BRITISH SUGAR PLC (R on the application of) v SECRETARY OF STATE FOR INTERNATIONAL TRADE

An autonomous tariff quota is not selective State aid merely because, in practice, one undertaking is likely to obtain most of its benefit. Selectivity must be assessed by reference to the ordinary or normal regime, comparable operators and any justification inherent in the structure of that regime. The same approach applies to a tariff measure alleged to involve revenue foregone under the Trade and Cooperation Agreement.

A tariff measure may fall within Article 10 of the Northern Ireland Protocol, but the relevant effect on Northern Ireland–EU trade must be genuine and direct, rather than hypothetical, presumed or barely discernible. On the facts, the quota was neither selective nor shown to have the required effect on trade.

British Sugar sought judicial review of the recommendation to introduce a 260,000 metric tonne autonomous tariff quota for raw cane sugar imported for refining. The quota was implemented under Part 1 of the Taxation (Cross-border) Trade Act 2018 and the Customs (Tariff Quotas) (EU Exit) Regulations 2020.

British Sugar alleged that the quota unlawfully benefited T&L Sugars and contravened Article 10 of the Northern Ireland Protocol and the subsidy-control provisions of the Trade and Cooperation Agreement. The central issues were whether the quota was selective State aid or a specific subsidy, and whether it affected trade between Northern Ireland and the European Union in the required manner.

1. Disposition. The judicial review challenge failed. The quota was not unlawful State aid under Article 10 of the Northern Ireland Protocol and was not a subsidy under Article 363 of the Trade and Cooperation Agreement.
2. State aid and selectivity. The court adopted the three-stage approach in Commission v World Duty Free Group: identify the ordinary or normal regime; determine whether the measure differentiates between operators in comparable factual and legal situations; and consider whether any differentiation is justified by the nature or general structure of the regime. The quota was not de jure selective. Its terms were available to any importer of raw cane sugar for refining. The fact that T&L was expected to obtain almost all the benefit because it was the only established cane refiner did not make the measure selective.
3. The relevant normal regime could not be artificially defined as the £28 per 100kg tariff. The wider tariff arrangements contained several lawful departures from the standard rate, and British Sugar did not pay that tariff on its domestic beet production. The quota therefore did not confer more favourable treatment on T&L than on British Sugar or other comparable operators.
4. Article 10. A UK tariff measure is capable of falling within Article 10 where it otherwise satisfies the EU State aid rules. The court rejected an interpretation excluding tariffs from Article 10, while recognising the United Kingdom’s independent trade policy. The EU unilateral declaration required a genuine and direct link to Northern Ireland and prevented reliance on merely hypothetical or presumed effects.
5. The evidence showed no trade in raw cane sugar between Northern Ireland and the EU, no production of refined sugar in Northern Ireland, and only limited indirect sales of T&L sugar into Northern Ireland. The alleged displacement of EU refined sugar was unproven and insufficiently direct. Article 10 was therefore not engaged.
6. Trade and Cooperation Agreement. Tariff exemptions can, in principle, involve revenue foregone. However, the quota did not involve revenue otherwise due on the proper benchmark. It applied equally to anyone importing raw cane sugar for refining and did not treat T&L more advantageously than comparable operators. It was therefore not specific under Article 363(1)(b)(iii). The court accepted that, if the other requirements had been met, the quota could affect trade in refined sugar between the United Kingdom and the European Union.

First-instance judicial review in the Administrative Court. The judgment records no prior appellate decision in the same proceedings.