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Portugal / Constitutional Court / 422/2020

Company; Institute for the Financing of Agriculture; Fishing Bank

Deciding Body type:
National Court/Tribunal
Deciding Body:
Constitutional Court
Decision date:
Key facts of the case:
A wine exporter filed an appeal with the Constitutional Court arguing the extinction of a banking guarantee provided in the context of the financing of a wine exporting operation to Angola by the Institute for the Financing of Agriculture and Fishing (IFAP). The granting of export refunds by IFAP was based on EU law, namely Article 19 (1) (a) of Regulation (EEC) 2220/85, which made its allocation dependant on the fulfilment of certain requirements. The export refunds consist of the attribution of a value that covers the difference (for less) between the price of the products exported to third countries and the price of those same products in the common market, with the goal of encouraging the export of agricultural products from the internal market outside of EU space. The provision of a guarantee is a requirement of the anticipation of the refund amount to the beneficiary. Since the granting of refunds was based on EU law, before the appeal to the Constitutional Court, two requests for a preliminary ruling were sent to the CJEU regarding the interpretation of Article 19 (1) (a) of Regulation (EEC) 2220/85. According to the CJEU, Article 19 (1) (a) of Regulation (EEC) 2220/85 must be interpreted as meaning that the guarantee furnished by an exporter to ensure the repayment of the advance received by way of export refund must not be considered to be extinguished if the other conditions for the grant of the refund are not satisfied (Case C-128/13, ECLI:EU:C:2014:2432).
Key legal question raised by the Court:
The exporting company filed an appeal with the Constitutional Court, arguing the non-conformity of the abovementioned EU rule with the constitutional principle of equality (Article 13 of the Constitution). In particular, the company considered that the rule in question, as well as the interpretation given to it by the CJEU, discriminated against exporters who had provided a guarantee in comparison with the others that did not.
Outcome of the case:
The Constitutional Court rejected the appeal. Under Article 8 (4) of the Constitution, that establishes the principle of direct effect of EU law and the principle of primacy, the Constitutional Court can only consider and refuse the application of an EU rule, if such rule is incompatible with a fundamental principle of the democratic state based on the rule of law that does not have an equal parametric value to that recognised in the Constitution. As such, whenever the assessment of an EU rule is at stake in light of a fundamental principle of the democratic state based on the rule of law that has an equal parametric value to that recognised in the Constitution, the Constitutional Court does not appreciate its compatibility with the Constitution.