Societa industriale metallurgica di Napoli (Simet) v Commission of the European Communities. (Information ) [1971] EUECJ C-67/69 (16 March 1971)

[ Home ] [ Databases ] [ World Law ] [ Multidatabase Search ] [ Help ] [ Feedback ] [ DONATE ] Court of Justice of the European Communities (including Court of First Instance Decisions) You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Societa industriale metallurgica di Napoli (Simet) v Commission of the European Communities. (Information ) [1971] EUECJ C-67/69 (16 March 1971) URL: https://www.bailii.org/eu/cases/EUECJ/1971/C6769.html Cite as: [1971] EUECJ C-67/69 [ New search ] [ Help ] IMPORTANT LEGAL NOTICE - The source of this judgment is the web site of the Court of Justice of the European Communities . The information in this database has been provided free of charge and is subject to a Court of Justice of the European Communities disclaimer and a copyright notice . This electronic version is not authentic and is subject to amendment. 61969J0067 Judgment of the Court of 16 March 1971. Società industriale metallurgica di Napoli (Simet) v Commission of the European Communities. Case 67-69. European Court reports 1971 Page 00197 Danish special edition 1971 Page 00033 Greek special edition 1969-1971 Page 00717 Portuguese special edition 1971 Page 00053 ++++ 1 . INFORMATION - CHECKS - INSTRUCTIONS FOR CARRYING THEM OUT - NO DELEGATION OF POWERS - FREE CHOICE OF AGENTS ( ECSC TREATY, ARTICLE 47 ) 2 . COMMON FINANCIAL ARRANGEMENTS - FERROUS SCRAP - EQUALIZATION - DRAWING UP OF FINAL ACCOUNTS - CAPITALIZED INTEREST ON CREDIT AND DEBIT BALANCES - LEGALITY ( GENERAL DECISION OF THE HIGH AUTHORITY ECSC NO 19/65 OF 15 DECEMBER 1965, ARTICLE 5 ) 3 . COMMON FINANCIAL ARRANGEMENTS - EQUALIZATION - GENERAL DECISION TAKEN WITH THE ASSENT OF THE COUNCIL - RECOMMENDATIONS FORMULATED IN THE ASSENT WITHOUT EFFECT ON THE ASSESSMENT OF THE POWERS PROVIDED FOR IN THE DECISION ( ECSC TREATY, ARTICLE 53 ) 4 . COMMON FINANCIAL ARRANGEMENTS - EQUALIZATION - NORMAL DISADVANTAGES - ABSENCE OF DAMAGE ( ECSC TREATY, ARTICLE 40, ARTICLE 53 ) 5 . LIABILITY OF THE ECSC - WRONGFUL ACT OR OMISSION - EXISTENCE OF FRAUDS - FAILURE OF THE ADMINISTRATION IN ITS DUTY OF SUPERVISION - INSUFFICIENT PROOF ( ECSC TREATY, ARTICLE 40 ) 1 . SINCE ARTICLE 47 EMPOWERS THE HIGH AUTHORITY TO HAVE CHECKS MADE, THE INSTRUCTIONS WHICH IT GIVES FOR THE CARRYING OUT OF SUCH CHECKS CONSTITUTES THE ACTUAL EXERCISE OF ITS OWN POWERS AND NOT A DELEGATION OF THEM; CONSEQUENTLY THE FORMS AND THE PUBLICITY REQUIRED FOR A DELEGATION OF POWERS ARE NOT APPLICABLE IN THIS CASE . THE EXPRESSION " HAVE ... MADE " SHOWS CLEARLY THAT THE HIGH AUTHORITY IS NOT REQUIRED TO CARRY OUT THE CHECKS MENTIONED EXCLUSIVELY BY MEANS OF ITS OWN SERVANTS BUT THAT IT MAY HAVE THEM CARRIED OUT BY ANY PERSON WHOM IT CONSIDERS COMPETENT FOR THIS WORK . 2 . THE NECESSITY FOR BALANCE IN THE MANAGEMENT OF THE SCHEME, EQUALITY OF TREATMENT AND THE INTERDEPENDENCE OF PAYMENTS REQUIRE THE APPLICATION OF A SINGLE RATE OF INTEREST TO CREDIT AND TO DEBIT BALANCES . THE INTRODUCTION OF A SYSTEM BY WHICH INTEREST IS CAPITALIZED INFRINGES NEITHER THE TREATY NOR THE RULES OF LAW CONCERNING ITS APPLICATION, BUT THE PAYMENT OF SUCH INTEREST CANNOT BE REQUIRED WHILST DEBTORS HAVE NOT BEEN INFORMED OF THEIR POSITION AS SUCH . 3 . THE RECOMMENDATIONS DRAWN UP BY THE COUNCIL UPON THE GIVING OF AN ASSENT CANNOT HAVE THE EFFECT OF RESTRICTING OR MODIFYING THE EXPRESS POWERS CONFERRED BY THE DECISION WHICH IS THE SUBJECT OF THAT ASSENT . THE LEGALITY OF DECISIONS TAKEN IN IMPLEMENTATION OF A GENERAL DECISION WHICH HAS BEEN THE SUBJECT OF AN ASSENT CAN THEREFORE BE EXAMINED ONLY ON THE BASIS OF THE ACTUAL PROVISIONS OF THAT GENERAL DECISION . 4 . THE INEVITABLE AND INHERENT DISADVANTAGES IN THE EQUALIZATION SCHEME WHICH OF ITS NATURE NECESSITATES A POSTERIORI CALCULATIONS FOR THE FIXING OF THE RATE DO NOT CONSTITUTE DAMAGE GIVING A RIGHT TO COMPENSATION . 5 . THE EXISTENCE OF FRAUDS DOES NOT ALONE SUFFICE TO PROVE THAT THE ADMINISTRATION HAS FAILED IN ITS DUTIES OF SUPERVISION AND CONSEQUENTLY IS GUILTY OF A WRONGFUL ACT OR OMISSION . IN CASE 67/69 SOCIETA INDUSTRIALE METALLURGICA DI NAPOLI ( SIMET ) S . P . A ., WITH ITS REGISTERED OFFICE AT 16 VIA STAFANO BARBATO, NAPLES-BARRA, REPRESENTED FIRST BY ARTURO COTTRAU, AND THEN BY GIORGIO COTTRAU, OF THE TURIN BAR, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF GEORGES MARGUE, 20 RUE PHILIPPE-II, APPLICANT, V COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY ITS LEGAL ADVISER, ANTONINO ABATE, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF EMILE REUTER, 4 BOULEVARD ROYAL, DEFENDANT, APPLICATION FOR - THE ANNULMENT OF THE INDIVIDUAL DECISION OF THE COMMISSION OF THE EUROPEAN COMMUNITIES OF 9 OCTOBER 1969, REQUIRING THE SIMET UNDERTAKING TO PAY THE SUMS DUE UNDER THE PROVISIONS CONCERNING THE EQUALIZATION SCHEME FOR IMPORTED FERROUS SCRAP AND SCRAP TREATED AS SUCH; - COMPENSATION FOR DAMAGE CAUSED BY A WRONGFUL ACT OR OMISSION OF THE DEFENDANT . 1 BY AN APPLICATION OF 12 NOVEMBER 1969 LODGED AT THE COURT REGISTRY ON 14 NOVEMBER 1969 THE SIMET UNDERTAKING OF NAPLES BROUGHT BEFORE THE COURT ( A ) AN APPLICATION FOR THE ANNULMENT UNDER ARTICLE 33 OF THE TREATY ESTABLISHING THE EUROPEAN COAL AND STEEL COMMUNITY, OF THE DECISION OF THE COMMISSION OF THE EUROPEAN COMMUNITIES OF 9 OCTOBER 1969, TAKEN IN IMPLEMENTATION OF THE PROVISIONS CONCERNING THE EQUALIZATION OF IMPORTED FERROUS SCRAP AND SCRAP TREATED AS SUCH AND FIXING IN THE APPLICANT' S CASE THE TONNAGE OF BOUGHT SCRAP ASSESSABLE AND THE SUMS DUE BY WAY OF EQUALIZATION CONTRIBUTIONS; AND ( B ) AN ACTION FOR DAMAGES UNDER ARTICLE 40 OF THE SAME TREATY . THE APPLICATION FOR ANNULMENT 2 THE APPLICANT DISPUTES THE CONTESTED DECISION ON THE GROUNDS OF INFRINGEMENT OF ESSENTIAL PROCEDURAL REQUIREMENTS, PARTICULARLY FOR AN INSUFFICIENT STATEMENT OF REASONS, AND FOR INFRINGEMENT OF THE TREATY OR OF RULES OF LAW RELATING TO ITS APPLICATION AND RAISES FURTHER AN OBJECTION OF ILLEGALITY AGAINST GENERAL DECISIONS NOS 7/63 AND 19/65 OF THE HIGH AUTHORITY ON WHICH THE CONTESTED DECISION IS BASED . THE SUBMISSION OF INFRINGEMENT OF ESSENTIAL PROCEDURAL REQUIREMENTS 3 UNDER THIS HEADING THE APPLICANT COMPLAINS THAT THE CONTESTED DECISION LACKS AN ADEQUATE STATEMENT OF REASONS BECAUSE IT FIXED THE BASIS OF ITS CONTRIBUTION AT 17 737 METRIC TONS WITHOUT JUSTIFYING SUFFICIENTLY THE DIFFERENCE BETWEEN THAT QUANTITY AND THE 15 469 METRIC TONS IN ALL OF BOUGHT SCRAP WHICH IT DECLARED . IN CONFINING ITSELF TO STATING THAT ON THE OCCASION OF THE CHECKS CARRIED OUT FROM 21 TO 25 MARCH 1960 THE UNDERTAKING PRODUCED INVOICES CONCERNING PURCHASES OF SCRAP MADE IN 1956 TO THE EXTENT OF 2 268 METRIC TONS, THE DECISION IS SAID NOT TO HAVE SUFFICIENTLY JUSTIFIED IN LAW THE INCREASE OF THAT QUANTITY IN RELATION TO THE TONNAGE DURING THE YEARS 1957 AND 1958 RESULTING FROM THE MONTHLY DECLARATIONS OF THE UNDERTAKING . IT SAYS THAT THE INVOICES RELIED UPON WERE NEVER PRODUCED AND FURTHERMORE DO NOT EXIST . IT IS A MATTER THEREFORE OF WHOLLY UNFOUNDED ALLEGATIONS OF A GENERAL NATURE . 4 IN ORDER TO ESTABLISH THE CHARACTER OF THE INVOICES MENTIONED AND THE CIRCUMSTANCES IN WHICH THESE INVOICES WERE PRODUCED, THE COURT ORDERED THE HEARING OF MR CHAUDAT, MR LUCCHINI AND MR DAVIER WHO HAD VISITED THE UNDERTAKING ON THE OCCASION OF THE CHECKS IN QUESTION . AT THE HEARING ON 17 NOVEMBER 1970 BY THE FIRST CHAMBER TO WHICH THIS HEARING HAD BEEN ASSIGNED IT APPEARED THAT ON THE OCCASION OF THAT CHECK THE WITNESSES CHAUDAT AND DAVIER TOOK PART ONLY IN A FORMAL MANNER IN ORDER TO INTRODUCE THE WITNESS LUCCHINI, WHO CARRIED OUT THE WORK OF CHECKING, AND IN ORDER TO ENSURE THE SUPERVISION OF THE CHECKS MADE . 5 THE WITNESS LUCCHINI STATED THAT FROM 21 TO 25 MARCH 1960 AT THE OFFICE OF THE COMPANY HE MADE A CHECK OF THE CONSUMPTION OF ELECTRIC CURRENT BY THE UNDERTAKING DURING THE YEAR 1956 . IN THE COURSE OF HIS WORK, ACCORDING TO HIS EVIDENCE, HE DISCOVERED BY CHANCE A BUNDLE OF INVOICES RELATING TO THE PURCHASE OF SCRAP FOR THE YEAR 1956 WHICH WERE AT HIS REQUEST HANDED TO HIM BY THE EMPLOYEE WHOM THE UNDERTAKING HAD PUT AT HIS DISPOSAL TO PRODUCE FOR HIM THE DOCUMENTS WHICH HE NEEDED . THESE WERE INVOICES IN GOOD ORDER SHOWING THE SUPPLIER, THE DATE OF DELIVERY, THE TYPE OF SCRAP, ITS WEIGHT AND THE PRICES PAID . 6 THE WITNESS STATED THAT HE ADDED UP ON A MACHINE THE WEIGHTS AND THE AMOUNTS OF THE INVOICES FOR EACH MONTH OF 1956 . THE PAPER ROLL FROM THE ADDING MACHINE WAS DEPOSITED AT THE COURT REGISTRY . THE CONTENT OF THAT EVIDENCE WAS NOT DISPUTED BY THE APPLICANT WHICH CONFINED ITSELF, BY INVOKING ARTICLE 86 OF THE TREATY, TO CASTING DOUBT UPON THE QUALIFICATIONS OF THE EMPLOYEES OF THE S . A . FIDUCIAIRE SUISSE TO MAKE CHECKS WITHIN THE MEANING OF THE TREATY AND CONSEQUENTLY THE RIGHT OF THE COMMISSION TO UTILIZE AS EVIDENCE THE RESULTS OF THESE CHECKS . 7 IN THIS RESPECT ARTICLE 47, WHICH GOVERNS THE MATTER IN QUESTION, EMPOWERS THE HIGH AUTHORITY TO HAVE CHECKS MADE . THE INSTRUCTIONS WHICH IT GAVE FOR THE CARRYING OUT OF THE CHECK CONSTITUTED THE ACTUAL EXERCISE OF ITS OWN POWERS AND NOT A DELEGATION OF THEM . THE FORMS AND THE PUBLICITY REQUIRED FOR A DELEGATION OF POWERS WERE THUS NOT APPLICABLE IN THE PRESENT CASE . FURTHER, THE EXPRESSION " HAVE ... MADE " SHOWS CLEARLY THAT THE HIGH AUTHORITY WAS NOT REQUIRED TO CARRY OUT THE CHECKS MENTIONED EXCLUSIVELY BY MEANS OF ITS OWN SERVANTS, BUT THAT IT COULD HAVE THEM CARRIED OUT BY ANY PERSON WHOM IT CONSIDERED COMPETENT FOR THIS WORK . 8 THE COMPANY HAS IN NO WAY CALLED IN QUESTION THE COMPETENCE OR THE OBJECTIVITY OF THE PERSON ENTRUSTED WITH THE CHECKS . IT DID NOT, FURTHERMORE, OBJECT TO THE MEASURES . 9 THE EVIDENCE OF THE WITNESS LUCCHINI IS CONFIRMED BY OTHER FACTS RELIED UPON BY THE DEFENDANT, IN PARTICULAR THE EXISTENCE OF AN ELECTRIC FURNACE WITH A CAPACITY OF FOUR TO FIVE TONS INSTALLED IN FEBRUARY 1956, THE CONSUMPTION OF ELECTRIC CURRENT BY THIS FURNACE, THE STOCKS OF SEMI-FINISHED PRODUCTS, OF FINISHED PRODUCTS AND OF SCRAP DETERMINED AS AT 1 JANUARY 1957, THE REPORT FOR THE FINANCIAL YEAR, THE BALANCE SHEET AND THE PROFIT AND LOSS ACCOUNT FOR 1956 . THESE FACTS SUFFICIENTLY PROVE IN LAW THE CORRECTNESS OF THE DATA ON WHICH THE COMMISSION BASED ITS DECISION . 10 THESE DATA WERE OBTAINED BY MEANS OF A PROCEDURE WHICH CONFORMED TO ARTICLE 47 OF THE TREATY . THE CONTESTED DECISION SET OUT THESE DATA IN A SUFFICIENTLY CLEAR AND PLAIN MANNER . CONSEQUENTLY THE SUBMISSION BASED ON AN INADEQUATE STATEMENT OF THE REASONS FOR THE DECISION MUST BE REJECTED . THE SUBMISSION OF INFRINGEMENT OF THE TREATY 11 THE APPLICANT ALSO ALLEGES THE ILLEGALITY OF THE CONTESTED DECISION TO THE EXTENT TO WHICH THIS PROVIDES FOR PAYMENT OF INTEREST ON THE SUM DUE BY WAY OF CONTRIBUTION TO THE EQUALIZATION SCHEME . IT SAYS THAT ON THE ONE HAND THIS DEBT WAS NOT THE SUBJECT OF ANY FORMAL DEMAND BEFORE THE APPLICANT WAS INFORMED BY THE CONTESTED DECISION OF ITS EXACT AMOUNT . FURTHER A SYSTEM OF CAPITALIZED INTEREST SUCH AS THAT INTRODUCED BY DECISION NO 19/65 IS ILLEGAL AS CONTRARY TO THE FUNDAMENTAL PRINCIPLES OF LAW CONCERNING INTEREST . THE CONTESTED DECISION IS THUS SAID TO INFRINGE THE TREATY AND THE RULES OF LAW CONCERNING ITS APPLICATION, PARTICULARLY THE LEGAL PRINCIPLES RELATING TO THE CHARGING OF INTEREST FOR DELAYED PAYMENT AS ENSHRINED IN THE LEGAL SYSTEMS OF THE MEMBER STATES . 12 THE INTEREST PRESCRIBED BY THE DECISION IN QUESTION IS IN ACCORDANCE WITH THE PROVISIONS OF GENERAL DECISION NO 19/65, WHICH REPLACED NUMEROUS PREVIOUS DECISIONS WHICH HAD ALREADY INSTITUTED AND LAID DOWN DETAILS WITH REGARD TO THE OBLIGATION TO PAY LEGAL INTEREST ON THE AMOUNTS DUE BY WAY OF EQUALIZATION CONTRIBUTIONS . THE SUBMISSION RAISED THEREFORE AMOUNTS IN SUBSTANCE TO AN OBJECTION OF ILLEGALITY DIRECTED AGAINST GENERAL DECISION NO 19/65 . 13 THAT DECISION PROVIDES IN ARTICLE 5 THAT AS FROM 31 MAY 1963 THE CREDIT OR DEBIT BALANCES OF UNDERTAKINGS SUBJECT TO THE SCHEME SHALL BEAR INTEREST AT 5 PER CENT PER ANNUM UNTIL THE DATE ON WHICH PAYMENT IS MADE . UNDER THE SAME PROVISION, AS FROM 1 JANUARY 1966, INTEREST ACCRUED OVER THE YEAR IS TO BE CONVERTED INTO CAPITAL EVERY THIRTY-FIRST OF DECEMBER . 14 THE DECISIONS RELATING TO THE WORKING OF THE EQUALIZATION SCHEME HAVE PROPERLY PROVIDED THAT CREDITS AND DEBITS RESULTING FROM ITS APPLICATION SHALL CARRY INTEREST . IN PARTICULAR, THE UNDERTAKINGS WHICH, HAVING PURCHASED IMPORTED FERROUS SCRAP OR SCRAP TREATED AS SUCH, HAD A RIGHT TO THE BENEFIT OF EQUALIZATION, WERE JUSTIFIED IN ASKING TO BE INDEMNIFIED FOR DELAYS IN THE PAYMENT OF WHAT WAS DUE TO THEM . CONSEQUENTLY THE NECESSARY BALANCE IN THE MANAGEMENT OF THE SCHEME, EQUALITY OF TREATMENT AND THE INTERDEPENDENCE OF PAYMENTS REQUIRED THAT THIS SUPPLEMENTARY CHARGE SHOULD BE SET OFF BY THE APPLICATION OF THE SAME RATE OF INTEREST ON THE SUMS OWING BY UNDERTAKINGS LIABLE TO CONTRIBUTE TO THE SCHEME . 15 A RATE OF INTEREST OF 5 PER CENT PER ANNUM DOES NOT APPEAR TO BE OF AN EXCESSIVE NATURE . FURTHER, CONTRARY TO THE ALLEGATIONS OF THE APPLICANT, IT DOES NOT APPEAR THAT THE LEGAL SYSTEMS OF THE MEMBER STATES INCLUDE IN GENERAL A FUNDAMENTAL PRINCIPLE OPPOSED TO THE CHARGING OF COMPOUND INTEREST . IN ORDER TO FACILITATE THE WINDING-UP OF THE SCHEME, THE DECISIONS MENTIONED ABOVE WERE THUS ABLE TO INTRODUCE COMPOUND INTEREST WHICH FURTHERMORE APPLIES EQUALLY TO THE CREDIT BALANCES OF THE UNDERTAKINGS . 16 ALTHOUGH, BY THE INTRODUCTION OF THE SYSTEM OF INTEREST IN DISPUTE, THE DECISIONS IN QUESTION INFRINGED NEITHER THE TREATY NOR THE RULES OF LAW CONCERNING ITS APPLICATION, IT WOULD NEVERTHELESS BE IMPROPER TO REQUIRE THE PAYMENT OF INTEREST, PARTICULARLY OF CAPITALIZED INTEREST, WHILST THE DEBTORS HAD NOT BEEN INFORMED OF THEIR POSITION AS SUCH . HOWEVER THE QUESTION WHETHER THAT CONDITION WAS SATISFIED MUST BE CONSIDERED TAKING INTO ACCOUNT THE PECULIARITIES OF THE EQUALIZATION SCHEME, PARTICULARLY THE FACT THAT IN SUCH A SCHEME THE BALANCES OF THOSE SUBJECT TO IT IN ACCOUNT WITH THE EQUALIZATION FUND WOULD NOT BE ACCEPTED AS FINAL BEFORE THE CLOSING OF THE ACCOUNTS OF THE SCHEME . IN THESE CIRCUMSTANCES THE EXTRACTS OF ACCOUNTS PROVIDED TO THE UNDERTAKINGS COULD ONLY BE OF A PROVISIONAL NATURE AND AS LONG AS THIS WAS SO CAPITALIZATION COULD NOT BE JUSTIFIED . 17 AS HAS BEEN STATED HOWEVER, THIS COMPOUND INTEREST WAS INTRODUCED ONLY AS FROM 1 JANUARY 1966, THAT IS TO SAY, AFTER THE ENTRY INTO FORCE OF DECISION NO 19/65, WHICH MAKES PROVISION FOR THE FINAL CLOSURE OF THE ACCOUNTS . IT IS NOT DISPUTED THAT THE APPLICANT WAS PROPERLY INFORMED OF ITS POSITION AS A DEBTOR BY EQUALIZATION ACCOUNTS OR EXTRACTS FROM ACCOUNTS WHICH ENABLED IT TO KNOW THE EXTENT OF ITS OBLIGATIONS . 18 ALTHOUGH IT IS TRUE THAT THESE ACCOUNTS WERE BASED ON MONTHLY STATEMENTS PROVIDED BY THE APPLICANT ITSELF, THE LATTER CANNOT COMPLAIN OF THE INCREASE IN THE AMOUNT OF INTEREST FOLLOWING THE CORRECTION OF ITS INCORRECT DECLARATIONS . CONSEQUENTLY THE SUBMISSION MUST BE REJECTED AS UNFOUNDED . THE OBJECTION OF ILLEGALITY RAISED AGAINST GENERAL DECISIONS NOS 7/63 AND 19/65 19 THE APPLICANT CHALLENGES GENERAL DECISIONS NOS 7/63 AND 19/65 AS APPLIED BY THE CONTESTED DECISION, ON THE BASIS OF SEVERAL OBJECTIONS OF ILLEGALITY . 20 A - THESE DECISIONS ARE SAID TO BE DISCRIMINATORY TO THE EXTENT TO WHICH THEY EXCLUDE FROM THE OBLIGATION TO PAY CONTRIBUTIONS AND FROM THE RIGHT TO RECEIVE EQUALIZATION PAYMENTS, THE TONNAGES OF PURCHASED ALLOY STEEL SCRAP AND, IN THE CASE OF UNDERTAKINGS HAVING A STEEL FOUNDRY, THE PROPORTION OF BOUGHT SCRAP CONSUMED CORRESPONDING TO THE PROPORTION OF PRODUCTION OF CRUDE STEEL FOR CASTINGS . 21 THE DEFENDANT HAS ARGUED THAT THE EXEMPTION OF ALLOY STEEL SCRAP IS JUSTIFIED BY THE DIFFERENCE BETWEEN THE ALLOY SCRAP MARKET AND THAT OF ORDINARY SCRAP, THE PRICE OF ALLOY SCRAP DEPENDING RATHER ON THE PROPORTION OF NOBLE METALS FOUND IN IT THAN ON THAT OF FERROUS SCRAP . THE INCLUSION OF ALLOY SCRAP IN THE EQUALIZATION SCHEME HAD, ACCORDING TO THE DEFENDANT, AN UNDOUBTED INFLUENCE ON THE MARKET IN NON-FERROUS METALS WHICH DO NOT FALL WITHIN THE ECSC TREATY . THE DEFENDANT HAS GIVEN AS A REASON FOR THE EXCLUSION OF SCRAP INTENDED FOR INTEGRATED FOUNDRIES, THE NECESSITY NOT TO CHANGE THE NORMAL CONDITIONS OF COMPETITION BETWEEN THEM AND THE INDEPENDENT FOUNDRIES . 22 THESE EXPLANATIONS, WHICH ARE NOT DISPUTED BY THE APPLICANT, IN SUBSTANCE APPEAR ACCEPTABLE . THE HIGH AUTHORITY, BY ADOPTING GENERAL DECISIONS NOS 7/63 AND 19/65, WHICH FURTHERMORE ONLY RE-ENACTED PREVIOUS PROVISIONS, WAS ENTITLED TO TAKE THE VIEW THAT A PROPER APPLICATION OF THE PRNCIPLES OF THE TREATY REQUIRED THE EXCLUSION OF THE SAID SCRAP FROM THE EQUALIZATION SCHEME AND THERE IS NOTHING TO SHOW THAT IN DOING THIS IT DISTORTED THE SCHEME AND MADE IT DISCRIMINATORY . 23 CONSEQUENTLY THE COMPLAINT MUST BE REJECTED . 24 B - FURTHER, ACCORDING TO THE APPLICANT, THE COMPETENT AUTHORITIES DISREGARDED THE RECOMMENDATIONS WHICH THE COUNCIL OF THE ECSC MADE WHEN GIVING ITS ASSENT TO DECISION NO 14/55 OF THE HIGH AUTHORITY OF 26 MARCH 1955 ESTABLISHING FINANCIAL MACHINERY DESIGNED TO ENSURE A REGULAR FLOW OF SCRAP FOR THE COMMON MARKET ( OJ NO 8 OF 30 . 3 . 1955, P . 685 ). 25 RECOMMENDATIONS DRAWN UP BY THE COUNCIL UPON THE GIVING OF AN ASSENT SUCH AS THAT PRESCRIBED IN ARTICLES 28 AND 53 OF THE TREATY CANNOT HAVE THE EFFECT OF RESTRICTING OR MODIFYING THE EXPRESS POWERS CONFERRED BY THE DECISION WHICH IS THE SUBJECT OF THAT ASSENT . THE LEGALITY OF DECISIONS TAKEN IN IMPLEMENTATION OF A GENERAL DECISION WHICH HAS BEEN THE SUBJECT OF AN ASSENT CAN THEREFORE BE EXAMINED ONLY ON THE BASIS OF THE ACTUAL PROVISIONS OF THAT GENERAL DECISION . CONSEQUENTLY EVEN IF IT WERE ESTABLISHED, WHICH THE DEFENDANT DENIES, THAT IN THE EXERCISE OF THE POWERS CONFERRED BY DECISION NO 14/55 THE COMPETENT AUTHORITIES DISREGARDED THE RECOMMENDATIONS OF THE COUNCIL, THIS WOULD HAVE CONSEQUENCES ONLY AS REGARDS THE RELATIONS BETWEEN THOSE AUTHORITIES AND THE COUNCIL, BUT COULD NOT INVALIDATE DECISIONS TAKEN IN CONFORMITY WITH THE PROVISION IN RESPECT OF WHICH THE ASSENT WAS GIVEN . 26 FURTHERMORE DECISION NO 14/55 WAS SUPPLEMENTED AND AMENDED BY SEVERAL LATER DECISIONS WHICH ALSO OBTAINED THE REQUISITE ASSENT OF THE COUNCIL, PARTICULARLY DECISION NO 16/58 OF THE HIGH AUTHORITY OF 24 JULY 1958 ( OJ NO 10 OF 30 . 7 . 1958, P . 275 ), BY WHICH THE SCHEME WAS RENEWED . THERE IS NOTHING TO INDICATE THAT ON THESE OCCASIONS THE COUNCIL FOUND THAT ITS INITIAL RECOMMENDATIONS HAD BEEN DISREGARDED . 27 THE COMPLAINT MUST THEREFORE BE REJECTED . 28 C - THE APPLICANT GOES ON TO ALLEGE THAT THE DATA USED AS THE BASIS OF THE AVERAGE WEIGHTED EQUALIZATION PRICES FIXED BY DECISIONS NOS 7/63 AND 19/65 ARE INCORRECT . IT SAYS THAT THE AVERAGE WEIGHTED COSTS OF INTERNAL RECOVERED SCRAP WERE EXCESSIVELY REDUCED WHILST THE AVERAGE COSTS OF IMPORTED SCRAP WERE INCREASED SO THAT THE EQUALIZATION RATE WAS RAISED TO AN UNNECESSARILY HIGH LEVEL . ACCORDING TO THE EXPERIENCE OF THE APPLICANT ITSELF THE PRICES OF INTERNAL RECOVERED SCRAP WERE CONSISTENTLY HIGHER THAN THE AVERAGE PRICES ADOPTED BY DECISIONS NOS 7/63 AND 19/65 . 29 THE DEFENDANT REPLIES THAT THE BASIC DATA FOR FIXING AVERAGE PRICES OF IMPORTED SCRAP WERE TAKEN DIRECTLY FROM CONTRACTS OF PURCHASE MADE BY THE JOINT BUREAU OF FERROUS SCRAP CONSUMERS, THE ONLY BODY COMPETENT TO MAKE PURCHASES OF SCRAP ON THE INTERNATIONAL MARKET ON BEHALF OF UNDERTAKINGS WHICH REQUESTED IT TO DO SO AND THAT THIS FIXING OF PRICES CONSEQUENTLY CANNOT ATTRACT ANY CRITICISM . AS REGARDS THE AVERAGE PRICES OF SCRAP BOUGHT WITHIN THE MARKET, THE NECESSARY DATA WERE DERIVED FROM THE MONTHLY DECLARATIONS OF THE UNDERTAKINGS CONTAINING INFORMATION CONCERNING THE PRICES PAID . THESE DECLARATIONS WERE STRICTLY SUPERVISED BY THE CHECKING OF PURCHASE INVOICES . THE DEFENDANT FURTHER STATES THAT IT IS IN THE NATURE OF THE SCRAP MARKET TO CAUSE, PARTICULARLY ON THE BASIS OF THE LOCATION OF CONSUMING UNDERTAKINGS, PRICE DIFFERENCES WHICH ARE IN THEMSELVES COMPATIBLE WITH THE UNITY OF THE MARKET . 30 THE APPLICANT HAS SUBMITTED NOTHING CAPABLE OF CONSTITUTING EVEN THE BEGINNINGS OF PROOF OF ITS ALLEGATIONS . IN PARTICULAR IT HAS FAILED TO PROVE THAT THE PRICE DIFFERENCES IN THE MARKET WERE CHANGED THROUGH THE FUNCTIONING OF THE EQUALIZATION SCHEME OR THAT THE FUNCTIONING OF THE SCHEME AGGRAVATED THE DISADVANTAGES WHICH IT SUFFERED IN COMPARISON WITH BETTER SITUATED UNDERTAKINGS . 31 THE COMPLAINT MUST THEREFORE BE REJECTED . 32 D - THE APPLICANT LASTLY ALLEGES THAT THE REASONS FOR DECISIONS NOS 7/63 AND 19/65 ARE INADEQUATELY STATED . IN ITS REPLY IT STATED THAT BY THIS COMPLAINT IT DID NOT INTEND TO REQUIRE THAT THE DOCUMENTS JUSTIFYING THE VARIOUS FIGURES LAID DOWN BY THESE DECISIONS SHOULD BE ANNEXED TO THE DECISIONS OR PUBLISHED, BUT ASKS THAT THE DEFENDANT SHOULD SUBMIT THE BOOKS OF ACCOUNT RELATING TO THE EQUALIZATION SCHEME TO AN OFFICIAL AUDITOR OF ACCOUNTS OR TO A COMMITTEE OF REPRESENTATIVES OF UNDERTAKINGS AND THAT THE DEFENDANT SHOULD PUBLISH THE RESULTING REPORT . 33 THE REASONS FOR THE PROVISIONS OF DECISIONS NOS 7/63 AND 19/65 ARE GIVEN IN BOTH THE PREAMBLES AND ANNEXES TO THOSE DECISIONS . THE REQUIREMENT OF A FINAL CHECK OF THE ACCOUNTING OF THE EQUALIZATION SCHEME IS CONCERNED NOT WITH THE SUPERVISION OF THE LEGALITY OF THE DECISIONS IN QUESTION BUT WITH THE EFFICIENCY OF THE WORKING OF THIS SCHEME WHICH IS A MATTER FOR OTHER INSTITUTIONS AND AUTHORITIES OF THE COMMUNITY AND PARTICULARLY THE PARLIAMENT AND THE AUDITOR . 34 FURTHER, THE DEFENDANT HAS STATED THAT ALL THE FIGURES SET OUT IN THE ANNEXES TO DECISIONS NOS 7/63 AND 19/65 WERE SUBMITTED BY ITS OFFICERS TO REPEATED EXAMINATIONS AND CHECKS AND THAT THE AUDITOR OF THE ECSC ALWAYS EXERCISED HIS SUPERVISION OVER THE MANAGEMENT AND THE ANNUAL ACCOUNTS OF THE EQUALIZATION SCHEME . 35 THE COMPLAINT MUST CONSEQUENTLY BE REJECTED . 36 IT FOLLOWS THAT THE OBJECTION OF ILLEGALITY RAISED AGAINST THESE DECISIONS MUST BE REJECTED . THE APPLICATION FOR DAMAGES 37 IN ITS ORIGINATING APPLICATION THE APPLICANT ASKS THE COURT TO HOLD THE DEFENDANT LIABLE FOR WRONGFUL ACTS OR OMISSIONS WITHIN THE MEANING OF ARTICLE 40 OF THE TREATY . A FIRST UNLAWFUL ACT OR OMISSION IS SAID TO BE CONSTITUTED BY THE FACT THAT ON THE ONE HAND THE COMMISSION VALIDLY NOTIFIED IT FOR THE FIRST TIME ON 18 OCTOBER 1969 OF THE AMOUNT OF ITS EQUALIZATION CONTRIBUTIONS WHILST ON THE OTHER HAND THE APPLICANT WAS OBLIGED TO PUBLISH ITS PRICE LISTS FOR THE PERIOD SUBJECT TO EQUALIZATION ( APRIL 1954 TO NOVEMBER 1958 ) WITHOUT KNOWING THE AMOUNT OF THOSE CONTRIBUTIONS . THE DAMAGE SUFFERED BY THE APPLICANT UNDER THIS HEAD AMOUNTS TO 15 PER CENT OF ITS TOTAL SALES OF STEEL DURING THE CONTRIBUTION PERIOD . 38 A SECOND WRONGFUL ACT OR OMISSION IS SAID TO BE CONSTITUTED BY THE FACT THAT BECAUSE OF ITS COMMITMENTS TO THE COUNCIL, THE HIGH AUTHORITY WAS SERIOUSLY IN BREACH OF THE DUTY OF SUPERVISION WHICH IS IMPOSED UPON IT BY THE TREATY AND GROSSLY FAILED TO EXERCISE THE NORMAL DILIGENCE WHICH ANY PUBLIC ADMINISTRATION MUST SHOW, THUS FACILITATING THE PERPETRATION OF LARGE-SCALE FRAUDS WITHIN THE FRAMEWORK OF THE EQUALIZATION SCHEME . IN ITS CONCLUSIONS THE APPLICANT STATED LASTLY THAT IT WOULD ACCEPT ANY SOLUTION CAPABLE OF FIXING THE AMOUNT OF DAMAGE WHICH IT HAD SUFFERED . 39 AS CONCERNS THE FIRST HEAD OF THE CLAIM, THE VERY NATURE OF ANY EQUALIZATION SCHEME WHICH COULD LEGALLY HAVE BEEN ESTABLISHED BY THE GENERAL DECISIONS OF THE HIGH AUTHORITY NECESSARILY IMPLIED A POSTERIORI CALCULATIONS . IN FACT THE EQUALIZATION RATE COULD BE FIXED ONLY FOLLOWING CONSIDERATION OF A SERIES OF FACTORS SUCH, IN PARTICULAR, AS THE PRICES AND THE RESPECTIVE TOTAL QUANTITIES OF IMPORTED SCRAP AND OF SCRAP PURCHASED WITHIN THE MARKET . 40 IN ORDER TO ASCERTAIN THESE FACTORS THE COMPETENT AUTHORITIES DEPENDED PARTICULARLY ON THE CARE WITH WHICH THE UNDERTAKINGS CONCERNED CARRIED OUT THEIR DUTY TO MAKE THE NECESSARY DECLARATIONS . IT IS COMMON KNOWLEDGE AND FURTHERMORE PROVED BY THIS VERY CASE THAT CERTAIN UNDERTAKINGS HAVE NOT ALWAYS SHOWN ALL THE CARE REQUIRED . THE APPLICANT HAS NOT HOWEVER ALLEGED THAT THE ADMINISTRATION WAS GUILTY OF NEGLIGENCE BY FAILING TO USE THE REQUISITE VIGOUR IN REMINDING THOSE SUBJECT TO ITS ADMINISTRATION OF THEIR DUTIES . 41 IN FACT THE DISADVANTAGES COMPLAINED OF WERE INEVITABLE AND INHERENT IN THE EQUALIZATION SCHEME . SUCH DISADVANTAGES CANNOT AMOUNT TO DAMAGE GIVING RISE TO A RIGHT TO COMPENSATION ESPECIALLY AS THEY AFFECT ALL IRON AND STEEL UNDERTAKINGS IN THE COMMUNIY AND EQUALIZATION HAS ON THE OTHER HAND BROUGHT CONSIDERABLE BENEFITS TO USERS OF SCRAP AS A WHOLE . 42 IN THE PRESENT CASE IT HAS NOT BEEN ESTABLISHED THAT THE DISADVANTAGE SUFFERED BY THE APPLICANT EXCEEDED THAT NORMALLY INHERENT IN THE CHOSEN SCHEME OR THOSE SUFFERED BY ITS COMPETITORS . IT CANNOT BE DISPUTED, FURTHERMORE, THAT WHILE THE SCHEME WAS FUNCTIONING THE APPLICANT WAS REGULARLY INFORMED OF THE AMOUNT OF ITS CONTRIBUTIONS AS APPEARED ON THE ONE HAND FROM PROVISIONAL CALCULATIONS BY THE ADMINISTRATION AND ON THE OTHER HAND FROM DECLARATIONS MADE BY ITSELF REGARDING ITS PURCHASES OF SCRAP . IN DECEMBER 1965 AT THE LATEST IT RECEIVED ITS VIRTUALLY DEFINITIVE STATEMENT OF ACCOUNT WHICH WAS OF COURSE SUBJECT TO ITS OBLIGATION TO PAY INTEREST WHICH WAS LEGALLY DUE FROM IT . 43 SINCE NEITHER THE EXISTENCE OF A WRONGFUL ACT OR OMISSION NOR OF DAMAGE SPECIAL TO THE APPLICANT HAS BEEN ESTABLISHED, THE FIRST HEAD OF THE ACTION FOR DAMAGES MUST BE DISMISSED . 44 AS REGARDS THE SECOND HEAD OF THE ACTION IT APPEARS FROM THE ORIGINATING APPLICATION THAT BY THE COMMITMENTS WHICH IT MENTIONS THE APPLICANT HAS IN MIND THE RECOMMENDATION OF THE COUNCIL, FORMULATED AT THE TIME OF THE ASSENT TO DECISION NO 14/55 MENTIONED ABOVE, THAT THE HIGH AUTHORITY SHOULD LIMIT VERY STRICTLY THE ACTION TAKEN BY IT IN RESPECT OF AND SUPERVISION EXERCISED OVER THE MEASURES ADOPTED BY THE BRUSSELS ORGANIZATIONS AND THEIR NATIONAL OFFICES . ACTING IN ACCORDANCE WITH THAT RECOMMENDATION THE HIGH AUTHORITY IS STATED TO HAVE FAILED IN ITS DUTY TO ENSURE THE ACHIEVEMENT OF THE OBJECTIVES BOTH OF THE TREATY AND OF THE FINANCIAL ARRANGEMENT . 45 THE POSSIBLE EXISTENCE OF THE ALLEGED COMMITMENTS IS IN ANY EVENT IRRELEVANT IN THE PRESENT CASE, SINCE THE RESPONSIBILITY OF THE COMMUNITY AUTHORITIES MUST BE CONSIDERED IN THE LIGHT OF THE ESTABLISHED RULES AND THE VALID PRINCIPLES APPLYING TO THE MATTER . THE HIGH AUTHORITY, FURTHERMORE, HAS NEVER SOUGHT TO EXONERATE ITSELF BY RELYING ON SUCH RECOMMENDATIONS OF THE COUNCIL, NOR COULD IT DO SO . 46 THE APPLICANT BASED ITS COMPLAINTS OF LACK OF SUPERVISION AND OF CARE ON NOTHING MORE THAN THE FACT THAT VERY SERIOUS FRAUDS TOOK PLACE IN THE MANAGEMENT OF THE EQUALIZATION SCHEME . 47 THE DEFENDANT CONSIDERS THE CLAIM TO BE INADMISSIBLE ON THE GROUND THAT IT IS NOT POSSIBLE TO SEE EXACTLY WHICH FACTS THE APPLICANT INTENDS TO RELY UPON, AS THE BASIS OF ITS RIGHT TO COMPENSATION . 48 THE MERE FACT THAT FRAUDS TOOK PLACE DOES NOT BY ITSELF PROVE THAT THE ADMINISTRATION FAILED IN ITS DUTIES OF SUPERVISION AND CONSEQUENTLY WAS GUILTY OF A WRONGFUL ACT OR OMISSION . THE COMMISSION HAS STATED THAT THE TONNAGES OF SCRAP WRONGFULLY ACCEPTED FOR EQUALIZATION AMOUNT TO APPROXIMATELY 2 PER CENT OF THE TOTAL TONNAGE ACCEPTED AND THAT THE FRAUDS COMPLAINED OF, ALTHOUGH THEY AMOUNT TO A SERIOUS DISADVANTAGE, WERE NOT OF SUCH A CHARACTER AS TO DISTORT THE EQUALIZATION SCHEME OR THROW IT OUT OF BALANCE . IT HAS STATED ALSO THAT AT PRESENT FOUR-FIFTHS OF THE WRONGLY PAID SUMS HAVE BEEN RECOVERED AND THAT, AS TO THE REST, PROCEEDINGS FOR RECOVERY ARE STILL PENDING . 49 HAVING REGARD TO THESE OBSERVATIONS, WHICH WERE NOT DISPUTED DURING THE PROCEEDINGS, THE COMPLAINTS PUT FORWARD MUST BE SUPPORTED BY MUCH MORE PRECISE PARTICULARS THAN THE GENERAL ASSERTIONS TO WHICH THE APPLICANT HAS CONFINED ITSELF, IN ORDER TO BE TAKEN INTO CONSIDERATION AS PROOF OF THE EXISTENCE OF A WRONGFUL ACT OR OMISSION . THIS HEAD OF THE ACTION FOR DAMAGES MUST CONSEQUENTLY ALSO BE REJECTED . 50 UNDER ARTICLE 67 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS . THE APPLICANT HAS FAILED IN ITS SUBMISSIONS . THE COURT HEREBY : 1 . DISMISSES THE APPLICATION; 2 . ORDERS THE APPLICANT TO BEAR THE COSTS . © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII URL: https://www.bailii.org/eu/cases/EUECJ/1971/C6769.html