Posts Tagged Off-specification products
The CJEU’s finding in Shell, was applied by the Court of first instance at Antwerp in a judgment from October last, which has just reached me. (I have not yet found it in relevant databases (not uncommon for Belgian case-law), but I do have a copy for those interested). The case concerned debunkered off-spec fuel, off the ship Else Maria Theresa (her engines apparently having been affected by the oil being off-spec), blended into /with a much larger amount of bunker oil.
The court applied the Shell /Carens criteria, leading to a finding of waste. In brief, the blending in the case at issue was not, the court held, standing practice in the bunkering /debunkering business, and /or a commercially driven, readily available preparation of off-spec for purchase by eager buyers. Rather, a quick-fix solution to get rid off unwanted fuel.
The judgment (which is being appealed I imagine) emphasises the case-by-case approach needed for the determination of ‘waste’. It relies heavily on (the absence of) evidence on market consultation and signals from interested buyers for the off-spec fuel.
Update 11 January 2016: Shell inform me that the DA (‘parket’ /Openbaar Ministerie) has appealed.
I have reported some time ago on the reverse logistics case involving Shell and Carens. As noted in that post, the CJEU instructed the court at Rotterdam to gauge the ‘true intentions’ of Shell vis-a-vis the contaminated fuel which it had taken back from one of its clients (Carens).
The Court at Rotterdam issued its final judgment on 23 December last, truly a christmas present for the companies involved for the accusations of illegal waste shipments were rejected. (I could not locate the judgment on ECLI yet: I have a copy for those interested).
The court first of all rejected a rather neat attempt of the Dutch prosecutor to get around the CJEU’s finding in para 46 of its judgment : ‘it is particularly important that the Belgian client returned the contaminated ULSD to Shell, with a view to obtaining a refund, pursuant to the sale contract. By so acting, that client cannot be regarded as having intended to dispose of or recover the consignment at issue and, accordingly, it did not ‘discard’ it within the meaning of Article 1(1)(a) of Directive 2006/12.‘ It was suggested that incoterm FOB (‘Free on Board’), applicable to the agreement between Carens and Shell, meant that the qualification of the payment by Shell could not have been a refund for defective goods (ownership of the goods already having been transferred prior to contamination) but rather the payment of damages for a contract not properly carried out. This, it was argued, made para 46 irrelevant for the facts of the case. The court at Rotterdam essentially argued that par 46 needs to be applied beyond the black letter of the law: in effect, in acting as they did and following their running contractual relationships, Shell and Carens had decided to annul the sale, sale price was refunded, and Carens could therefore not be seen as owner or holder of the goods.
Neither, the court held, could Shell be considered a discarding the fuel: the court paid specific attention to testimony that the fuel concerned was actually presented to market, with a view to establishing what price it could fetch. Offers were made which were not far off the initial sale price. Re-blending of the fuel was only done to obtain a higher price and was carried out in accordance with established market practices. Shell’s resale of the fuel, as holder of it, was not just a mere possibility but a certainty (language reminiscent of what the CJEU normally employs for the distinction recovery /disposal).
Final conclusion: the fuel at no stage qualified as waste and no one could have discarded it.
A very important judgment indeed – it will be interesting to see whether the prosecutor’s office will appeal.
The ECJ this morning held in Case C-241/12 and C-242/12 Shell Nederland Verkoopmaatschappij NV and Belgian Shell. The judgment was not yet uploaded unto the ECJ website however it should be soon (and presumably also in English). I reported earlier on the AG’s Opinion which was not very favourable. There is much more hope in today’s judgment.
Most important to me is the finding by the Court (at 46) that in order to determine whether client who received the off-spec product, discards it, particular attention needs to be paid to the fact that the (Belgian) client returned the off-specification fuel with a view to obtaining repayment in accordance with the sales agreement. As I discuss in my posting on the Opinion, the Advocate General generally and unjustifiably dismissed the relevance of the contractual context.
The Court also emphasises that Shell at any rate cannot have been considered to have discarded the product before it was discovered that the product was off-spec (as a result of contamination). The ECJ instructed the Court at Rotterdam to discover Shell’s true intention, taking into account in particular the possibility to sell the off-spec product to another buyer in its off-spec state; the fact that no waste operations (disposal or recovery) such as outlined in the Waste Framework Directive had to be carried out; that the market value of the off-spec product sold corresponds almost one to one to the value of the on-spec product; and Shell’s acceptance of the product with a view to blending so as to re-market it. This latter point is important: blending is not seen by the Court as a waste recovery operation.
Back to Rotterdam therefore without a definitive answer however with another piece in the waste definition jigsaw laid (in particular: the contractual context). Very very important judgment.