Push Energy Limited v The Commissioners for HMRC

Push Energy Limited (the “Appellant”) applied to the First-tier Tribunal (“FTT”) for a direction seeking disclosure from the European Commission (the “EC”) of a copy of an undertaking (the “Undertaking”) issued to the EC by the China Chamber of Commerce for Import and Export Machinery and Electrical Products (the “CCCME”). The FTT refused the request and the Appellant now appeals, with the permission of the FTT, against that decision (the “Decision”).

We are grateful to Counsel for their clear and helpful submissions, although we have not found it necessary to refer to each and every point which they raised.

The Appellant’s substantive appeal concerns Anti-dumping Duty (“ADD”) and Countervailing Duty (“CVD”). ADD is a type of customs duty imposed to protect against the “dumping” of certain goods into the EU at prices below normal value in order to prevent injury to EU industry. It is applied to specific goods originating or exported from named countries or supplied by named exporters. CVD applies in a similar fashion and is imposed on goods which have received government subsidies in the originating/exporting country.

Pursuant to Regulation (EU) No. 513/2013 the EC has imposed a provisional ADD on imports into the EU of certain crystalline photovoltaic modules (Footnote: ¹) originating in or consigned from China. A group of exporting producers in China gave a mandate to the CCCME to submit a price undertaking to the EC on their behalf. The EC accepted the undertaking which was in due course submitted (being the Undertaking), and amended Regulation 513/2013 by Regulation (EU) No. 748/2013, so as to provide an exemption from ADD for the producers who had given the undertaking, subject to the satisfaction of certain conditions. One of those conditions was that the relevant imports be accompanied by an Export Undertaking Certificate in the form set out in Annex III of Regulation 748/2013.

Pursuant to Implementing Regulation (EU) No. 128/2013 (the “ADD Regulation”), the EC imposed a definitive ADD on the imports in question. That Regulation also contained, in Article 3, an exemption by reference to the Undertaking, and again included as a condition to that exemption the requirement that such imports be accompanied by an Export Undertaking Certificate, this time in the form set out in Annex IV of Regulation 128/2013. Annex IV included the following:

Implementing Regulation (EU) No. 1239/2013 imposed a definitive CVD in materially identical terms.

The Appellant imported into the EU photovoltaic modules from one of the signatories to the Undertaking. The goods were accompanied by an Export Undertaking Certificate dated 16 October 2014, and were exported from China on 26 October 2014. They were imported into the UK on 5 December 2014 but were then bonded into a long-term storage facility and only released into free circulation on 29 January 2015. The Export Undertaking Certificate expired on 16 January 2015.

HMRC concluded that the relevant goods did not benefit from the exemption under the Regulations because they were released into free circulation after the Certificate had expired. HMRC raised a post-clearance duty demand note or C18 on this basis on 11 October for ADD and CVD on the goods of £1,115.540.04 (Footnote: ²) plus a penalty. Following a statutory review by HMRC which upheld the decisions, the Appellant appealed against the decisions to the FTT. The grounds of appeal are recorded at [10] of the Decision as follows:

The primary dispute between the parties in the substantive appeal therefore relates to the construction of the relevant Regulations, and in particular what needed to have taken place before the expiry of the three-month period of the Certificate in order for the goods to have qualified for exemption from ADD and CVD. The Appellant contends that the Undertaking is relevant to this issue of construction.

Following the EC’s refusal of an informal request in February 2019, on 13 March 2019 the Appellant applied to the EC for access to certain information relating to the Undertaking (the “Initial Access Application”). That application was made under Article 2 of Regulation (EC) No. 1049/2010 (the “Public Access Regulation”) which deals with public access to EC documents. The EC refused, stating that the information was by its nature confidential. However, the EC also stated as follows:

There followed further fruitless attempts by the Appellant to obtain from the EC information regarding the Undertaking. The Appellant then requested access to a copy of the Undertaking alone. In a lengthy response dated 9 October 2019 the EC set out its reasons for refusing this request. However, that response referred again to the possibility of a national court requesting access as follows:

References below to paragraphs in the form [x] are, unless stated otherwise, to paragraphs of the Decision.

The Appellant applied to the FTT for a direction seeking disclosure from the EC of a copy of the Undertaking.

HMRC’s position was recorded at [44]:

The FTT first considered various relevant authorities, beginning with Zwartveld and Others EUECJ C-2/881 [1990] ECR I-3365 (“Zwartveld”). Those authorities were the decisions of the CJEU (Footnote: ³) in First NV et Franex NV [2002] EUECJ C-275/00 (“First NV”) and Eurobolt BV [2019] EUECJ C-644/17 (“Eurobolt”) and of the VAT and Duties Tribunal in S&S Services Ltd v Customs & Excise Comrs [2003] VATD 4571 (“S&S”).

The FTT’s discussion and conclusions can be summarised as follows:

The Appellant appeals on three grounds:

Before we turn to these grounds of appeal, it is convenient to consider three preliminary issues, namely the nature of the application before the FTT, territoriality, and the threshold for a successful challenge by the Appellant to the Decision.

The application to the FTT was made under Rule 5(3)(d) of the FTT Rules. The parties differed in this appeal as to which of the FTT Rules conferred the necessary jurisdiction to make the request of the EC.

Rule 5 contains the following relevant powers:

Rule 16 contains the following powers:

We consider it clear that the FTT has jurisdiction under one or both of Rules 5 and 16 to make the request of the EU applied for by the Appellant. We do not consider that much turns on which of the general or specific powers is in point, although, as we discuss below, specific practice guidance exists in relation to territoriality in respect of Rule 16.

A separate question is whether the FTT was correct in concluding that the application was “not strictly” being made under Rule 5(3)(d) at all, so that different principles applied in determining it. We discuss this below.

In this appeal, though not before the FTT, HMRC raised as a problem for the Appellant’s application the fact that the FTT would likely lack power under Rule 5(3)(d) to direct the EC to disclose the Undertaking, because the EC is a non-party based in a territory outside the UK.

In relation to Rule 16 of the FTT Rules, there is a Practice Statement issued on 15 June 2022 by the Chamber President which gives guidance on the practice to be adopted by the FTT in relation to the issue of witness summonses and orders to produce documents. The guidance contains the following statement under the heading “Territorial limitation”:

Although this guidance is contained under the section headed “Application for a witness summons”, the guidance makes clear that the Practice Statement is generally to apply equally to orders for the production of documents (Footnote: ⁴).

The Practice Statement relates to Rule 16, but there would seem no good reason not to regard it as guidance also applying in relation to orders for the production of documents under Rule 5.

In any event, in practice we do not foresee this issue as a bar to the Appellant’s application, were the FTT to accede to it. Any request by the FTT could be made to the EC’s representative in London. This was the course followed by the tribunal in S&S, in exercise of a power under what was (broadly) a predecessor to Rule 16, delivering a witness summons to produce documents to the Head of Representation of the EC in the UK. The EC in Brussels responded, treating the application as one made under the Zwartveld principle. We see no reason why that procedure could not be followed if the application in this case was accepted by the FTT, with the request presumably being made of what is now (following the UK’s withdrawal) the Delegation of the EU to the UK.

The FTT’s decision was made in exercise of its case management powers. It is well established that this Tribunal will be slow to interfere with the proper exercise by the FTT of its discretion in case management decisions. The position was summarised by Sales J, as he then was, in HMRC v Ingenious Games LLP [2014] UKUT 0062 (TCC) (“Ingenious Games”), at [56]:

Having considered certain of the relevant authorities, the FTT stated at [52] as follows:

The FTT’s reasoning for its conclusion that a request may only be made in relation to a challenge to the validity of an EU act is not articulated. It is evidently based on its conclusion at [50] that “[T]he line of cases starting with Zwartveld establishes that the Tribunal is entitled to request documents and information where those documents are “essential in order to dispel all doubts which it may have as regards the validity of the EU act concerned” ”. This indicates strongly that the conclusion is based on the use of that precise wording at paragraph 30 of Eurobolt.

We consider that this conclusion was an error of law. It so happened that Eurobolt was a decision which related to a challenge to the validity of an EU act. However, although the passage in that decision on which the FTT appears to have relied was expressed in general terms, it was not laying down for the first time a restriction on the application of the Zwartveld principle. Such a significant development of that long-standing doctrine, not found or alluded to in any of the relevant CJEU authorities in the thirty years preceding Eurobolt (or since), would have required some discussion and an explicit finding by the Court to that effect.

We intend no disrespect to Mr Fell when we observe that his defence of the FTT’s conclusion on this issue was somewhat less than whole-hearted. He pointed out that the FTT only said that the scope of a Zwartveld request would “appear” to be limited in this way, and argued that this was not essential to the FTT’s reasoning. However, it was expressed by the FTT in terms which show that it was an additional reason for its decision to refuse the application, and there is no indication in the Decision that it was not an operative reason for that conclusion. It may not have been, but that is speculation.

We conclude that Ground 1 succeeds, and the FTT erred in law by misdirecting itself as to the law in this conclusion. We discuss below what this means for the disposition of the appeal.

As we have described, the FTT determined that in considering the application, the normal rules governing disclosure were not applicable, so that (in particular) it was not enough for the Appellant to satisfy the FTT that the Undertaking was relevant. Rather, it was necessary to pass a higher hurdle, namely that the Undertaking was “essential” to the FTT’s determination of the substantive appeal. The FTT decided that this more stringent test was not met, and this was a reason for refusing the application.

In this context, the FTT explained what it understood by the “essential” requirement, at [50]:

The FTT emphasised the test it was applying at [55]:

HMRC say that the FTT was right to have reached this conclusion and applied this test, on the basis of the relevant CJEU case law, particularly Eurobolt. The Appellant says that the FTT was wrong and the case law does not support this view.

Mr Fell submitted that the CJEU authorities show that in applying the Zwartveld practice, it is necessary to consider and evaluate separately the positions of the national court making the request and the EC. He said that it is only the decisions in Eurobolt and First NV which address the position of the national court, and these both support the “essential” threshold. The other authorities, said Mr Fell, focus on the position of the EC in receipt of a request, and are therefore of no material assistance in relation to the test to be applied by the national court making the request. In particular, he argued, the two Zwartveld decisions offer no guidance as to the threshold to be applied by the national court.

In relation to First NV, Mr Fell relied on the use of the word “needs”, which he said was the same test as essentiality, at paragraph 49 of the decision (emphasis added to original):

In relation to Eurobolt, Mr Fell relied on passages in both the Opinion of Advocate General Hogan and the decision of the CJEU. He referred to the following passage from the Advocate General’s Opinion, at paragraph 35:

In the Court’s decision, he relied on the following passages:

The case law of the CJEU makes it clear that the Zwartveld practice results from the interest of the EC in assisting a national court to reach a proper and compliant determination of matters of EU law before the national court. That is, of course, entirely consistent with the principle of sincere co-operation. In Zwartveld itself, the Court described the principle in the following terms:

Confining the principle to a situation where the document or information is essential to the national court’s determination would be a significant limitation. As Mr Elliott pointed out, it could be extremely difficult in practice for a national court to determine with any certainty whether the information sought would be decisive in the sense that it could not decide the case without it. That may well be apparent only when and if the information was available, and in light of the court’s eventual conclusion.

We do not accept Mr Fell’s submissions. The authorities as a whole, considered against the purpose of the practice as first articulated in Zwartveld, do not indicate that the CJEU has approached that practice as involving two distinct positions or stages, namely those applicable to the national court and the EC. That is an over-complication or at least a restatement of the principle which is nowhere set out in those authorities. So, we do not accept Mr Fell’s basic proposition that the various Zwartveld authorities which do not mention a test of essentiality can simply be ignored because they are dealing with the position of the EC as recipient of a request. In any event, we do not consider that Eurobolt, which is the foundation stone for HMRC’s position, supports a generally applicable test of essentiality.

We begin by considering the most relevant authorities other than those relied on by HMRC. In Zwartveld itself, although the request from the authorities in the Netherlands did state that they considered the documents sought to be “essential” to their investigation, there is no mention or indication in the CJEU’s decisions (Footnote: ⁵) of any requirement that the document or information sought from the EC must be essential to the national court’s determination of the relevant EU law issue. In Stergios Delimitis v Henninger Brau AG (Case C-234/89), the Court described Zwartveld as permitting the national court to request information from the EC “where the concrete application of [the relevant EU legislation] raises particular difficulties” (Footnote: ⁶). In SFEI and others v La Poste and others (Case C-39/94), the Court described the Zwartveld practice as follows at paragraph 50 (emphasis added to original):

In Postbank NV v Commission of the European Communities [1997] 4 CMLR 33, the Court said that the national court “will be able to use [the requested documents] when deciding whether or not there has been any infringement of [the relevant Articles]” (Footnote: ⁷).

These authorities (Footnote: ⁸) do describe the nature of the Zwartveld process from the perspective of a national court, although that may not have been among the questions referred to the Court, and in doing so they do not do so by reference to a threshold of essentiality.

HMRC relied on the reference in the passage we set out above from First NV to a situation where a national court “needs” the requested information. We consider that in context that language is simply referring to a national court’s decision that it requires the requested information from the EC, rather than in passing laying down a threshold for that decision. In any event, we do not accept that the word “needs” in this context equates to “essential”. It is quite possible for a court to “need” material to assist in the interpretation of a relevant provision without that material being “essential”.

HMRC support the FTT’s decision to refuse the application partly because the Undertaking was not essential, in the sense that the FTT could not decide the appeal without it. The FTT’s decision in this respect appears to rest on the passages we have set out from Eurobolt. However, we consider that that ignores the context in which those comments were made, and was a misdirection.

The issue which was referred in Eurobolt was a challenge to the validity of an EU regulation concerning anti-dumping duty. In particular, the CJEU was asked to determine the approach which a national court should take in considering whether to make a reference to the Court for a preliminary ruling regarding validity. The CJEU held that:

We consider that it is the latter point which was being made at paragraphs 30 and 32 of the Court’s decision in Eurobolt (set out above at [42] of this decision) and at paragraph 35 of the Advocate General’s Opinion (set out at [41] of this decision). In other words, Eurobolt suggests that a test of essentiality applies when a national court is determining whether information or documents are needed in order to decide whether to make a reference for a preliminary ruling as to the validity of EU legislation. Contrary to the FTT’s assumption, it does not suggest that such a test applies to a Zwartveld request made outside that situation.

The conclusion that Eurobolt was not for the first time imposing a general restriction on the long-standing Zwartveld principle is shown by paragraph 31 of the decision, which in describing the general Zwartveld principle refers to the duty on the EC to “provide [the national authorities] with the evidence and documents which have been asked of them in the exercise of their powers”.

For these reasons, we consider that the FTT erred in law and that Ground 2 succeeds. We consider below what his means for the disposition of the appeal.

By this ground, the Appellant asserts that the FTT erred in law by acting in a procedurally unfair manner in giving significant weight to what it judged to be the likely refusal of the EC if the FTT were to have granted the application and requested the Undertaking from the EC.

It is clear from the Decision that the FTT did afford this factor material weight.

However, we agree with Mr Fell that, applying the overriding objective, it cannot fairly be said that this was clearly an irrelevant factor in the FTT’s consideration of the application. In our view, the FTT afforded it too much weight, but we are mindful of the approach which we should take to an appeal against a case management decision of the FTT, as set out above. In BPP Holdings Ltd & Ors v HMRC [2017] UKSC 55, at [33] Lord Neuberger quoted with approval the passage we have cited above from Walbrook Trustee, and added:

So, we should not and would not disturb the FTT’s reasoning in this respect on the ground that we consider that it afforded the perceived position of the EC too much weight in reaching its decision. Weight was a matter for the FTT.

However, we do consider that the FTT made an Edwards v Bairstow (Footnote: ⁹) error in relation to the relevance of the likely EC position to its decision. Such an error can occur where the FTT makes a finding where the evidence contradicted the finding or where the FTT failed to take into account a relevant factor in reaching a finding.

That is because, having decided that the likely reaction of the EC was a material factor in deciding the application, the FTT took an irrational decision by taking into account the EC’s previous refusals to deliver the Undertaking to the Appellant while failing to take into account at all the fact that the EC had twice reminded the Appellant of the alternative route of a Zwartveld request. Put another way, the EC’s prior position looked at in the round was that it had steadfastly refused to deliver the requested information or Undertaking to the Appellant, but had explicitly pointed out the alternative route of production to the national court under the Zwartveld principle. If the EC’s position was to be given weight—and the FTT decided that it was—then its references to that alternative route could not rationally be entirely ignored in reaching a decision.

We therefore conclude that the FTT erred in law by failing to take into account both aspects of the EC’s previous responses in predicting and taking into account their likely response to a request from the FTT for the Undertaking.

We have concluded that the FTT erred in law in reaching its decision. Therefore, we may, but need not, set aside the decision: section 12(2)(a) Tribunals, Courts and Enforcement Act 2007 (“TCEA”). We are satisfied that the errors were material, taking into account that this was a case management decision, so we set the decision aside.

Having set the decision aside, we may either remit it to the FTT with directions for its reconsideration, or re-make it: section 12(2)(b) TCEA. We consider that the appropriate course is for the decision to be remitted with directions. It is the FTT which should make any request for a copy of the Undertaking from the EC, since it is the FTT, not this Tribunal, which still has to hear and case manage the substantive appeal. We understood both parties to agree with this course, should we decide to set the decision aside.

In giving directions to the FTT, we consider that we should decide whether to direct the FTT which hears the remitted case to grant the application which was before it. We have decided that it should be so directed, for the following reasons, which reflect the findings we have made above in respect of the Appellant’s grounds of appeal:

The impact on the Zwartveld practice of the UK’s withdrawal from the EU was not discussed before the FTT, although the FTT did consider that “enforcing a request, if refused by the Commission, is via the CJEU, an action which, post Brexit, [is] likely to be fraught with difficulty if permitted at all” (Footnote: ¹¹). We consider that, whether or not that comment is correct, speculation as to steps which might or might not follow if the EC refused a request is again not material to the decision whether to grant the application in the first place. As to the current status of the Zwartveld practice following withdrawal from the EU, we agree with Counsel that in this decision we need not resolve that question, given that the parties were in broad agreement that although the position was complicated there are grounds to consider that the practice survives the UK’s withdrawal. We observe that given that the purpose of the principle of sincere co-operation in this context is that the EC has an interest in helping national courts to reach an informed decision about EU legislation, since the substantive appeal relates to matters prior to withdrawal and to the interpretation of EU law, there are grounds for optimism that the principle should apply in this case. Regardless, speculation as to whether the EC might take a point in this respect is ultimately not fruitful; if the FTT makes the application, the EC’s position will become apparent in due course.

We therefore remit this decision to the FTT. We see no reason why the same tribunal judge should not decide the remitted case. The decision is remitted on terms that the application should be granted, with the FTT hearing submissions from both parties as to the terms of the request to be made of the EC, including as to whether it should be delivered to the EC’s Delegation to the UK.