When is a car “waste”? | In Principle

The classification of damaged and post-accident vehicles imported to Poland as waste still raises many doubts. Recent judgments of administrative courts confirm a strict approach to this issue in judicial practice, posing significant risk for importers of such cars.

International shipments of waste

Shipments of waste between European Union member states as well as imports into and exports out of the European Union are subject to the Waste Shipment Regulation ((EC) 1013/2006). In Poland, the regulation is supplemented by the International Shipments of Waste Act of 29 June 2007, specifying the competence of the authorities and the financial penalties for breaching the obligations set out in the regulation and the act. The following instruments of international law are also relevant:

• Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal
• OECD Council Decision C (2001)107/Final concerning the control of transboundary movements of wastes destined for recovery operations, amending OECD Decision C(92)39/Final.

Consequences of importing damaged and post-accident vehicles

In practice, it is particularly problematic to assess whether and in what situations second-hand cars imported to Poland, including post-accident and damaged vehicles, constitute waste and are subject to the above regulations. This results in numerous disputes between the importers of such vehicles and environmental inspectors determining that a car imported from abroad is waste. Those appealing against the decisions of the inspection authorities and subsequently lodging complaints with the administrative courts argue that such vehicles do not meet the definition of waste, as after repair they have passed technical inspection and have been registered. But if an imported vehicle is considered waste, it can be concluded that an illegal international shipment of waste has taken place. Such vehicles are classified under the European Waste Catalogue under EWC code 16 01 04* (end-of-life vehicles).

If an imported vehicle constitutes waste, it is subject to the procedures under the aforementioned provisions, and violations are severely sanctioned. Under Art. 24(3) of the Waste Shipment Regulation, if responsibility for an illegal shipment of waste lies with the consignee, then the competent authority of destination (in Poland, the Chief Inspector of Environmental Protection) should ensure that the illegally shipped waste is recovered or disposed of in an environmentally sound manner. In principle, this obligation lies on the consignee (with the exception of a situation where execution by the consignee is impracticable). The consignee of illegally imported waste is subject to a fine imposed by the province inspector of environmental protection, currently up to PLN 500,000.

Doubts about the classification of damaged vehicles have arisen for many years. To minimise discrepancies in interpretation, in Poland and the EU guidelines have been issued to facilitate correct vehicle assessment. One such document is the methodological guidelines of the Chief Inspector of Environmental Protection on recognition of vehicles as waste in transboundary shipments of waste (from 3 April 2008, with revisions of 15 July 2008 and 21 March 2013), serving to ensure uniform interpretation of provisions on transboundary shipments of waste. According to the guidance, a cross-border shipped vehicle meets the definition of waste if:

• The previous owner disposed of a damaged vehicle with a vehicle ownership document showing that it is unrepairable or was written off as a total loss (“certificate of destruction,” “damage equal to value,” “for parts only,” “non-rebuildable,” “non-repairable,” etc)
• The previous owner disposed of a damaged vehicle with a vehicle document other than in the preceding point and the damaged vehicle requires repairs beyond the minor repairs specified in Correspondents’ Guidelines No. 9 on shipment of waste vehicles
• It appears from the party’s statement or documents (invoice) that the party purchased the vehicle for parts, or
• A part of the vehicle or individual parts not suitable for direct installation in vehicles, and parts removed from vehicles the reuse of which threatens the safety of road traffic or has a negative impact on the environment, are transported.

In addition to the methodological guidance mentioned above, Correspondents’ Guidelines No. 9, which, like the guidance mentioned above, is not legally binding, also facilitates the desired interpretation of Regulation 1013/2006 in order to correctly distinguish between used vehicles and waste vehicles.

However, the application of these provisions is still not uniform. The lack of consistent application of the provisions was pointed out by Poland’s Supreme Audit Office, which found widely diverging opinions in similar cases. Sometimes vehicles that could be put on the road after the required repairs were held to be waste. Conversely, cars whose documentation indicated they should be dismantled or used for spare parts were held not to be waste.

Recent decisions of the Supreme Administrative Court provide some clarification, but there is a tendency to interpret the notion of “waste” quite broadly. This usually results in upholding the findings of environmental inspectors in disputes with vehicle importers.

Criteria for classifying a car as waste

The key issue for application of the relevant regulations is the classification of an object as waste. It is only if a vehicle is deemed to be waste within the meaning of these provisions that the Chief Inspector of Environmental Protection may conclude that an illegal shipment of waste took place, making it possible to apply the procedure provided for in Art. 24(3) of Regulation 1013/2006.

Here, the case law is essentially uniform. Following the views of the Court of Justice of the European Union, the administrative courts in Poland have held that the assessment of whether waste is involved in a given situation must be made in light of all the circumstances, taking into account the purpose and effectiveness of EU waste legislation. In a recent ruling, the Court of Justice indicated that particular attention should be paid to the fact that the object or substance in question is of no use or no longer useful to its possessor, making the object or substance a burden which the owner intends to dispose of (C-629/19, Sappi Austria Produktions). When this situation arises, there is a risk that the owner will dispose of the object or substance in question in a way that may harm the environment. Therefore, the object or substance should be recovered or neutralised without endangering human health and without using processes or methods that could harm the environment. This is what the waste regulations are for.

In this context, it is particularly important to note that the concept of waste does not exclude substances and objects that can be economically reused. In its judgment of 1 December 2020 (case no. II OSK 1313/18), the Supreme Administrative Court stressed that the supervision and management system established by the Waste Directive is intended to cover all objects and substances disposed of by their owners, even if they have commercial value and are collected for commercial reasons for the purpose of recycling, regeneration or reuse.

Under Art. 3(1)(6) of the Waste Act of 14 December 2012, “waste” means any substance or object which the owner disposes of, intends to dispose of, or is obliged to dispose of. According to the administrative courts and the legal literature, this concept of “disposal” should be understood broadly. Whether an item is waste is not determined by the commercial value of the item and whether it can be used.

The decisive factor for recognition of an item as waste is its condition at the time of import into Poland and the intention of its previous owner. In simple terms, it can even be said that it is the previous owner who in fact “decides” whether a vehicle is considered useless (e.g. judgment of the Province Administrative Court in Warsaw of 25 October 2016, case no. IV SA/Wa 1413/16, and further judgment of the Supreme Administrative Court of 5 March 2019, case no. II OSK 961/17). In the latter judgment, the Supreme Administrative Court stressed that disposal cannot be understood merely as loss of control over an object, but rather as a fundamental change in the method of its exploitation, different from its basic purpose, for which the object has ceased to be suitable (useful), which change may also cause serious negative consequences for a person or the environment.

The circumstances to be taken into account are the issues referred to in the aforementioned methodological notes, correspondents’ guidelines, etc. Thus, for example, it is relevant whether the damage to the vehicle requires more than “minor repairs.” The explanations given to the customs office showing that the importer described the vehicle as a “wreck,” and remarks made in foreign vehicle documents (e.g. “do not issue a registration document”), have been held to be relevant. What matters is whether the documentation shows that a post-accident vehicle is in a condition in which it cannot be driven on the road. As a rule, these circumstances are assessed at the time of import into Poland. The case law shows that as a general rule, it is not decisive whether a vehicle is repairable or whether the excise duty has been paid. Documentary evidence is crucial to establish the intent of the previous owner of the vehicle (Supreme Administrative Court judgment of 16 April 2014, case no. II OSK 2793/12).

What matters is the state upon introduction to Poland and the intent of the previous owner

These grounds are best summarised by the judgment of the Province Administrative Court in Warsaw of 25 October 2016, cited above, in which the court held that the decisive factor for considering a given object as waste is its condition at the time of its import into the territory of Poland and the intent of its previous owner. Thus, an object becomes waste at the time of its “disposal” by its previous owner, as it is the previous owner who decides whether a substance or object may be considered useless in a particular place or time (here, the court cited its earlier judgment of 15 October 2009, case no. IV SA/Wa 982/09).

It follows that the acquisition of waste status by a vehicle depends on whether, at the time of crossing the border, it may be used for its original purpose, and therefore whether it can be driven on the roads. In assessing whether an illegal international shipment of waste is involved, the possibility of restoring the vehicle to roadworthy condition is not examined. In one of its rulings, the Supreme Administrative Court held that what happens to a vehicle in the future has no effect on the waste status it had acquired (judgment of 18 June 2015, case no. II OSK 2874/13).

Occasionally, however, the courts recognise a need for particularly meticulous consideration of evidence to determine the status of a vehicle. In one of its rulings, the Supreme Administrative Court held that it was necessary to examine the formal legal status of a vehicle under the law in force at the place of its sale (judgment of 24 June 2019, case no. II OSK 1975/17). In that ruling, the court found it necessary to examine the US law in the state where the vehicle was sold, and to consider US federal law and German law in connection with the certificates of the German customs office attached to the file.

Repair and registration of a vehicle does not deprive the vehicle of its waste status

Repair of a vehicle retired from service at a traditional car repair shop is not acceptable, as waste can only be deprived of its waste status by undergoing recovery processes, in particular recycling. In the ruling of 1 December 2020 cited above, the Supreme Administrative Court held that possible repair of a vehicle retired from service in a garage, or even registration of the vehicle, does not constitute the application of waste management processes which, by depriving waste of some of its features, may allow a finding that the vehicle retired from service, already qualified as waste, has lost this status. Similarly, in the judgment of 5 March 2019 cited above, the Supreme Administrative Court held that the fact that a vehicle was repaired, obtained a certificate of periodic technical inspection, and was even registered, did not cause the vehicle to lose its waste status, as, pursuant to Art. 18 of the Act on Recycling of Vehicles Retired from Service of 20 January 2005, the owner of a vehicle retired from service can only transfer it to a business operating a disassembly station or vehicle collection point. On the other hand, carrying out recovery and recycling processes means not only performing certain factual activities subjecting waste to specific mechanical treatment processes, or physical or chemical processes; it is also necessary to meet formal requirements. Recycling and recovery activities are regulated. Carrying out such waste treatment processes requires a permit. As a result, it is the formal requirements of the waste treatment process that determine whether activities can be qualified as a legally regulated waste treatment process. Carrying out recovery and recycling of a vehicle retired from service outside a disassembly station is an illegal activity and does not alter the vehicle’s waste status.

Interestingly, in one of the rulings of the Province Administrative Court in Warsaw, a dissenting opinion was expressed, although it was not considered relevant in the subsequent ruling by the Supreme Administrative Court. The dissenting judge argued that the law normatively linked the notion of recycling with factual activities—subjecting waste to specific physical, chemical and mechanical treatment processes, etc—rather than formal requirements. But the Supreme Administrative Court did not share this position. In turn, in the judgment of 4 February 2020 (case no. II OSK 782/18), the Supreme Administrative Court expressly held that repair of a car and replacement of parts in a paint and body shop do not meet the statutory requirements for waste management. Admitting a vehicle for operation by registering it is not relevant for its classification as waste (Supreme Administrative Court judgment of 20 May 2016, case no. II OSK 2202/14).

Historic vehicles

It should be mentioned that the Act on Recycling of Vehicles Retired from Service does not apply to historic vehicles. These are antique vehicles, or vehicles at least 25 years old, recognised by an automotive expert as unique or of particular importance for documenting the history of the automotive industry. In this respect, the rules described above will not apply, although doubts arise with respect to the application of waste regulations regarding these cars as well.

Dr Dominik Wałkowski, adwokat, Environment practice, Wardyński & Partners