The EU waste regime requires transboundary shipments of waste for recovery or disposal to be notified to the competent authorities in advance. In cases of disposal, the authorities’ consent to shipment is also needed. The current rules are found in Regulation (EC) 1013/2006. The Regulation adopts the familiar definition of “waste” in Article 1(a) of the Waste Framework Directive 2006/12/EC: “any substance or object in the categories set out in
Annex I which the holder discards or intends or is required to discard”. In these joined cases, the CJEU had to consider how that definition applies to re-shipment of goods rejected by a buyer for non-compliance with the contractual specification.
Shell Nederland shipped a consignment of ultra light sulphur diesel (ULSD) to a Belgian buyer for sale at the pump. By mistake, the barge already contained a quantity of the fuel additive MTBE. The resulting mixture was too volatile for retail sale. The buyer exercised its contractual right to reject the consignment. So Shell shipped the fuel back to the Netherlands. Despite contamination, the fuel could be re-sold as specialised fuel, either in its existing state or after re-mixing. Shell in fact subsequently re-blended the mixture and sold it. The Dutch and Belgian authorities prosecuted Shell Nederlands and Belgian Shell for an unlawful transhipment of waste. Both criminal courts made references to the CJEU for guidance on the proper approach to deciding whether the re-shipped cargo was “waste”. At the relevant time, the former transhipment legislation – Regulation (EEC) 259/93 – applied. But this contained materially identical provisions to 1013/2006.
Advocate General Jääskinen rejected Shell’s argument that the 2006/12 definition should be applied in a way that avoided a disproportionate effect on trade. Equally, he accepted that the fact of rejection by the buyer under the law of contract could not be decisive of whether Shell, as holder, intended to or was required to “discard” it. The legislation had to be construed solely by reference to its environmental aims. It was highly significant that Annex I listed “off- specification products” including “materials... contaminated as a result of... mishap”, and that Annex IIB listed as a recovery operation “oil re-refining or other re-uses of oil”. ULSD and MTBE were themselves hazardous in the event of leakage or human contact. So the fact that the rejected mixture retained an economic value (cf. Palin Granit C-90/00  ECR I-3533) and could be re-sold was irrelevant: in substance it amounted to “waste”. It became “waste” from the moment of contamination and only ceased to be so when the recovery operation of re-blending was complete.
In its judgment of 12 December 2013 the CJEU disagreed. While an object’s falling within the Annex I list “constitutes initial evidence in favour of its classification as `waste’”, the focus in every case must be on whether the holder “intends to or is required to discard” it. In accordance with the precautionary principle, that phrase “cannot be interpreted restrictively”. However, the fact that the buyer might have “discarded” it by rejection could not be determinative of Shell’s position. Shell was not legally bound to dispose of the mixture, and the fact that it had commercial value and could be re-sold on the market – even in its contaminated state – pointed to a low risk of its disposal in a harmful manner. The additional fact that transactions in off-spec petroleum products were not generally regarded by the industry as a trade in waste was “additional evidence” to suggest that the consignment was not waste. In sum, “the fact that Shell took back the consignment... with the intention of blending it and placing it back on the market is of decisive importance”. However, this reasoning “should be confined to situations in which the reuse of the goods... is not a mere possibility but a certainty, which it is for the referring court to ascertain.”
The judgment will be welcomed by players in the petroleum industry. The Advocate-General’s opinion would have converted a normal and beneficial trade practice, not in itself harmful to the environment, into an extremely burdensome proposition. By focusing on the Annex I and Annex IIB lists, the A-G examined the situation through the wrong end of the telescope. The Court has issued a timely reminder that the decisive question in every case is whether the holder is required or intends to discard the material. Helpfully – it has recognised that commercial considerations such as economic value, and opinion within the trade, are relevant factors in answering that question. If the material is not waste within Article 1(a), the fact that it may be subjected to an operation that would be a recovery operation if it were waste cannot bring it within the definition.
But the re-use argument is not a get-out-of- jail-free card. The precautionary principle prompted the Court to emphasise that re-use of the material had to be a “certainty”. This factor enables Shell Nederland to be read consistently with earlier case-law such as Palin Granit, in which the CJEU decided that a by-product (leftover quarried stone) stored indefinitely until a use could be found for it should be categorised as waste. The difference is that in Shell Nederland, the CJEU treated the question of sufficient certainty as one of fact for the national court, introducing a large element of unpredictability to the scope and operation of the re-use argument. So the Court’s welcome, if modest, nod towards commercial reality may be at the cost of greater legal uncertainty.