CELEX: 62000TJ0383
Non-contractual liability of the Community
Incompatibility of the Community regime governing the import of bananas with the rules of the World Trade Organisation (WTO)
Imposition by the United States of America of retaliatory measures in the form of increased customs duty levied on imports from the Community, pursuant to a WTO authorisation
Decision of the WTO Dispute Settlement Body
Legal effects
Community liability in the absence of unlawful conduct of its institutions
Causal link
Unusual and special damage

Legal context
1       On 15 April 1994 the Community signed the Final Act concluding the Uruguay Round multilateral trade negotiations, the Agreement
establishing the World Trade Organisation (WTO) and all the agreements and understandings in Annexes 1 to 4 to the Agreement
establishing the WTO (‘the WTO agreements’).
2       Following signature of those instruments, the Council adopted Decision 94/800/EC of 22 December 1994 concerning the conclusion
on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round
multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1).
3       As is apparent from the preamble to the Agreement establishing the WTO, the contracting parties intended to enter into ‘reciprocal
and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to
the elimination of discriminatory treatment in international trade relations’.
4       Article II(2) of the Agreement establishing the WTO provides:
‘The agreements and associated legal instruments included in Annexes 1, 2 and 3 … are integral parts of this Agreement, binding
on all Members.’
5       Article XVI of the Agreement establishing the WTO, headed ‘Miscellaneous Provisions’, provides in paragraph 4:
‘Each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided
in the annexed Agreements.’
6       The Understanding on Rules and Procedures Governing the Settlement of Disputes (‘the DSU’), which is set out in Annex II to
the Agreement establishing the WTO, specifies, in the final sentence of paragraph 2 of Article 3, which is headed ‘General
Provisions’:
‘Recommendations and rulings of the [Dispute Settlement Body] cannot add to or diminish the rights and obligations provided
in the covered agreements.’
7       Article 3(7) of the DSU states:
‘Before bringing a case, a Member shall exercise its judgement as to whether action under these procedures would be fruitful.
The aim of the dispute settlement mechanism is to secure a positive solution to a dispute. A solution mutually acceptable
to the parties to a dispute and consistent with the covered agreements is clearly to be preferred. In the absence of a mutually
agreed solution, the first objective of the dispute settlement mechanism is usually to secure the withdrawal of the measures
concerned if these are found to be inconsistent with the provisions of any of the covered agreements. The provision of compensation
should be resorted to only if the immediate withdrawal of the measure is impracticable and as a temporary measure pending
the withdrawal of the measure which is inconsistent with a covered agreement. The last resort which [the DSU] provides to
the Member invoking the dispute settlement procedures is the possibility of suspending the application of concessions or other
obligations under the covered agreements on a discriminatory basis vis-à-vis the other Member, subject to authorisation by
the [Dispute Settlement Body] of such measures.’
8       Article 7 of the DSU provides that panels are to make such findings as will assist the Dispute Settlement Body (‘the DSB’)
in making recommendations or in giving rulings on the matters submitted to that body. Under Article 12(7) of the DSU, where
the parties to the dispute do not manage to develop a mutually satisfactory solution, the panel is to submit its findings
in the form of a written report to the DSB.
9       Article 17 of the DSU provides for establishment by the DSB of a standing Appellate Body responsible for hearing appeals from
panel cases.
10     As provided in Article 19 of the DSU, where a panel or the Appellate Body concludes that a measure is inconsistent with a
WTO agreement, it is to recommend that the member concerned bring the measure into conformity with that agreement. In addition
to its recommendations, the panel or Appellate Body may suggest ways in which the member concerned could implement the recommendations.
11     According to Article 21(1) of the DSU, under the heading ‘Surveillance of Implementation of Recommendations and Rulings’,
prompt compliance with recommendations or rulings of the DSB is essential in order to ensure effective resolution of disputes
to the benefit of all members.
12     By virtue of Article 21(3) of the DSU, a member unable to comply immediately with the DSB’s recommendations and rulings is
to be allowed a reasonable period of time, determined, if necessary, through binding arbitration.
13     Where there is disagreement as to the existence, or consistency with a WTO agreement, of measures taken to comply with the
DSB’s recommendations and rulings, Article 21(5) of the DSU states that such dispute is to be decided through recourse to
the dispute settlement procedures laid down by the DSU, including wherever possible resort to the original panel.
14     Under Article 21(6) of the DSU, the DSB keeps under surveillance the implementation of adopted recommendations or rulings
and, unless the DSB decides otherwise, the issue of implementation of the recommendations or rulings is placed on the agenda
of the DSB meeting after six months following the date of establishment of the reasonable period of time pursuant to Article
21(3) and remains on the DSB’s agenda until the issue is resolved.
15     Article 22 of the DSU, headed ‘Compensation and the Suspension of Concessions’, provides:
‘1.      Compensation and the suspension of concessions or other obligations are temporary measures available in the event that the
recommendations and rulings are not implemented within a reasonable period of time. However, neither compensation nor the
suspension of concessions or other obligations is preferred to full implementation of a recommendation to bring a measure
into conformity with the covered agreements. Compensation is voluntary and, if granted, shall be consistent with the covered
agreements.
2.      If the Member concerned fails to bring the measure found to be inconsistent with a covered agreement into compliance therewith
or otherwise comply with the recommendations and rulings within the reasonable period of time determined pursuant to paragraph
3 of Article 21, such Member shall, if so requested, and no later than the expiry of the reasonable period of time, enter
into negotiations with any party having invoked the dispute settlement procedures, with a view to developing mutually acceptable
compensation. If no satisfactory compensation has been agreed within 20 days after the date of expiry of the reasonable period
of time, any party having invoked the dispute settlement procedures may request authorisation from the DSB to suspend the
application to the Member concerned of concessions or other obligations under the covered agreements.
3.      In considering what concessions or other obligations to suspend, the complaining party shall apply the following principles
and procedures:
(a)      the general principle is that the complaining party should first seek to suspend concessions or other obligations with respect
to the same sector(s) as that in which the panel or Appellate Body has found a violation or other nullification or impairment;
(b)      if that party considers that it is not practicable or effective to suspend concessions or other obligations with respect to
the same sector(s), it may seek to suspend concessions or other obligations in other sectors under the same agreement;
(c)      if that party considers that it is not practicable or effective to suspend concessions or other obligations with respect to
other sectors under the same agreement, and that the circumstances are serious enough, it may seek to suspend concessions
or other obligations under another covered agreement;
...
4.      The level of the suspension of concessions or other obligations authorised by the DSB shall be equivalent to the level of
the nullification or impairment.
…
6.      When the situation described in paragraph 2 occurs, the DSB, upon request, shall grant authorisation to suspend concessions
or other obligations within 30 days of the expiry of the reasonable period of time unless the DSB decides by consensus to
reject the request. However, if the Member concerned objects to the level of suspension proposed, or claims that the principles
and procedures set forth in paragraph 3 have not been followed where a complaining party has requested authorisation to suspend
concessions or other obligations … , the matter shall be referred to arbitration. Such arbitration shall be carried out by
the original panel, if members are available, or by an arbitrator appointed by the Director-General and shall be completed
within 60 days after the date of expiry of the reasonable period of time. Concessions or other obligations shall not be suspended
during the course of the arbitration.
7.      The arbitrator acting pursuant to paragraph 6 shall not examine the nature of the concessions or other obligations to be suspended
but shall determine whether the level of such suspension is equivalent to the level of nullification or impairment. … The
parties shall accept the arbitrator’s decision as final and the parties concerned shall not seek a second arbitration. The
DSB shall be informed promptly of the decision of the arbitrator and shall, upon request, grant authorisation to suspend concessions
or other obligations where the request is consistent with the decision of the arbitrator, unless the DSB decides by consensus
to reject the request.
8.      The suspension of concessions or other obligations shall be temporary and shall only be applied until such time as the measure
found to be inconsistent with a covered agreement has been removed, or the Member that must implement recommendations or rulings
provides a solution to the nullification or impairment of benefits, or a mutually satisfactory solution is reached. In accordance
with [Article 21(6) of the DSU], the DSB shall continue to keep under surveillance the implementation of adopted recommendations
or rulings, including those cases where compensation has been provided or concessions or other obligations have been suspended
but the recommendations to bring a measure into conformity with the covered agreements have not been implemented.
...’

Facts
16     On 13 February 1993 the Council adopted Regulation (EEC) No 404/93 on the common organisation of the market in bananas (OJ
1993 L 47, p. 1) (‘the COM for bananas’). The regime governing trade with third countries that was laid down by Title IV of
the regulation contained preferential provisions for bananas originating in certain African, Caribbean and Pacific (ACP) States
which were cosignatories of the Fourth ACP-EEC Convention signed at Lomé on 15 December 1989 (OJ 1991 L 229, p. 3).
17     Following complaints lodged in February 1996 with the DSB by several WTO members, including Ecuador and the United States
of America, on 22 May 1997 the panel constituted in accordance with the DSU presented its reports concluding that the import
regime under the COM for bananas was incompatible with the obligations entered into by the Community under the WTO agreements.
The reports drawn up by the panel also recommended that the DSB request the Community to bring that regime into conformity
with its obligations under the WTO agreements.
18     Following an appeal by the Community, on 9 September 1997 the Appellate Body essentially upheld the panel’s conclusions, and
recommended that the DSB request the Community to bring the Community provisions at issue into conformity with the WTO agreements.
19     On 25 September 1997 the reports of the panel and the Appellate Body were adopted by the DSB.
20     On 16 October 1997 the Community informed the DSB, in accordance with Article 21(3) of the DSU, that it would fully respect
its international obligations.
21     On 17 November 1997, the complainant States requested, pursuant to Article 21(3)(c) of the DSU, that the reasonable period
within which the Community was to comply with its obligations be fixed by binding arbitration.
22     By award published on 7 January 1998, the arbitrator specified for that purpose the period from 25 September 1997 to 1 January
1999.
23     By adopting Regulation (EC) No 1637/98 of 20 July 1998 amending Regulation No 404/93 (OJ 1998 L 210, p. 28), the Council amended
the regime governing trade in bananas with third countries.
24     The preamble to Regulation No 1637/98 states:
‘(1) … a number of changes are required in the provisions on trade with third countries contained in Title IV of Regulation
… No 404/93;
(2) … the Community’s international commitments under the [WTO] and to the other signatories of the Fourth ACP-EC Convention
should be met, whilst achieving at the same time the purposes of the [COM for bananas];
…
(9) … operation of this Regulation should be reviewed at the end of an adequate trial period;
…’
25     On 28 October 1998 the Commission adopted Regulation (EC) No 2362/98 laying down detailed rules for the implementation of
Regulation No 404/93 regarding imports of bananas into the Community (OJ 1998 L 293, p. 32). This regulation contains the
body of provisions necessary for implementation of the new regime governing trade in bananas with third countries, including
the transitional measures justified by the imminence of the entry into force of its implementing rules.
26     Since the United States of America took the view that the Community had set up a banana import regime that was designed to
preserve the unlawful elements of the previous regime, in breach of the WTO agreements and the DSB’s decision of 25 September
1997, it published on 10 November 1998 in the
Federal Register
a provisional list of products originating in Member States of the Community on whose import it proposed to charge increased
customs duty by way of retaliation.
27     On 21 December 1998 the United States of America announced that it intended to apply from 1 February 1999, or at the latest
3 March 1999, customs duty at the rate of 100% on imports of Community products appearing on a list drawn up by the United
States authorities.
28     On 14 January 1999 the United States of America requested the DSB, pursuant to Article 22(2) of the DSU, to authorise suspension
of the application to the Community and its Member States of tariff concessions and related obligations under the General
Agreement on Tariffs and Trade (GATT) 1994 and the General Agreement on Trade in Services (GATS), in respect of trade amounting
to USD 520 million.
29     At a meeting of the DSB which took place from 25 January to 1 February 1999, the Community contested that amount, on the ground
that it did not correspond to the level of nullification or impairment suffered by the United States of America and maintained
that the principles and procedures laid down by Article 22(3) of the DSU had not been observed.
30     On 29 January 1999 the DSB decided, at the request of the Community, to refer this matter for arbitration by the original
panel, on the basis of Article 22(6) of the DSU, and deferred a decision on the United States of America’s request for authorisation
pending determination of the permitted amount of duty to be levied by way of retaliatory measure.
31     On 3 March 1999 the United States authorities introduced a requirement for Community exporters of products appearing on a
new list drawn up by them to provide a bank guarantee for 100% of the value of the imports covered.
32     By decision of 9 April 1999 the arbitrators, first, found that several provisions of the new import regime under the COM for
bananas were contrary to provisions of the WTO agreements and set the level of nullification or impairment suffered by the
United States of America at USD 191.4 million per year, and second, held that the suspension by that country of the application
to the Community and its Member States of tariff concessions and related obligations under the GATT 1994 covering trade in
a maximum amount of USD 191.4 million per year would be consistent with Article 22(4) of the DSU.
33     On 7 April 1999 the United States of America requested pursuant to Article 22(7) of the DSU that the DSB authorise it to levy
customs duty on imports up to that amount.
34     By press release of 9 April 1999, the United States Trade Representative (‘the Trade Representative’) announced the list of
products whose import was subject to 100% customs duty. The products listed, originating in Austria, Belgium, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden or the United Kingdom, included ‘folding cartons, boxes
and cases of non-corrugated paper or paperboard’. It was stated that the Trade Representative would publish the determination
imposing the 100% duty in the
Federal Register
and intended to make imposition of the duty effective as from 3 March 1999.
35     That decision, published on 19 April 1999 in the
Federal Register
(Volume 64, No 74, pp. 19209 to 19211), was adopted on the basis of section 301 of the 1974 Trade Act, which provides that
the Trade Representative is to take the measures authorised if he finds a breach of the rights of the United States of America
under a trade agreement.
36     It is apparent from the section of that decision concerning the ‘effective date’ that the Trade Representative ‘determined
that, effective April 19, 1999, a 100% ad valorem rate of duty [would] be applied to the articles that are entered, or withdrawn
from warehouse, for consumption on or after March 3, 1999’.
37     A panel constituted following a request made by Ecuador on 18 December 1998 under Article 21(5) of the DSU also concluded,
on 6 April 1999, that the new Community regime governing the import of bananas was incompatible with the WTO agreements. The
panel’s report was approved by the DSB on 6 May 1999.
38     On 19 April 1999 the DSB authorised the United States of America to levy customs duties in respect of trade amounting to up
to USD 191.4 million per year on imports originating in the Community.
39     On 25 May 1999 the Community contested before the WTO bodies the United States retaliatory measures in respect of the period
from 3 March to 19 April 1999, in particular on the ground that they took effect on 3 March 1999.
40     Since the panel to which the matter was referred by the Community found that the entry into force of the United States increased
duty on 3 March 1999 was contrary to the DSU, it deferred the date on which that measure took effect to 19 April 1999.
41     In negotiations with all the interested parties, the Community proposed amendments to the new COM for bananas. Those amendments
were enacted in Council Regulation (EC) No 216/2001 of 29 January 2001 amending Regulation No 404/93 (OJ 2001 L 31, p. 2).
42     The preamble to Regulation No 216/2001 states:
‘(1) There have been numerous close contacts with supplier countries and other interested parties to settle the disputes arising
from the import regime established by Regulation … No 404/93 and to take account of the conclusions of the [panel] set up
under the dispute settlement system of the [WTO].
(2) Analysis of all the options presented by the Commission suggests that establishment in the medium term of an import system
founded on the application of a customs duty at an appropriate rate and application of a preferential tariff to imports from
ACP countries provides the best guarantees, firstly of achieving the objectives of the common organisation of the market as
regards Community production and consumer demand, secondly of complying with the rules on international trade, and thirdly
of preventing further disputes.
(3) However, such a system must be introduced upon completion of negotiations with the Community’s partners in accordance
with WTO procedures, in particular Article XXVIII of the [GATT]. The result of these negotiations must be submitted for approval
to the Council which must also, in accordance with the provisions of the Treaty, establish the applicable level of the Common
Customs Tariffs.
(4) Until the entry into force of that regime, the Community should be supplied under several tariff quotas open to imports
from all origins and managed in line with the recommendations made by the [DSB].
(5) In view of the contractual obligations towards the ACP countries and the need to guarantee them proper conditions of competition,
application to imports of bananas originating in those countries of a tariff preference of EUR 300 per tonne would allow the
trade flows in question to be maintained. This will entail in particular the application to such imports of zero duty under
the … tariff quotas.
(6) The Commission should be authorised to open negotiations with supplier countries having a substantial interest in supplying
the Community market to endeavour to achieve a negotiated allocation of the first two tariff quotas. …’
43     On 11 April 2001 the United States of America and the Community concluded a memorandum of understanding identifying ‘the means
by which the long-standing dispute over the EC’s banana import regime can be resolved’. That memorandum provided that the
Community undertook to ‘introduce a tariff-only regime for imports of bananas no later than 1 January 2006’. The memorandum
defined the measures which the Community undertook to take during the interim period expiring on 1 January 2006. In return,
the United States of America undertook to suspend provisionally the imposition of the increased customs duty which they were
authorised to levy on Community imports. The United States of America stated, however, by a communication to the DSB of 26 June
2001, that that memorandum of understanding ‘[did] not in itself constitute a mutually agreed solution pursuant to Article
3(6) of the DSU [and that], in view of the steps yet to be taken by all parties, it would also be premature to take this item
off the DSB agenda’.
44     By Regulation (EC) No 896/2001 of 7 May 2001 laying down detailed rules for applying Regulation No 404/93 as regards the arrangements
for importing bananas into the Community (OJ 2001 L 126, p. 6), the Commission set out the detailed rules for applying the
new Community regime for importing bananas that had been introduced by Regulation No 216/2001.
45     The United States of America suspended application of the increased customs duty with effect from 30 June 2001. From 1 July
2001 its import duty on folding cartons, boxes and cases originating in the Community was reduced to its initial rate.
46     Statistics produced by the Commission at the Court’s request show that the total c.i.f. (cost, insurance, freight) value of
imports into the United States of folding cartons, boxes and cases originating in the Community amounted to USD 27 932 045
in 1998, USD 16 645 665 in 1999, USD 9 531 023 in 2000 and, finally, USD 18 444 637 in 2001.
47     Beamglow Ltd produces folding boxes made of printed and decorated paperboard. These boxes are intended as packaging for products
such as cosmetics and fragrances and fall within the product category ‘folding cartons, boxes and cases of non-corrugated
paper or paperboard’ concerned by the increased customs duty.

Procedure
48     By application lodged at the Registry of the Court of First Instance on 22 December 2000, the applicant brought the present
action claiming compensation for the damage alleged to result from the increased duty.
49     By document lodged at the Court Registry on 20 March 2001, the Parliament raised an objection of inadmissibility under Article
114 of the Rules of Procedure of the Court of First Instance.
50     On 8 June 2001, the applicant lodged its written comments on that objection.
51     By order of the President of the Fourth Chamber of 12 June 2001, the Kingdom of Spain was granted leave to intervene in support
of the forms of order sought by the defendants.
52     A decision on the objection of inadmissibility raised by the Parliament was reserved to the final judgment by order of 16
October 2001.
53     Following a request made by the Commission pursuant to the second subparagraph of Article 51(1) of the Rules of Procedure,
the case was referred to a chamber in extended composition, composed of five Judges, by decision of the Court of 4 July 2002.
54     The case was reassigned to the First Chamber, Extended Composition, on 3 October 2002, pursuant to the decision of the Court
of First Instance of 4 July 2002 on the composition of chambers and the assignment of cases to them.
55     When the Judge-Rapporteur initially designated could no longer act as a result of ceasing to hold office, the President of
the Court appointed a new Judge-Rapporteur, by decision of 18 December 2002.
56     On 1 April 2004 the Court, after hearing the parties, decided to refer the present case and five related cases to the Grand
Chamber of the Court.
57     By order of 19 May 2004, the President of the Grand Chamber, after hearing the parties, joined the six cases for the purposes
of the oral procedure.
58     By way of measures of organisation of procedure, the Court requested the parties to reply in writing prior to the hearing
to a series of questions. The parties duly adduced the information required.
59     The parties presented oral argument and answered questions put by the Court at the hearing of the Grand Chamber which took
place on 26 May 2004.

Forms of order sought
60     The applicant claims that the Court should:
–       order the defendants jointly and severally to pay compensation to the applicant in the sum of GBP 1 299 632;
–       in the alternative, order the defendants to present to the Court within a reasonable period of time after the date of the
judgment figures as to the amount of the compensation agreed between the parties or, in the absence of agreement, order the
parties to present to the Court within the same period their conclusions with detailed figures;
–       order that interest at the annual rate of 8% or any other appropriate rate to be determined by the Court be paid on the compensation
payable, as from the date of the judgment;
–       order the Community, represented by the Parliament, the Council and the Commission, to bear the costs;
–       adopt such further measures as might reasonably be found necessary.
61     The defendants, supported by the Kingdom of Spain, contend that the Court should:
–       dismiss the action as inadmissible or, in the alternative, as unfounded;
–       order the applicant to pay the costs.

Admissibility
62     The defendants contest the admissibility of the action in three respects. It is submitted (i) that Beamglow’s action for compensation
is inadmissible in so far as it is brought against the Parliament; (ii) that the application does not comply with the requirements
of Article 44(1)(c) of the Rules of Procedure; and (iii) that the Court lacks jurisdiction to rule on the present action.

Inadmissibility of the action in so far as it is brought against the Parliament
63     The Parliament pleads that the action is inadmissible in its regard. First, Beamglow’s lawyer is not empowered to act against
it, having failed to produce, on the date when the application was lodged, an authority to act designating the Parliament
as a defendant institution. Second, the application is not supported by any evidence capable of establishing liability which
the Community could incur by reason of the Parliament’s conduct.
64     The Court considers it expedient first to examine the second plea of inadmissibility put forward by the Parliament.
Arguments of the parties
65     The Parliament submits that the application does not in any way establish how the Parliament could have rendered the Community
liable. In any event, the Parliament cannot be considered responsible for the alleged damage given its lack of competence
to decide the terms of the Community agricultural legislation at issue or to adopt measures capable of causing, preventing
or mitigating the alleged damage. The resolutions adopted by the Parliament were merely a reflection of the exercise of its
general power of debate.
66     The applicant replies that the damage suffered by it is due to failures at every stage in the process for changing the Community
regime governing the import of bananas and, consequently, to the part played by all the institutions involved, including the
Parliament.
67     According to the applicant, the Parliament was consulted before the adoption of Regulations No 404/93 and No 1637/98 which
were declared incompatible with the WTO agreements. The Parliament possessed, but failed to exercise, the right to submit
any appropriate proposal on matters which it considered to require a Community act. Finally, various opinions, resolutions
and interventions of the Parliament stressed the need to prevent the disastrous effects of the WTO rules for the producer
regions of the Community.
Findings of the Court
68     Where, as here, proceedings are brought in respect of its non-contractual liability, the Community is represented before the
Community courts by the institution or institutions responsible for the matters supposedly at the origin of the damage alleged.
69     In particular, an applicant seeking compensation is justified in bringing his action against the Community, as represented
by the Commission and the Council, where, in accordance with the third subparagraph of Article 43(2) of the EC Treaty (Article
43 is now, after amendment, Article 37 EC), the former has proposed, and the latter adopted, the Community agricultural legislation
whose unlawfulness is claimed to be at the origin of the damage alleged (Joined Cases 63/72 to 69/72
Werhahn and Others
v
Council
[1973] ECR 1229, paragraphs 7 and 8).
70     The above provision does not confer any decision-making power on the Parliament and allows it to act only as a consultative
organ in the course of the procedure for adoption by the Council alone of regulations, directives and decisions relating to
the common agricultural policy.
71     The opinion which the Parliament gave on that basis concerning the proposal submitted to it that led to Regulation No 1637/98
was not therefore in any way binding.
72     The same is true of the opinions and resolutions which the Parliament should, if appropriate, have adopted in favour of businesses
operating in sectors other than the banana sector. Not being binding, such resolutions could not have given rise to a legitimate
expectation that the Council and the Commission would comply with them (Joined Cases 87/77, 130/77, 22/83, 9/84 and 10/84
Salerno and Others
v
Commission and Council
[1985] ECR 2523, paragraph 59) or, consequently, have created obligations to that effect for those two institutions (see,
to this effect, the order of the Court of Justice of 29 October 2004 in Case C‑18/04 P
Krikorian and
Others
v
Parliament and Others
, not published in the ECR, paragraph 33).
73     In those circumstances, both the adoption of Council Regulation No 1637/98 and of Commission Regulation No 2362/98 which were
found by the DSB to be incompatible with the WTO agreements and the alleged failure to bring the import regime at issue into
conformity with the agreements must be regarded as falling within the competence of the Council and the Commission alone.
74     It does not therefore appear that the Parliament could have contributed to creating any non-contractual liability which the
Community might incur as a result of the Community regime governing the import of bananas being incompatible with the WTO
agreements.
75     Accordingly, the objection of inadmissibility raised by the Parliament should be upheld and the action dismissed as inadmissible
in so far as it is brought against the Parliament, without there being any need to rule on the plea of inadmissibility concerning
the unavailability, on the date when the action was brought, of an authority from Beamglow empowering its lawyer to proceed
against the Parliament.

Failure of the application to comply with the requirements of Article 44(1)(c) of the Rules of Procedure
Arguments of the parties
76     The Council and the Commission contend that the application is inadmissible in that it alleges in the alternative that they
adopted unlawful legislative measures and that they were guilty of an omission, with the result that they are not in a position
to submit a proper defence. Nor does the application demonstrate the existence or the nature of the damage complained of.
77     The applicant replies that the application sets out the approximate extent of the damage suffered and the evidence on the
basis of which its nature and extent can be assessed, and that the evidence subsequently provided demonstrates plainly that
the damage is real and certain.
Findings of the Court
78     Under the first paragraph of Article 21 of the Statute of the Court of Justice, applicable to the procedure before the Court
of First Instance by virtue of the first paragraph of Article 53 of that Statute, and under Article 44(1)(c) of the Rules
of Procedure of the Court, all applications must indicate the subject-matter of the dispute and contain a summary of the pleas
in law on which the application is based. That statement must be sufficiently clear and precise to enable the defendant to
prepare his defence and the Court to rule on the application, if necessary, without any further information. In order to guarantee
legal certainty and sound administration of justice it is necessary, in order for an action to be admissible, that the basic
legal and factual particulars relied on be indicated, at least in summary form, coherently and intelligibly in the application
itself.
79     In order to satisfy those requirements, an application seeking, as in the present case, compensation for damage allegedly
caused by Community institutions must set out the evidence from which can be identified both the conduct of which the applicant
accuses those institutions and the reasons for which the applicant considers that there is a causal link between that conduct
and the damage he claims to have suffered (Case T-113/96
Dubois et Fils
v
Council and Commission
[1998] ECR II‑125, paragraphs 29 and 30).
80     As is apparent from its arguments, the applicant effectively contends that it has suffered damage because, first, the Community
regime governing the import of bananas was not amended so as to bring it into conformity with the obligations entered into
by the Community under the WTO agreements within the time-limit laid down by the DSB and, second, there were no Community
measures protecting the applicant against the United States trade reprisals.
81     Contrary to the submissions made by the defendants, the application thus contains the evidence enabling the conduct of which
the applicant accuses them and which it considers to be the cause of the damage to it to be identified.
82     It is, moreover, apparent from the arguments set out by the defendants on the merits of the action that they have been fully
able to prepare their defence on the conditions under which the Community incurs non-contractual liability. It follows that
the Court is in a position to rule on the action fully informed of the file contents and in compliance with the
audi alteram partem
rule.
83     The ground of challenge put forward by the Council and the Commission alleging that the application does not comply with the
requirements of Article 44(1)(c) of the Rules of Procedure will therefore be rejected.

Jurisdiction of the Court
Arguments of the parties
84     The Council and the Commission question whether the Court has jurisdiction to hear the present action for compensation. The
imposition of increased customs duty arose from a decision of the Government of the United States of America and not from
an act of a Community institution. The jurisdiction of the Community courts cannot be invoked on the basis of a mere allegation
of harm supposedly resulting from an act or omission of a Community institution.
85     The Community courts cannot entertain an action for compensation brought against a Community institution where the act at
the origin of the alleged damage has been committed autonomously by a State (Joined Cases 89/86 and 91/86
Étoile commerciale and CNTA
v
Commission
[1987] ECR 3005, paragraphs 18 to 20).
86     The applicant responds that its action is directed not against the conduct of the United States authorities but against that
of the Community, which caused the imposition of the increased duty and failed to protect the applicant against it.
Findings of the Court
87     Article 235 EC, in conjunction with the second paragraph of Article 288 EC, confers jurisdiction upon the Community courts
to hear actions seeking compensation for damage caused by the Community institutions or by their servants in the performance
of their duties.
88     In the present case, the applicant claims compensation for the damage allegedly suffered by it both by reason of the increase
in the import duty imposed on its products by the authorities of the United States of America, in accordance with the authorisation
granted by the DSB following the finding that the Community regime governing the import of bananas was incompatible with the
WTO agreements, and because of the defendants’ failure to adopt Community measures designed to protect against the United
States trade reprisals.
89     The action is thus grounded on the Community’s non-contractual liability which the applicant claims is incurred because the
cause of its loss lies in the enactment by the Council and the Commission of legislation which was found by the DSB to be
incompatible with the WTO agreements, without there being Community measures conferring protection.
90     The Court therefore has jurisdiction to hear, under Article 235 EC and the second paragraph of Article 288 EC, the present
claim for compensation which, in contrast to the situation obtaining in
Étoile commerciale and CNTA
v
Commission
, cited in paragraph 85 above, on which the Commission relies, is not directed exclusively at a decision of a national body
as the basis for liability.
91     It is true that, according to settled case-law, in order for the Community to incur liability the damage alleged must be attributable
to the conduct of the Community institutions. However, this involves a substantive condition, which must be investigated when
reviewing whether a sufficiently direct causal link exists between the damage alleged and the institutions’ conduct and which
does not enable the Court to deny jurisdiction, once it is alleged that the damage is attributable to the conduct of the Community
institutions.
92     The line of argument developed by the Council and the Commission concerning the Court’s lack of jurisdiction will therefore
be rejected, but without prejudice to the assessment of the causal link between the conduct of the Council and the Commission
and the alleged damage, which will be made when examining whether the conditions for non-contractual liability are fulfilled.
93     Accordingly, the action will be declared admissible.

Substance
94     The applicant’s claim for compensation is founded on the rules governing non-contractual liability of the Community for the
unlawful conduct of its institutions. The applicant also relies on the non-contractual liability that the Community may incur
even in the absence of such conduct (judgment in Case T‑184/95
Dorsch Consult
v
Council and Commission
[1998] ECR II-667, paragraph 59, upheld on appeal in Case C-237/98 P
Dorsch Consult
v
Council and Commission
[2000] ECR I-4549, paragraphs 19 and 53).

Liability of the Community for unlawful conduct of its institutions
95     It is settled case-law that in order for the Community to incur non-contractual liability under the second paragraph of Article
288 EC for unlawful conduct of its institutions a number of conditions must be satisfied: the institutions’ conduct must be
unlawful, actual damage must have been suffered and there must be a causal link between the conduct and the damage pleaded
(Case 26/81
Oleifici Mediterranei
v
EEC
[1982] ECR 3057, paragraph 16, Case T‑175/94
International
Procurement Services
v
Commission
[1996] ECR II‑729, paragraph 44; Case T-336/94
Efisol
v
Commission
[1996] ECR II‑1343, paragraph 30, and Case T-267/94
Oleifici Italiani
v
Commission
[1997] ECR II‑1239, paragraph 20).
96     If any one of those conditions is not satisfied, the action must be dismissed in its entirety and it is unnecessary to consider
the other conditions (Case C-146/91
KYDEP
v
Council and Commission
[1994] ECR I-4199, paragraphs 19 and 81, and Case T-170/00
Förde-Reederei
v
Council and Commission
[2002] ECR II‑515, paragraph 37).
97     The unlawful conduct alleged against a Community institution must consist of a sufficiently serious breach of a rule of law
intended to confer rights on individuals (Case C-352/98 P
Bergaderm and Goupil
v
Commission
[2000] ECR I‑5291, paragraph 42).
98     The decisive test for finding that that requirement is fulfilled is whether the Community institution concerned manifestly
and gravely disregarded the limits on its powers.
99     Where an institution has only a considerably reduced, or even no, discretion, the mere infringement of Community law may be
sufficient to establish the existence of a sufficiently serious breach (Joined Cases T-198/95, T-171/96, T-230/97, T‑174/98
and T-225/99
Comafrica
and Dole Fresh Fruit Europe
v
Commission
[2001] ECR II‑1975, paragraph 134, and Joined Cases T-64/01 and T-65/01
Afrikanische Frucht-Compagnie and Internationale Fruchtimport Gesellschaft Weichert
v
Council and Commission
[2004] ECR II-521, paragraph 71).
100   It is in the light of those observations that the applicant’s claim for compensation will be examined.
Arguments of the parties
–       The unlawful conduct of which the defendant institutions are accused
101   The applicant submits that, by failing to bring the Community regime governing the import of bananas into conformity with
the WTO agreements, the defendants infringed the GATT 1994, the GATS and the DSB’s recommendations and rulings.
102   The Community’s failure to perform its obligations under the WTO agreements thwarted the applicant’s legitimate expectations
in respect of its sales and investments in the United States and infringed the principle of legal certainty.
103   The Community could have funded a policy of maintaining in place conditions favourable to trade in bananas with regard to
its ACP partners either by financing it from the general budget by way of negotiated compensation under Article 22(2) of the
DSU or by provoking the retaliatory measures imposed in the present case by the United States of America.
104   However, that shifting of the cost of protecting ACP banana producers onto other sectors was neither necessary nor appropriate.
The Community should have taken precautions to avoid the applicant being asked to pay the price of the Community’s decision
to ignore its international obligations.
105   The Community’s policy choice thus infringed the principle of proportionality, the applicant’s fundamental right to pursue
an economic activity and its right to property.
106   The defendants allege that the applicant has not proved the nature or substance of the alleged omission or the source of the
duty to act which they are alleged to have breached.
107   WTO members act legally if, with a view to putting an end to the incompatibility of a measure with WTO rules as determined
by the DSB, they restore the balance of their respective concessions, which has been upset by the measure at issue, by choosing
one of the options made available by the DSU.
108   In the present case, the Community had no other choice but to comply with all its international obligations by opening negotiations
and proposing amendments to the COM for bananas. Those amendments were incorporated into the revised COM for bananas by Regulation
No 216/2001 and by Commission Regulation (EC) No 395/2001 of 27 February 2001 fixing certain indicative quantities and individual
ceilings for the issuing of Community import licences for bananas for the second quarter of 2001 under the tariff quotas or
as part of the quantity of traditional ACP bananas (OJ 2001 L 58, p. 11).
109   The protection of legitimate expectations applies only to situations and relationships lawfully created under Community law,
which do not extend to any relationship between the applicant and its United States customers. The concessions exchanged by
the members of the WTO cannot in any case found a legitimate expectation of permanent access to a given national market. The
Community institutions have never given the applicant any specific assurance as to the manner in which the Community would
comply with the DSB’s rulings and recommendations.
110   It is not apparent how the principles of proportionality or of the protection of legitimate expectations, the applicant’s
right freely to pursue its economic activity or its right to property could have been infringed independently of a breach
of WTO rules.
111   The applicant regards as disproportionate not the banana import regime itself but the decision to tolerate the suspension
of concessions by the United States of America, when that was the only option available to the Community.
112   Finally, the applicant’s freedom to pursue its economic activity was impeded by the suspension of tariff concessions by the
United States of America, and not by the adoption of the COM for bananas.
–       The legal nature of the rules of law allegedly infringed by the defendants
113   The applicant submits that, inasmuch as the infringed rules of the GATT and the GATS reduce obstacles to trade between WTO
members and thus allow undertakings to trade more freely, they confer rights on individuals, as do the recommendations and
rulings of the DSB, which clarify the WTO agreements. This must also be accepted as regards the principles of the protection
of legitimate expectations, legal certainty and proportionality, the applicant’s right freely to pursue its economic activity
and its right to property.
114   The Community courts may review the legality of a Community measure in the light of the WTO agreements where the Community
intended, as in the present case, to implement a particular obligation assumed in the context of the WTO.
115   The defendants reply that, as is apparent from decisions of WTO bodies and from Community case-law, it is not possible to
invoke the rules of the WTO or the recommendations of the DSB to establish the unlawfulness of an act or omission of a Community
institution.
116   The question as to whether the provisions of the GATT and the GATS are capable of conferring rights on individuals is therefore
irrelevant as the applicant cannot rely on those rights.
117   Nor can a DSB decision have more extensive effects within the Community legal order than the provisions of the WTO agreements
on which it is based.
–       The seriousness of the alleged breaches
118   The applicant submits that the WTO agreements imposed limits on the choices available to the Community for adjusting its banana
import regime which were clearly exceeded by the Community. The repeated infringement of the WTO rules over a long period
amounts to a manifest and grave disregard of the limits on the Community’s discretion.
119   This results in a manifest and serious failure to fulfil the applicant’s legitimate expectations and in a manifest and serious
breach of the principle of proportionality, of the applicant’s right freely to pursue its economic activity and of its right
to property.
120   The Council and the Commission deny having manifestly and seriously exceeded the limits of their discretion in choosing to
settle the dispute by adopting a new COM for bananas.
121   A WTO member is not obliged to apply
stricto sensu
findings of a panel or of the Appellate Body, but has at its disposal various methods for implementing them.
122   The panel which decided, pursuant to Article 21(5) of the DSU, that certain aspects of the banana import regime laid down
by Regulations No 1637/98 and No 2362/98 were incompatible with WTO rules suggested three solutions for rendering the regime
consistent with the rules, a fact which shows the extent of the Community’s discretion and the difficulty of fashioning legislation
compatible with WTO rules.
123   Since the Community cannot be held responsible for the acts of a sovereign non-member State, it cannot be considered to have
seriously infringed the principles of proportionality and of the protection of legitimate expectations and the right to pursue
an economic activity.
124   Exercise of the legislative function must not be hindered by the prospect of actions for damages whenever the general interest
of the Community requires legislative measures to be adopted which may adversely affect individual interests (Joined Cases
C-46/93 and C-48/93
Brasserie du pêcheur and Factortame
[1996] ECR I-1029, paragraph 45).
Findings of the Court
–       The preliminary question as to whether the WTO rules may be relied upon
125   Before examining the legality of the conduct of the Community institutions, it is necessary to decide whether the WTO agreements
give rise, for persons subject to Community law, to the right to rely on those agreements when contesting the validity of
Community legislation if the DSB has declared that both that legislation and the subsequent legislation adopted by the Community
in order to comply with the WTO rules in question are incompatible with those rules.
126   In asserting that the defendants have breached WTO rules, the applicant relies on the principle
pacta sunt servanda
, which is one of the rules of law with which the Community institutions must comply when carrying out their functions, being
a fundamental principle of all legal orders and particularly of the international legal order (Case C-162/96
Racke
[1998] ECR I‑3655, paragraph 49).
127   However, the principle
pacta sunt servanda
cannot be asserted against the defendants in the present case since, in accordance with settled case-law, the WTO agreements
are not in principle, given their nature and structure, among the rules in the light of which the Community courts review
the legality of action by the Community institutions (judgment in Case C-149/96
Portugal
v
Council
[1999] ECR I-8395, paragraph 47; order in Case C-307/99
OGT
Fruchthandelsgesellschaft
[2001] ECR I-3159, paragraph 24; and judgments in Joined Cases C-27/00 and C-122/00
Omega Air and Others
[2002] ECR I-2569, paragraph 93, Case C-76/00 P
Petrotub and Republica
v
Council
[2003] ECR I‑79, paragraph 53, and Case C-93/02 P
Biret International
v
Council
[2003] ECR I‑10497, paragraph 52).
128   First, the Agreement establishing the WTO is founded on reciprocal and mutually advantageous arrangements which distinguish
it from those agreements concluded between the Community and non-member States that introduce a certain asymmetry of obligations.
It is common ground that some of the most important commercial partners of the Community do not include the WTO agreements
among the rules by reference to which their courts review the legality of their rules of domestic law. To review the legality
of actions of the Community institutions in the light of those rules could therefore lead to an unequal application of the
WTO rules depriving the legislative or executive organs of the Community of the scope for manoeuvre enjoyed by their counterparts
in the Community’s trading partners (
Portugal
v
Council
, cited in paragraph 127 above, paragraphs 42 to 46).
129   Second, to require the courts to refrain from applying rules of internal law which are incompatible with the WTO agreements
would have the consequence of depriving the legislative or executive organs of the contracting parties of the possibility
afforded by Article 22 of the DSU of entering into negotiated arrangements, even on a temporary basis, in order to arrive
at mutually acceptable compensation (
Portugal
v
Council
, cited in paragraph 127 above, paragraphs 39 and 40).
130   It follows that in principle the Community cannot incur non-contractual liability by reason of any infringement of the WTO
rules by the defendant institutions (Case T-18/99
Cordis
v
Commission
[2001] ECR II‑913, paragraph 51, Case T‑30/99
Bocchi Food Trade International
v
Commission
[2001] ECR II‑943, paragraph 56, and Case T-52/99
T. Port
v
Commission
[2001] ECR II‑981, paragraph 51).
131   It is only where the Community intends to implement a particular obligation assumed in the context of the WTO or where the
Community measure refers expressly to specific provisions of the WTO agreements that the Court can review the legality of
the conduct of the defendant institutions in the light of the WTO rules (see, as regards the GATT 1947, Case 70/87
Fediol
v
Commission
[1989] ECR 1781, paragraphs 19 to 22, and Case C-69/89
Nakajima
v
Council
[1991] ECR I‑2069, paragraph 31, and, as regards the WTO agreements,
Portugal
v
Council
, cited in paragraph 127 above, paragraph 49, and
Biret International
v
Council
, cited in paragraph 127 above, paragraph 53).
132   However, notwithstanding the existence of a decision of the DSB finding the measures taken by a member to be incompatible
with WTO rules, neither of those exceptions is applicable in this instance.
–       The exception based on an intention to implement a specific obligation assumed within the WTO
133   In undertaking, after the adoption of the DSB decision of 25 September 1997, to comply with the WTO rules, the Community did
not intend to assume a specific obligation in the context of the WTO capable of justifying an exception to the principle that
WTO rules cannot be relied upon before the Community courts and of allowing the latter to review the legality of the conduct
of the Community institutions by reference to those rules.
134   It is true that, compared with the GATT 1947, the DSU has strengthened the dispute settlement mechanism, in particular in
respect of the adoption of panel reports.
135   Thus, Article 3(7) of the DSU makes it clear that the first objective of the dispute settlement mechanism is usually the withdrawal
of measures which have been found to be incompatible with the WTO agreements. Similarly, Article 22(1) of the DSU favours
full implementation of a recommendation to bring a measure into conformity with the WTO agreements.
136   Furthermore, as provided in Article 17(14) of the DSU, an Appellate Body report adopted, as in the present case, by the DSB
is to be unconditionally accepted by the parties to the dispute. Finally, Article 22(7) states that the parties are to accept
as final the arbitrator’s decision determining the level of the suspension of concessions.
137   None the less, the DSU in any event accords considerable importance to negotiation between WTO members which are parties to
a dispute (
Portugal
v
Council
, cited in paragraph 127 above, paragraphs 36 to 40).
138   The DSU thus allows the WTO member involved several methods of implementing a recommendation or ruling of the DSB finding
a measure incompatible with WTO rules.
139   Where immediate withdrawal of the incompatible measure is impracticable, the DSU envisages, in Article 3(7), that the member
harmed may be granted compensation or may be authorised to suspend the application of concessions or other obligations on
an interim basis pending the withdrawal of the incompatible measure (see
Portugal
v
Council
, cited in paragraph 127 above, paragraph 37).
140   Under Article 22(2) of the DSU, if the impugned WTO member fails to comply with its obligation to implement the recommendations
and rulings of the DSB within the period of time that it has been set, it is, if so requested and no later than the expiry
of that period, to enter into negotiations with the complaining party with a view to arriving at mutually acceptable compensation.
141   If no satisfactory compensation has been agreed within 20 days after the expiry of the reasonable period of time provided
for in Article 21(3) of the DSU for complying with WTO rules, the complaining party may request authorisation from the DSB
to suspend the application to that member of concessions or other obligations under the WTO agreements.
142   Even on expiry of the period of time set for bringing the measure declared incompatible into conformity with WTO rules and
after authorisation and adoption of measures granting compensation or suspending concessions under Article 22(6) of the DSU,
considerable importance is still accorded to negotiation between the parties to the dispute.
143   Article 22(8) of the DSU thus makes it clear that the suspension of concessions or other obligations is temporary in nature
and states that the suspension is only to be applied ‘until such time as the measure found to be inconsistent with a covered
agreement has been removed, or the Member that must implement recommendations or rulings provides a solution to the nullification
or impairment of benefits, or a mutually satisfactory solution is reached’.
144   Article 22(8) further provides that, in accordance with Article 21(6), the DSB is to continue to keep the implementation of
adopted recommendations or rulings under surveillance.
145   In the event of disagreement as to the compatibility with a WTO agreement of measures taken to comply with the DSB’s recommendations
and rulings, Article 21(5) of the DSU provides that the dispute is to be decided ‘through recourse to these dispute settlement
procedures’, which include pursuit by the parties of a negotiated solution.
146   Neither the expiry of the period set by the DSB for the Community to bring its banana import regime into conformity with the
DSB’s decision of 25 September 1997 nor the decision of 9 April 1999, by which the DSB arbitrators expressly found that the
new mechanism for banana imports established by Regulations No 1637/98 and No 2362/98 was incompatible with WTO rules, resulted
in exhaustion of the methods for settling disputes made available by the DSU.
147   To that extent, review by the Community courts of the legality of the conduct of the defendant institutions by reference to
WTO rules could have the effect of weakening the position of the Community negotiators in the search for a mutually acceptable
solution to the dispute that is consistent with WTO rules.
148   In those circumstances, to require courts to refrain from applying the rules of internal law which are incompatible with the
WTO agreements would have the consequence of depriving the legislative or executive organs of the contracting parties of the
possibility afforded in particular by Article 22 of the DSU of entering into a negotiated arrangement even on a temporary
basis (
Portugal
v
Council
, cited in paragraph 127 above, paragraph 40).
149   Moreover, in again amending, by Regulation No 216/2001, the banana import regime, the Council sought to reconcile various
divergent objectives. The preamble to Regulation No 216/2001 thus states, in the first recital, that there were numerous close
contacts in order, in particular, ‘to take account of the conclusions of the [panel]’ and, in the second recital, that the
new import system envisaged provides the best guarantees both ‘of achieving the objectives of the [COM for bananas] as regards
Community production and consumer demand’ and ‘of complying with the rules on international trade’.
150   It was, ultimately, in return for the Community’s undertaking to establish a tariff-only regime for imports of bananas before
1 January 2006 that the United States of America agreed, as set out in the memorandum of understanding concluded on 11 April
2001, to suspend provisionally the imposition of the increased customs duty.
151   Such an outcome could have been jeopardised by intervention of the Community courts in reviewing the legality by reference
to WTO rules of the conduct of the defendant institutions in the present case with a view to awarding compensation for the
loss sustained by the applicant.
152   The Court notes in this regard that, as the United States of America has expressly stated, the memorandum of understanding
of 11 April 2001 does not in itself constitute a mutually agreed solution for the purposes of Article 3(6) of the DSU and
that the question of implementation by the Community of the DSB’s recommendations and rulings was still included on 12 July
2001, that is to say after the present action had been brought, on the agenda of the meeting of the DSB.
153   It follows that the defendant institutions did not intend, by amending the Community regime at issue governing the import
of bananas, to implement specific obligations arising from the WTO rules and in the light of which the DSB had found that
regime to be incompatible with those rules.
154   Besides, as is apparent from the preamble to Regulation No 1637/98, the Council intended in the present instance to reconcile
the Community’s international commitments both under the WTO and to the other signatories of the Fourth Lomé Convention, by
utilising the various methods of dispute settlement defined by the DSU, whilst also safeguarding the objectives of the COM
for bananas.
155   That intention is confirmed by Article 20(e) of Regulation No 404/93, as amended by Regulation No 1637/98. In so far as Article
20(e) states that the provisions which the Commission is empowered to adopt for the purposes of application of Title IV of
Regulation No 404/93, which relates to trade in bananas with third countries, include measures needed to ensure respect for
obligations stemming from agreements concluded by the Community under Article 300 EC, it encompasses all the contractual obligations
entered into, without giving greater weight to the obligations assumed by the Community under the WTO agreements.
156   Furthermore, in the ninth recital in the preamble to Regulation No 1637/98 the Community legislature expressly reserved the
possibility of reviewing the operation of that regulation at the end of an adequate trial period.
–       The exception based on express reference to specific provisions of the WTO agreements
157   The COM for bananas, as established by Regulation No 404/93 and subsequently amended, cannot be regarded as referring expressly
to specific provisions of the WTO agreements (see, to this effect,
OGT Fruchthandelsgesellschaft
, cited in paragraph 127 above, paragraph 28).
158   In particular, the preambles to the various regulations amending the banana import regime do not show that the Community legislature
referred to specific provisions of the WTO agreements when it purported to bring the regime into conformity with those agreements.
159   Thus, Regulation No 2362/98 contains no express reference to specific provisions of the WTO agreements (
Cordis
v
Commission
, cited in paragraph 130 above, paragraph 59,
Bocchi
Food Trade International
v
Commission
, cited in paragraph 130 above, paragraph 64, and
T. Port
v
Commission
, cited in paragraph 130 above, paragraph 59).
160   Accordingly, notwithstanding a finding of incompatibility made by the DSB, the WTO rules do not in the present case, whether
because of particular obligations which the Community intended to implement or because of an express reference to specific
provisions, amount to rules of law by reference to which the legality of the institutions’ conduct may be assessed.
161   It follows from the above reasoning that the applicant is not entitled to argue, for the purposes of its claim for compensation,
that the conduct of which the Council and the Commission are accused is contrary to WTO rules.
162   The complaints advanced by the applicant based on breach of the principles of the protection of legitimate expectations, of
legal certainty and of proportionality, and on infringement of its right to property and its right freely to pursue its economic
activity, all rest on the premiss that the conduct of which the defendant institutions are accused is contrary to WTO rules.
163   Inasmuch as those rules are not among the rules by reference to which the Community courts review the legality of the Community
institutions’ conduct, these complaints will therefore be rejected.
164   It follows that the defendant institutions’ conduct cannot be regarded as unlawful and there is no need to consider the applicant’s
arguments relating to the legal nature of the provisions and principles claimed to be infringed and to the alleged gravity
of their infringement.
165   Finally, the applicant has established neither the nature nor the basis of the measures which it accuses the defendant institutions
of not having adopted for its protection.
166   Omissions by the Community institutions can give rise to liability on the part of the Community only where the institutions
have infringed a legal obligation to act under a provision of Community law (
Dubois et Fils
v
Council and Commission
, cited in paragraph 79 above, paragraph 56).
167   Since it has not been proved that the conduct of which the defendant institutions are accused was unlawful, one of the three
cumulative conditions of non-contractual liability of the Community for unlawful conduct is not met.
168   In those circumstances, the applicant’s claim for compensation grounded on this liability regime will be dismissed and it
is not necessary to consider, in this context, whether the other two conditions, relating to the reality of the alleged damage
and to the existence of a causal link between the conduct and the damage, are met (Case C-257/98 P
Lucaccioni
v
Commission
[1999] ECR I‑5251, paragraph 14, and Case T-220/96
EVO
v
Council and Commission
[2002] ECR II‑2265, paragraph 39).

Liability of the Community in the absence of unlawful conduct of its institutions
The principle of non-contractual liability of the Community in the absence of unlawful conduct of its institutions
–       Arguments of the parties
169   The applicant contends in effect that the policy choice adopted by the Community in favour of support for operators in the
banana sector led to unequal treatment of private individuals in the discharge of public burdens, to the detriment of the
particular category made up of the Community undertakings which were affected in a disproportionate manner by the increased
duty on their imports into the United States.
170   The defendant institutions claim in essence that the Community courts have never before held the Community to be non-contractually
liable in the absence of any unlawful act by its institutions, and that in any event the conditions for the incurring of such
liability are in no way met in the present case.
–       Findings of the Court
171   Where, as in the present case, it has not been established that conduct attributed to the Community institutions is unlawful,
that does not mean that undertakings which, as a category of economic operators, are required to bear a disproportionate part
of the burden resulting from a restriction of access to export markets can in no circumstances obtain compensation by virtue
of the Community’s non-contractual liability (see, to this effect, Case 81/86
De Boer Buizen
v
Council and Commission
[1987] ECR 3677, paragraph 17).
172   The second paragraph of Article 288 EC bases the obligation which it imposes on the Community to make good any damage caused
by its institutions on the ‘general principles common to the laws of the Member States’ and therefore does not restrict the
ambit of those principles solely to the rules governing non-contractual Community liability for unlawful conduct of those
institutions.
173   National laws on non-contractual liability allow individuals, albeit to varying degrees, in specific fields and in accordance
with differing rules, to obtain compensation in legal proceedings for certain kinds of damage, even in the absence of unlawful
action by the perpetrator of the damage.
174   When damage is caused by conduct of the Community institution not shown to be unlawful, the Community can incur non-contractual
liability if the conditions as to sustaining actual damage, to the causal link between that damage and the conduct of the
Community institution and to the unusual and special nature of the damage in question are all met (see Case C-237/98 P
Dorsch Consult
v
Council and Commission
, cited in paragraph 94 above, paragraph 19).
175   It is necessary therefore to examine whether those three conditions are met here.
The existence of actual and certain damage
–       Arguments of the parties
176   The applicant states that it sustained serious losses in respect of its investments in the United States market, the remuneration
of a United States distributor, legal fees and import duty paid.
177   In addition, the Community’s unlawful action caused the applicant a considerable loss of profits due to the loss of certain
contracts and a fall in its sales in comparison with its forecasts prior to the imposition of the United States sanctions.
178   The defendants state in response that the applicant has adduced no objectively verifiable evidence of its loss of existing
business and its loss of profit.
179   The applicant fails to establish that it was not possible for it to compensate for its losses by increasing, for example,
the price of its products or by redirecting its export policy. No explanation is provided concerning the measures that it
could have adopted to mitigate its losses.
–       Findings of the Court
180   The Council and the Commission do not fundamentally dispute that the applicant suffered actual and certain damage following
the introduction of the United States increased customs duty on imports of folding cartons, boxes and cases originating in
the Community.
181   In particular, in claiming that the applicant has not established that it was impossible to mitigate its losses by putting
up its prices or redirecting its export policy and that it has provided no explanation concerning the measures that it could
have taken to limit the damage to it, the defendants implicitly concede that the applicant must, at the very least, have necessarily
suffered commercial damage by reason of the incontestable rise in the price of its products caused, on the United States market,
by the sudden increase of the United States ad valorem import duty to 100%.
182   Moreover, the statistics adduced by the Commission bear out the applicant’s contentions, since they indubitably show an appreciable
reduction in the total value of imports into the United States of folding cartons, boxes and cases originating in the Community.
183   To that extent, the Court finds that the condition requiring the applicant to have sustained actual and certain damage is
satisfied.
The causal link between the damage suffered and the conduct of the defendant institutions
–       Arguments of the parties
184   The applicant submits that the increase in United States import duty is the direct result of the conduct of the Community
institutions since the United States of America merely exercised a right conferred upon it by the WTO agreements.
185   Since the Council and the Commission were aware of the consequences of their conduct, they cannot validly claim that the United
States increased duty was not an objective and foreseeable consequence of that conduct.
186   The point is not whether or not the United States of America was under an obligation to impose increased duty or could choose
how to do so, but only whether the institutions’ conduct led it to impose those measures and created the conditions necessary
for it to be able to adopt them. The matters left to the discretion of the United States of America were therefore not sufficient
to break the causal chain.
187   The defendants point out that non-contractual Community liability cannot be relied upon to claim reparation for every harmful
consequence, even one remote from the Community institutions’ conduct.
188   Interposed between the increase in United States customs duty and the Community institutions’ action lie several decisions
adopted by the DSB and autonomous and unilateral decisions adopted by the United States of America. In other words, the action
of the United States of America was not an objectively foreseeable consequence, in the normal course, of the Community’s action.
189   It was far from clear that the United States Government would react to the panel reports by imposing the increased duties.
The United States of America requested permission to suspend concessions even before it had been definitively established
that Regulations No 1637/98 and No 2362/98 were incompatible with WTO rules.
190   The United States Government decided entirely independently to impose increased duty on the applicant’s products and the Community
was in no position to influence that choice. Likewise, the level of the duties imposed by the United States of America was
decided independently by the United States Government.
191   Even assuming that the suspension of concessions by the United States of America could have been anticipated, it was certainly
not foreseeable, within the meaning of Community case-law, that the United States of America would choose precisely the applicant’s
products for the purpose of imposing increased import duties.
–       Findings of the Court
192   The principles common to the laws of the Member States to which the second paragraph of Article 288 EC refers cannot be relied
upon to found an obligation on the Community to make good every harmful consequence, even a remote one, of conduct of its
institutions (see, by analogy, the judgments in Joined Cases 64/76, 113/76, 167/78, 239/78, 27/79, 28/79 and 45/79
Dumortier and Others
v
Council
[1979] ECR 3091, paragraph 21, and Joined Cases C-363/88 and C‑364/88
Finsider and Others
v
Commission
[1992] ECR I‑359, paragraph 25, and the order in Case T-201/99
Royal Olympic Cruises and
Others
v
Council and Commission
[2000] ECR II‑4005, paragraph 26).
193   The condition under the second paragraph of Article 288 EC relating to a causal link requires there to be a sufficiently direct
causal nexus between the conduct of the Community institutions and the damage (
Dumortier and Others
v
Council
, cited in paragraph 192 above, paragraph 21, and judgment in Case T-178/98
Fresh Marine
v
Commission
[2000] ECR II‑3331, paragraph 118, upheld on appeal in Case C-472/00 P
Commission
v
Fresh Marine
[2003] ECR I‑7541).
194   It is admittedly true that the United States of America was, at its request, simply authorised by the DSB, and not obliged,
to withdraw concessions by way of an increase in its duty on imports of products originating in the Community. Even after
obtaining that authorisation, the United States Government still had the option of seeking to settle the dispute between it
and the Community without adopting retaliatory measures against the latter.
195   It was also by making a choice in the exercise of its discretion that the United States authorities decided to impose increased
customs duty on folding cartons, boxes and cases originating in the Community, from which they themselves exempted those originating
in certain Member States of the Community, and to set the rate of increased import duty at 100% of the price of the products
affected.
196   It is none the less the case that, were it not for the existence of the Community regime at issue governing the import of
bananas and the finding by the DSB of its incompatibility with WTO rules, the United States of America would not have been
able to seek or obtain from the DSB authorisation to suspend its tariff concessions on products originating in the Community
in an amount up to the level of nullification or impairment resulting from retention of the Community regime at issue.
197   It was on the basis of the amount of damage suffered by the United States economy as a result of the Community regime governing
the import of bananas held to be incompatible with WTO rules that the DSB determined the amount of trade up to which the United
States authorities were authorised to suspend their tariff concessions in relation to the Community.
198   In those circumstances, the withdrawal of concessions in relation to the Community which took the form of increased customs
duties on imports is to be regarded as a consequence resulting objectively, in accordance with the normal and foreseeable
operation of the WTO dispute settlement system accepted by the Community, from the retention in force by the defendant institutions
of a banana import regime incompatible with the WTO agreements.
199   The unilateral decision by the United States of America to impose increased customs duty on imports of folding cartons, boxes
and cases originating in the Community is not therefore such as to break the causal link that exists between the damage which
the imposition of that increased duty caused to the applicant and the defendants’ retention of the banana import regime at
issue.
200   The conduct of the defendant institutions necessarily led to adoption of the retaliatory measure by the United States authorities
in compliance with the procedures established by the DSU and accepted by the Community, so that their conduct must be regarded
as the immediate cause of the damage suffered by the applicant following imposition of the United States increased customs
duty.
201   Even before the DSB, on 19 April 1999, authorised the United States of America to levy its increased import duties, the defendant
institutions were not unaware that the retaliatory measures by the United States of America were imminent.
202   On 10 November 1998 the United States of America had published the provisional list of products originating in the Community
on which it proposed to charge increased import duties, and on 21 December 1998 it confirmed that the duty was soon to apply
at a rate of 100%.
203   From 3 March 1999, the date on which the requirement for Community exporters to provide a bank guarantee for 100% of the value
of the imports covered was introduced, the defendants could no longer have been unaware of the firm intention of the United
States of America to impose the increased customs duties. There could be no remaining doubt after the Trade Representative’s
press release of 9 April 1999 announcing the list of products subject to the increased duties.
204   It must therefore be accepted that the requisite direct causal link exists between the conduct of the defendant institutions
with regard to banana imports into the Community and the damage suffered by the applicant by reason of imposition by the United
States of the increased import duties.
The unusual and special nature of the damage suffered
–       Arguments of the parties
205   The applicant submits that the Court of Justice has already recognised that the Community has an obligation to ensure adequate
compensation if a category of economic operators has to bear, as in the present case, a disproportionate part of the burden
attributable to the implementation of a trade arrangement between the Community and a non-member State (
De Boer Buizen
v
Council and Commission
, cited in paragraph 171 above, paragraph 17).
206   The same applies where an individual has to bear, in the public interest, a financial burden which would not normally fall
upon him (Case 267/82
Développement and Clémessy
v
Commission
[1986] ECR 1907) and constitutes unusual and special damage (Joined Cases 9/71 and 11/71
Compagnie d’approvisionnement and Grands Moulins de Paris
v
Commission
[1972] ECR 391, paragraphs 45 and 46, Case 59/83
Biovilac
v
EEC
[1984] ECR 4057, and Case C-237/98 P
Dorsch Consult
v
Council and Commission
, cited in paragraph 94 above, paragraph 18).
207   The defendants reply that the commercial risks to which Community exporters are exposed may be regarded as inherent in the
WTO system itself and that there is no particular reason for the Community to take on the burden of those risks. In addition,
the damage must concern a limited group of undertakings.
–       Findings of the Court
208   In the case of damage which economic operators may sustain as a result of the activities of the Community institutions, damage
is, first, unusual when it exceeds the limits of the economic risks inherent in operating in the sector concerned and, second,
special when it affects a particular circle of economic operators in a disproportionate manner by comparison with other operators
(see Case T-184/95
Dorsch Consult
v
Council and Commission
, cited in paragraph 94 above, paragraph 80, and
Afrikanische Frucht-Compagnie and Internationale Fruchtimport Gesellschaft Weichert
v
Council and Commission
, cited in paragraph 99 above, paragraph 151).
209   It has not been established in the present case that the applicant suffered, as a result of the incompatibility of the Community
regime governing the import of bananas with the WTO agreements, damage in excess of the limits of the risks inherent in its
export operations.
210   It is true that, as stated in its preamble, the Agreement establishing the WTO is intended to establish an integrated multilateral
trading system that incorporates the results of past trade liberalisation efforts.
211   Nevertheless, the possibility, which has come about in the present case, of tariff concessions being suspended as provided
for by the WTO agreements is among the vicissitudes inherent in the current system of international trade. Accordingly, the
risk of this vicissitude has to be borne by every operator who decides to sell his products on the market of one of the WTO
members.
212   The arbitrators’ decision of 9 April 1999 emphasised that the temporary nature attributed to the suspension of concessions
by Article 22(1) of the DSU indicates that suspension is intended to induce the WTO member proceeded against to comply with
the recommendations and rulings of the DSB.
213   In addition, it is clear from Article 22(3)(b) and (c) of the DSU, an international instrument which was publicised appropriately
so as to ensure that Community operators were aware of it, that the complaining member of the WTO may seek to suspend concessions
or other obligations in sectors other than that in which the panel or Appellate Body has found a violation by the member concerned,
whether under the same agreement or another WTO agreement.
214   It follows that the risks to which the marketing by the applicant of its folding paperboard boxes on the United States market
could thereby be exposed are not to be regarded as beyond the normal hazards of international trade as currently organised.
215   Therefore, in the circumstances of the present case, the damage suffered by the applicant cannot be classified as unusual.
216   Such a finding is sufficient to preclude any entitlement to compensation on this basis. It is thus unnecessary for the Court
to rule on the condition requiring special damage.
217   Accordingly, the applicant’s claim for compensation founded on the rules governing non-contractual Community liability in
the absence of unlawful conduct will be dismissed.
218   It follows from all the foregoing reasoning that the action must be dismissed as unfounded and there is no need to rule on
the applicant’s claims in the alternative.

Costs
219   Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been
applied for in the successful party’s pleadings.
220   Since the applicant has been unsuccessful, it will be ordered to bear, in addition to its own costs, the costs incurred by
the Parliament, the Council and the Commission, in accordance with the applications to that effect made by the three defendant
institutions.
221   Under the first subparagraph of Article 87(4) of the Rules of Procedure, Member States which have intervened in the proceedings
are to bear their own costs.
222   The Kingdom of Spain will therefore bear its own costs.
On those grounds,
THE COURT OF FIRST INSTANCE (Grand Chamber)
hereby:
1.
Dismisses the action as inadmissible in so far as it is brought against the Parliament;
2.
Dismisses the remainder of the action as unfounded;
3.
Orders the applicant to bear, in addition to its own costs, the costs incurred by the Parliament, the Council and the Commission;
4.
Orders the Kingdom of Spain to bear its own costs.
Vesterdorf
Lindh
Azizi
Pirrung
Legal
García-Valdecasas
Tiili
Cooke
Meij
Vilaras

Forwood
Delivered in open court in Luxembourg on 14 December 2005.
Registrar

President
E. Coulon

B. Vesterdorf
Table of contents
Legal context
Facts
Procedure
Forms of order sought
Admissibility
Inadmissibility of the action in so far as it is brought against the Parliament
Arguments of the parties
Findings of the Court
Failure of the application to comply with the requirements of Article 44(1)(c) of the Rules of Procedure
Arguments of the parties
Findings of the Court
Jurisdiction of the Court
Arguments of the parties
Findings of the Court
Substance
Liability of the Community for unlawful conduct of its institutions
Arguments of the parties
– The unlawful conduct of which the defendant institutions are accused
– The legal nature of the rules of law allegedly infringed by the defendants
– The seriousness of the alleged breaches
Findings of the Court
– The preliminary question as to whether the WTO rules may be relied upon
– The exception based on an intention to implement a specific obligation assumed within the WTO
– The exception based on express reference to specific provisions of the WTO agreements
Liability of the Community in the absence of unlawful conduct of its institutions
The principle of non-contractual liability of the Community in the absence of unlawful conduct of its institutions
– Arguments of the parties
– Findings of the Court
The existence of actual and certain damage
– Arguments of the parties
– Findings of the Court
The causal link between the damage suffered and the conduct of the defendant institutions
– Arguments of the parties
– Findings of the Court
The unusual and special nature of the damage suffered
– Arguments of the parties
– Findings of the Court
Costs
*
Language of the case: English.