Judgment — ECLI:EU:T:2006:28
Date: 2006-01-26
Language of the case: English
Court formation: Fourth Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Dumping;External relations;Commercial policy
Concepts: Basis of liability
Procedure: Action for damages - unfounded
Origin: Germany

summary form, coherently and intelligibly in the application itself (Case T-195/95 Guérin automobiles v Commission [1997] ECR II-679, paragraph 20, and Case T-19/01 Chiquita Brands and Others v Commission [2005] ECR II-0000, paragraph 64). 52 In order to satisfy those requirements, an application seeking compensation for damage allegedly caused by a Community institution must state the evidence from which the conduct which the applicant alleges against the institution can be identified, the reasons for which the applicant considers there is a causal link between the conduct and the damage it claims to have suffered, and the nature and extent of that damage (Case T-64/89 Automec v Commission [1990] ECR II-367, paragraph 73, and Chiquita Brands and Others v Commission, paragraph 65). 53 In the present case, only the identification of the conduct alleged against the Council is at issue. 54 As regards the measure of the Council which caused the damage, it is apparent from the file, and in particular from the information given in the application and in the reply, that it is the adoption of Regulation No 2380/98 which is concerned and, more specifically, the refusal of the Council to abide, in that regulation, by all the findings of the investigation giving rise to its adoption. Consequently, the Court must reject the plea of inadmissibility raised by the Council alleging that the act which caused the damage was not identified. 55 As regards identification of the rule of law which has been infringed, it is true that the application refers not only to Article 1(1) of the Basic Regulation, but also to Articles 7(1), 9(4) and 11(5) thereof, stating that ‘these provisions are intended to safeguard, or protect, individuals from the arbitrary and wrongful imposition of anti-dumping duties when the essential three criteria are not satisfied’. However, the applicant explained in its reply that it was pleading infringement only of Article 1(1) of the Basic Regulation, and that the other provisions of that regulation cited in the application were referred to only to illustrate the fundamental principle laid down by that article. In view of this and given, first, that the infringement of Article 1(1) of the Basic Regulation was pleaded by the applicant in its application and, second, that it is accepted that an applicant may specify its claim in the reply (see, to that effect, Case 25/62 Plaumann v Commission [1963] ECR 95, 108), the Court must also reject the plea of inadmissibility raised by the Council alleging that the rule of law purportedly infringed by the Council has not been identified. 56 Furthermore, the file shows that the Council was in a position to present its defence both as regards the unlawful conduct alleged against it and as regards the rule of law allegedly infringed. 57 It follows from the foregoing that the action is admissible. Substance 58 First of all, the Court observes that this is an action for compensation for damage, based on Article 235 EC and the second paragraph of Article 288 EC. 59 In the case of non-contractual liability of the Community within the meaning of the second paragraph of Article 288 EC, it is settled case-law that, for the Community to incur that liability, a series of conditions must be met, namely the conduct of which the institutions are accused must have been unlawful, the damage must be real and a causal connection must exist between that conduct and the damage in question (Case 26/81 Oleifici Mediterranei v EEC [1982] ECR 3057, paragraph 16, and Case T-283/02 EnBW Kernkraft v Commission [2005] ECR II-0000, paragraph 84). 60 If any one of those conditions is not satisfied, the action must be dismissed in its entirety and it is unnecessary to consider the other conditions for the non-contractual liability in question (EnBW Kernkraft v Commission, paragraph 85). 61 It is common ground in the present case that the unlawfulness of the conduct alleged against the Council by the applicant, namely the adoption of Regulation No 2380/98 without giving retroactive effect to the amendment of the rate of anti-dumping duty imposed on the applicant’s imports of Lucci Creation’s products, was established by the Medici Grimm I judgment and that, according to paragraph 87 of that judgment, the infringement of Article 1(1) of the Basic Regulation has also been established. 62 However, that is not sufficient to justify the conclusion that the first condition for the Community’s non-contractual liability, relating to the unlawfulness of the conduct alleged against the institution in question, has been satisfied. As regards that condition, the case-law requires a sufficiently serious breach to be established of a rule of law intended to confer rights on individuals (Case C-352/98 P Bergaderm and Goupil v Commission [2000] ECR I-5291, paragraph 42). 63 Since the two conditions, relating to the nature of the rule of law relied on and the seriousness of the breach of that rule, are cumulative, it is appropriate, in the present case, first to examine whether the conduct of the Council constitutes a sufficiently serious breach of Article 1(1) of the Basic Regulation. Arguments of the parties 64 The applicant submits that the test for finding that a breach of Community law is sufficiently serious is whether the Community institution manifestly and gravely disregarded the limits on its discretion. Where that institution has only a considerably reduced, or no, discretion, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach. 65 In the present case, the Council had no alternative but to abide by the consequences of its findings and give retroactive effect to the measures taken, and had no discretion. The Court of First Instance has already ruled on this question at paragraphs 85 and 86 of the Medici Grimm I judgment. Thus, that judgment establishes that the Council had no discretion in deciding whether to abide by all the consequences of the review and, consequently, the mere infringement of Community law is sufficient to establish the existence of a sufficiently serious breach. 66 Three additional factors show that the Council had little or no discretion when it adopted Regulation No 2380/98. First, that regulation had limited application and scope. Second, the review which was carried out involved no choice of economic policy on the part of the institutions and therefore little or no discretion other than examining the export prices of the Chinese producers participating in the investigation. On the contrary, the retention of the review period initially used for the adoption of Regulation No 1567/97 made the exercise akin to an administrative procedure by excluding the normal policy choices entailed in a normal review procedure. Third, Regulation No 2380/98 did no more than draw the appropriate conclusions from the analysis of the information given to the Commission by the applicant and Lucci Creation in the course of the investigation. 67 The applicant adds as a secondary point that in any event the Council manifestly and gravely disregarded the limits on its discretion. The failure of the Council to respect the protection afforded by the Basic Regulation is manifest because the Council failed to take into account the consequences of the review findings in purporting to conclude a review investigation based on Article 11(3) of the Basic Regulation in order to avoid the consequences of that review when in fact the procedure which was followed was a reopening of the original investigation. 68 The breach of the protection afforded by the Basic Regulation is aggravated by three factors. First, the applicant drew the Council’s attention to the fact that the refusal to give retroactive effect to the findings of Regulation No 2380/98 was inconsistent with the general scheme of the Basic Regulation. Second, for the applicant, the consequences of refusal were foreseeable and were nevertheless disregarded by the Council as unimportant. Third, the decision to use the original investigation period should have alerted the Council to the fact that the procedure was unusual and it ought to have been obvious to it that Regulation No 2380/98 would be adopted to address a particular set of circumstances that could, conceivably, have special consequences. 69 Furthermore, the reasons given by the Council for its refusal to act in accordance with the review findings amount to an abuse of power. 70 In any event, in the light of the facts of this case, the conduct of the Council constitutes a sufficiently serious breach of Community law, since the Council knew that data relating to an original investigation period had never before been used to carry out a review investigation, retroactive anti-dumping measures having already been adopted in the past and the difficulties faced by the Council being irrelevant for the purposes of assessing the legality of its acts. 71 The Council replies that, were the Court to find that the Council acted in breach of a rule of law intended for the protection of the applicant, that breach would not be sufficiently serious. The question whether a breach of Community law is sufficiently serious or not must be assessed by reference to the complexity of the situations to be regulated, difficulties in the application or interpretation of the legislation and, more particularly, the margin of discretion available to the author of the act in question. Furthermore, the decisive test for finding that a breach of Community law is sufficiently serious is whether the Community institution concerned manifestly and gravely disregarded the limits of its discretion. Where that institution has only a considerably reduced discretion, or no discretion at all, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach. 72 In the present case, the Council considers that it had a discretion with respect to the question of whether to give retroactive effect to Regulation No 2380/98. 73 The Council emphasises, first, that its position on whether or not to apply Regulation No 2380/98 retroactively was taken as the culmination of a process which began with the initiation of a review investigation at the behest of the Member States and, second, that, as a result of the adoption of that regulation, the applicant was better off than if that investigation had not been initiated. The initiation of the review investigation was thus a purely discretionary act which enabled the applicant to obtain relief which legally it could not have claimed if that investigation had not been initiated. The fact that the institutions failed to provide further relief to the applicant cannot be considered a sufficiently serious breach giving rise to the Community’s non-contractual liability under the second paragraph of Article 288 EC. 74 As a secondary point, the Council puts forward three additional arguments. First, the decision as to whether Regulation No 2380/98 should apply retroactively involved an element of discretion, namely to determine whether the circumstances of the review investigation allowed or justified an exception to the general rule that measures adopted pursuant to review investigations have only prospective effect. Second, the Council did not wilfully disregard the findings of the review investigation. The Council considered whether it was possible to give retroactive effect to Regulation No 2380/98, given that reusing original data in connection with a review was unprecedented and that it was clear that the findings did not relate to a later period. However, it concluded that this was not possible in the light of the provisions applying to reviews and in the absence of any similar precedent. The Council could not have foreseen that the Court would disagree with it. Since the case was exceptional, the risk of error was greater. Furthermore, by refusing to give retroactive effect, it was merely endeavouring to apply the Basic Regulation in a non-discriminatory manner to a situation in respect of which that regulation had not provided for a solution; to apply a rule of law by analogy would be very difficult. Third, the fact that the applicant drew the institutions’ attention to the consequences of not giving retroactive effect to Regulation No 2380/98 is irrelevant, in particular as the institutions did not ignore this reminder, but merely came to a different conclusion. 75 Likewise the Council did not misuse its powers. The request for retroactive application was rejected due to the prospective nature of measures adopted pursuant to review investigations, and Regulation No 2380/98 was not adopted with the sole or main purpose of achieving ends other than those stated. 76 In the present case, the Council’s conduct therefore amounts merely to ‘an erroneous but excusable approach to an unresolved legal question’, which does not trigger the non-contractual liability of the Community within the meaning of the second paragraph of Article 288 EC. 77 At the hearing, the Commission claimed that in this case the Council, by adopting Regulation No 2380/98, was simply and of its own initiative compensating for an excessively rigid and strict application of Regulation No 1567/97, in order to assist parties such as the applicant. Since the Basic Regulation does not contain any provision on the reopening of the procedure, a review investigation was initiated under Article 11(3) of that regulation. Furthermore, case-law accords the institutions wide discretion in terms of determining the investigation period. Therefore the institutions merely thought that they were reviewing the measures in force. It was only the Medici Grimm I judgment which made it clear that the provisions of the Basic Regulation relating to reviews were not applicable in this case. Since new and exceptional circumstances were involved, it cannot be inferred that, by acting in that manner, the Council manifestly or gravely exceeded the limits on its discretion. In the present case, there is not therefore a sufficiently serious breach of Community law giving rise to the Community’s non-contractual liability. Findings of the Court 78 The unlawful conduct alleged in the present case arises, in essence, from the fact that, in Regulation No 2380/98, the Council failed to give retroactive effect to the amendment of the rate of anti-dumping duty imposed on the applicant’s imports of Lucci Creation’s products and thus did not abide by all the consequences of the review findings relating to those imports. 79 According to settled case-law, and as the applicant points out, the test for finding that a breach of Community law is sufficiently serious is whether the Community institution concerned manifestly and gravely disregarded the limits on its discretion. Where that institution has only a considerably reduced, or no, discretion, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach (Bergaderm and Goupil v Commission, paragraphs 41 to 44, and EnBW Kernkraft v Commission, paragraph 87). In particular, the finding of an irregularity which in comparable circumstances would not have been committed by a normally prudent and diligent administration permits the conclusion that the conduct of the institution constituted an illegality of such a kind as to give rise to the liability of the Community under Article 288 EC (Joined Cases T-198/95, T‑171/96, T-230/97, T-174/98 and T-225/99 Comafrica and Dole Fresh Fruit Europe v Commission [2001] ECR II-1975, paragraph 134). 80 In this respect, the Community rules on the non-contractual liability of the Community also take account of the complexity of the situations to be regulated, and the difficulties in the application or interpretation of the legislation (Joined Cases C-46/93 and C-48/93 Brasserie du PêcheurandFactortame [1996] ECR I‑1029, paragraph 43, and Case C-312/00 P Commission v Camar and Tico [2002] ECR I-11355, paragraph 52). 81 Furthermore, the protection of the rights which individuals derive from Community law cannot vary depending on whether a national authority or a Community authority is responsible for the damage (Bergaderm and Goupil v Commission, paragraph 41). It must therefore be recognised that, as with proceedings relating to the liability of Member States for infringement of Community law, in order to determine whether an infringement of Community law committed by a Community institution constitutes a sufficiently serious breach, the Community Court hearing a claim for compensation must take account of all the factors which characterise the situation put before it, and those factors include, in particular, the clarity and precision of the rule infringed, and whether any error of law was inexcusable or intentional (see, by analogy, Case C-424/97 Haim [2000] ECR I-5123, paragraph 43, and Case C-63/01 Evans [2003] ECR I‑14447, paragraph 86). 82 As a first step, it must be ascertained whether in this case the Council had a discretion when adopting Regulation No 2380/98 as regards the issue of whether the amendment of the rate of anti-dumping duty imposed on the applicant’s imports of Lucci Creation’s products had retroactive effect. 83 The Court of First Instance held, in paragraph 87 of the Medici Grimm I judgment, that, since the Community institutions found in the review investigation that one of the factors on the basis of which the definitive anti-dumping duties had been imposed was missing, it was no longer possible to consider that the conditions laid down in Article 1 of the Basic Regulation were satisfied at the time when Regulation No 1567/97 was adopted and that the trade-protection measures against Lucci Creation exports to the Community were necessary. That being so, the institutions were bound to abide by all the consequences flowing from their choice of the investigation period used and, since they had found that Lucci Creation had not engaged in dumping during that period, they were obliged to give retroactive effect to the consequences flowing from that finding. 84 It follows that, since the Council had found that Lucci Creation had not engaged in any dumping during the investigation period, it was not entitled to impose an anti-dumping duty on imports of those products by the applicant. As a matter of law, it therefore had no discretion and was bound to give retroactive effect to the amendment of the rate of such a duty. 85 The Council’s arguments to the contrary, relating to the prospective nature of the measures adopted as a result of review investigations, cannot be accepted. The Court held in the Medici Grimm I judgment that, since the investigation period used for the review preceding the adoption of Regulation No 2380/98 was the same as that covered by the original investigation leading to the adoption of Regulation No 1567/97, it was not a review procedure but a reopening of the original investigation. 86 Furthermore, the fact that the initiation of the investigation which led to the adoption of Regulation No 2380/98 could have been a political gesture, amounting to an exercise of discretion by the Council – were that fact established – is irrelevant, since that exercise of discretion could not have had any effect on the Council’s obligations under the Basic Regulation. 87 However, the Council’s lack of discretion as regards the retroactive effect of Regulation No 2380/98 is not sufficient to justify the conclusion that in the present case there was a sufficiently serious breach of Article 1(1) of the Basic Regulation such as to give rise to the liability of the Community. It is also necessary, as a second step, to take account of the complexity of the situation to be regulated, the difficulties in the application or interpretation of the legislation, the clarity and precision of the rule infringed, and whether the error of law made was inexcusable or intentional. 88 In the present case, the Council claims, in essence, that it made an excusable error, the circumstances of the case being unprecedented, and that it acted in good faith when it chose not to give retroactive effect to Regulation No 2380/98. 89 In that respect, it should be pointed out, first, that it follows both from Regulation No 2380/98 and from the entire procedure prior to its adoption, that the institutions took the view that they had initiated a review investigation, as opposed to reopening the original procedure. It was only after the Medici Grimm I judgment that the legal situation was clarified and that the procedure followed by the institutions was reclassified. 90 Second, it is apparent from the principles applicable to reviews, and in particular from Article 11(6) of the Basic Regulation, that measures adopted as a result of review investigations are of a prospective nature, since any retroactive effect of certain review regulations is allowed only under certain limited conditions which are not satisfied here. Moreover, there was no similar precedent. 91 Third, the second paragraph of recital 19 in the preamble to Regulation No 2380/98 clearly demonstrates that the Council did not ignore the arguments submitted by the applicant prior to the adoption of Regulation No 2380/98 as regards its retroactive effect, but that, after considering them, it reached a different conclusion. 92 Fourth, even if the adoption of Regulation No 2380/98 did not involve, in itself, a choice of economic policy, it none the less raised a difficult legal question, without any precedent in case-law, which was resolved only when the Court of First Instance, giving judgment in Medici Grimm I, ruled on the lawfulness of that regulation. 93 Fifth, it has not been established that the Council misused its powers. According to the case-law, an act of a Community institution is vitiated by such unlawfulness only if it was adopted with the exclusive or main purpose of achieving an end other than that stated (Case C-285/94 Italy v Commission [1997] ECR I-3519, paragraph 52, and Case T-52/99 T. Port v Commission [2001] ECR II-981, paragraph 53) and a finding of misuse of powers may be made only on the basis of objective, relevant and consistent evidence (Joined Cases T-551/93, T-231/94 to T-234/94 Industrias Pesqueras Campos and Others v Commission [1996] ECR II‑247, paragraph 168, and T. Port v Commission, paragraph 53). 94 In the present case, the applicant has not established at all that the Council refused to give retroactive effect to Regulation No 2380/98 with the exclusive or main purpose of achieving an end other than that stated. 95 On the contrary, the Council refused to give retroactive effect to Regulation No 2380/98 not with the exclusive or main purpose of ensuring that importers who did not participate in the original investigation would be sanctioned and deprived of entitlement to the refund of their anti-dumping duties, but because, in the factual and legal context such as it could reasonably have been perceived at the time, the Council considered that it was a review investigation which had in fact been carried out and that the measures to be taken as a result of that investigation could only have prospective effect. The justification for having recourse to the original investigation period for reasons of expedition, in recital 8 in the preamble to Regulation No 2380/98, and the classification of this recourse as ‘exceptional’ moreover demonstrate that the institutions believed that they were carrying out a review. 96 Moreover, the reasoning put forward by the Council to justify the refusal to give retroactive effect to Regulation No 2380/98, noted in paragraph 18 above, is not relevant for the purposes of analysing whether there might have been a misuse of powers. Even if that reasoning is undeniably awkward, it is only secondary in relation to the – in itself sufficient – main line of reasoning put forward, according to which review procedures, in the context of which the Council considered that it was acting, are inherently prospective in nature. 97 Therefore, contrary to what the applicant submits, it cannot be held, in view of the circumstances and in the absence of any evidence to the contrary, that the Council misused its powers or intentionally infringed Article 1(1) of the Basic Regulation. 98 In those circumstances, it is not apparent that the Council infringed Article 1(1) of the Basic Regulation in a sufficiently serious manner to give rise to the non-contractual liability of the Community. The applicant’s arguments must therefore be rejected, without there being any need to consider whether that provision is intended to confer rights on individuals. 99 Since the condition which gives rise to the non-contractual liability of the Community has not therefore been satisfied in the present case, the action must be dismissed and it is unnecessary to consider the other conditions for non-contractual liability. Costs 100 Article 87(2) of the Rules of Procedure provides that the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs in accordance with the form of order sought by the defendant. 101 The Commission, as intervener, is to bear its own costs under Article 87(4) of the Rules of Procedure, according to which institutions which intervened in the proceedings are to bear their own costs. On those grounds, THE COURT OF FIRST INSTANCE (Fourth Chamber) hereby: 1. Dismisses the action; 2. Orders the applicant to bear, in addition to its own costs, the costs incurred by the Council; 3. Orders the Commission to bear its own costs. Legal Mengozzi Wiszniewska-Białecka Delivered in open court in Luxembourg on 26 January 2006. E. Coulon H. Legal Registrar President * Language of the case: English.