LUXEMBOURG (CN) – The European Union’s highest court found Thursday that the United Kingdom and the Netherlands must repay the bloc for customs duties that their overseas territories failed to collect.
The Luxembourg-based European Court of Justice held that “by virtue of the special relations linking Anguilla to the United Kingdom that that member state is accountable to the European Union for the acts and omissions of the authorities of Anguilla.”
It ruled similarly in the case involving the Netherlands. That decision is only available in Dutch.
In both cases, the overseas country or territory improperly claimed that goods being exported to the EU met the requirements to be exempted from tariffs. The EU allows for the free movement of goods between its member states if the products originated in the country itself.
The case against the UK involves the eastern Caribbean island nation of Anguilla, a self-governing overseas territory, while the Dutch case involves two southern Caribbean islands, Aruba and Curaçao, which are constituent countries of the Netherlands. All three islands are former colony holdings.
Between 1999 and 2000, Anguilla imported aluminum to the country and then resold it, without tariffs, to Italy. Curaçao, between 1997 and 2000, wrongly claimed that it produced milk powder and rice that it sold to both the Netherlands and Germany. Aruba did the same between 2002 and 2003 with groats and meal, which are components of grains.
All of these schemes were uncovered by the European Commission’s Anti-Fraud Coordination Unit and the facts of those cases were not in dispute.
In 2010, the European Commission requested that the UK compensate the EU for the loss of tax revenue and asked the same of the Netherlands in 2012. In both cases, the Commission argued that because the UK and the Netherlands are EU member states, they are responsible for the bloc’s financial loss.
Both the UK and the Netherlands refused to pay and the European Commission brought both cases to the European Court of Justice in 2017.
The Netherlands and the UK joined each other’s cases in support and argued that Anguilla, Aruba, and Curaçao improperly exported the goods and therefore should be held responsible.
Aruba and Curaçao “had their own Constitution and had a high degree of autonomy” and were responsible for the issuing of export certificates, the Netherlands argued in its pleadings. The UK maintained a similar stance regarding Anguilla.
However, the 13-judge panel disagreed. They wrote that the Netherlands is “required to take all general or specific measures appropriate to ensure compliance with the Treaties or the acts of the institutions of obligations arising from the Union.” The judges used similar reasoning in the UK case.
Both countries were found to be obligated to “to compensate any loss of own resources, together with any default interest.” For the Netherlands, the EU claimed that it lost more than $20 million from Curaçao and $332,000 from Aruba. The European Commission did not provide a specific number with regards to Anguilla.
The judgment in both cases is final and cannot be appealed.