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|Judgments - Consorzio Del Prosciutto Di Parma v. Asda Stores Limited and Others
HOUSE OF LORDS
Lord Nicholls of Birkenhead Lord Hoffmann Lord Hope of Craighead Lord Clyde Lord Scott of Foscote
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
CONSORZIO DEL PROSCIUTTO DI PARMA
ASDA STORES LIMITED AND OTHERS
ON 8 FEBRUARY 2001
 UKHL 7
LORD NICHOLLS OF BIRKENHEAD
1. I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Hoffmann and Lord Scott of Foscote. I agree that, in order to decide this appeal, it is necessary for the House to refer to the European Courts of Justice a question to the effect mentioned by Lord Hoffmann.
2. Prosciutto di Parma, or Parma ham, has been made in the Parma area from pigs reared in northern and central Italy since Etruscan times. It is famous throughout the world. It is made according to traditional methods and standards. The name "Prosciutto di Parma", signifying ham from the Parma area, is a "protected designation of origin" (PDO) under European Community legislation, which I shall later have to analyse in some detail. The outward guarantee of the authenticity of the product is the brand mark in the form of a five pointed coronet (the "corona ducale") symbolising the ancient Grand Duchy of Parma. By Italian law this has to appear upon the product in whatever form it is sold to the customer. If he buys a complete ham, or slices cut from a ham in the shop, it must appear branded upon the ham itself. If he buys pre-packaged pieces or slices, it must appear stamped upon the package. The authority which under Italian law enforces compliance by producers with the required methods and standards of manufacture and also protects the name and mark against misuse by others is the "Consorzio del Prosciutto di Parma" or Parma Ham Association ("the Association"). It has a system of inspection, which includes supervision of the application of the corona ducale brand on hams and packaging.
3. The second respondent, Hygrade Foods Ltd ("Hygrade") is a reputable food processor with premises at Corsham in Wiltshire. It imports boned hams from a producer in Parma. There is no dispute that the hams are authentic, properly made and branded. But Hygrade then slices and packages the hams in Wiltshire. It puts the slices into packages on which they are described as Parma ham but which do not bear the corona ducale. It supplies the packages to the first respondent Asda Stores Ltd ("Asda") which sells them to the public in its supermarkets. The Association say that this is unlawful, not only under Italian law but also under European law, enforceable in the courts of all the member states. In the present proceedings, the Association claims an injunction against Hygrade and Asda, restraining them from marketing the packages as Parma ham. The judge (Mr Lawrence Collins QC, sitting as a deputy High Court judge of the Chancery division) held that they had no rights under European law and his decision was affirmed by the Court of Appeal. The Association, and one of the Parma ham producers which was added in a representative capacity when a question was raised about the Association's locus standi, appeals to your Lordships' House.
4. In Italian law, the designation "Parma ham" is protected by Law No. 26 of 13 February 1990, entitled "Protection of denomination of origin 'Prosciutto di Parma'". Article 1 provides that the designation is exclusively reserved for -
5. Article 6 deals with the application of the mark.
6. The "competent authority" for this purpose was declared in article 11 to be the Ministries of Industry and Agriculture, which could and did delegate its functions to the Association. Article 23(c) conferred a power to make regulations concerning, inter alia, the "application of the indelible stamp . . . including the affixing of the mark on packaging in accordance with . . . article 6." These regulations were made by the two Ministries by Decree No 253 of 15 February 1993. They contain the most elaborate provisions designed to ensure the authenticity of the product at every stage in the chain of supply. Breeders have to stamp their pigs with an identification code, slaughterers have to be authorised and apply their identification code to the pork legs, producers have to keep records of properly marked fresh pork legs received for processing. Slicing and packaging must take place in approved "laboratories" within the traditional area, supervised by inspectors of the Association, who keep records of hams received, weights sliced and so forth. Article 29 of the regulations also provides for labels on packages to bear various items of information additional to the mark required by article 6 of the law.
7. It is therefore clear that the marketing as "Parma ham" of ham packaged in Wiltshire without the appropriate mark on the package would be unlawful in Italy, whatever the authenticity of the ham at earlier stages in the chain of manufacture. But the Association does not, and probably cannot, rely upon Italian law. It relies upon European law.
European law: the arguments.
8. European protection of "geographical indications and designations of origin" was instituted by Council Regulation (EEC) No 2081/92 ("the Regulation") of 14 July 1992 which came into force on 24 July 1993. It creates a procedure by which the Commission can register a name which satisfies specified criteria as a "protected designation of origin" ("PDO") or a "protected geographical indication" ("PGI"). A PDO is the name of a place used to describe a product, originating in that place, with characteristics that are due to its particular environment. A PGI is similar to a PDO except that the causal link between the place of origin and the quality of the product may be a matter of reputation rather than verifiable fact. I need not say much more about a PGI because we are concerned solely with a PDO which, after going through the prescribed procedure, was registered by the Commission on 12 June 1996. A registered PDO was to enjoy, in the language of one of the recitals to the Regulation, "protection in every member state". Accordingly, the Association claims such protection in the United Kingdom.
9. The respondents attack the Association's case at a number of different levels. At the highest level, they say that the Regulation is invalid. But the courts of this country have no jurisdiction to declare the act of a Community institution invalid: Foto-Frost v Hauptzollamt Lubeck-Ost (Case 314/85)  ECR 4199. So this defence would require a reference to the European Court of Justice. Secondly, they say that upon its true construction, it was not intended to create rights and duties directly enforceable in the courts of member states. Thirdly, they say it should not be enforced because the extent of the protection afforded to the PDO was not precisely defined, or not sufficiently publicised, or both. Arguments of this kind might, as it seems to me, be regarded as operating in one of two ways: either in aid of construction, to support the argument that the Regulation was not intended to have direct effect, or alternatively, as showing that, as a Regulation intended to have direct effect, it should be treated as invalid. The latter form of argument would again require a reference to the European Court. I am not sure that Mr Green, who appeared for the respondents, accepted this last proposition. He suggested, I think, that a regulation might be intended to create directly enforceable rights but not create them for one or other of the reasons upon which he relies and yet somehow be valid. I shall return to this point in due course. Fourthly, the respondents say that while the PDO may confer a degree of protection which requires ham sold as Prosciutto di Parma to have been made in Parma, it does not extend to a requirement that packages should bear a mark which has to be applied in Parma. This argument again takes different forms. One is that the Regulation, upon its true construction, read with the documents to which it refers, does not confer the wider protection. Alternatively, if it should be so construed, the Commission did not have power under the Regulation (or possibly even under the EEC Treaty (Treaty of Rome) (Cmnd 5179-II)) to register a PDO purporting to confer the wider protection. The latter form of argument would again require a reference.
10. As the effect of the Regulation is central to all the above arguments, I am afraid that I must summarise its provisions in some detail. It recites that certain member states had successfully introduced "registered designations of origin" which enabled producers to secure higher returns for high quality products and enabled consumers to purchase such products "with guarantees as to the method of production and origin". The Italian protection of the designation "Prosciutto di Parma" was no doubt an example. It recited that there was however a diversity in national practices. A "framework of Community rules on protection" would provide a more uniform approach. The method to be adopted was that "to enjoy protection in every member state", a PDO (or PGI) would have to be "registered at community level". A product bearing a registered PDO or PGI "must meet certain conditions set out in a specification." Article 1 then defines the scope of the Regulation and articles 2 provides that "Community protection of designations of origin and of geographical indications of agricultural products and foodstuffs shall be obtained in accordance with this Regulation". The specific provisions for obtaining such protection are set out in articles 2 to 7. A PDO and a PGI are defined, in the way I have already indicated, in article 2(a) and (b) respectively.
11. Article 4 is the first of the provisions which deals with the procedure for registration. It starts with a general provision (4.1) that "to be eligible to use" a PDO "an agricultural product must comply with a specification". Article 4.2 then sets out what must appear in the specification under various headings. Sub-paragraphs (a) and (b) are concerned with the name of the product and its description. Sub-paragraph (c) is the definition of the geographical area, (d) is the evidence that the product originated in the area, (e) is the description of how it is made and (f) is the evidence of the link between the product and the area required by article 2(a). For present purposes, since this case is about packaging and labelling, the important parts of the specification are sub-paragraphs (g) "details of the inspection structures provided for in article 10", (h) "the specific labelling details relating to the PDO" and (i) "any requirements laid down by Community and/or national provisions". I shall return later to the significance of these parts of the specification.
12. Article 5 provides in paragraph 1 that a group of producers may apply for registration and in paragraph 3 that the application must include the product specification. The application is not sent direct to the Commission but to the applicant's member state, which checks that it is justified and sends it to the Commission. By article 5.6, member states are required to introduce the necessary laws to enable this application procedure to function.
13. Article 6 then takes on the story from the point at which the application is received by the Commission from the member state. The Commission must verify "by means of a formal investigation" whether the application includes all the particulars required by article 4. If the result is favourable, it must publish in the Official Journal of the European Communities-
14. After publication, article 7 provides for objections by "legitimately concerned" persons on various grounds. These must be sent to the competent authorities in the member states and the member state may then object to the registration. If the applicant member state and the objecting member state cannot arrive at an agreement within a specified time table, the Commission decides whether to maintain the registration or not.
15. Articles 8 to 14 then deal with the consequences of registration. The most important is article 8, which simply says that a PDO "may appear only on agricultural products and foodstuffs that comply with this Regulation." Article 9 provides for the amendment of a specification, "in particular to take account of developments in scientific and technical knowledge". Article 10.1 provides that member states must set up "inspection structures"
16. There must be designated inspection authorities (paragraph 2) which "offer adequate guarantees of objectivity and impartiality with regard to all producers or processors subject to their control" and have sufficient staff and resources: paragraph 3. If the inspection authority establishes that a product bearing a PDO in its member state does not meet the specification criteria, it must take steps to ensure that the Regulation is complied with: paragraph 4. And the costs of the inspection system must be borne by the producers using the PDO.
17. Article 11 provides for complaints by member states that a product produced in another member state is not in accordance with the specification. If there are "repeated irregularities" and no agreement is reached, the Commission may take the "necessary steps" which may include cancellation of the registration.
18. Article 13 extends the protection of registered names beyond the use of the name in respect of the registered product. It provides that registered names "shall be protected" against various forms of infringement, including (a) use in certain circumstances in respect of products not covered by the registration (b) any "misuse, imitation or evocation" of the name (c) various forms of misleading get-up and (d) "any other practice liable to mislead the public as to the true origin of the product". Article 14 deals with potential clashes between a PDO and a trade mark registration. Once a PDO has been registered, a member state may not register a trade mark which would infringe the extended protection given by article 13. On the other hand, there are savings for existing trade marks in paragraph 2.
19. Finally, articles 15 and 17 deal with the registration procedure. Article 15 provides that the Commission is to be assisted by a committee of representatives of member states which gives its opinion on a draft measure submitted by the Commission. If the Committee does not deliver an opinion, the Commission must submit the draft to the Council. If the Council does not act within three months, the Commission will adopt the proposed measure. Article 17 provides what has been called a "fast track" procedure by which, within six months of the Regulation coming into force, member states may apply to the Commission for registration without going through the objection provisions of article 7. The application for the Parma PDO was submitted under this provision, went through the procedure of article 15 (neither the Committee nor the Council expressed a view) and was registered by the Commission, together with many other such applications, by the Commission Regulation (EC) No 1107/96 of 12 June 1996.
20 My Lords, I think that the best place to begin is by considering whether, as a matter of construction, the Regulation was intended to confer protection upon a PDO which is directly enforceable in the courts of member states. Once one has decided this question, the other arguments put before your Lordships tend to fall into place.
21. Unlike a directive, which requires implementation by the member states, a regulation is usually intended to lay down generally enforceable rules of Community law. Article 249 (ex article 189) of the EEC Treaty provides: "A regulation shall have general application. It shall be binding in its entirety and directly applicable in all member states." Of course the fact that it is directly applicable does not necessarily mean that it creates rights and duties enforceable in the courts. It may, like some domestic statutes, create public duties without creating private law rights. One would normally assume, however, that unless the Regulation contemplated that it would have to be fleshed out by domestic or Community legislation, it was intended to be effective to create rights or duties or both and not be what Lord Simonds once called a "pious aspiration". (Cutler v Wandsworth Stadium Ltd  AC 398, 407).
22. In the present case, I have no doubt that the exclusive right to the use of a PDO was intended to be enforceable in the courts of member states. The Regulation was intended to create a Community right in substitution for previous national rights. The recitals speak of registration enabling a PDO to "enjoy protection in every member state." Article 4.1 provides that to be eligible to use a PDO a product must comply with the relevant specification and article 8 says quite unequivocally that a PDO may appear only on products which comply with the Regulation. Article 13 says that registered names "shall be protected" against the various additional forms of misuse which I have mentioned and article 17.3 contemplates that the national protection of such names shall lapse when the PDO is registered. In Consorzio per la Tutela del Formaggio Gorgonzola v Käserei Champignon Hofmeister GmbH & Co KG (Case C-87/97)  E.C.R. I-1301 the European Court of Justice said (in paragraph 18, p 1331) that upon the registration of a PDO (in that case, Gorgonzola) national rules ceased to apply and "only the legal rules laid down in [the Regulation] are, together with the Treaty rules, relevant for the purpose of answering the questions referred [about the scope of the protection of the PDO]. The whole judgment (see, for example, paragraph 36) proceeds on the assumption that protection of the PDO is now guaranteed by Community law.
23. In the Court of Appeal, Aldous LJ said that the Regulation was "only intended to set up a framework to set up a uniform approach" and made a number of other references to the Regulation being a "framework". The word appears to have been taken from one of the recitals which says that "a framework of Community rules on protection will permit the development of designations of origin". Aldous LJ seems to have thought that the word "framework" indicated that national or subordinate Community legislation would be needed to implement the Regulation, by analogy with what is sometimes called a "framework directive", which lays down very general principles to be embodied in national legislation.
24. In my opinion the analogy is unsound. What the recital to the Regulation contemplated was a framework of Community rules, on which would proceed the development of PDO's - not a framework of principles, on which would proceed the development of national or Community rules. The Regulation does specifically require the introduction of national rules as to certain matters: setting up the application procedure under article 6 and the inspection procedure under article 10. But there is no other requirement for national rules and, as I have said, a clear statement that the Community protection of a PDO will replace that accorded by national rules. Article 16 refers to detailed Community rules for applying the Regulation being adopted, but, as I shall later explain, I do not think that this power was intended to detract from the direct effect of the main provisions.
25. Aldous LJ also described articles 10 and 11 as a "framework for enforcement of registered rights", which he appears to have regarded as exhaustive. But that seems to me to rest upon a misunderstanding of the purpose of those articles. Article 10 provides that, as a price of the exclusive right to use the PDO, the producers in a member state must pay for an impartial and efficient inspection system which will ensure that the products they sell conform to the specification. Article 11 allows another member state to complain that the producers who have the right to use the PDO are marketing goods under that description which are below specification. The ultimate sanction of the Commission for "irregularities" of this kind is cancellation of the registration. Thus both articles 10 and 11 are concerned with the quality of goods marketed by producers authorised to use the PDO. They are designed to ensure that producers who enjoy the protection of a PDO do not market goods of inferior quality, to the detriment of consumers in that and other member states. But these articles have nothing to do with the enforcement of the exclusive right by authorised producers against others. Such enforcement depends simply upon the fact that article 8 lays down a clear rule and upon the general principle that the courts of member states are obliged to provide remedies to enforce Community rights.
The scope of the PDO.
26. The next question is the nature of the directly enforceable right conferred by the registration of the PDO. Again, the Regulation is entirely clear upon this point. Article 8 provides that the PDO may appear only on products which comply with the Regulation and article 4.1 provides that to be eligible to use a PDO, a product must comply with the specification. Thus the specification lays down, for authorised producers within the designated area, the standards they must observe in producing the product and the labelling and other measures they must take to guarantee its authenticity to the consumer. At the same time, for outsiders, it defines the product in respect of which the producers have the exclusive right to use the PDO.
27. The Parma ham specification runs to some 84 pages, organised under the lettered heads of article 4.2 to which I have already referred. As one would expect, it contains a good deal of material about the history of the pig in the Po Valley and the details of breeding, slaughtering and curing. But your Lordships need be concerned only with sections under (G) (details of inspection structures), (H) (labelling details) and (I) (Community and national requirements). Part H is headed "Specific Requirements Concerning the Presentation, Identification and Labelling of Parma Ham". It refers to and summarises the Italian legislation to which I have already referred. Paragraph H.2 says:
28. Under section G of the specification, reference is made to the role of the Association in supervising the application of the brands, attending the slicing and packaging and verifying that the Italian regulations have been complied with. Under section I, reference is made to the domestic provisions to which I have referred.
29. Mr Green submitted that the requirements as to slicing, packaging and labelling do not form part of the exclusive rights conferred by the PDO. The specification is a discursive document and not everything it contains is intended to be enforceable. The purpose of the PDO is to protect products which have the quality link with a geographical area required by article 2.2(a) and it cannot therefore protect matters which have no effect upon the quality of the product. The fact that a ham, whether whole or in a package, bears a mark affixed under the supervision of the Association, does not affect the question of whether it is a genuine Parma ham or not. It either is or it is not and in the present case it is accepted that the respondents' packages contained genuine Parma ham of appropriate quality.
30. The judge accepted this argument. He said that neither the Regulation nor the Commission Regulation by which the PDO was registered contained any reference to slicing and packaging. The fact that it was mentioned in the specification was not enough. There had to be some provision in the Regulation which incorporated the slicing and packaging requirements. In his opinion there was nothing in article 4 of the Regulation which required the product specification to include "the subsequent commercial stages, such as slicing and packaging, by persons other than farmers". They fell outside the scope of protection.