**Joined Cases C-120/06 P and C-121/06 P**

**Fabbrica italiana accumulatori motocarri Montecchio SpA (FIAMM) and Others**

**v**

**Council of the European Union**

**and**

**Commission of the European Communities**

(Appeals – Recommendations and rulings of the World Trade Organisation (WTO) Dispute Settlement Body – Determination of the Dispute Settlement Body that the Community regime governing the import of bananas was incompatible with
WTO rules – Imposition by the United States of America of retaliatory measures in the form of increased customs duty levied on imports
of certain products from various Member States – Retaliatory measures authorised by the WTO – No non-contractual Community liability – Duration of the proceedings before the Court of First Instance – Reasonable period – Claim for fair compensation)

Summary of the Judgment

1.        *Appeals – Pleas in law – Inadequate or contradictory reasoning – Admissibility*

*(Art. 225 EC; Statute of the Court of Justice, Art. 58, first para.)*

2.        *International agreements – Agreements concluded by the Community*

3.        *International agreements – Agreement establishing the World Trade Organisation*

4.        *Non-contractual liability – Liability for a lawful act*

*(Art. 288, second para., EC)*

5.        *Community law – Principles – Fundamental rights – Right to property – Freedom to pursue a trade or profession – Scope*

6.        *Appeals – Pleas in law – Grounds of a judgment vitiated by an infringement of Community law – Operative part well founded
on other legal grounds – Dismissal*

7.        *Procedure – Duration of the proceedings before the Court of First Instance – Reasonable length – Criteria for assessment*

1.        The question whether the grounds of a judgment of the Court of First Instance are contradictory or inadequate is a question
of law which is amenable, as such, to judicial review on appeal.

In that connection, the requirement that the Court of First Instance give reasons for its decisions cannot be interpreted
as meaning that it is obliged to respond in detail to every single argument advanced by an applicant, particularly if the
argument is not sufficiently clear and precise.

Nor does the obligation to state reasons require the Court of First Instance to provide an account which follows exhaustively
and one by one all the arguments put forward by the parties to the case. The reasoning may therefore be implicit on condition
that it enables the persons concerned to know why the Court of First Instance has not upheld their arguments and provides
the Court of Justice with sufficient material for it to exercise its power of review.

(see paras 90-91, 96)

2.        The effects within the Community of provisions of an agreement concluded by the Community with non-member States may not be
determined without taking account of the international origin of the provisions in question. In conformity with the principles
of public international law, Community institutions which have power to negotiate and conclude such an agreement are free
to agree with the non-member States concerned what effect the provisions of the agreement are to have in the internal legal
order of the contracting parties. If that question has not been expressly dealt with in the agreement, it is the courts having
jurisdiction in the matter and in particular the Court of Justice within the framework of its jurisdiction under the Treaty
that have the task of deciding it, in the same manner as any other question of interpretation relating to the application
of the agreement in question in the Community, on the basis in particular of the agreement’s spirit, general scheme or terms.

Thus, specifically, it falls to the Court to determine whether the provisions of an international agreement confer on persons
subject to Community law the right to rely on that agreement in legal proceedings in order to contest the validity of a Community
measure.

The Court can examine the validity of secondary Community legislation in the light of an international treaty only where the
nature and the broad logic of the latter do not preclude this and, in addition, the treaty’s provisions appear, as regards
their content, to be unconditional and sufficiently precise.

(see paras 108-110)

3.        A decision of the Dispute Settlement Body (DSB) of the WTO, which has no object other than to rule on whether the conduct
of a WTO member is consistent with the obligations entered into by that State within the context of the WTO, cannot in principle
be fundamentally distinguished from the substantive rules which convey such obligations and by reference to which such a review
is carried out, at least when it is a question of determining whether or not an infringement of those rules or that decision
can be relied upon before the Community courts for the purpose of reviewing the legality of the conduct of the Community institutions.

A recommendation or a ruling of the DSB finding that the substantive rules contained in the WTO agreements have not been complied
with is, whatever the precise legal effect attaching to such a recommendation or ruling, no more capable than those rules
of conferring upon individuals a right to rely thereon before the Community courts for the purpose of having the legality
of the conduct of the Community institutions reviewed, whether the review is in annulment proceedings or for the purpose of
deciding an action for compensation.

First, the nature of the WTO agreements and the reciprocity and flexibility characterising them continue to obtain after such
a ruling or recommendation has been adopted and after the reasonable period of time allowed for its implementation has expired.
The Community institutions continue in particular to have an element of discretion and scope for negotiation vis-à-vis their
trading partners with a view to the adoption of measures intended to respond to the ruling or recommendation, and such leeway
must be preserved.

Second, as is apparent from Article 3(2) of the Understanding on Rules and Procedures Governing the Settlement of Disputes,
which forms Annex 2 to the Agreement establishing the WTO, recommendations and rulings of the DSB cannot add to or diminish
the rights and obligations provided in the agreements concerned. It follows in particular that a decision of the DSB finding
an infringement of such an obligation cannot have the effect of requiring a party to the WTO agreements to accord individuals
a right which they do not hold by virtue of those agreements in the absence of such a decision.

(see paras 120, 128-131)

4.        In affirming the existence of a regime providing for non-contractual liability of the Community on account of the lawful pursuit
by it of its activities falling within the legislative sphere, the Court of First Instance erred in law. As Community law
currently stands, no liability regime exists under which the Community can incur liability for conduct falling within the
sphere of its legislative competence in a situation where any failure of such conduct to comply with the WTO agreements cannot
be relied upon before the Community courts.

It is immaterial in this regard whether that conduct is to be regarded as a positive act, that is to say, for example, the
adoption of regulations following a decision of the Dispute Settlement Body (DSB) of the WTO, or as an omission, that is to
say the failure to adopt measures calculated to ensure the correct implementation of that decision. Failure on the part of
the Community institutions to act can also fall within the legislative function of the Community, including in the context
of actions for damages.

However, the Community legislature enjoys a broad discretion for the purpose of assessing whether the adoption of a given
legislative measure justifies, when account is taken of certain harmful effects that are to result from its adoption, the
provision of certain forms of compensation.

Also, a Community legislative measure whose application leads to restrictions of fundamental rights, such as the right to
property and the freedom to pursue a trade or profession, that impair the very substance of those rights in a disproportionate
and intolerable manner, perhaps precisely because no provision has been made for compensation calculated to avoid or remedy
that impairment, could give rise to non-contractual liability on the part of the Community.

(see paras 176, 178-179, 181, 184)

5.        An economic operator cannot claim a right to property in a market share which he held at a given time, since such a market
share constitutes only a momentary economic position, exposed to the risks of changing circumstances. Nor can the guarantees
accorded by the right to property or by the general principle safeguarding the freedom to pursue a trade or profession be
extended to protect mere commercial interests or opportunities, the uncertainties of which are part of the very essence of
economic activity.

An economic operator whose business consists in particular in exporting goods to the markets of non-member States must therefore
be aware that the commercial position which he has at a given time may be affected and altered by various circumstances and
that those circumstances include the possibility, which is moreover expressly envisaged and governed by Article 22 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), which forms Annex 2 to the Agreement establishing
the WTO, that one of the non-member States will adopt measures suspending concessions in reaction to the stance taken by its
trading partners within the framework of the WTO and will for this purpose select in its discretion, as follows from Article
22(3)(a) and (f) of the DSU, the goods to be subject to those measures.

(see paras 185-186)

6.        If the grounds of a judgment of the Court of First Instance disclose an infringement of Community law but its operative part
is shown to be well founded on other legal grounds, the appeal must be dismissed.

(see para. 187)

7.        Where there is no indication that the length of the proceedings affected their outcome in any way, a plea that the proceedings
before the Court of First Instance did not satisfy the requirements concerning completion within a reasonable time cannot
as a general rule lead to the setting aside of the judgment delivered by the Court of First Instance.

In addition, the reasonableness of the length of proceedings before the Court of First Instance must be appraised in the light
of the circumstances specific to each case and, in particular, the importance of the case for the person concerned, its complexity
and the conduct of the applicant and of the competent authorities.

(see paras 203, 212)

JUDGMENT OF THE COURT (Grand Chamber)

9 September 2008 (*)

(Appeals – Recommendations and rulings of the World Trade Organisation (WTO) Dispute Settlement Body – Determination of the Dispute Settlement Body that the Community regime governing the import of bananas was incompatible with
WTO rules – Imposition by the United States of America of retaliatory measures in the form of increased customs duty levied on imports
of certain products from various Member States – Retaliatory measures authorised by the WTO – No non-contractual Community liability – Duration of the proceedings before the Court of First Instance – Reasonable period – Claim for fair compensation)

In Joined Cases C‐120/06 P and C‐121/06 P,

TWO APPEALS under Article 56 of the Statute of the Court of Justice, brought on 24 and 27 February 2006 respectively,

**Fabbrica italiana accumulatori motocarri Montecchio SpA (FIAMM),** established in Montecchio Maggiore (Italy),

**Fabbrica italiana accumulatori motocarri Montecchio Technologies LLC,**formerly Fabbrica italiana accumulatori motocarri Montecchio Technologies Inc. (FIAMM Technologies), established in East Haven,
Delaware (United States of America),

represented by I. Van Bael, A. Cevese and F. Di Gianni, avocats,

appellants,

the other parties to the proceedings being:

**Council of the European Union,** represented by A. Vitro, S. Marquardt and A. De Gregorio Merino, acting as Agents,

**Commission of the European Communities,** represented by P.J. Kuijper, V. Di Bucci, C. Brown and E. Righini, acting as Agents, with an address for service in Luxembourg,

defendants at first instance,

**Kingdom of Spain,** represented by E. Braquehais Conesa and M. Muñoz Pérez, acting as Agents, with an address for service in Luxembourg,

intervener at first instance (C‐120/06 P),

and

**Giorgio Fedon & Figli SpA,** established in Vallesella di Cadore (Italy),

**Fedon America, Inc.,** established in Wilmington, Delaware (United States of America),

represented by I. Van Bael, A. Cevese, F. Di Gianni and R. Antonini, avocats,

appellants,

the other parties to the proceedings being:

**Council of the European Union,** represented by A. Vitro, S. Marquardt and A. De Gregorio Merino, acting as Agents,

**Commission of the European Communities,** represented by P.J. Kuijper, V. Di Bucci, C. Brown and E. Righini, acting as Agents, with an address for service in Luxembourg,

defendants at first instance,

supported by:

**Kingdom of Spain,** represented by M. Muñoz Pérez, acting as Agent, with an address for service in Luxembourg,

intervener on appeal (C‐121/06 P),

THE COURT (Grand Chamber),

composed of V. Skouris, President, P. Jann, C.W.A. Timmermans, G. Arestis and U. Lõhmus, Presidents of Chambers, K. Schiemann
(Rapporteur), E. Juhász, A. Borg Barthet, M. Ilešič, J. Malenovský, J. Klučka, E. Levits and C. Toader, Judges,

Advocate General: M. Poiares Maduro,

Registrar: J. Swedenborg, Administrator,

having regard to the written procedure and further to the hearing on 3 July 2007,

after hearing the Opinion of the Advocate General at the sitting on 20 February 2008,

gives the following

**Judgment**

1        By their appeals, Fabbrica italiana accumulatori motocarri Montecchio SpA and Fabbrica italiana accumulatori motocarri Montecchio
Technologies LLC (together referred to as ‘FIAMM’) and Giorgio Fedon & Figli SpA and Fedon America, Inc. (together referred
to as ‘Fedon’) respectively request the Court to set aside the judgment of the Court of First Instance of the European Communities
of 14 December 2005 in Case T-69/00 *FIAMM and FIAMM Technologies* v *Council* *and Commission* [2005] ECR II‐5393 (Case C‐120/06 P) and the judgment of the Court of First Instance of 14 December 2005 in Case T-135/01
*Fedon & Figli and* *Others* v *Council and Commission* (Case C‐121/06 P). By those judgments (‘the *FIAMM* judgment’ and ‘the *Fedon* judgment’ respectively or, together, ‘the judgments under appeal’), the Court of First Instance dismissed the actions brought
by FIAMM and Fedon seeking compensation for the damage allegedly suffered by them on account of the increased customs duty
which the Dispute Settlement Body (‘the DSB’) of the World Trade Organisation (WTO) authorised the United States of America
to levy on imports of their products, following a finding by the DSB that the Community regime governing the import of bananas
was incompatible with the agreements and understandings annexed to the Agreement establishing the WTO.

2        By order of the President of the Court of Justice of 8 August 2006, the Kingdom of Spain was granted leave to intervene in
support of the forms of order sought by the Council of the European Union and the Commission of the European Communities in
Case C‐121/06 P.

3        By order of the President of the Court of Justice of 12 April 2007, Cases C-120/06 P and C‐121/06 P were joined for the purposes
of the oral procedure and the judgment.

**Legal context**

*The WTO agreements*

4        By 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 (1986-94) (OJ 1994 L 336,
p. 1), the Council approved the Agreement establishing the WTO and the agreements in Annexes 1 to 4 to that agreement (‘the
WTO agreements’).

5        Article 3(2) and (7) of the Understanding on Rules and Procedures Governing the Settlement of Disputes (‘the DSU’), which
forms Annex 2 to the Agreement establishing the WTO, provides:

‘2.      The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral
trading system. The Members recognise that it serves to preserve the rights and obligations of Members under the covered agreements,
and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public
international law. Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in
the covered agreements.

...

7.      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 this Understanding 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 DSB of such measures.’

6        Article 7 of the DSU provides that panels established at the request of a complaining party are to make such findings as will
assist 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.

7        Under Article 16(4) of the DSU, within 60 days after the date of circulation of a panel report to WTO members, the report
is to be adopted at a DSB meeting unless a party to the dispute formally notifies the DSB of its decision to appeal or the
DSB decides by consensus not to adopt the report.

8        Article 17 of the DSU provides for the establishment of a standing Appellate Body responsible for hearing appeals from panel
cases. Under Article 17(6), an appeal is limited to issues of law covered in the panel report and legal interpretations developed
by the panel. As is apparent from Article 17(13), in the report which it is called upon to provide the Appellate Body may
uphold, modify or reverse the legal findings and conclusions of the panel.

9        Article 17(14) of the DSU provides:

‘An Appellate Body report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless the
DSB decides by consensus not to adopt the Appellate Body report within 30 days following its circulation to the Members. ...’

10      Article 19(1) of the DSU states:

‘Where a panel or the Appellate Body concludes that a measure is inconsistent with a covered agreement, it shall 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      Article 21 of the DSU, which is headed ‘Surveillance of Implementation of Recommendations and Rulings’, provides:

‘1.      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.

...

3.      At a DSB meeting held within 30 days after the date of adoption of the panel or Appellate Body report, the Member concerned
shall inform the DSB of its intentions in respect of implementation of the recommendations and rulings of the DSB. If it is
impracticable to comply immediately with the recommendations and rulings, the Member concerned shall have a reasonable period
of time in which to do so. The reasonable period of time shall be:

(a)      the period of time proposed by the Member concerned, ... approved by the DSB; or, in the absence of such approval,

(b)      a period of time mutually agreed by the parties to the dispute ...; or, in the absence of such agreement,

(c)      a period of time determined through binding arbitration ...

...

5.      Where there is disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the
recommendations and rulings such dispute shall be decided through recourse to these dispute settlement procedures, including
wherever possible resort to the original panel. ...

6.      The DSB shall keep under surveillance the implementation of adopted recommendations or rulings. ... Unless the DSB decides otherwise,
the issue of implementation of the recommendations or rulings shall be placed on the agenda of the DSB meeting after six months
following the date of establishment of the reasonable period of time pursuant to paragraph 3 and shall remain on the DSB’s
agenda until the issue is resolved. ...

...’

12      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;

...

(f)      for purposes of this paragraph, “sector” means:

(i)      with respect to goods, all goods;

...

...

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. ... Concessions or other obligations shall
not be suspended during the course of the arbitration.

7.      ... The DSB 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 paragraph 6 of Article 21, 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.

...’

*The Community legislation on the common organisation of the market in bananas, and the related dispute within the WTO*

13      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), Title IV of which was devoted to trade with third countries and contained preferential provisions for bananas
originating in certain African, Caribbean and Pacific States (‘ACP States’) that were co-signatories to the Fourth ACP-EEC
Convention signed at Lomé on 15 December 1989 (OJ 1991 L 229, p. 3).

14      Following complaints lodged in February 1996 by several WTO members, including the United States of America, the regime governing
that trade became the subject of a dispute settlement procedure.

15      In its report, the Appellate Body found that certain elements of that trading regime were incompatible with the obligations
entered into by the Community under the WTO agreements and recommended that the DSB request the Community to bring the regime
into conformity with those obligations. This report was adopted by decision of the DSB on 25 September 1997 (‘the DSB’s decision
of 25 September 1997’).

16      On 16 October 1997, the Community informed the DSB, in accordance with Article 21(3) of the DSU, that it would respect its
international obligations.

17      Pursuant to Article 21(3)(c) of the DSU, the reasonable period of time within which the Community had to comply with its obligations
was set by arbitral award as expiring on 1 January 1999.

18      As is apparent from recital 2 in its preamble, Council Regulation (EC) No 1637/98 of 20 July 1998 amending Regulation No 404/93
(OJ 1998 L 210, p. 28) altered the regime governing trade in bananas with third countries having regard to the fact that ‘the
Community’s international commitments under the [WTO] and to the other signatories [to] the Fourth ACP-[EEC] Convention should
be met, whilst achieving at the same time the purposes of the common organisation of the market in bananas’.

19      Commission Regulation (EC) No 2362/98 of 28 October 1998 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) became applicable on 1 January 1999.

20      Since the United States of America took the view that the new Community regime governing the import of bananas that had thereby
been established preserved the unlawful elements of the previous regime, in breach of the WTO agreements and the DSB’s decision
of 25 September 1997, on 14 January 1999 it 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.

21      As the Community objected to that amount and maintained that the principles and procedures laid down in Article 22(3) of the
DSU had not been observed, the DSB decided, on 29 January 1999, to refer this matter to arbitration, on the basis of Article
22(6) of the DSU.

22      By decision of 9 April 1999, the arbitrators found that several provisions of the new Community regime governing the import
of 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.

23      On 19 April 1999, the DSB authorised the United States of America to levy customs duty in respect of trade amounting to up
to USD 191.4 million per year on imports originating in the Community.

24      On the same day, the United States authorities imposed ad valorem import duty at a rate of 100% on various products. These
products, originating in Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Portugal, Spain,
Sweden or the United Kingdom, included ‘lead-acid storage batteries other than of a kind used for starting piston engines
or as the primary source of power for electric vehicles’ and ‘articles of a kind normally carried in the pocket ..., with outer
surface of sheeting of plastic, of reinforced or laminated plastics’.

25      The Community regime governing the import of bananas was further amended by Council Regulation (EC) No 216/2001 of 29 January
2001 amending Regulation No 404/93 (OJ 2001 L 31, p. 2).

26      Recitals 1 to 6 in the preamble to Regulation No 216/2001 state:

‘(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 (EEC) 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 [States] 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 1994]. ...

(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 [States] 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. ...’

27      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 it was
authorised to levy on Community imports.

28      Following the adoption of Commission 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 United States of
America suspended application of its increased customs duty. From 1 July 2001, import duty on stationary batteries and articles
of a kind normally carried in the pocket originating in the Community was reduced to its initial rate of 3.5% and 4.6% respectively.

**The actions brought before the Court of First Instance, the course of the proceedings before it and the judgments under appeal**

*The actions*

29      The business activities of FIAMM relate in particular to stationary batteries, and those of Fedon to spectacle cases and associated
accessories falling within the category of articles of a kind normally carried in the pocket.

30      Since FIAMM and Fedon considered the Community to be liable for the damage which they claimed to have suffered as a result
of the fact that these products were among those subject to the increased customs duty imposed by the United States authorities
between 19 April 1999 and 30 June 2001, they brought before the Court of First Instance actions for compensation, founded
on Article 235 EC in conjunction with the second paragraph of Article 288 EC, against the Council and the Commission.

31      The principal claim advanced by FIAMM and Fedon was that the Community had incurred non-contractual liability by reason of
the unlawful conduct of its institutions. As is apparent from paragraphs 69 and 92 to 95 of the *FIAMM* judgment and paragraphs 63 and 85 to 88 of the *Fedon* judgment, they contended more specifically, as regards the unlawful conduct alleged, that the failure of the Council and
the Commission to adopt amendments to the Community regime governing the import of bananas such 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 infringed
the principle *pacta sunt servanda*, the principles of the protection of legitimate expectations and of legal certainty, their rights to property and pursuit
of an economic activity and, finally, the principle of proper administration.

32      In the alternative, FIAMM and Fedon claimed, in particular, that the Community had incurred non-contractual liability even
in the absence of unlawful conduct of its institutions.

*Proceedings before the Court of First Instance*

33      It is apparent from paragraphs 48 to 59 of the *FIAMM* judgment and paragraphs 48 to 55 of the *Fedon* judgment that the proceedings before the Court of First Instance took the following course.

34      FIAMM’s action was brought on 23 March 2000 (Case T-69/00). The Kingdom of Spain was granted leave to intervene in that case
by order of 11 September 2000.

35      Fedon’s action was brought on 18 June 2001 (Case T-135/01).

36      Following a request made by the Commission pursuant to the second subparagraph of Article 51(1) of the Rules of Procedure
of the Court of First Instance, both cases were reassigned to a chamber in extended composition, composed of five judges,
by decisions of the Court of First Instance of 4 July and 7 October 2002.

37      Following the departure from office of the Judge-Rapporteur initially designated in those cases, a new Judge-Rapporteur was
appointed on 13 December 2002.

38      By order of 3 February 2003, the case which gave rise to the *FIAMM* judgment and the cases which gave rise to the judgments of the Court of First Instance of 14 December 2005 in *Laboratoire du Bain* v *Council and Commission* (Case T-151/00) and *Groupe Fremaux and Palais Royal* v *Council and Commission* (Case T-301/00) were joined for the purposes of the oral procedure. A hearing was held in those cases on 11 March 2003.

39      By decisions of 23 March and 1 April 2004, the Court of First Instance reopened the oral procedure in those cases and referred
to the Grand Chamber of the Court of First Instance both them and the related cases which gave rise to the judgments of the
Court of First Instance of 14 December 2005 in *CD Cartondruck*v *Council and Commission* (Case T-320/00) and *Beamglow* v *Parliament and Others*(Case T-383/00) and to the *Fedon* judgment. These six cases were joined for the purposes of the oral procedure by order of 19 May 2004.

40      The hearing was held on 26 May 2004.

*The judgments under appeal*

41      By the judgments under appeal, the Court of First Instance dismissed the actions brought by FIAMM and Fedon.

42      The Court first dismissed, in paragraphs 84 to 150 of the *FIAMM* judgment and paragraphs 77 to 143 of the *Fedon* judgment, those applicants’ actions for compensation in so far as they were founded on the regime governing non-contractual
liability for unlawful conduct of the Community institutions.

43      Paragraph 100 of the *FIAMM* judgment is worded as follows:

‘The applicants observe that all the principles infringed by the defendants are higher-ranking and are designed to protect
individuals. Before the United States increased the import duty, the WTO regime directly granted the applicants the right
to import their products into the United States paying the original import duty at the reduced rate of 3.5%. Even if the WTO
agreements are not to be regarded as directly applicable, such effect must be accorded to the [DSB’s] decision [of 25 September
1997] that found against the Community, which meets all the conditions laid down for that purpose by Community case-law.’

44      Paragraph 93 of the *Fedon* judgment is couched in the following terms:

‘The applicants observe that, even if the WTO agreements were to be considered not to have direct effect, the DSB’s decision
[of 25 September 1997] that found against the Community should on the other hand be recognised as having such a property.
The Court of Justice has acknowledged that it has the power to review the legality of actions of the Community institutions
where, as here, they intended to implement a specific obligation assumed within the framework of the GATT.’

45      Ruling on the preliminary question as to whether the WTO rules could be relied upon, the Court of First Instance held in particular,
in paragraphs 108 to 115 of the *FIAMM* judgment and paragraphs 101 to 108 of the *Fedon* judgment:

‘108      [101] 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.

109      [102] The applicants rely in this connection 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).

110      [103] 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).

111      [104] 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 ... above, paragraphs 42 to 46).

112      [105] 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 ... above, paragraphs 39 and 40).

113      [106] 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).

114      [107] 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 ... above, paragraph 49, and *Biret International* v *Council*, cited ... above, paragraph 53).

115      [108] 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.’

46      The Court of First Instance then stated the reasons why it considered that neither of those exceptions could apply.

47      With regard to the exception based on an intention to implement a specific obligation assumed within the WTO, the Court held
as follows in paragraphs 116, 121, 122 and 125 to 137 of the *FIAMM* judgment and paragraphs 109, 114, 115 and 118 to 130 of the *Fedon* judgment:

‘116      [109] In undertaking, after the adoption of the [DSB’s] 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.

...

121      [114] The DSU ... allows the WTO member involved several methods of implementing a recommendation or ruling of the DSB finding
a measure incompatible with WTO rules.

122      [115] 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 ... above, paragraph 37).

...

125      [118] 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.

126      [119] 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”.

127      [120] 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.

128      [121] 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.

129      [122] 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.

130      [123] 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.

131      [124] 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 ... above, paragraph 40).

132      [125] The applicants are therefore wrong in inferring from Articles 21 and 22 of the DSU an obligation on the WTO member to
comply, within a specified period, with the recommendations and rulings of the WTO bodies and in contending that DSB rulings
are enforceable unless the contracting parties unanimously oppose this.

133      [126] 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”.

134      [127] 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.

135      [128] 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 applicants.

136      [129] 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.

137      [130] 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.’

48      The Court also ruled out any application of the exception derived from express reference to specific provisions of the WTO
agreements, after having in particular found in paragraph 142 of the *FIAMM* judgment and paragraph 135 of the *Fedon* judgment that ‘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’.

49      The Court thus concluded, in paragraphs 144 and 145 of the *FIAMM* judgment and paragraphs 137 and 138 of the *Fedon* judgment, that, ‘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’
and that ‘the applicants are not entitled to argue, for the purposes of their claim for compensation, that the conduct of
which the Council and the Commission are accused is contrary to WTO rules’.

50      After observing in paragraph 146 of the *FIAMM* judgment and paragraph 139 of the *Fedon* judgment that ‘the complaints advanced by the applicants based on breach of the principles of the protection of legitimate
expectations and of legal certainty, on infringement of the right to property and to pursuit of an economic activity and,
finally, on failure to observe the principle of proper administration all rest on the premiss that the conduct of which the
defendant institutions are accused is contrary to WTO rules’, the Court deduced, in paragraphs 147 and 140 of those judgments,
that, ‘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 [would] therefore be rejected’.

51      In the light of the foregoing, the Court found, in paragraph 149 of the *FIAMM* judgment and paragraph 142 of the *Fedon* judgment, that, ‘since it [had] not been proved that the conduct of which the defendant institutions [were] accused was unlawful,
one of the three cumulative conditions of non-contractual liability of the Community for unlawful conduct [was] not met’.
Consequently, it dismissed the applicants’ first head of claim.

52      As regards the head of claim founded on a regime providing for non-contractual Community liability even in the absence of
unlawful conduct of the institutions, the Court first of all affirmed the existence of such a regime in paragraphs 157 to
160 of the *FIAMM* judgment and paragraphs 150 to 153 of the *Fedon* judgment, stating as follows:

‘157      [150] 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).

158      [151] 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.

159      [152] 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.

160      [153] 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 (Case C-237/98 P *Dorsch Consult* v *Council and Commission* [[2000] ECR I-4549], paragraph 19).’

53      The Court then concluded that the applicants had sustained actual and certain damage.

54      It further held that a direct causal link existed between the conduct of the Community institutions with regard to the importing
of bananas into the Community and the damage thereby sustained by the applicants.

55      Finally, the Court held that the damage incurred by FIAMM and Fedon was not unusual in nature, and therefore rejected their
claims in so far as they were founded on the regime providing for liability of the Community in the absence of unlawful conduct
of its institutions.

56      In reaching this conclusion, the Court held in particular, in paragraphs 205 and 207 of the *FIAMM* judgment and paragraphs 194 and 196 of the *Fedon* judgment:

‘205      [194] ... 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.

...

207      [196] 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.’

**The forms of order sought and the course of the proceedings before the Court of Justice**

57      FIAMM, in Case C‐120/06 P, and Fedon, in Case C‐121/06 P, claim respectively that the *FIAMM* judgment and the *Fedon* judgment should be set aside. They each put forward two pleas in law in support of their appeal.

58      By their first plea, they submit that the judgments under appeal lack reasoning and are unfounded so far as concerns one of
the main arguments – regarding direct effect of decisions of the DSB – underlying their respective applications for damages
by reason of unlawful conduct of the Community.

59      By their second plea, FIAMM and Fedon submit that, in concluding that the damage incurred by them was not unusual in nature
and accordingly rejecting their claim for compensation founded on a liability regime applicable in the absence of unlawful
conduct of the Community institutions, the Court of First Instance gave reasons that were insufficiently explained, illogical
and at variance with the relevant settled case-law.

60      They each further claim that the Court should:

–        give a substantive ruling confirming their entitlement to compensation arising out of the defendants’ liability for an unlawful
act or for a lawful act;

–        in any event, order the defendants to pay the costs both of the appeal proceedings and of the proceedings at first instance.

61      In the alternative, FIAMM and Fedon request the Court to grant them fair compensation on account of the unreasonable duration
of the proceedings before the Court of First Instance and to grant such further relief as fairness might require.

62      The Council contends that the Court should:

–        replace certain of the Court of First Instance’s grounds or partially set aside the judgments under appeal, declaring that
non-contractual liability of the Community in the absence of an unlawful act is inapplicable in respect of a failure to take
legislative action or, in the alternative, declaring that the factors required for such liability are not present;

–        dismiss the appeals as unfounded;

–        order the appellants to pay the costs.

63      The Commission contends that the Court should:

–        dismiss the appeals, altering, in so far as is necessary, the grounds of the judgments under appeal;

–        in the alternative, dismiss the claims put forward at first instance seeking compensation for damage;

–        in the further alternative, refer the cases back to the Court of First Instance in order for the proceedings to be resumed
and the damage for which compensation may be awarded to be quantified, in accordance with Article 61 of the Statute of the
Court of Justice;

–        order the appellants to pay the costs.

64      Both in Case C-120/06 P, in which it lodged a response in its capacity as a party to the proceedings before the Court of First
Instance, and in Case C-121/06 P, in which it has the status of intervener before the Court of Justice, the Kingdom of Spain
contends that the Court should:

–        dismiss the appeal in so far as it relates to liability for an unlawful act of the defendant institutions;

–        partially set aside the judgment under appeal and find that liability for a lawful act does not exist in Community law or,
in the alternative, dismiss the appeal in so far as it relates to the liability of the defendant institutions for a lawful
act or, in the further alternative, dismiss the appellants’ claim for compensation for a lawful act;

–        declare the claim for compensation based on the unreasonable duration of the proceedings before the Court of First Instance
to be inadmissible;

–        order the appellants to pay the costs.

65      After the Council and the Commission had lodged their responses in Cases C‐120/06 P and C-121/06 P and the Kingdom of Spain
had lodged its response in Case C‐120/06 P, FIAMM and Fedon were, upon application by them, granted the right to submit a
reply under Article 117(1) of the Rules of Procedure of the Court of Justice.

66      In Case C‐120/06 P, the Court Registry received by fax, within the periods referred to in Article 117(1) and (2) respectively
of the Rules of Procedure, FIAMM’s reply and its response to the cross-appeal brought by the Council. The originals of those
pleadings were not, however lodged at the Court Registry within the period of 10 days referred to in Article 37(6) of the
Rules of Procedure. Consequently, those pleadings, and the originals thereof belatedly received at the Registry, were excluded
from the proceedings and returned to FIAMM.

67      In Case C‐121/06 P, Fedon lodged neither a reply nor a response to the Council’s cross-appeal. Fedon and the Commission lodged
observations on the statement in intervention of the Kingdom of Spain.

**The first plea in the main appeals**

*Arguments of the parties*

68      By their first plea, FIAMM and Fedon submit that the judgments under appeal lack reasoning and are unfounded as regards one
of the main arguments put forward in support of their respective applications for damages in respect of unlawful conduct of
the Community.

69      They state that, as the Court of First Instance indeed noted in paragraph 100 of the *FIAMM* judgment and paragraph 93 of the *Fedon* judgment, during both the written procedure and the hearing they dwelt on the specific legal effects attaching to the DSB’s
decision of 25 September 1997 that found against the Community. They thus submitted that the existence of such a decision
constitutes, alongside the two types of exception already laid down by *Fediol* v *Commission* and *Nakajima* v *Council*, a third case where it is appropriate to allow a breach of the WTO agreements by the Community institutions to be pleaded
before the Community courts, in particular exclusively for purposes of compensation.

70      The assessments of the Court of First Instance and the mere reference to previous case-law contained in paragraphs 110 to
112 of the *FIAMM* judgment and paragraphs 103 to 105 of the *Fedon* judgment are irrelevant in this regard, since that case-law rules on a different question, namely whether a substantive rule
contained in the WTO agreements can be relied upon for the purpose of reviewing the legality of Community legislation and
of declaring, where appropriate, such legislation to be inapplicable.

71      As is apparent, in particular, from paragraphs 114 and 115 of the *FIAMM* judgment and paragraphs 107 and 108 of the *Fedon* judgment, the Court of First Instance took the DSB’s decision of 25 September 1997 into consideration only in order to determine
whether, given its existence, either of the exceptions already established in the case-law to the rule that the WTO agreements
lack direct effect could apply here.

72      In so doing, the Court of First Instance did not take appropriate account of the arguments of FIAMM and Fedon to the effect
that, after the expiry of the reasonable period of time allowed for implementing the DSB’s decision of 25 September 1997,
the Community then had just two options, namely to comply or not to comply with that decision. The flexibility of the WTO
dispute settlement system, a feature which in particular enables the parties to pursue negotiated solutions and upon which
the case-law recalled in paragraph 112 of the *FIAMM* judgment and paragraph 105 of the *Fedon* judgment, establishing that it is not possible to review the legality of Community legislation in the light of the WTO agreements,
is founded, is accordingly lacking here. In those circumstances there is nothing to preclude direct effect being accorded
to a decision of the DSB.

73      Furthermore, a finding of unlawfulness which merely takes note of the failure to comply with the DSB’s decision of 25 September
1997 within the period allowed does not require the substance of the Community measure at issue to be examined and cannot
therefore affect the way in which the Community decides to put an end to the unlawfulness, any solution remaining possible
provided that it is consistent with the WTO agreements and accepted by the opposing party.

74      Nor did the Court of First Instance take appropriate account of the arguments of FIAMM and Fedon that, unlike an application
for annulment or a reference for a preliminary ruling on the validity of a measure, an action for compensation cannot result
in the Community measure concerned being eliminated or rendered inapplicable or, therefore, in the responsible bodies of the
parties to the WTO agreements being denied the possibility of entering into negotiated arrangements. That line of argument
is particularly apposite because in the present instance the application for compensation is being examined after the conclusion
of the dispute.

75      The same considerations provide grounds for rejecting the argument, recalled in paragraph 111 of the *FIAMM* judgment and paragraph 104 of the *Fedon* judgment, regarding the fact that the WTO agreements are founded on reciprocal and mutually advantageous arrangements.

76      The Council submits that the Court of First Instance in fact examined in parallel the possibility of relying on WTO rules
and on the DSB’s decision of 25 September 1997, as is apparent inter alia from paragraph 129 of the *FIAMM* judgment and paragraph 122 of the *Fedon* judgment.

77      The judgments under appeal are, moreover, consistent with the case-law stating that the WTO agreements are not in principle
among the rules in the light of which the Court of Justice is to review the legality of measures adopted by the Community
institutions, and the Court of First Instance correctly held that neither of the two permitted exceptions to that principle
is applicable here.

78      Since the WTO agreements are not intended to confer rights on individuals, the Community likewise cannot incur liability by
reason of any infringement of those agreements if the scope for manoeuvre enjoyed by WTO members with a view to complying
or not complying with a decision of the DSB is not to be prejudiced.

79      The Council further contends that the distinction drawn by the appellants between the legal effects attached to a DSB decision
and those resulting from the substantive rules which that decision has found to have been infringed is artificial. Such a
decision can be taken into consideration in an action for compensation only in so far as those substantive rules have previously
been found to have direct effect.

80      In the Commission’s submission, at first instance FIAMM and Fedon did not in any way put forward the possibility of relying
directly on a DSB decision as a specific and independent theory enabling the unlawfulness of action of the Community to be
established or centre their arguments on this point. They essentially set out standard arguments in order to establish that
the failure to amend the Community legislation so as to comply with the WTO agreements after the DSB’s decision of 25 September
1997 involved a breach of higher-ranking rules of law.

81      It was only as a subsidiary point that FIAMM and Fedon simply contended, without expanding upon and otherwise substantiating
this assertion, that, should the WTO agreements not be directly applicable, the DSB’s decision of 25 September 1997 should
have direct effect.

82      The Court of First Instance, which is not indeed required to rule on each of the arguments put forward by the applicants,
accordingly took account of the arguments of FIAMM and Fedon in an appropriate manner, mainly concentrating, in paragraphs
108 to 150 of the *FIAMM* judgment and paragraphs 101 to 143 of the *Fedon* judgment, on an examination of the conduct of the Community institutions, but not without referring to the effects of the
DSB’s decision of 25 September 1997 in paragraphs 108 and 144 of the *FIAMM* judgment and paragraphs 101 and 137 of the *Fedon* judgment. In view of the, even implicit, grounds of the judgments under appeal, FIAMM and Fedon are, furthermore, able to
understand the reasons for which the Court of First Instance held that the institutions’ conduct had not been established
to be unlawful, even after a decision of the DSB.

83      If the Court of Justice were nevertheless to hold that the grounds of the judgments under appeal are insufficient, it could
uphold their operative parts while supplementing their grounds.

84      The question whether the WTO agreements may be relied upon by individuals who have suffered damage in order to contest the
validity of Community legislation, in a situation where a DSB decision has found that legislation to be incompatible with
the WTO agreements and the reasonable period of time granted for complying with the DSB decision has expired, was decided
by the Court in the negative in Case C-377/02 *Van Parys* [2005] ECR I‐1465.

85      Any distinction between review of the legality of Community action with a view to a finding of invalidity and such review
with a view to the award of compensation is, in this regard, irrelevant. Furthermore, to compensate the industry affected
by measures providing for suspension which are consistent with the WTO agreements would prejudice the rebalancing of concessions
to which those measures contribute and would therefore prejudice reciprocity.

86      The Kingdom of Spain also takes the view that the judgments under appeal satisfy the obligation to state reasons. The Court
of First Instance referred, in paragraph 100 of the *FIAMM* judgment and paragraph 93 of the *Fedon* judgment, to the proposition advanced by FIAMM and Fedon regarding the direct effect of a DSB decision and, in paragraphs
116 to 150 of the *FIAMM* judgment and paragraphs 109 to 143 of the *Fedon* judgment, it refuted that proposition in examining the question whether the existence of such a decision enables the Community
courts to review the legality of the conduct of the Community institutions in the light of WTO rules.

87      Furthermore, the Court of First Instance did not err in law in concluding that it was impossible to carry out such a review
in the case in point. In particular, the risk for the Community of laying itself open to actions for damages would be liable
to weaken its position and to lead it not to contemplate the possibility of exhausting all the ways in which disputes may
be settled, including in particular the possible adoption of retaliatory measures by the opposing party and the subsequent
search for a solution.

88      Nor is there any justification in law for drawing a distinction according to whether the review of the legality of the Community’s
action takes place with a view to the annulment of a measure or with a view to the award of compensation, since the criteria
for such review are invariable and in particular cannot depend on whether or not there is damage or on the time at which the
damage is alleged.

*Findings of the Court*

89      First of all, as the Advocate General has observed in point 20 of his Opinion, although, according to its heading, the first
plea is intended to raise a lack of reasoning in the judgments under appeal, examination of the content of the appeals reveals
that the latter also contain substantive complaints regarding the approach adopted by those judgments; those complaints were,
moreover, the focus of most of the debate between the parties both during the written procedure and at the hearing. It is
therefore appropriate, for the purposes of ruling on the first plea, to distinguish its two parts, concerning, first, a lack
of reasoning in the judgments under appeal and, second, an error of law committed by the Court of First Instance in relation
to the conditions under which the Community can incur liability for the unlawful conduct of its institutions.

First part of the plea

90      The question whether the grounds of a judgment of the Court of First Instance are contradictory or inadequate is a question
of law which is amenable, as such, to judicial review on appeal (see, inter alia, the judgment of 11 January 2007 in Case
C-404/04 P *Technische Glaswerke Ilmenau* v *Commission*, paragraph 90).

91      It should however be recalled, first, that, as the Court of Justice has repeatedly held, the requirement that the Court of
First Instance give reasons for its decisions cannot be interpreted as meaning that it is obliged to respond in detail to
every single argument advanced by the appellant, particularly if the argument was not sufficiently clear and precise (see,
inter alia, Case C-274/99 P *Connolly* v *Commission* [2001] ECR I‐1611, paragraph 121; Case C-197/99 P *Belgium* v *Commission* [2003] ECR I‐8461, paragraph 81; and *Technische Glaswerke Ilmenau* v *Commission*, paragraph 90).

92      Examination of the applications lodged by FIAMM and Fedon before the Court of First Instance reveals, first of all, that the
assertion relating to the possible direct effect of the DSB’s decision of 25 September 1997 does not appear at all in the
section of those applications intended to establish that an infringement of the WTO agreements by the Community exists or
can be relied upon. The assertion can be found in a section of the applications seeking to demonstrate that the higher-ranking
rules of law which are thus alleged to have been infringed, and which include, in particular, the principle *pacta sunt servanda* and the WTO agreements, are ‘intended to protect individuals’, so that there would be compliance in that regard with one
of the conditions which the case-law requires to be met in order for liability of the Community for unlawful conduct of its
institutions to be put in issue.

93      Also, that assertion was expressed, from the angle described above, only very much as a subsidiary point, since FIAMM and
Fedon simply submitted that, if direct effect and the resulting status of a rule protecting individuals were not to be accepted
in the case of the WTO agreements, they should be as regards decisions of the DSB.

94      Finally, that assertion, which, as regards FIAMM, takes up two paragraphs of an application of 177 paragraphs and, as regards
Fedon, is contained in a footnote, is not, either in the applications or in the replies subsequently lodged by FIAMM and Fedon,
expanded upon or accompanied by a specific line of argument intended to support it.

95      It follows from the foregoing that, contrary to what FIAMM and Fedon contend in the very specific arguments which they devote
to this question in the context of their appeals under the cover of a request that the reasoning of the judgments under appeal
be reviewed, they did not in their applications to the Court of First Instance in any way state with the clarity and precision
which would have been required that the direct effect which may attach to decisions of the DSB would justify the establishment
of failure to comply with them as a new, third, exception to the principle that the WTO agreements cannot be relied upon for
the purposes of reviewing the legality of secondary Community legislation. As is apparent from Fedon’s application and FIAMM’s
reply, they, on the contrary, expressly invoked one of the two traditionally accepted exceptions to that principle, submitting
that in this instance the Community indicated that it intended to implement a specific obligation assumed within the framework
of the GATT.

96      Second, it should also be recalled that the obligation to state reasons does not require the Court of First Instance to provide
an account which follows exhaustively and one by one all the arguments put forward by the parties to the case and that the
reasoning may therefore be implicit on condition that it enables the persons concerned to know why the Court of First Instance
has not upheld their arguments and provides the Court of Justice with sufficient material for it to exercise its power of
review (see, in particular, Joined Cases C-204/00 P, C‐205/00 P, C-211/00 P, C-213/00 P, C-217/00 P and C-219/00 P *Aalborg Portland and Others* v *Commission* [2004] ECR I-123, paragraph 372, and the judgment of 25 October 2007 in Case C-167/06 P *Komninou* *and Others* v *Commission*, paragraph 22).

97      It is apparent, first of all, from paragraph 108 of the *FIAMM* judgment and paragraph 101 of the *Fedon* judgment that in the case in point the Court of First Instance sought to decide whether the WTO agreements, including the
DSU and its provisions devoted to the implementation of decisions of the DSB, confer on persons 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’.

98      Next, likewise referring to ‘the WTO agreements’ as so defined, the Court of First Instance explained, in paragraphs 110 to
112 of the *FIAMM* judgment and paragraphs 103 to 105 of the *Fedon* judgment, that, in accordance with settled case-law and for the reasons recalled by the Court of First Instance, those agreements
are not in principle among the rules in the light of which the Community courts review the legality of action by the Community
institutions.

99      Finally, it is to be noted that the judgments under appeal do contain considerable explanation of the legal effects that may
attach to a decision of the DSB, in particular where the period of time allowed for implementation of the decision has expired.

100    While it is true that that explanation appears in passages of the judgments under appeal in which the Court of First Instance
examined whether one of the two exceptions traditionally accepted by the case-law to the principle that the WTO agreements
cannot be relied upon by individuals was applicable in the case in point, the fact remains that the findings made by the Court
of First Instance at that juncture responded in an implicit, but nevertheless certain, manner to the specific arguments which
are alleged in the appeals not to have been dealt with by the Court.

101    Thus, it is apparent in particular from paragraphs 129 to 131 of the *FIAMM* judgment and paragraphs 122 to 124 of the *Fedon* judgment that the Court of First Instance held, after an examination of the relevant provisions of the DSU, that the expiry
of the period of time allowed for the Community to bring its banana import regime into conformity with the DSB’s decision
of 25 September 1997 had not resulted in exhaustion of the methods for settling disputes made available by the DSU. The Court
also stated in this connection that review of the legality of the conduct of the defendant institutions could have the effect
of weakening the position of the Community negotiators in the search for a mutually acceptable solution to the dispute consistent
with WTO rules and, in some cases, of thus depriving the legislative or executive organs of a contracting party of the possibility
afforded in particular in Article 22 of the DSU of entering into a negotiated arrangement even on a temporary basis.

102    Furthermore, in paragraph 132 of the *FIAMM* judgment and paragraph 125 of the *Fedon* judgment, the Court of First Instance concluded its analysis in this regard, holding that the applicants were therefore wrong
in inferring from Articles 21 and 22 of the DSU an obligation on the WTO member to comply, within a specified period, with
the recommendations and rulings of the WTO bodies and in contending that DSB rulings are enforceable unless the contracting
parties unanimously oppose this.

103    In so deciding, the Court of First Instance ruled, implicitly at the very least, on the applicants’ assertion that direct
effect should be accorded to such recommendations or such rulings once the period of time allowed for their implementation
has expired.

104    It follows from all of the foregoing that the grounds of the judgments under appeal deal adequately with the arguments set
out by the applicants at first instance and that they in particular enable the Court of Justice to exercise its power of judicial
review, so that the first part of the plea must be declared unfounded.

Second part of the plea

105    The following should be stated in relation to the second part of the first plea, alleging an error of law regarding the circumstances
in which liability for unlawful conduct of the Community can found an action.

106    The Court has consistently interpreted the second paragraph of Article 288 EC as meaning that the non-contractual liability
of the Community and the exercise of the right to compensation for damage suffered depend on the satisfaction of a number
of conditions, relating to the unlawfulness of the conduct of which the institutions are accused, the fact of damage and the
existence of a causal link between that conduct and the damage complained of (see, inter alia, Case 26/81 *Oleifici Mediterranei* v *EEC* [1982] ECR 3057, paragraph 16, and Case C-146/91 *KYDEP* v *Council and Commission* [1994] ECR I‐4199, paragraph 19).

107    Here, the applicants essentially contended in support of their claim for compensation before the Court of First Instance that
the Community institutions acted unlawfully, and therefore wrongfully, in failing to bring the Community legislation into
conformity with the WTO agreements within the reasonable period of time that the Community was allowed for that purpose after
a decision of the DSB had found that legislation to be incompatible with the WTO agreements.

108    It is to be observed in that regard that the effects within the Community of provisions of an agreement concluded by the Community
with non-member States may not be determined without taking account of the international origin of the provisions in question.
In conformity with the principles of public international law, Community institutions which have power to negotiate and conclude
such an agreement are free to agree with the non-member States concerned what effect the provisions of the agreement are to
have in the internal legal order of the contracting parties. If that question has not been expressly dealt with in the agreement,
it is the courts having jurisdiction in the matter and in particular the Court of Justice within the framework of its jurisdiction
under the EC Treaty that have the task of deciding it, in the same manner as any other question of interpretation relating
to the application of the agreement in question in the Community (see, in particular, Case 104/81 *Kupferberg* [1982] ECR 3641, paragraph 17, and *Portugal* v *Council*, paragraph 34), on the basis in particular of the agreement’s spirit, general scheme or terms (see, to this effect, Case
C‐280/93 *Germany* v *Council* [1994] ECR I‐4973, paragraph 110).

109    Therefore, specifically, it falls to the Court to determine, on the basis in particular of the abovementioned criteria, whether
the provisions of an international agreement confer on persons subject to Community law the right to rely on that agreement
in legal proceedings in order to contest the validity of a Community measure (see, with regard to the GATT 1947, Joined Cases
21/72 to 24/72 *International Fruit Company and Others* [1972] ECR 1219, paragraph 19).

110    As is apparent from its case-law, the Court considers that it can examine the validity of secondary Community legislation
in the light of an international treaty only where the nature and the broad logic of the latter do not preclude this and,
in addition, the treaty’s provisions appear, as regards their content, to be unconditional and sufficiently precise (see,
in particular, Case C‐308/06 *Intertanko and Others* [2008] ECR I-0000, paragraph 45 and the case-law cited).

111    As regards, more specifically, the WTO agreements, it is settled case-law that, given their nature and structure, those agreements
are not in principle among the rules in the light of which the Court is to review the legality of measures adopted by the
Community institutions (see, in particular, *Portugal* v *Council*, paragraph 47; *Biret International* v *Council*, paragraph 52; and *Van* *Parys*, paragraph 39).

112    It is only where the Community has intended to implement a particular obligation assumed in the context of the WTO, or where
the Community measure refers expressly to the precise provisions of the WTO agreements, that it is for the Court to review
the legality of the Community measure in question in the light of the WTO rules (see *Biret International* v *Council*, paragraph 53, and *Van* *Parys*, paragraph 40 and the case-law cited).

113    The Court has already held that the common organisation of the market in bananas, as introduced by Regulation No 404/93 and
subsequently amended, is not designed to ensure the implementation in the Community legal order of a particular obligation
assumed in the context of the GATT and does not refer expressly to specific provisions of the GATT either (order in *OGT Fruchthandelsgesellschaft*, paragraph 28).

114    As regards, in particular, Regulation No 1637/98 and the regulations adopted to implement it, the Court stated in *Van Parys*, paragraph 52, that they do not expressly refer to specific provisions of the WTO agreements.

115    The Court also held in that judgment that, by undertaking after the adoption of the DSB’s decision of 25 September 1997 to
comply with the WTO rules and, in particular, with Articles I(1) and XIII of the GATT 1994, the Community did not intend to
assume a particular 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 enabling the Community courts to review the legality of Regulation No
1637/98 and the regulations adopted to implement it in the light of those rules (see, to this effect, *Van Parys*, paragraphs 41 and 52).

116    It should be remembered that the decisive factor here is that the resolution of disputes concerning WTO law is based, in part,
on negotiations between the contracting parties. Withdrawal of unlawful measures is admittedly the solution recommended by
WTO law, but other solutions are also authorised (*Omega Air and Others*, paragraph 89).

117    The Court thus held in *Van Parys*, paragraph 51, that the expiry of the period granted by the DSB for implementation of its decision of 25 September 1997 does
not imply that the Community had exhausted the possibilities under the DSU of finding a solution to the dispute between it
and the other parties. In those circumstances, to require the Community courts, merely on the basis that that period has expired,
to review the legality of the Community measures concerned in the light of the WTO rules could have the effect of undermining
the Community’s position in its attempt to reach a mutually acceptable solution to the dispute in conformity with those rules.

118    Referring in particular to the memorandum of understanding concluded with the United States of America on 11 April 2001, the
Court observed more specifically that such an outcome, by which the Community sought to reconcile its obligations under the
WTO agreements with those in respect of the ACP States, and with the requirements inherent in the implementation of the common
agricultural policy, could have been compromised if the Community courts had been entitled to review the legality of the Community
measures in question in the light of the WTO rules upon the expiry of the reasonable period of time granted by the DSB (see,
to this effect, *Van Parys*, paragraphs 49 and 50).

119    The Court also pointed out that to accept that the Community courts have the direct responsibility for ensuring that Community
law complies with the WTO rules would effectively deprive the Community’s legislative or executive organs of the scope for
manoeuvre enjoyed by their counterparts in the Community’s trading partners. It is not in dispute that some of the contracting
parties, including the Community’s most important trading partners, have concluded from the subject-matter and purpose of
the WTO agreements that they are not among the rules applicable by their courts when reviewing the legality of their rules
of domestic law. Such lack of reciprocity, if accepted, would risk introducing an imbalance in the application of the WTO
rules (*Van Parys*, paragraph 53).

120    As is apparent from the Court’s case-law, there is also no reason to draw a distinction in these various respects according
to whether the legality of the Community action is to be reviewed in annulment proceedings or for the purpose of deciding
an action for compensation (see to this effect, with regard to the period preceding the expiry of the reasonable period of
time allowed for implementing a decision of the DSB, *Biret International* v *Council*, paragraph 62).

121    First, as the Court has pointed out, the prospect of actions for damages is liable to hinder exercise of the powers of the
legislative authority whenever it has occasion to adopt, in the public interest, legislative measures which may adversely
affect the interests of individuals (Joined Cases 83/76, 94/76, 4/77, 15/77 and 40/77 *Bayerische HNL Vermehrungsbetriebe and Others* v *Council and Commission* [1978] ECR 1209, paragraph 5, and Joined Cases C-46/93 and C-48/93 *Brasserie du pêcheur and Factortame* [1996] ECR I-1029, paragraph 45).

122    Second, any determination by the Community courts that a Community measure is unlawful, even when not made in the exercise
of their jurisdiction under Article 230 EC to annul measures, is inherently liable to have repercussions on the conduct required
of the institution that adopted the measure in question.

123    Thus, in particular, it is settled case-law that when the Court rules, in proceedings under Article 234 EC, that a measure
adopted by a Community authority is invalid, its decision has the legal effect of requiring the competent Community institutions
to take the necessary measures to remedy that illegality, as the obligation laid down in Article 233 EC in the case of a judgment
annulling a measure applies in such a situation by analogy (see, in particular, the order of 8 November 2007 in Case C-421/06
*Fratelli Martini and Cargill*, paragraph 52 and the case-law cited).

124    There is nothing to suggest that the position should be different in the case of a judgment delivered in an action for compensation
in which it is found that a measure adopted by the Community or a failure by it to act is unlawful. As the Advocate General
has observed in point 49 of his Opinion, any determination by the Community courts that a measure is unlawful, even when made
in an action for compensation, has the force of res judicata and accordingly compels the institution concerned to take the
necessary measures to remedy that illegality.

125    The distinction which the appellants seek to draw between the ‘direct effect’ of the WTO rules imposing substantive obligations
and the ‘direct effect’ of a decision of the DSB, asserting that it should be open to individuals to have the legality of
the conduct of the Community institutions reviewed by the Community courts in the light of the DSB decision itself if such
a review is not possible in the light of the WTO rules which that decision has found to have been infringed, calls for the
following comments.

126    Even though the Court has not yet been required to rule expressly on such a distinction, it nevertheless necessarily follows
from its case-law mentioned above that there is no basis for the distinction.

127    In holding that the WTO rules which have been found by a decision of the DSB to have been infringed cannot, notwithstanding
the expiry of the period of time laid down for implementing that decision, be relied upon before the Community courts for
the purpose of having the legality of the conduct of the Community institutions reviewed by the Community courts in the light
of those rules, the Court has necessarily excluded such a review in the light of the DSB decision itself.

128    A DSB decision, which has no object other than to rule on whether a WTO member’s conduct is consistent with the obligations
entered into by it within the context of the WTO, cannot in principle be fundamentally distinguished from the substantive
rules which convey such obligations and by reference to which such a review is carried out, at least when it is a question
of determining whether or not an infringement of those rules or that decision can be relied upon before the Community courts
for the purpose of reviewing the legality of the conduct of the Community institutions.

129    A recommendation or a ruling of the DSB finding that the substantive rules contained in the WTO agreements have not been complied
with is, whatever the precise legal effect attaching to such a recommendation or ruling, no more capable than those rules
of conferring upon individuals a right to rely thereon before the Community courts for the purpose of having the legality
of the conduct of the Community institutions reviewed.

130    First, as is apparent from paragraphs 113 to 124 of the present judgment, the considerations linked to the nature of the WTO
agreements and to the reciprocity and flexibility characterising them continue to obtain after such a ruling or recommendation
has been adopted and after the reasonable period of time allowed for its implementation has expired. The Community institutions
continue in particular to have an element of discretion and scope for negotiation vis-à-vis their trading partners with a
view to the adoption of measures intended to respond to the ruling or recommendation, and such leeway must be preserved.

131    Second, as is apparent from Article 3(2) of the DSU, recommendations and rulings of the DSB cannot add to or diminish the
rights and obligations provided in the agreements concerned. It follows in particular that a decision of the DSB finding an
infringement of such an obligation cannot have the effect of requiring a party to the WTO agreements to accord individuals
a right which they do not hold by virtue of those agreements in the absence of such a decision.

132    It should, in particular, be recalled in this regard that the Court has already held in relation to the provisions of the
GATT 1994, which have been found by the DSB to have been infringed in the present case, that those provisions are not such
as to create rights upon which individuals may rely directly before the courts by virtue of Community law (see, to this effect,
the order in *OGT Fruchthandelsgesellschaft*, paragraphs 25 and 26).

133    It follows from all of the foregoing considerations that the Court of First Instance rightly decided that, notwithstanding
the expiry of the period of time allowed for implementing a decision of the DSB, the Community courts could not, in the circumstances
of the case in point, review the legality of the conduct of the Community institutions in the light of WTO rules.

134    Since, therefore, neither part of the first plea in the appeals is well founded, this plea must be dismissed.

**The second plea in the main appeals, the cross-appeals and the claims seeking the substitution of grounds**

*Arguments of the parties*

135    By a second plea, FIAMM and Fedon submit that, in holding when it examined their claims expressed in terms of no-fault Community
liability that the damage suffered by them was not unusual in nature, the Court of First Instance adopted illogical reasoning
and infringed certain principles that are well established in the case-law.

136    According to FIAMM and Fedon, in the judgments under appeal the Court of First Instance in particular misapplied the dual
requirement that damage must be, first, foreseeable and, second, inherent in operating in the sector concerned if it is to
be classifiable as usual.

137    Damage caused by customs penalties imposed by a non-member State in the industrial-battery or spectacle-case sector following
a dispute in the banana sector is not inherent in the first two of those sectors, as is attested in particular by Article
22(3)(a) of the DSU. Such damage is all the less foreseeable because of its novel punitive nature and because it is unprecedented
in GATT and WTO history and in relations between the Community and the United States of America.

138    The Court of First Instance’s reasoning that, as Article 22(3) of the DSU authorises the adoption of retaliatory measures,
the damage incurred is not unusual is contradictory. To take the view that damage is usual because it is the consequence of
an act permitted by the applicable law is tantamount to denying that damage caused by a lawful act can give rise to liability,
but this possibility is accepted by the judgments under appeal.

139    The Council contends that the Court of First Instance was right in holding that the alleged damage falls within the normal
risks which an exporter must assume given the current arrangements for world trade.

140    However, it contests some of the grounds of the judgments under appeal and asks the Court either to substitute various grounds
in those respects or, ruling on the cross-appeals brought by it in this regard, to set aside those judgments in part.

141    First, since barely half of the Member States’ legal systems provide for the possibility – which moreover is subject to very
strict conditions – of obtaining compensation for damage resulting from certain lawful acts of public authorities, the Council
contests the statement, appearing in paragraph 160 of the *FIAMM* judgment and paragraph 153 of the *Fedon* judgment, according to which a general principle common to the Member States exists that enables the liability of the Community
to be put in issue even in the absence of unlawful conduct on the part of its institutions.

142    Even assuming that such a principle can be established, the Court of First Instance was in any event wrong in its view that
it is capable of applying in a situation such as that here since, in particular:

–        liability for legislative omission would limit both the freedom of choice inherent in the Commission’s right of initiative
and the legislature’s discretion, calling into question the separation of powers and institutional balance intended by the
Treaty;

–        the lack of proportionality between Community liability for an unlawful legislative measure, which is subject to very strict
conditions as regards the unlawfulness of the conduct, and liability for a lawful legislative omission, which would require
only special and unusual damage and therefore be more easily brought into play, betrays an inconsistency;

–        the position thus adopted by the Court of First Instance conflicts with the reasoning followed by it in concluding that it
is not possible to rely on WTO rules in an action for compensation founded on unlawful Community conduct, in particular with
the need not to deprive the Community organs of the scope for manoeuvre enjoyed by the organs of the Community’s trading partners.

143    Second, the judgments under appeal wrongly concluded that there was damage that was certain, since FIAMM and Fedon had not
proved the existence, extent or the precise amount of such damage.

144    Third, with regard to the causal link, the Court of First Instance failed to observe the requirement that the damage must
be a sufficiently direct consequence of the conduct of the institution concerned. There is no automatic link between the DSB’s
decision of 25 September 1997 and the introduction of the increased customs duty at issue, since the United States authorities,
in the exercise of their discretion, decided in principle to impose the duty and determined the products upon which it would
be charged and its rate when, in particular, they could have accepted the compensation offered by the Community.

145    The Commission too submits that the Court of First Instance rightly concluded in the judgments under appeal that there was
no unusual damage. In order for damage to be usual, it is in particular not necessary for the risk of it occurring to be inherent
in the sector in which the business operates. Involvement in international trade is, whatever the product market concerned,
accompanied by the risk that an importing country will adopt decisions affecting trade for the most diverse reasons.

146    While thus concluding that the second plea in the appeals should be dismissed, the Commission submits however, like the Council,
that the Court of First Instance made various errors of law as regards the question of Community liability in the absence
of unlawful conduct on the part of its institutions. Since the operative parts of the judgments under appeal are nevertheless
justified, it asks the Court of Justice to substitute various grounds in this regard.

147    First, so far as concerns the affirmation as to the very existence of the principle of such liability, the Court of First
Instance could not, according to the Commission, make so significant an innovation on the basis of merely the vague reasoning
contained in paragraph 159 of the *FIAMM* judgment and paragraph 152 of the *Fedon* judgment.

148    This principle has never been accepted by the case-law, which has systematically left the question to one side, merely setting
out a purely hypothetical reference framework in this regard without in any way laying down the conditions under which and
fields and situations in which such liability could where appropriate be incurred.

149    Furthermore, by setting out in paragraph 160 of the *FIAMM* judgment and paragraph 153 of the *Fedon* judgment the conditions to which liability is subject, the Court of First Instance implicitly but necessarily held that this
principle applies in the type of situation covered by the present case, without establishing, however, whether such a conclusion
is justified in the light of principles common to the legal systems of the Member States.

150    In particular, the Court of First Instance did not focus its examination on instances of liability of the public authorities
resulting from legislative activity, referring on the contrary, in paragraph 159 of the *FIAMM* judgment and paragraph 152 of the *Fedon* judgment, in the most general manner to the possibility of obtaining compensation from the perpetrator of damage in the absence
of fault on his part.

151    However, examination of the 25 legal orders of the Member States indicates that, in contrast to cases such as expropriation
in the public interest or compensation paid by the State for damage caused by dangerous activity on its part or on account
of a specific relationship between it and the victim, which are irrelevant here, any obligation to pay compensation as a result
of a lawful State act reflecting a broad discretion, on account for example of considerations of solidarity or fairness, is
unknown to the law of a large number of Member States. While liability of such a type can be found, in exceptional circumstances,
in the legal orders of certain other Member States, it is, as a general rule, limited solely to administrative acts, with
the notable exception of French law which alone clearly accepts this type of liability in the case of legislative activity,
provided that the damage is unusual, special, serious and direct, that the legislature is not pursuing the common good and
that the legislature has not ruled out compensation as a matter of principle.

152    Furthermore, the principle specific to French law cannot be transferred to the Community legal order. While the basis of that
principle is the fact that, in France, judicial review by the Conseil d’État (Council of State) of the constitutionality of
laws is precluded, Community law provides for review of the legality of measures of the legislature by reference to the Treaty
and fundamental principles and for the possibility of the liability of the Community to be put in issue if those higher-ranking
norms are infringed.

153    Second, the Commission submits that, in concluding in the judgments under appeal that there was real and certain damage, the
Court of First Instance in particular distorted the Commission’s arguments, failed to verify specifically that the damage
was real and certain and infringed the principles for determining who has the burden of proof.

154    Third, the Commission contends, for reasons analogous to those set out by the Council, that the Court of First Instance erred
in the legal characterisation of the facts in concluding that the condition relating to the causal link was met in the case
in point.

155    The Kingdom of Spain also contends that the second plea in the appeals should be dismissed. As practice shows, there is nothing
unforeseeable or exceptional in the imposition of retaliatory measures within the framework of the WTO, including in sectors
other than those concerned by a dispute.

156    By the cross-appeal which it has brought in Case C-120/06 P and in its statement in intervention in Case C-121/06 P, the Kingdom
of Spain further requests that the judgments under appeal be set aside in so far as the Court of First Instance held that
Community law includes, by way of a general principle common to the Member States, a system of liability for lawful acts.
Moreover, in conferring upon that principle a scope as wide as that resulting from the conditions set out in paragraph 160
of the *FIAMM* judgment and paragraph 153 of the *Fedon* judgment, the Court of First Instance failed to have regard to the finding which it itself made in paragraph 159 of the *FIAMM* judgment and paragraph 152 of the *Fedon* judgment.

157    Acceptance of the possibility of Community liability for a legislative omission although no rule obliging the Community to
act can be invoked by the person harmed disregards the principle of reciprocity which the Court of First Instance relied on
in rejecting the possibility of liability for unlawful conduct.

158    In its observations on the statement in intervention of the Kingdom of Spain, Fedon contends that the Court of First Instance
was right in holding that a principle of liability for lawful conduct of the Community institutions has been laid down and
delimited by settled case-law, as the Court of Justice noted in *Dorsch Consult* v *Council and Commission*.

159    Since the second paragraph of Article 288 EC is intended to safeguard the fundamental principle of a State based on the rule
of law that protects individuals and, in particular, their rights to property and pursuit of an economic activity, it must,
having regard to the liberal orientation of the Community legal system, be interpreted in such a way as to favour the most
liberal principles characterising the legal systems of the Member States. In addition, in a Union composed of 25 Member States
this provision must be interpreted flexibly if it is not to be rendered inapplicable. In the case in point, the legal systems
of the new Member States should nevertheless not be taken into account, since the relevant enlargement occurred after the
material time.

160    Fedon further submits that the objection put forward by the Kingdom of Spain relating in particular to the fact that the conduct
complained of consists of an omission is inadmissible as it was not raised at first instance. In any event, the Community
can incur liability for both omissions and acts of the institutions.

*Findings of the Court*

161    In the first plea of their respective cross-appeals, the Council has contended that the *FIAMM* and *Fedon* judgments should be set aside, and the Kingdom of Spain that the *FIAMM* judgment should be set aside, on the ground that the Court of First Instance erred in law in establishing a principle of
Community liability in the absence of unlawful conduct attributable to its institutions or, in any event, in holding that
such a principle is applicable in the case of conduct such as that at issue in the case in point. Without bringing a cross-appeal,
the Commission asks the Court to retain the operative parts of the judgments under appeal but to substitute grounds to the
same effect.

162    Since the grounds of challenge as so formulated dispute the very existence or very applicability of the liability regime which
the judgments under appeal applied, they should be considered first.

163    Indeed, if the error of law pleaded were proved, there would no longer be any need to rule on the second plea in the main
appeals, concerning the unusual nature of the damage incurred, or on the other two pleas in the cross-appeals, respectively
concerning the lack of certainty of the damage and the lack of a causal link, as the liability regime to which those three
conditions are supposed to relate would not exist or not be applicable.

The first plea in the cross-appeals and the claims seeking the substitution of grounds, according to which a regime of no-fault
liability, as established by the judgments under appeal, does not exist

164    It should be pointed out first of all that, in accordance with the settled case-law noted in paragraph 106 of the present
judgment, the second paragraph of Article 288 EC means that the non-contractual liability of the Community and the exercise
of the right to compensation for damage suffered depend on the satisfaction of a number of conditions, relating to the unlawfulness
of the conduct of which the institutions are accused, the fact of damage and the existence of a causal link between that conduct
and the damage complained of.

165    The Court has also repeatedly pointed out that that liability cannot be regarded as having been incurred without satisfaction
of all the conditions to which the duty to make good any damage, as defined in the second paragraph of Article 288 EC, is
thus subject (*Oleifici Mediterranei* v *EEC*, paragraph 17).

166    The Court has accordingly held that, where the Community courts find that there is no act or omission by an institution of
an unlawful nature, so that the first condition for non-contractual Community liability under the second paragraph of Article
288 EC is not satisfied, they may dismiss the application in its entirety without it being necessary for them to examine the
other preconditions for such liability, namely the fact of damage and the existence of a causal link between the conduct of
the institutions and the damage complained of (see, in particular, *KYDEP* v *Council* *and Commission*, paragraphs 80 and 81).

167    The Court’s case-law enshrining, in accordance with the second paragraph of Article 288 EC, both the existence of the regime
governing the non-contractual liability of the Community for the unlawful conduct of its institutions and the conditions for
the regime’s application is thus firmly established. By contrast, that is not so in the case of a regime governing non-contractual
Community liability in the absence of such unlawful conduct.

168    Contrary to what the Court of First Instance stated in the judgments under appeal, it cannot, first of all, be deduced from
the case-law prior to those judgments that the Court of Justice has established the principle of such a regime.

169    As the Court of Justice noted in particular in *Dorsch Consult* v *Council and Commission*, paragraph 18, a judgment to which the Court of First Instance refers in paragraph 160 of the *FIAMM* judgment and paragraph 153 of the *Fedon* judgment, the Court has on the contrary hitherto limited itself, as set out in settled case-law, to specifying some of the
conditions under which such liability could be incurred in the event of the principle of Community liability for a lawful
act being recognised in Community law (see also, in similar terms, Case 59/83 *Biovilac* v *EEC* [1984] ECR 4057, paragraph 28). It was solely on that basis that the Court noted in *Dorsch Consult* v *Council and Commission*, paragraph 19, that if the principle of such liability came to be recognised, at the very least three conditions, comprising
the fact of damage, the existence of a causal link between it and the act concerned and the unusual and special nature of
the damage, would all have to be satisfied in order for liability to be incurred.

170    Secondly, as regards the liability regime recognised in Community law, the Court, while noting that it is to the general principles
common to the laws of the Member States that the second paragraph of Article 288 EC refers as the basis of the non-contractual
liability of the Community for damage caused by its institutions or by its servants in the performance of their duties, has
held that the principle of the non-contractual liability of the Community expressly laid down in that article is simply an
expression of the general principle familiar to the legal systems of the Member States that an unlawful act or omission gives
rise to an obligation to make good the damage caused (*Brasserie du pêcheur and Factortame*, paragraphs 28 and 29).

171    As regards, more specifically, liability for legislative activity, the Court moreover pointed out at a very early stage that,
although the principles in the legal systems of the Member States governing the liability of public authorities for damage
caused to individuals by legislative measures vary considerably from one Member State to another, it is however possible to
state that the public authorities can only exceptionally and in special circumstances incur liability for legislative measures
which are the result of choices of economic policy (*Bayerische HNL Vermehrungsbetriebe and Others* v *Council and Commission*, paragraph 5).

172    The Court has therefore held in particular that, in view of the second paragraph of Article 288 EC, the Community does not
incur liability on account of a legislative measure which involves choices of economic policy unless a sufficiently serious
breach of a superior rule of law for the protection of the individual has occurred (see, inter alia, Joined Cases 9/71 and
11/71 *Compagnie d’approvisionnement, de transport et de crédit and Grands Moulins de Paris* v *Commission* [1972] ECR 391, paragraph 13; *Bayerische HNL Vermehrungsbetriebe and Others* v *Council and Commission*, paragraph 4; Case 50/86 *Les Grands Moulins de Paris* v *EEC* [1987] ECR 4833, paragraph 8; and Case C-119/88 *AERPO and Others* v *Commission* [1990] ECR I‐2189, paragraph 18).

173    It has further pointed out, in this connection, that the rule of law the breach of which must be found has to be intended
to confer rights on individuals (see to this effect, inter alia, Case C-352/98 P *Bergaderm and Goupil*v *Commission* [2000] ECR I‐5291, paragraphs 41 and 42, and Case C-282/05 P *Holcim (Deutschland)* v *Commission* [2007] ECR I‐2941, paragraph 47).

174    The Court has, moreover, stated that the strict approach taken towards the liability of the Community in the exercise of its
legislative activities is attributable to two considerations. First, even where the legality of measures is subject to judicial
review, 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. Second,
in a legislative context characterised by the exercise of a wide discretion, which is essential for implementing a Community
policy, the Community cannot incur liability unless the institution concerned has manifestly and gravely disregarded the limits
on the exercise of its powers (see, in particular, *Brasserie du pêcheur and Factortame*, paragraph 45).

175    Finally, it is clear that, while comparative examination of the Member States’ legal systems enabled the Court to make at
a very early stage the finding recalled in paragraph 170 of the present judgment concerning convergence of those legal systems
in the establishment of a principle of liability in the case of unlawful action or an unlawful omission of the authority,
including of a legislative nature, that is in no way the position as regards the possible existence of a principle of liability
in the case of a lawful act or omission of the public authorities, in particular where it is of a legislative nature.

176    In the light of all the foregoing considerations, it must be concluded that, as Community law currently stands, no liability
regime exists under which the Community can incur liability for conduct falling within the sphere of its legislative competence
in a situation where any failure of such conduct to comply with the WTO agreements cannot be relied upon before the Community
courts.

177    In the case in point, the conduct which the appellants allege to have caused them damage comes within the context of establishment
of a common organisation of the market and clearly falls within the sphere of legislative activity of the Community legislature.

178    It is immaterial in this regard whether that conduct is to be regarded as a positive act, namely the adoption of Regulations
No 1637/98 and No 2362/98 following the DSB’s decision of 25 September 1997, or as an omission, namely the failure to adopt
measures calculated to ensure the correct implementation of that decision. Failure on the part of the Community institutions
to act can also fall within the legislative function of the Community, including in the context of actions for damages (see,
to this effect, *Les Grands Moulins de Paris* v *EEC*, paragraph 9).

179    It follows from all of the foregoing that, in affirming in the judgments under appeal the existence of a regime providing
for non-contractual liability of the Community on account of the lawful pursuit by it of its activities falling within the
legislative sphere, the Court of First Instance erred in law.

180    However, two further points should be made.

181    First, the finding in paragraph 179 of the present judgment is made without prejudice to the broad discretion which the Community
legislature enjoys where appropriate for the purpose of assessing whether the adoption of a given legislative measure justifies,
when account is taken of certain harmful effects that are to result from its adoption, the provision of certain forms of compensation
(see to this effect, with regard to agricultural policy, Joined Cases C-20/00 and C‐64/00 *Booker Aquaculture and Hydro Seafood* [2003] ECR I‐7411, paragraph 85).

182    Second, it is to be remembered that it is settled case-law that fundamental rights form an integral part of the general principles
of law the observance of which the Court ensures.

183    With regard, more specifically, to the right to property and the freedom to pursue a trade or profession, the Court has long
recognised that they are general principles of Community law, while pointing out however that they do not constitute absolute
prerogatives, but must be viewed in relation to their social function. It has thus held that, while the exercise of the right
to property and to pursue a trade or profession freely may be restricted, particularly in the context of a common organisation
of the market, that is on condition that those restrictions in fact correspond to objectives of general interest pursued by
the Community and that they do not constitute, with regard to the aim pursued, a disproportionate and intolerable interference
which infringes upon the very substance of the rights guaranteed (see, inter alia, Case 265/87 *Schräder HS Kraftfutter* [1989] ECR 2237, paragraph 15; *Germany* v *Council*, paragraph 78; and Case C-295/03 P *Alessandrini and Others* v *Commission* [2005] ECR I‐5673, paragraph 86).

184    It follows that a Community legislative measure whose application leads to restrictions of the right to property and the freedom
to pursue a trade or profession that impair the very substance of those rights in a disproportionate and intolerable manner,
perhaps precisely because no provision has been made for compensation calculated to avoid or remedy that impairment, could
give rise to non-contractual liability on the part of the Community.

185    Having regard to the features of the present cases, it should also be noted that it follows from the Court’s case-law that
an economic operator cannot claim a right to property in a market share which he held at a given time, since such a market
share constitutes only a momentary economic position, exposed to the risks of changing circumstances (see to this effect,
in particular, *Germany* v *Council*, paragraph 79, and *Alessandrini and Others* v *Commission*, paragraph 88). The Court has also stated that the guarantees accorded by the right to property or by the general principle
safeguarding the freedom to pursue a trade or profession cannot be extended to protect mere commercial interests or opportunities,
the uncertainties of which are part of the very essence of economic activity (Case 4/73 *Nold* v *Commission* [1974] ECR 491, paragraph 14).

186    An economic operator whose business consists in particular in exporting goods to the markets of non-member States must therefore
be aware that the commercial position which he has at a given time may be affected and altered by various circumstances and
that those circumstances include the possibility, which is moreover expressly envisaged and governed by Article 22 of the
DSU, that one of the non-member States will adopt measures suspending concessions in reaction to the stance taken by its trading
partners within the framework of the WTO and will for this purpose select in its discretion, as follows from Article 22(3)(a)
and (f) of the DSU, the goods to be subject to those measures.

187    Although it follows from paragraphs 176 and 179 of the present judgment that the Court of First Instance erred in law, it
is settled case-law that, if the grounds of a judgment of the Court of First Instance disclose an infringement of Community
law but its operative part is shown to be well founded on other legal grounds, the appeal must be dismissed (see, in particular,
Case C-320/92 P *Finsider* v *Commission* [1994] ECR I‐5697, paragraph 37; Case C-150/98 P *ESC* v *E* [1999] ECR I‐8877, paragraph 17; and Case C-210/98 P *Salzgitter* v *Commission* [2000] ECR I‐5843, paragraph 58).

188    That is the case here. The Court has held that Community law as it currently stands does not provide for a regime enabling
the liability of the Community for its legislative conduct to found an action in a situation where any failure of such conduct
to comply with the WTO agreements cannot be relied upon before the Community courts. The claims for compensation by the applicants
sought in particular to put in issue the liability of the Community for such conduct. Accordingly, the Court of First Instance
could only dismiss those claims, whatever the arguments put forward by the applicants to support them (see, by analogy, *Salzgitter* v *Commission*, paragraph 59). The Court of First Instance would thus have been obliged to dismiss the applicants’ claims on that basis
if it had not made the error of law that led it to dismiss them on other grounds (see, by analogy, *Finsider* v *Commission*, paragraph 38, and *ESC* v *E*, paragraph 18).

189    It follows that, although the first plea relied upon in support of the cross-appeals is well founded, it is of no consequence
and must therefore be dismissed (see, by analogy, *Salzgitter* v *Commission*, paragraph 60).

The second plea in the main appeals and the second and third pleas in the cross-appeals

190    In the light of the finding made in paragraph 176, and the matters set out in paragraph 163, of the present judgment, there
is no need to examine the second plea in the main appeals, concerning the unusual nature of the damage allegedly suffered
by FIAMM and Fedon, or the second and third pleas in the cross-appeals, respectively concerning the lack of certainty of that
damage and the lack of a causal link between that damage and the conduct of the Community institutions.

**The claims for compensation on account of the duration of the proceedings at first instance**

*Arguments of the parties*

191    In the alternative, FIAMM and Fedon seek fair compensation having regard to the excessive duration of the proceedings at first
instance.

192    Relying on Case C-185/95 P *Baustahlgewebe* v *Commission* [1998] ECR I‐8417, paragraphs 26 to 49, FIAMM submits in this regard (i) that the case is of considerable financial importance
to it, (ii) that the questions of fact here are very clear, (iii) that the conduct of none of the parties contributed to prolonging
the procedure and (iv) that the Court of First Instance did not have to deal with exceptional circumstances.

193    The Commission contends that the forms of order sought by FIAMM and Fedon are inadmissible in this respect.

194    In the case of Fedon’s appeal, the inadmissibility is dictated firstly by Article 112(1)(c) of the Rules of Procedure of the
Court of Justice, since Fedon has not stated any reasons at all to substantiate the claim.

195    Also, in the case of both appeals, the forms of order sought are necessarily inadmissible *ratione materiae*. First, as is apparent from Articles 57 and 58 of the Statute of the Court of Justice, an appeal cannot concern new facts
that have not already been set out at first instance. Second, the length of the proceedings before the Court of First Instance
cannot be characterised as a breach of procedure, in the absence of any effect on the outcome of the cases.

196    Finally, the forms of order sought are also inadmissible *ratione personae*, since the Community is represented in the present proceedings by the Council and the Commission and not by the Court of
Justice, of which the Court of First Instance – to which the conduct giving rise to the liability alleged is attributed here
– forms an integral part.

197    Furthermore, compensation on grounds of fairness like the compensation granted in *Baustahlgewebe* v *Commission* cannot be envisaged here as FIAMM and Fedon are not obliged to pay into the Community budget a sum that is capable of being
reduced.

198    Finally, the length of the proceedings before the Court of First Instance is in any event explained by the complexity of the
cases, by the procedural hazards linked to the joinder of a multiplicity of cases brought in five different languages and
involving three institutions and an intervener, by the reassignment of those cases to a larger chamber and by the fact that
*Van Parys*, a case raising similar questions of principle, was pending before the Court of Justice.

199    According to the Kingdom of Spain, the claims of FIAMM and Fedon are inadmissible as they were not relied upon at first instance
and therefore could not be dealt with in the judgments under appeal.

*Findings of the Court*

200    The appellants’ claims seeking reasonable satisfaction on account of the fact that the proceedings before the Court of First
Instance exceeded a reasonable duration cannot be upheld here.

201    As regards Fedon’s claim, suffice it to state that, while the claim is set out in the form of order sought, it is not mentioned
at all in the main body of the appeal.

202    As provided in Article 112(1)(c) of the Rules of Procedure, an appeal is to contain the pleas in law and legal arguments relied
on. Since such pleas and arguments, which are to be distinguished from the form of order sought by the action, referred to
in Article 112(1)(d), were here entirely absent from Fedon’s appeal, it follows that the claim for reasonable compensation
made by it, for which no reasoning at all is given, must be dismissed as manifestly inadmissible.

203    As regards FIAMM’s claim, it must be pointed out that, where there is no indication that the length of the proceedings affected
their outcome in any way, a plea that the proceedings before the Court of First Instance did not satisfy the requirements
concerning completion within a reasonable time cannot as a general rule lead to the setting aside of the judgment delivered
by the Court of First Instance (see, to this effect, *Baustahlgewebe* v *Commission*, paragraph 49).

204    In the present case, FIAMM has indeed not asserted that the allegedly excessive duration of the proceedings affected their
outcome, or requested that the *FIAMM* judgment be set aside on this basis.

205    As is apparent from Article 113(1) of the Rules of Procedure, any appeal is to seek to set aside, in whole or in part, the
judgment of the Court of First Instance and, as the case may be, to seek the same form of order, in whole or in part, as that
sought at first instance.

206    In this regard, it is to be observed that in *Baustahlgewebe* v *Commission*, upon which FIAMM relies, the appeal before the Court of Justice was brought against a judgment in which the Court of First
Instance had imposed a fine on the appellant for infringement of the competition rules, in exercise of the unlimited jurisdiction
which it enjoys for that purpose and which the Court of Justice itself may exercise when it sets aside such a judgment of
the Court of First Instance and rules on the action.

207    In paragraph 33 of that judgment, the Court of Justice noted the appellant’s right to fair legal process within a reasonable
period and in particular to a decision on the merits of the allegations of infringement of competition law made against it
by the Commission and of the fines imposed on it in that regard.

208    After holding that such a period had, in the case in point, been exceeded by the Court of First Instance, the Court of Justice
decided, for reasons of economy of procedure and in order to ensure an immediate and effective remedy regarding a procedural
irregularity of that kind, that in the circumstances the requisite reasonable satisfaction could be granted by setting aside
and varying, solely in relation to determination of the amount of the fine, the judgment of the Court of First Instance (*Baustahlgewebe* v *Commission*, paragraphs 47, 48 and 141).

209    By contrast, the present appeal challenges a judgment of the Court of First Instance dismissing an action for compensation
brought on the basis of the second paragraph of Article 288 EC.

210    It follows that the setting aside of such a judgment cannot lead to the grant of reasonable satisfaction for the excessive
duration of the proceedings before the Court of First Instance by variation of the judgment under appeal, since in such proceedings
the Court of First Instance is not in any event, any more than the Court of Justice on appeal, called upon to order the applicants
to pay a sum from which that reasonable satisfaction could, where appropriate, be subtracted.

211    Accordingly, FIAMM’s claim seeking reasonable satisfaction for the allegedly excessive duration of the proceedings before
the Court of First Instance must also be dismissed as inadmissible.

212    It should, moreover, be pointed out that, even though in this instance the proceedings before the Court of First Instance
did last a considerable time, the reasonableness of a period must be appraised in the light of the circumstances specific
to each case and, in particular, the importance of the case for the person concerned, its complexity and the conduct of the
applicant and of the competent authorities (see, inter alia, *Baustahlgewebe* v *Commission*, paragraph 29, and Joined Cases C‐238/99 P, C‐244/99 P, C-245/99 P, C-247/99 P, C-250/99 P to C‐252/99 P and C-254/99 P *Limburgse Vinyl Maatschappij and Others* v *Commission* [2002] ECR I‐8375, paragraph 210).

213    It should be stated with regard to the conduct of the competent authority and the degree of complexity of the case that the
considerable length of the proceedings before the Court of First Instance is in this instance capable of being largely explained
by a combination of objective circumstances relating to the number of parallel cases successively brought before that court
and to the importance of the legal questions raised by them.

214    Those circumstances provide the explanation as to why a series of procedural hazards arose which had a decisive contribution
in delaying the conclusion of the cases concerned and which cannot here be considered unusual, such as the joinder, in the
light of the connection between them, of six cases brought in a number of different languages, or their reassignment, first
to a chamber in extended composition, then to a new Judge-Rapporteur following the departure of the Judge-Rapporteur initially
designated and, finally, to the Grand Chamber of the Court of First Instance, this final reassignment being itself accompanied
by the reopening of the oral procedure.

**Costs**

215    Under Article 69(2) of the Rules of Procedure, which applies to appeal proceedings by virtue of Article 118 thereof, the unsuccessful
party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. The first subparagraph
of Article 69(4) of the Rules of Procedure provides that Member States which intervene in the proceedings are to bear their
own costs.

216    Since the Council and the Commission have applied for costs and FIAMM and Fedon have been unsuccessful, FIAMM and Fedon must
be ordered to pay the costs.

217    The Kingdom of Spain will bear its own costs.

On those grounds, the Court (Grand Chamber) hereby:

1.      **Dismisses the main appeals;**

2.      **Dismisses the cross-appeals;**

3.      **Orders Fabbrica italiana accumulatori motocarri Montecchio SpA, Fabbrica italiana accumulatori motocarri Montecchio Technologies
LLC, Giorgio Fedon & Figli SpA and Fedon America, Inc. to bear the costs incurred by the Council of the European Union and
the Commission of the European Communities;**

4.      **Orders the Kingdom of Spain to bear its own costs.**

[Signatures]

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- Language of the case: Italian.