ECJ Decision Examines Definition of ‘Waste’ for Transboundary Consignments

Request for preliminary ruling from the Hague Court of Appeal confirms that the concepts of “waste” and “discard” must be interpreted broadly.

By Paul A. Davies and Michael D. Green

The European Court of Justice (ECJ) recently handed down its judgment in response to a request for a preliminary ruling in criminal proceedings against Tronex BV (Case C-624/17), a Dutch wholesaler of residual consignments of electronic goods. The case concerns the transboundary shipment of electronic and electrical appliances to a third party in Tanzania.

This blog will examine the legislative framework and facts underpinning the case, and the ECJ’s discussion and decision.

Legislative Framework

“Waste” is “any substance or object which the holder discards or intends or is required to discard,” according to Directive 2008/98/EC of 19 November 2008 on Waste (the Waste Framework Directive).[1]

The shipment of waste from the European Community to third countries is governed by Regulation (EC) No 1013/2006 of 14 June 2006 on Shipments of Waste[2] (the Waste Shipment Regulation). This Regulation requires prior written notification and consent for shipments of waste intended for disposal operations.[3] Any shipment of waste effected without notification to, or consent from, all competent concerned authorities is deemed an “illegal shipment”.[4]

Case Background

In 2014, Tronex BV received a conditional fine from the Rotterdam District Court for an alleged breach of the Waste Shipment Regulation. The alleged breach concerned plans by Tronex BV to ship a consignment of electrical and electronic appliances to a third party in Tanzania (which is considered a third country for the purposes of the Waste Shipment Regulation). The appliances — mostly electric kettles and steam irons — were mainly boxed in original packaging. However, some items were loose and unpackaged.

The appliances fell into the following three classes:

            Class 1: Defective appliances

            Class 2: Appliances returned by consumers under product guarantees

            Class 3: Appliances that were part of a discontinued range

Tronex BV had acquired the appliances in their current condition and in arranging shipment to a third party in Tanzania, had not provided prior written notification or obtained consent for the shipment under the Waste Shipment Regulation. Tronex BV appealed against the fine to the Hague Court of Appeal, which referred questions of law regarding the Waste Framework Directive and the Waste Shipment Regulation to the ECJ.

ECJ Consideration of “Waste”

The ECJ reformulated the Hague Court of Appeal’s questions. The ECJ therefore considered if the shipment of a consignment of appliances that were originally intended for retail sale, but were returned by the consumer or retailer, should be deemed a “shipment of waste” under the Waste Shipment Regulation and the Waste Framework Directive.

To answer that question, the ECJ considered the Waste Framework Directive’s definition of “waste”, noting that the classification of a substance or object as “waste” should be inferred from the holder’s actions and the meaning of the word “discard”.

The ECJ stated that “discard” must be interpreted through the lens of the Waste Framework Directive and its aims. The Waste Framework Directive aims to minimize the negative effects of the generation and management of waste on human health and the environment, striving to provide a high level of protection. The terms “waste” and “discard” must therefore be interpreted broadly.

The ECJ’s broad interpretation examined the following criteria:

Use

The ECJ considered whether the goods were of use to the holder. If the goods were of no use, they would constitute a burden that the holder would seek to discard, risking disposal in a manner likely to cause environmental harm (e.g., dumping or uncontrolled disposal). Such goods would qualify as “waste” under the Waste Framework Directive, and that “waste” should be disposed of “in such a way that human health is not endangered and without using processes or methods likely to harm the environment”.[5]

Reuse

The ECJ considered whether the goods would be reused without a prior processing operation. In general terms, if the possibility of reuse exists, and if there is a financial advantage to the holder in reusing the goods, the likelihood of reuse is high. “In such circumstances, the goods … must no longer be regarded as a burden which its holder seeks to ‘discard’, but as a genuine product”.[6]

ECJ Decision

The ECJ referred the reformulated question back to the Hague Court of Appeal, providing guidance on “waste” and “discard”.

The ECJ considered that the shipment would have been in breach of the Waste Shipment Regulation if, at the time the Dutch customs authorities discovered the appliances: (i) the appliances were already considered to be “waste”, and (ii) Tronex BV did not dispose of or recover the appliances.

An intention to discard may be inferred from the fact that the appliances were no longer fit for their original purpose and had been discarded by the original holders. However, the consignment contained three classes of appliance (outlined above), and the mere categorization of the appliances as a waste consignment did not mean that every consigned appliance met the definition of “waste”. The ECJ’s view of the relevant facts can be summarized as follows:

  • In order to prove that defective appliances (classes 1 and 2) are not “waste”, the holder must demonstrate that reuse is certain, and ensure that inspections are carried out and, if necessary, repairs (i.e. a recovery operation) undertaken.
  • The appliances returned by customers under product guarantees (class 2), were subject to a return transaction under a contract of sale. Although a reimbursed item should not be considered discarded, an intention to reuse could not be confirmed or excluded. However, if the defects rendered the appliances unusable, reuse would not be certain.
  • The appliances from the discontinued range (class 3) were still in their unopened original packaging and presumably still in good working order.
  • Without adequate packaging to protect the loose appliances in transit, the holder presumably intended to discard them.

The ECJ concluded that: (i) class 1 and 2 appliances — initially intended for retail sale but returned by the consumer or retailer — would be regarded as “waste” if the good working condition of the appliances had not been ascertained or if the appliances had not been protected for transit, and (ii) class 3 appliances — discontinued appliances in their unopened original packaging — would presumably be in working condition and would not therefore be regarded as “waste”.

Conclusion

The ECJ’s discussion and judgment confirms that the concepts of “waste” and “discard” must be interpreted broadly, and all the circumstances of the case in question must be taken into account.

If an inspection reveals that an item or appliance is capable of functional use, that item or appliance is unlikely to be classified as “waste”. However, if an inspection reveals defects that require repair before the item or appliance is able to function, that item or appliance is likely to constitute “waste,” since there is no guarantee that the holder will carry out the necessary repair.

Further, if a consignment of used items or appliances is not to be regarded as “waste”, the items or appliances must be adequately packaged to provide protection in transit.

The ECJ’s judgment in this case has provided helpful guidance to the classification of items in the context of transboundary shipment of waste.

Latham & Watkins will continue to monitor developments in this area.

This blog was prepared with the assistance of Martin Cassidy in the London office of Latham & Watkins.

 

[1] Directive 2008/98/EC of 19 November 2008 on Waste (Art.3(1)).

[2] Regulation (EC) No 1013/2006 of 14 June 2006 on Shipments of Waste (Art.1(2)(c)).

[3] Regulation (EC) No 1013/2006 of 14 June 2006 on Shipments of Waste (Art.3(1).

[4] Regulation (EC) No 1013/2006 of 14 June 2006 on Shipments of Waste (Art.2(35)(a) and (b)).

[5] Case C-624/17 para 22.

[6] Case C-624/17 para 23.