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Judgments - Consorzio Del Prosciutto Di Parma v. Asda Stores Limited and Others

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    31. My Lords, it is noticeable that the judge discusses "slicing and packaging" without in any way connecting these operations to the reason why the Italian authorities require them to be controlled and supervised, namely, for the purpose of ensuring that the authenticity of the product in sliced form can be guaranteed to the consumer by an authentic label. The purpose of protection of the PDO, according to the recitals to the Regulation, is to enable the consumer to "purchase high quality products with guarantees as to the method of production and origin". The PDO will "enhance the credibility of the products in the consumers' eyes". Article 4.2(h) specifically requires that "abelling details" be included in the specification. I can therefore see no reason why labelling requirements should not form a part of the specification with which article 4.1 requires the product to comply. As a matter of plain language, the rules in section H (which incorporate by reference the Italian law and regulations) are part of the specification.

    32. My Lords, the authenticity of Parma ham has traditionally been guaranteed by the brand on the ham itself. The consumer in the butcher or delicatessen has been able to satisfy himself on this point by inspecting the ham from which his order was sliced. But the retail revolution of the past 30 years has meant that much more ham is now sold pre-packaged in supermarkets. In the absence of control by the producers over the labelling of such packages, the supermarket consumer would have no guarantee other than the word of the retailer. He would have to take on trust the claim that the package contained genuine Parma ham. And the producers in Parma would have no convenient way to protect their goodwill except by testing packages in retail outlets all over the Community to establish, perhaps by some form of analysis, whether the product sold as Parma ham is genuine or not. In the present case, it is accepted that the respondents are honest traders and that their packages contain the authentic product. But this will not always be the case. The point of the labelling rules, which in the case of packaged products are inseparable from the packaging and slicing rules, is to provide a reliable and easy way to detect infringement of the PDO. They complement the inspection process in Parma, which otherwise would serve no purpose.

    Certainty and transparency.

    33. Mr Green next says that even if (1) the Regulation was intended to confer directly enforceable protection of the PDO and (2) the description of the product in respect of which there is protection is contained in the specification, including the packaging, slicing and labelling rules, nevertheless it does not achieve such protection because, first, the language of the specification is too imprecise and secondly, the specification is not readily available to the public.

    (a) Certainty.

    34. In H J Banks & Co Ltd v British Coal Corporation (Case C-128/92) [1994] E.C.R. I-1209, 1236-1237 Advocate General Van Gerven summarised the state of European jurisprudence on the requirements for direct effect. He cited Hurd v Jones (Case 44/84) [1986] ECR 29, para 47:

    "According to a consistent line of decisions of the court, a provision produces direct effect in relations between member states and their subjects only if it is clear and unconditional and not contingent on any discretionary implementing measure."

    35. He went on to say that it was an eminently practical test. The question was whether the provision of Community law was sufficiently operational in itself ; it must be "capable of being applied by a court to a specific case".

    36. I have already said that in my opinion the Regulation did not contemplate any implementing measures in domestic law except on the two ancillary points which I have mentioned. Article 16 refers to "detailed rules for applying this Regulation" being adopted (as Community rules) by the procedure laid down in article 16. But no further rules were needed to enable the provisions under consideration to be applicable and no such rules have ever been adopted. I can see no difficulty in applying the terms of the Regulation to a specific case. Mr Green complained that nowhere in the specification does it say specifically what his clients are forbidden from doing. It does not in my opinion need to. That is the function of the Regulation itself, which says in terms in article 8 that a PDO may appear only on products which comply with the Regulation. It follows that no one may put it on products which do not comply. The function of the specification, under article 4, is to tell you which products comply. And the terms of Part H of the specification makes it clear that packaged ham which has not had the corona ducale stamped on the package under the supervision of the Association does not comply. My Lords, I do not see how it could be more clearly spelled out.

    (b) Transparency.

    37. Both the judge and Aldous LJ in the Court of Appeal said that the Regulation did not have direct effect because the specification containing the description of the product (and in particular the requirements as to the packaging and labelling of sliced ham) had not been published in the Official Journal, or, for that matter, anywhere else. They said that it was a general principle of European law that any measures directly enforceable against the citizen should be "transparent", readily accessible. The Commission will have a copy of the specification and, if so requested, would no doubt make it available pursuant to Commission Decision of 8 February 1994 on public access to Commission documents published in the Official Journal on 18 February 1994 (L 46/58). (This Community act does not appear to have been cited to the Court of Appeal, who said that there was no obligation upon the Commission to provide a copy of the specification.) Alternatively, an interested person could obtain it from the Association, whose name and address is published in the Official Journal as part of a list of inspection bodies notified to the Commission under article 10 of the Regulation. But in either case it would be in Italian. The judge and the Court of Appeal said that this was not good enough. A dealer in the U.K. should be able to ascertain from a readily accessible document in his own language precisely what products he was entitled to sell. Mr Green painted an alarming picture of the difficulties of the corner grocer in obtaining and comprehending the 300 or so specifications, in a variety of Community languages, of products enjoying a PDO or PGI.

    38. The "ordinary" application procedure under articles 5 and 6 requires the Commission to publish "the main points of the application" and the "references to national provisions governing the preparation, production or manufacture of the product" in the Official Journal: see paragraph 6.2 It is then open to objections under article 7. But, under the "fast track" procedure in article 17, article 7 is excluded. Although it does not expressly say that article 6 is excluded, there is no evidence of publication and I shall assume there was none. Mr Green said, without making any concession, that publication under article 6.2 might have satisfied the requirements of transparency but the fast track procedure certainly did not.

    39. My Lords, the Court of Appeal regarded this argument as supporting their view that the Regulation was not intended to be directly effective. But, if your Lordships agree that the language and purpose of the Regulation shows beyond doubt that it was intended to be directly effective, then the argument on transparency becomes an attack on the validity of the Directive, on its competence to achieve its purpose. Mr Green is saying that although the Council which made the Regulation intended it to be directly effective, it was for this purpose ultra vires because the method of legislation adopted was not sufficiently transparent. Furthermore, the criticisms which are made of the lack of transparency of the Parma ham specification would also apply, one would imagine, to every other specification by reference to which a PDO or PGI has been registered. It is unlikely that the specification for Buxton blue cheese is more readily available to an Italian grocer than the specification for Parma ham to an English one. The Regulation specifically contemplates that registration will be by reference to a specification for which no provision for publication or translation is made. So the argument is an attack on the validity of the entire system of PDO's and PGI's created by the Regulation. If your Lordships regard such a submission as arguable, it would have to be referred for decision to the European Court. In my opinion, however, it is for a number of reasons not so arguable.

    40. The Regulation itself is published in the Official Journal. Article 4 will inform the reader that the PDO is protected in respect of a product described in the specification. So the objection is not that the law itself is inaccessible. It is that it refers to a document filed with the Commission and available for inspection but for which no public register (such as a register of patent specifications) is expressly provided.

    41. We were referred to no case in which a Regulation has been held invalid, or ineffective to achieve direct effect, because it created rights by reference to an unpublished document. The Court of Appeal referred only to Commission of the European Communities v Federal Republic of Germany (Case 29/84) [1985] ECR 1661 in which the question was whether Germany had given effect in domestic law to a directive which required the mutual recognition of nursing diplomas. German law conferred no right of recognition upon holders of diplomas from other member states but allowed their holders, if thought suitably qualified, to be given authority to practice on a case by case basis. But the German Government said that they had adopted an administrative policy which would result in recognition being accorded to all nurses from other member states. There was, however, nothing to stop them from changing the policy. The European Court said that this did not amount to an adequate implementation of the directive. Sir Gordon Slynn, Advocate General, said at p 1666, that the German administrative policy, which was not to be found in any public document, lacked transparency:

    "There are two reasons for this requirement: (1) to enable the Community citizen to know his rights and have at his disposal a text on which he can rely simply and cheaply; (2) to ensure sufficient transparency to enable the Commission to check effectively whether a directive has been implemented."

    42. These are, if I may say so, sensible remarks in the context of the implementation in national law of a directive conferring rights upon a class of citizens. In the German case, there was no way that a nurse with a foreign diploma could have obtained any document telling her that she was entitled to recognition. It is far from the present case, in which anyone interested in dealing in a product protected by a PDO can easily discover that it is protected and that the protection is defined by a specification held by the Commission and the local inspection authority.

    43. The question, then, is whether the Council of Ministers, in framing the Regulation, was entitled to consider that this was enough. I put the question in this way because clearly the Council has a legislative discretion in the matter. It is entitled to adapt the degree of publicity required for documents to which the Regulatuion refers to the circumstances of the case. The burden of showing that a Community institution exceeded the limits of its discretion in such a matter is a heavy one. In The Queen v. Ministry of Agriculture Fisheries and Food, Ex parte Fedesa (Case C-331/88) [1990] ECR I-4023, 4061 the European Court said in relation to an alleged infringement of the principle of legal certainty:

    " . . . having regard to the discretionary power conferred on the Council in the implementation of the common agricultural policy, be limited to examining whether the measure in question is vitiated by a manifest error or misuse of powers, or whether the authority in question has manifestly exceeded the limits of its discretion."

    Likewise in relation to the principle of proportionality, which requires that prohibitory measures be "appropriate and necessary in order to achieve the objectives legitimately pursued by the legislation in question, the Court said at para 14 that in view of the discretionary power to implement the common agricultural policy, the legality of the measure would be affected only if it was "manifestly inappropriate".

    44. In considering whether the Council was entitled to regard the specification as sufficiently available, it is important to bear in mind that its main purpose is to lay down manufacturing standards, labelling requirements and so forth for persons engaged in production, who will by definition be operating in a defined area of a member state. It is therefore entirely appropriate that the specification should be in the language of the relevant area and available from the local inspection authority. In practice, no one outside Parma needs to know anything about the specification except the fact that ham sold bearing a label saying that it is Parma ham must have the corona ducale mark. It is different from a patent specification, in which the purpose of the claims is to mark out the extent of the patentee's monopoly in respect of a product or process which may be made or utilised anywhere in the area covered by the patent.

    45. It is only in an unusual case like the present, in which a trader in another member state wants to change the packaging or way in which the product is presented to the consumer, that he will need to know whether such a change would be inconsistent with the use of the PDO. The notion that the local delicatessen will want to satisfy himself that his Roquefort, Gorgonzola and White Stilton have been made in accordance with their respective specifications seems to me fanciful.

    46. This leads me to the next point, which is that the degree of publicity appropriate for the specification is also linked to the remedy which the national court is expected to provide. Mr Green's submissions seemed to assume that if the Regulation was directly enforceable in domestic courts, it would follow that any grocer who, even in good faith, sold Camembert de Normandie or Single Gloucester which deviated from the recipe in their specifications would face criminal or civil penalties. There seems to me no reason why this should be so. First, it does not seem to me to be the business of domestic courts in other member states to enforce compliance with the specification by authorised producers within the area of the PDO, still less by the indirect method of imposing sanctions upon retail vendors within their own countries. That is the business of the member state concerned and the complaint machinery under article 11. The only remedy which the Regulation requires is for the protection of the producers within the PDO against outsiders. Secondly, it is a general principle of Community law that the nature of the remedy provided for protection of a Community right is a matter for domestic law, subject to the requirement that it must not be such as to make the Community right ineffective. So, for example, I do not think that if English domestic law adopted a rule that an action for damages against a seller of goods which infringed a PDO would lie only if he knew or ought to have known that the goods infringed, it could be said to be rendering the Commuinity right ineffective. I rather think that this would also be the case even if the U.K. courts decided that the only appropriate remedy was an injunction, but this point need not be decided: compare Garden Cottage Foods Ltd v Milk Marketing Board [1984] AC 130. In either case there could be no injustice arising from the difficulty of obtaining a copy of the specification. If the defendant needed the specification to know that the goods infringed and could not reasonably have been expected to obtain a copy, he would not be liable until the relevant provisions had been communicated to him.

    47. In the present case, of course, the respondents are fully aware that their product does not comply with the specification. They have a copy. But they claim the right to go on selling the product on the ground of what seem to me to be imaginary injustices which might be inflicted on other people if the Regulation were directly enforceable. I would reject this argument.

    Validity of the Commission Regulation.

    48. The next point is that the Commission, in registering the Parma ham PDO with a specification which included the provisions for slicing, packaging and labelling, exceeded its powers under the Regulation or the EEC Treaty or both. Again this is a matter which would have to be referred to the European Court if your Lordships thought the point was arguable. But for my part, I do not see how it can be.

    49. So far as the Regulation is concerned, I have already pointed out that article 4.2 specifically requires that labelling requirements be included in the PDO. The requirements as to slicing and packaging are integral to be operation of the requirements for labelling ham in the sliced and packaged form. But Mr Green argues that these requirements are for two reasons outside the powers conferred by the Treaty.

    50. First, because they cannot be regarded as within the powers conferred by article 37 (ex article 43) of the Treaty under which the Regulation was made. These powers, relating to the common agricultural policy, are limited by article 32(3) (ex article 38(3)) to products within Annex I (ex Annex II). This lists a large number of agricultural products, including "Preparations of meat". A cross-reference to the Common Customs Tariff, item 1602 41 shows that this includes "hams and cuts thereof". The respondents concede that the Treaty therefore confers a power to regulate dealing in sliced ham but say that this does not include regulation of the packaging of sliced ham. But in my opinion the provisions of the specification are not concerned with the regulation of packaging as such. The supervision of the packaging is entirely for the purpose of ensuring the authenticity of the sliced ham and this object, it seems to me, is well within the powers conferred on the Community institutions by the Treaty.

    51. Secondly, it is said that the effect of the slicing, packaging and labelling provisions is to confine those activities to the Parma area and to prevent firms elsewhere, in Italy or other member states, from carrying on what should be legitimate slicing and packaging activities. This, it is said, amounts to a quantitative restriction on exports (from Italy) or imports (of unsliced hams into other member states): see articles 28 and 29 (ex 30 and 34). Or alternatively, it is simply an undue restriction on freedom of trade.

    52. If, as I suggest, the control of slicing and packaging is in furtherance of a legitimate Community objective of guaranteeing the authenticity of sliced Parma ham bought under the PDO, then the only ground upon which the above argument can succeed is that the means adopted have a disproportionately adverse effect upon trade between member states or trade generally. Given that the act of a Community institution will be held to fail the proportionality test only if it is "manifestly inappropriate", I do not see how it can possibly pass this test. The PDO is a form of intellectual property right, conferring upon producers in a certain area the exclusive right to use their regional name as descriptive of the product. That exclusive right, like all intellectual property rights, is inherently restrictive of trade. The exercise of that right is linked to strict requirements designed to ensure that the product conforms to established standards. And in the case of sliced Parma ham, the packaging and labelling requirements are the only effective way of ensuring the authenticity of the product when it is sold to the consumer in what is now probably the most common form. In my opinion it is quite unarguable that the enforcement of such requirements is a manifestly inappropriate way of giving effect to the objects of the Regulation. The only alternative would be to require the Association to supervise the activities of anyone who chose to slice and package Parma ham anywhere in the Community. I do not think that the Commission could be criticised for taking the view that this would be unreasonable.

    53. In my opinion the respondents were infringing a valid Community right directly enforceable in a U.K. court. But since preparing this judgment, I have had the advantage of reading in draft the speech of my noble and learned friend Lord Scott of Foscote. In the light of his views, it is not possible to say that the conclusion which I have reached on the effect of the Regulation and specification is acte claire. Since the conclusion turns upon the construction of Community instruments, it is therefore necessary for your Lordships to refer the question to the European Court of Justice. I would advise your Lordships to refer the general question of whether, as a matter of Community law, Council Regulation (EEC) No. 2081/92 read with Commission Regulation (EC) No 1107/96 and the specification for the PDO "prosciutto di Parma" create a valid Community right, directly enforceable in the court of a member state, to restrain the retail sale as "Parma ham" of sliced and packaged ham derived from hams duly exported from Parma in compliance with the conditions of the PDO but which have not been thereafter sliced, packaged and labelled in accordance with the specification. A question formulated in such terms should enable the respondents to put before the Court of Justice all the grounds upon which they say that no such Community right exists.


My Lords,

    54. I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hoffmann. I agree with it, but I also agree that it is not possible to say that the conclusion which he has reached is acte claire . I too would refer the question which he has proposed for a preliminary ruling by the European Court of Justice.


My Lords,

    55. Having had the opportunity of reading in draft the speeches which have been prepared by my noble and learned friends Lord Hoffmann and Lord Scott of Foscote I agree that it is necessary for this House to refer a question along the lines mentioned by Lord Hoffmann to the European Court of Justice.


My Lords,

    56. Asda Stores Ltd (Asda) offers sliced Parma ham for sale at its supermarkets in this country. It offers the ham for sale in packages. Hygrade Foods Ltd (Hygrade) supplies Asda with the packages containing the sliced Parma ham. Hygrade imports the ham from a producer in Parma. Whether the imported ham is on the bone or boneless is not clear and does not, for present purposes, matter. Whichever it is, the imported ham bears the corona ducale stamp, the badge of authenticity and, it is common ground, is authentic Parma ham complying with all the national, i e Italian, requirements and specifications applicable to the sale of on-the-bone, or boneless, Parma ham. Hygrade, at its premises in Wiltshire, slices the ham and places the slices in Asda packages. The packages declare the contents to be "genuine Italian Parma Ham", as indeed is the case. But the packages do not bear the corona ducale. Hygrade have no authority to place the corona ducale on the packages. Nor do Asda. Only the Consorzio del Prosciutto di Parma (the Consorzio), or somebody authorised by the Consorzio, can do so. Moreover, the slicing and packaging of the Parma ham outside the local Parma area disqualifies the ham, according to Italian regulations, from being sold as Parma Ham, notwithstanding that that is what the product is. So if Asda or Hygrade asked for authority to place the corona ducale on their packages, they certainly would not get it. The Italian regulations stipulate that if Parma ham is to be sold in slices, the slicing and packaging must be carried out in the Parma area. These regulations would, ordinarily, have only territorial effect. They would not be enforceable in this country (see Consorzio del Prosciutto di Parma v Marks & Spencer plc [1990] FSR 530). But the Consorzio contends that the Italian regulations have become, via Council Regulation (EEC) No. 2081/92 of 14 July 1992 and Commission Regulation (EC) No. 1107/96 of 12 June 1996, part of European law and enforceable against Asda and Hygrade. Injunctions are sought restraining Asda and Hygrade from selling as Parma Ham, Parma ham "that has not been sliced, packaged and prepared under the supervision of the [Consorzio] in factories approved by the [Consorzio] in the Parma region of Italy".

    57. My noble and learned friend, Lord Hoffmann, has, in his opinion which I have had the advantage of seeing in draft, set out more fully the background to the case and has described the purpose and effect of Council Regulation 2081/92. I need not repeat what he has said and will confine myself to referring briefly to those matters that seem to me of particular importance for the purposes of this appeal.

    58. Council Regulation 2081/92 was intended to provide protection on a Community wide basis for "designations of origin" (PDOs) and "geographical indications" (PGIs) in relation to agricultural products and foodstuffs. "Parma Ham", the English version of "Prosciutto di Parma" is unquestionably a PDO for the purposes of the Regulation. The purpose of giving protection to PDOs and PGIs is twofold. It is intended both to protect producers of the products from unfair competition and to protect consumers from being misled by the application to products of false or misleading descriptions. These purposes clearly appear from the recitals to the Regulation.

    59. The Regulation did not itself specify the PDOs (I will for convenience omit any further reference to PGIs) entitled to protection. It provided, instead, registration procedures whereby PDOs could be entered on a register and thereby become entitled to Community wide protection. There were two distinct procedures. One, provided for by articles 5, 6 and 7, involved application (article 5), investigation by the Commission (article 6) and opportunity for objections (article 7). The other, a summary "fast track" procedure, was provided for by article 17. This was the procedure whereby "Prosciutto di Parma" became a registered PDO.

    60. The article 17 procedure required each member state, within six months of the coming into force of the Regulation, to inform the Commission of the PDOs it wished to be registered. The Commission was then obliged to "register the names . . . which comply with articles 2 and 4". There was no provision for objection. Article 7 was disapplied. Article 15 set out the manner in which the Commission was then to proceed. It said that the Commission was to be assisted by a committee composed of representatives of the member states and that the Commission was to submit "a draft of the measures to be taken" to the committee. The committee was then, within a specified time limit, to give its opinion on the draft. If within the time limit the committee had failed to give any opinion, the Commission was to submit the proposed measures to the Council. If within three months thereafter the Council had taken no action, article 15 required the Commission to adopt the proposed measures.

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