ECJ ruling in Shell Nederland Verkoopmaatschappij B.V. and Belgian Shell N.V. / the Netherlands Government

ECJ ruling in Shell Nederland Verkoopmaatschappij B.V. and Belgian Shell N.V. / the Netherlands Government

Arnold van Steenderen
15 January 2014

European Court of Justice 12 December 2013 in joint cases C-241/12 and C-242/12

Summary

Debunkering of off spec Ultra Light Sulphur Diesel (“diesel”). Must a consignment of diesel which is off spec be categorized as waste within the meaning of Regulations Nos 259/93 and 1013/2006?

Questions referred for a preliminary ruling

On 3 September 2006 Shell in the Netherlands loaded Ultra Light Sulphur Diesel (“diesel”) on to a barge for delivery to a client established in Belgium. When the consignment was delivered in Belgium it was discovered that, at the time of loading, the tanks of the barge had not been completely emptied, which resulted in the diesel being mixed with MTBE. Since the flashpoint of the resulting diesel mix was too low for it to be resold as fuel for diesel engines in accordance with the contractual purpose contemplated by the Belgian client and since the client was precluded from storing the diesel mixture at his premises having regard to its environmental permit, the consignee returned the off spec diesel to Shell, which shipped the consignment back to the Netherlands. In a criminal case before the Rotterdam District Court the Public Prosecutor alleged that, at the time of shipment from Belgium to the Netherlands, the product in question constituted waste and by having failed to adhere to the notification procedure laid down in Article 15 of Regulation no 259/93, Shell was guilty of illegal traffic, within the meaning of Article 26 (1) of that Regulation. Shell argued, however, that the consignment at hand could not be categorized as waste. The Rotterdam District Court asked the ECJ whether a consignment of off spec diesel at the time of its loading into a barge must be categorized as waste where, after delivery to the purchaser, it was discovered that the consignment did not meet the contractual specifications or the safety requirements, because of its low flashpoint, and whether, because of its new composition, it could not be stored by the purchaser having regard to its environmental permit nor sold by it as diesel fuel as was intended, so that it was, at the purchaser’s request, returned to the seller which intends to resell it after having blended it with another product.

ECJ Ruling

The ECJ reminded of the fact that, in accordance with settled case-law the concept of “waste” must not be understood as excluding substances and objects which have commercial value and which are capable of economic reutilization (Palin Granit Oy/Vehmassalon, C-9/00). The fact that Shell took back the consignment at hand with the intention of blending it and placing it back on the market was considered to be of decisive importance in the present case. It was established during the proceedings that the consignment at issue could be sold on the market without being processed, in the condition in which it was when it was taken back by Shell and, secondly, the commercial value of the contaminated diesel corresponded largely to that of a product which meets the agreed specifications. The ECJ held that it would not be justified at all to make goods, substances or products which the holder intends to exploit or market on economically advantageous terms in a subsequent recovery process subject to the provisions of Directive 2006/12, which seeks to ensure that recovery and disposal operations will be carried out without endangering human health and without using processes or methods which could harm the environment. Having regard to the requirement to interpret the concept of “waste” widely, the reasoning should be confined to situations in which the reuse of the goods or substance in question is not a mere possibility but a certainty, which it is for the referring Court to ascertain, without the necessity of using any of the waste recovery processes referred to in Annex II B to Directive 2006/12 prior to reuse. Consequently a consignment of diesel accidently contaminated with another substance is not covered by the concept of “waste”, provided that the holder of that consignment does actually intend to place that consignment, mixed with another product, back on the market, which is for the referring Court to ascertain.

Rotterdam, January 2014