19 July 2019
Top European Court Expands WEEE Definition: Certain Defective Equipment May Be Included
In a decision dated 4 July 2019, the European Court of Justice (“ECJ”) ruled that the definition of waste electrical and electronic equipment (“WEEE”) under the WEEE Directive may include defective products “that require repair, such that [the equipment] cannot be used for its original purpose”. The WEEE Directive requires Member States to appropriately enforce the collection, recycling and waste management of computers, televisions, cell phones, refrigerators, and other types of electronic waste at the end of their life cycle. Hong Kong traders that deal in used electrical goods may be affected by this new ruling. The Court’s decision comes about pursuant to a case brought before it on WEEE shipments being made out of the EU. In consequence, the case may have ramifications for traders shipping WEEE to, within or outside the EU.
Shipments of WEEE intended for disposal are regulated by the EU’s Waste Shipment Regulation (“WSR”), which lays down certain controls for the export of waste, including WEEE. The ECJ ruling addressed a specific issue regarding the definition of WEEE within the WSR: whether defective electrical equipment that is allegedly intended for resale can be considered “waste” under the WSR. While the WSR distinguishes between waste and non-waste, the precise meaning of the term as it relates to defective electrical equipment is unclear. This distinction is important because shipments of waste are subject to a range of regulatory controls that do not ordinarily apply to shipments of non-waste.
In its decision, the ECJ, which is the EU’s highest court, made the definition clear in this regard. It ruled that defective (or malfunctioning) electrical products should be considered waste, unless “the reuse of the goods or substance in question is not a mere possibility but a certainty”. The ECJ focused on the continued usefulness of a defective product to its holder, stating that:
Particular attention must be paid to the fact that the [defective] object or substance in question is not or is no longer of any use to its holder, such that that object or substance constitutes a burden which he will seek to discard. If that is indeed the case, there is a risk that the holder will dispose of the object or substance in his possession in a way likely to cause harm to the environment, particularly by dumping it or disposing of it in an uncontrolled manner.
In so holding, the Court agreed with the European Commission’s written submissions, which noted that “the existence of doubts as to whether goods will still be able to be sold... for their original purpose is determinant as regards its classification as ‘waste’”.
This ruling broadens the definition of waste to include even more products that previously would not have been included under the WSR. It follows that EU exporters of used, defective, or malfunctioning electronics now face increased regulatory scrutiny. Accordingly, Hong Kong traders who import such European electronics may feel a contraction in supply stemming from the tighter regulations.
In the proceedings before the ECJ, a Dutch electronics wholesaler (Tronex) argued unsuccessfully that its exports to Tanzania were not waste, but rather defective goods meant for resale. Tronex’s shipment included kettles, irons, fans, and shavers that had been returned by customers because of defects. Some of the items had been previously removed from their original packaging and returned to the seller under a product guarantee. The company argued that these items should not be considered waste because the electrical equipment could be repaired.
However, the Court rejected this argument. It ruled that allegedly defective products can only be exempt from the WSR’s controls if “the holder of the products in question [can] demonstrate not only that they can be reused, but that their reuse is certain.” In order to satisfy this requirement, the holder would have to ensure that the inspections or repairs necessary for resale have been completed prior to shipment.
The Court also considered that electrical products’ packaging for shipment could help determine whether the products were actually intended for repair. Specifically, when a defective item is intended for repair, the Court found that it must have adequate packaging to prevent it from being damaged during transport. Otherwise, if the defective item does not have appropriate packaging, then the authorities must presume that the holder intended to discard the item. This makes sense. Were the item to be inappropriately packaged, it is likely that the item would become damaged during transport, thus making repair even more costly.
In a partial victory for Tronex, the Court ruled that items that were contained within their “unopened original packaging … must not, without indications to the contrary, be regarded as waste.” Some of the items in Tronex’s shipment were still in their original packaging. This aspect of the ruling somewhat narrows the scope of WEEE under the WSR. Accordingly, while the WSR’s controls would still apply, the goods in question may fall outside of the scope of the WSR’s stringent provisions. Ultimately, that determination is left to individual Member States. The Court ruled that national authorities are responsible for ascertaining the facts of the case and whether certain items constitute waste or not.
Hong Kong and Chinese mainland traders of used, defective, or malfunctioning electronics in Europe may like to consider this ruling if and when arrangements are being made for the shipment of such goods.