The European Court of Justice delivered judgment in favour of the EU Commission on 1 October 1998. Ireland had appealed the EU Commission's decision to disallow £50,243,111, or 10 per cent and 5 per cent of intervention beef expenditure in 1990 and 1991 in respect of the control system for intervention beef, and £18,475,350 or 2 per cent of intervention beef expenditure in 1991 and 1992 in respect of tendering procedures for beef purchased into intervention. The court upheld the Commission position as regards weaknesses in the control system for beef intervention in 1990 and 1991 and ruled that the Commission had taken account of measures by Ireland to remedy these when it reduced the 1991 penalty from 10 to 5 per cent. As regards tendering, the court ruled that there had been an infringement of article 9(2) of regulation No. 859/89 and that member states have a general obligation to take the measures necessary to satisfy themselves that the transactions financed by the EAGGF are executed correctly even if the specific Community Act does not expressly provide for the adoption of particular supervisory measures. The court also rejected similar appeals lodged by Denmark, France, Italy and the United Kingdom.
In budgetary terms, the judgment has no immediate effect in that the transfer of the amount of disallowance to the EU budget took place when the Commission took the clearance decision in 1996. The disallowance arose during a period when it was necessary to have consideration of intervention support because of a market collapse in the beef sector and the Department's control systems were put under enormous pressure by annual intake levels of more than a quarter of a million tonnes or 750,000 animals. Since that period control systems have been considerably improved with the assistance partly of increased resources, and a subsequent EU Commission inquiry into intervention beef controls at slaughter plants and cold stores endorsed these improvements.
While it is disappointing that the court has confirmed the disallowance, the judgment emphasises the need for continuous vigilant controls to ensure sound management of annual EAGGF payments of £1.3 billion in Ireland. Ireland's performances in recent years compares favourably with other member states but the aim must be to have control systems in place which eliminate disallowances entirely.