (c) of Regulation No 995/2010, where, irrespective of the selling technique used, it transfers for the first time and for the purposes of distribution or use in the course of a commercial activity, the right of ownership in wood in the rough or fuel wood to a person who carries out transactions in the internal market.’ (para 31). When that transfer occurs is dependent upon the applicable law: if it already occurs viz the trees still standing, there is no transfer of ownership of timber or timber products and the due diligence requirements are imposed upon a party further down the chain.
The judgment illustrates the continuing need for the legislator to define core regulatory requirements with the specific intentions of the regulation in mind.
Geert.
