On 4th July 2019, the European Court of Justice handed down another ruling on whether particular articles were waste or products. This ruling will have resonance particularly in the consumer products sector. There have been several ECJ (and EU domestic courts’) judgments over the years on the question of whether an article or substance is waste. The root cause why so many cases arise on this subject is the rather tricky EU legal definition of waste coupled with inconsistent application of the definition.
Openbaar Ministerie v Tronex BV (Case C-624/17)
This ruling of the ECJ arose from an appeal against conviction in a Dutch criminal case. Tronex BV was convicted by the District Court in Rotterdam of breach of Dutch law containing prohibitions against transfrontier shipments of waste unless duly notified to the appropriate regulators and properly documented and consented etc. (the Dutch law being aligned with the EU Transfrontier Shipments of Wastes Regulation (EC) No. 1013/2006). The Dutch court at first instance found that in or around 10th February 2014 Tronex was planning to ship (in what appears to be a single container), a consignment of waste electrical equipment to a third party in Tanzania. Tronex had sold the consignment to its customer for €2,396.01. The Court held that this shipment would have been unlawful because it was to take place without notification to, and/or consent of, the appropriate regulators. Tronex was fined €5,000. Tronex appealed to the Dutch Court of Appeal and argued that the electrical items were products and not waste, and hence the waste laws did not apply. In the course of the appeal proceedings, the Dutch Court of Appeal sought assistance of the ECJ by referring questions to the ECJ relating to EU waste law and the distinction between waste and products.
Unfortunately neither the ruling of the ECJ, nor the prior related opinion of the Advocate General, contains the degree of factual background that would be most useful to persons interested in this area. This is a pity because judgments of this nature are extremely useful to manufacturers, retailers, wholesalers and the waste management sector in terms of processes, risk management and compliance relating to waste law. Nonetheless from what we can see in the ruling, and Advocate General’s opinion, Tronex operates a wholesale residual stock business and had accumulated, from several retailer, wholesaler and/or importer sources, various electrical appliances which it was intending to ship to its customer in Tanzania. The appliances consisted of electric kettles, steam irons, fans and shavers. In terms of the alliances it appears that:
- they had been returned by customers under a product guarantee,
- or were goods (maybe residual stock) which were redundant say due to a change in product range and could no longer be sold (normally),
- a number of the boxes in which appliances were packaged carried a notice stating there were defects,
- some of the appliances had no packaging whatsoever,
- glass in some of the glass kettles was damaged,
- Tronex’s was not intending to repair or recycle any of the appliances. It does not appear that Tronex carried out any inspection on the functionality of the appliances or any activities to prepare appliances for (re)use, and that no part of the shipment was shipment for repair.
Definition of waste
This is found at article 3(1) of the Waste Framework 2008/98/EC. It strongly divides opinion. Depending on one’s perspective, the definition is sometimes regarded as famous, or infamous. The definition is: “waste means any substance or object which the holder discards or intends or is required to discard”. As this is part of EU law, the definition must be interpreted purposively and in this regard recital (6) of the Directive is important. This recital states that “The first objective of any waste policy should be to minimise the negative effects of the generation and management of waste on human health and the environment…”.
This same definition applies to waste covered by the EU Waste Shipments Regulation (above) and the Waste Electrical and Electronic Equipment Directive 2012/19/EU (“WEEE Directive”).
It is for domestic courts to decide on the evidence whether the holder of a substance or article intends or intended to discard it, and hence whether it is waste. At one level this might appear quite simple, and very often it is. However it can be a difficult assessment particularly where articles may have a value. This was the case in this instance as the appliances had a value to Tronex but otherwise were a burden to retailers which would rather just get rid of them.
The ECJ provided guidance to the Dutch court. Most of this guidance is already very well known. However one particular part of the ruling (see below) is written in such a way that it may cause confusion, and maybe even consternation for regulators.
The ECJ did not expressly mention this but it is implicit in the judgment. Whether the holder intends to discard an article is not a question subjective to the holder. It is an objective question. The ECJ otherwise commented for instance:
- Articles can be waste even if they have a residual value (this has been a clear tenet of waste law for decades). The electrical appliances in question clearly had a residual value, as both Tronex and Tronex’s customer paid money for them.
- Appliances which are no longer fit for the purpose originally intended by the earlier holders (the retailers, wholesalers etc.), or cannot be used for the original purpose without repair, is a factor to consider and indicates a waste status. And here the Advocate General in her Opinion referred more expressly to Annex VI paragraphs 1(b) and 3 of the WEEE Directive, which broadly refers to these as features that might distinguish a waste electrical product from an electrical product.
- The packaging of the appliances can be taken into account. In this instance some appliances were in their original packaging and others had no packaging at all. Notably paragraphs 1(d) and 5 of Annex VI of the WEEE Directive are relevant here, as they provide that packaging (or absence of packaging) can be an indicator whether such appliance could be waste.
- The defective/non-defective nature of appliances, whether they can be sold without being repaired and whether their reuse is certain, are also factors.
- How the consignor and consignee decide to describe the consignment may be a factor but of course not determinatively so.
The ECJ ruled at follows:
“The shipment to a third country of a consignment of electrical and electronic appliances, such as those at issue in the main proceedings, which had been initially intended for retail sale but which were returned by the consumer or which, for various reasons, were sent back by the retailer to the supplier, is to be regarded as a “shipment of waste” within the meaning of Article 1(1) of the [Transfrontier Shipments of Waste Regulation], read in conjunction with Article 2(1) thereof and Article 3(1) of the [Waste Framework Directive], where that consignment contains appliances the good working condition of which has not been previously ascertained or which are not adequately protected from transport damage. Such goods which have become redundant in the Seller’s product range and which are in their unopened original packaging, on the other hand, must not, without indications to the contrary, be regarded as waste”.
The general commentary of the ECJ and the Advocate General (above) about the waste/non-waste analysis for particular types of appliances is welcome and straightforward.
However, the ruling reads as if one looks at the different types of appliances separately, but not also the consignment as a whole. Tronex’s consignment does not fit into the neat lines of the ECJ’s ruling. In real terms, Tronex’s consignment would not have been a homogenous consignment of either waste or non-waste appliances. Reading between the lines, Tronex’s consignment was mostly likely a mixed consignment of waste and non-waste appliances. Our experience is that in such circumstances, regulators will not see it as their duty to try and separate different fractions of a single consignment and regulate in respect only of the waste fraction. Instead they are more likely to regard the whole consignment as a consignment of waste (i.e. mix waste with non-waste and the resultant whole is likely to be waste). In addition to the above ruling, this is what the ECJ stated at paragraph 31 of its judgment: “… the mere fact that the seller and the buyer have categorised the sale as being that of a consignment and that that consignment contains appliances which must be regarded as waste does not mean that all the appliances contained in that consignment constitute waste”.
We shall have to see how the Dutch appeal court, and more widely the regulators and the waste management sector react to this ECJ ruling. Certainly for those countries which operate a duty of care in respect of waste, this aspect of the ECJ ruling may well cause confusion rather than provide clarity.
Central to this case appears to be the mixing of potential waste appliances with non-waste appliances in a single consignment. In terms of risk management, it would be prudent to separate the two. For consumer product organisations, particularly in parts of the world which operate a duty of care type approach to waste management, it would be prudent to determine if the organisations with whom they contract in terms of returned products, are on top of waste law and how returned/recalled products are going to be managed, to minimise the risk of non-compliance with waste law.