Agricultural disputes update

Two recent cases have been summarised below. The first deals with the issue as to whether claims for additional entitlement can be brought under the Single Payment Scheme. The second relates to the extent to which parties can agree only to arbitrate their disputes and oust the court’s decision in doing so.

Claim for subsidy payment on the basis of re-allocation of entitlement

1) In this case, the Applicant sought to overturn a decision by the Rural Payments Agency (RPA) refusing her right to a subsidy payment for 2012 under the Single Payment Scheme.

The Applicant owned farmland in the New Forest on which she carried on agricultural activities. She also enjoyed certain rights of common in relation to common land in the New Forest which gave her a right to graze animals there. Her complaint was that, while the RPA granted her claim to subsidy payments in relation to her farmland, it refused an additional claim she made for payment of subsidy in relation to her grazing rights.

The Applicant had not grazed any animals in 2004, which had been the date when the policy for allocation of the New Forest commons had been agreed. The RPA, therefore, stated that the Applicant did not establish any entitlement, and as such, she should not receive any payment even though she was now exercising her grazing rights. If she wanted to claim subsidy payments in relation to her grazing rights, she would need to buy her entitlement.

The RPA succeeded. The Court held that under EU legislation the initial allocation of entitlement hectares for farmland and rights of common was a once-and-for-all exercise; once farms had been allocated their entitlement hectares at the beginning of the scheme, the legislation did not allow re-distribution of those entitlement hectares. The ability to allow for changes in actual use of entitlement hectares for the purpose of claiming a subsidy was “a market mechanism” where farmers could buy and sell entitlement hectares.

Agreed disputes provisions found to prevail

2)The Court of Appeal recently considered the disputes provisions in a contract to supply seed potatoes. The Court held that where there was a clause which stipulated that disputes had to be referred to arbitration, this particular clause had the effect of ousting the Court’s jurisdiction.

The contract contained a condition which provided that any dispute arising out of the contract would be settled by arbitration according to the association’s arbitrations rules and had to be requested within 12 months of receipt by one party of a notice of the dispute. The contract then further provided that “after the expiry of the said 12 month’s period prosecution of the dispute shall be Time Barred”.

There was a dispute relating to an allegedly contaminated supply of seed potato, but the dispute was not referred to arbitration within the 12 month period. Instead, one party to the dispute commenced court proceedings, and they did this after the 12 month period.

It was successfully argued that the dispute was Time Barred as no arbitration had been instigated within the 12 month time limit. The proceedings were struck out and the aggrieved party lost their ability to pursue their dispute.

1) R. (on the application of Bickford-Smith) v. The Secretary of State for the Environment, Food and Rural Affairs [2013] EWHC 3371
2) Wholecrop Marketing Ltd v. Wolds Produce Ltd [2013] EWHC 2079 (Ch)

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