61962C0005
OPINION OF MR ADVOCATE-GENERAL LAGRANGE
DELIVERED ON 7 NOVEMBER 1962 (
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Mr President,
Members of the Court,
Let us briefly recall the facts. By a series of registered letters dated 27 November 1961, requiring acknowledgment of receipt, written on the headed paper of the High Authority (Directorate-General for Steel) and signed by the Director General and one of the directors, a number of Italian undertakings were called upon to send to Luxembourg by registered post within twenty-one days of the receipt of each letter:
1.
the originals or, alternatively, copies or photocopies certified as true copies of all the invoices for electric energy consumed by the undertaking from April 1954 to November 1958 inclusive ;
2.
(I quote) ‘a certificate confirming that the documents which you send us cover the total amount of electric energy consumed by your undertaking during the period from 1 April 1954 to 30 November 1958’.
Where an undertaking did not have all the invoices available, it was required, within the same period of twenty-one days, to ask its suppliers of electricity to send the same documents to the High Authority. Forms to be filled in covering each of the two situations were enclosed. The grounds for these orders were set out at the beginning and end of the letter. It bagan as follows:
‘The lack of a considerable part of your undertaking's accounting and non-accounting documents has prevented us from satisfactorily checking the data necessary for fixing your basis of contribution,’ and ended: ‘We are obliged to inform you that delaying tactics by a number of undertakings and the discovery of several instances of abuse capable of forming the subject of criminal proceedings have forced the High Authority to take severe measures.’
You have heard that a certain number of undertakings complied with these orders and that the checking of the documents supplied resulted in corrections in the case of several of them. On the other hand, the ten applicant
undertakings did not consider themselves obliged to act in the same way. The first seven (5/62 to 11/62), in similar letters all dated 27 December 1961, vigorously protested against the demand made of them and gave notice to the High Authority either to retract its Decision or, at the very least, to extend it to all undertakings in the same sector. They denied having prevented the officials of the High Authority from carrying out satisfactory inspections in their undertakings. They disputed on various grounds that Article 47 of the Treaty permitted the High Authority to make such demands. They claimed that consumption of electricity is not a suitable factor for checking the tonnage of scrap consumed. They drew attention to the discriminatory nature of these demands in all cases arising from the fact that they were not general and concluded by requesting the High Authority ‘to take a preliminary decision under Article 14 of the Treaty, in which it gives a ruling on all the points in dispute set out in this letter’.
The applicants were obviously thinking there of the preliminary formality necessary for the bringing of a possible action for failure to act under Article 35. In fact they did bring such an action, although the High Authority had, on 23 February 1962, taken a series of formal Decisions which the applicants also contested under Article 33. These Decisions, which are all alike, were taken by the full board of the High Authority and follow the procedural requirements established by Decision No 22/60 of 7 September 1960 concerning the implementation of Article 15 of the Treaty. In addition they differ from the letters of 27 November 1961 in two respects: (1) the grounds are restricted to a statement of the powers of checking vested in the High Authority under Article 47 and to a declaration that the High Authority ‘considers it convenient to use’ in this instance ‘the suitable method of checking’ represented by the consumption of electric energy — thus there is no longer any mention of the insufficiency of previous checks owing to the lack of an important part of the undertaking's accounting and non-accounting documents; (2) there is no further mention in the body of the Decisions of demanding the documents from the suppliers of electricity.
The last three applicants (13/62, 14/62 and 15/62) replied differently to the letter of 27 November 1961. The applicants in 13/62 and 14/62 simply remarked that, as a result of checks carried out at their works, amendments had been made which they had accepted in order to put a final end to the dispute. The applicant in 15/62 declared that it agreed to conform to Article 47 of the Treaty, but mentioned difficulties owing to the dismissal of all its employees and the death of the person in charge of the management of the company, and consequently requested additional time.
These three companies, however, received notice of a Decision identical to those sent to the seven other undertakings, without any reference to their particular circumstances.
I thought these differences should be mentioned for the sake of completeness. However, the last three applicants have formed their legal arguments and presented their conclusions in the same terms as the others, so that it would not seem that the particular aspects in fact presented by their circumstances need be considered by the Court. The only difference, from the procedural point of view, is that the last three applicants limit themselves to contesting the Decision of 23 February 1962 on the basis of Article 33 and have not brought an action for failure to act under Article 35.
Admissibility of the action for failure to act
The High Authority considers these applications inadmissible, as being without object and interest, under both the first and second paragraphs of Article 35. You know the arguments of the parties on this point and I shall not go over them again.
The nub ot the question seems to me to be the nature and scope of the letters of 27 November 1961. If in fact, as the High Authority claims, these letters did not have the character of Decisions with obligatory force, it is clear that the requests of the applicants that the High Authority either abandon its claims or extend them to other undertakings were pointless.
But can this really be asserted? I doubt i can it. In fact, as learned counsel for the applicant companies remarked, these ‘letters’ had all the appearance of a Decision taken under Article 47. The fact that it did not comply with the ‘canons’ of Decision No 22/60 is not in my opinion decisive, for the Court in its judgments has hitherto always concerned itself with material rather than procedural considerations in assessing in each particular case whether there is a Decision within the meaning of Article 14 of the Treaty. With regard to Article 47, it could well be considered that the task of the High Authority to ‘obtain the information it requires to carry out its tasks’ and to ‘have any necessary checks made’ falls within the scope of its executive function, rather than taking the form of a decision, which is an act involving the creation or modification of a legal position. At least it would be convenient perhaps to make some distinction according to whether the act in question is of a more or a less general and impersonal nature.
But this tendency to limit the scope of decisions under Article 47 seems to me difficult to justify in the face of the wording of the Article itself: the third paragraph in fact allows the High Authority to impose financial penalties ‘on undertakings which evade their obligations under decisions taken in pursuance of this Article’. This wording seems to envisage all the acts by which the High Authority exercises its power to obtain information and to make the necessary checks in accordance with the provisions of the first paragraph of Article 47. This was also mentioned specifically in the letters of 27 November 1961, which shows in any case that their signatories, for their part, considered them as Decisions. Futhermore, would there not be serious disadvantages in withdrawing all effect, except that of a harmless threat, from this type of order? Yet on the other hand, is it not excessive to require that decisions of this nature should be taken by the full board of the High Authority? In my opinion for this type of action certain powers could quite suitably be delegated to the competent directors. I would thus be inclined to regard the letters of 27 November 1961 as Decisions. Besides, it does not matter whether they are irregular for lack of power to delegate, since their annulment is not demanded; such an irregularity, although involving lack of competence, cannot cause the act to be considered as non-existent.
But what consequences follow from this point of view?
A distinction must be made, in my opinion, between the application of the first and second paragraphs of Article
(a)
Under the first paragraph, there is no basis for an action for failure to act. What in fact were the applicants demanding from the High Authority? Either that it should go back on its Decision; this is equivalent to an ex gratia appeal against the Decision, but there is in such a case no obligation on the High Authority to do so; the only legal remedy available to the parties concerned was to ask the Court for an annulment of this express Decision, that is on the basis of Article 33; or (second alternative) that it should extend the same orders to other undertakings. But it is clear that nothing in the Treaty obliges the High Authority to use its powers under Article 47 in relation to anyone in particular, and if the applicants intended to quote the failure to extend the order to other undertakings as constituting a discrimination against them, then it was a matter of a defect in the Decision leading, here again, to an application under Article 33 against the Decision.
(b)
On the other hand, with regard to the second paragraph, it is possible to maintain that if the High Authority, which was empowered (but not obliged) to act against other undertakings, refrained from doing so, this is because it was motivated in this respect by reasons other than those which it should have had in mind in the carrying out of its tasks, in other words, that ‘its abstention constitutes a misuse of powers’ in the words of the second paragraph of Article 35. Misuse of powers is in fact expressly pleaded. On this point I feel that the application is admissible. Of course, the misuse of powers will have to be established, but that is a matter of substance with which I shall deal in a moment.
To sum up, either the nature of a decision in the letters of 27 November 1961 is being contested, in which case there is no basis for an action for failure to act: this is the simplest solution but in my opinion not the most satisfactory one; or else the letters are recognized to have the nature of decisions, in which case the admissibility of the actions for failure to act must be accepted under the second paragraph, but not the first paragraph, of Article 35, and, of course, they are admissible only in relation to the second alternative (that the High Authority should have issued the same orders to other undertakings), the only one which arises from the abstention.
On the substance of the case
The applicants invoke the lack or insufficiency of grounds, infringement of the Treaty, especially of Article 47, and misuse of powers. Each of these three submissions is advanced under several heads. It seems preferable and clearer to examine one after the other the four heads under which the arguments are put forward, in the order followed by the report at the hearing by the Judge-Rapporteur. I shall however, examine the first two complaints together.
First complaint — ‘The letters of 27 November 1961 from the Directorate General for Steel of the High Authority are vitiated by lack of reasoning and by misuse of powers because they state that the applicants evaded investigation, which is not so.’
Second complaint — ‘These same letters are vitiated by lack of reasoning, infringement of the Treaty and misuse of powers because they call upon the applicants to send, or ask their suppliers of electricity to send, to the High Authority the invoices relating to the different amounts of energy consumed, and to certify that these invoices are authentic and that they cover the total amount of the energy used.’
The High Authority asserts that the letters of 27 November 1961 are distinct from the disputed Decisions which do not repeat the grounds set out in the letters.
It is true that ‘the lack of an important part of the undertaking's accounting and non-accounting documents’, which prevented a satisfactory check, is no longer referred to in the disputed Decisions; these Decisions are limited to citing the need for checking and the convenience of using in this case the consumption of electric energy in the furnaces of the undertaking which, according to the High Authority, forms a suitable method of checking.
Such reasoning would certainly be sufficient to justify a demand for a declaration of the various amounts of energy consumed. But is it sufficient for a demand for the production of invoices and a certificate such as that required in this case? This is, in itself, very debatable. In reality, such a requirement was justified on the part of the High Authority only if it had some reason to doubt the accuracy of a simple declaration of consumption of electricity, and for this reason the grounds of the disputed Decisions cannot be separated from the terms of the letters of 27 November 1961 which throw light on the whole case. If one reads this document again, the reasons for the requirements of the High Authority can be clearly seen; moreover its distrust is not directed against any of the undertakings in particular, but the previous enquiries and the criminal consequences to which some of them led put doubt into its mind and justifiably led to increased severity in its checking. Such phenomena are also to be found in national administrations: the good taxpayers suffer from the measures directed against the less good. But according to the case law of this Court (Judgment 31/59, 14 April 1960, Rec. 1960 p. 173), the limit of the powers of the High Authority in applying Article 47 is determined by the necessary requirement for checks in relation to the aim pursued. Does that mean that necessity can justify any measure? Certainly not. As in everything else, it is for the administrative court to reconcile the dictates of public interest with respect for individual rights. But in this case, taking account of the circumstances, I do not think that one could see an excessive requirement in a demand for the production of invoices together with a certificate, not of their authenticity, but ‘confirming that the documents supplied cover all the electric energy consumed by the undertaking during the period’ in question.
As for ‘misuse of powers’ resulting from the fact that the same orders were not addressed to all undertakings, the High Authority has replied to that at the hearing, asserting that all the undertakings using electric furnaces for their production had been subjected to them; this assertion has not been disputed. There is thus neither misuse of powers nor discrimination.
Third complaint — ‘These same letters, and in addition the Decisions of the High Authority of 23 February 1962, are vitiated by lack of reasoning and infringement of the Treaty because the invoices relating to consumption of electric energy are not a valid method of determing the quantity of scrap used.’ This complaint is particularly elaborated in the written procedure. The applicants claim to show that the consumption of electricity by the furnaces does not enable one to determine even approximately the amount of scrap consumed. That is a technical discussion into which it seems fruitless to enter. But it can hardly be disputed that if, as the High Authority recognizes, the consumption of electricity is not by itself sufficient to allow the consumption of scrap to be calculated from it, it is nonetheless a valuable basis of inspection when used together with other factors. The undertakings will have every opportunity subsequently to discuss the amount of their contribution and the basis on which it has been arrived at. There is here neither misuse of powers nor of procedure.
Fourth and last complaint — ‘These same letters and these same Decisions are vitiated by lack of reasoning and infringement of the Treaty because the powers conferred on the High Authority do not allow it to order that the documents subjected to checking be presented at Luxembourg.’
With regard to the question of procedure, I do not think that special reasoning was necessary to explain why the production of the documents at Luxembourg was demanded. But was this demand justified? At first sight such a requirement may seem strange. Is it not normal and in conformity with the rules usually followed that in the case of revenue inspections documents are to be checked on the spot ?
It appears that the current rules in the various countries of the Community are not exactly the same in this matter. Nevertheless, it cannot be claimed that it is unknown to require the taxpayer to produce certain documents in the tax office. We have been told that in Italy revenue officials have the right to require the attendance of the taxpayer or his representative in person. In the Community we have no rule. In my opinion it is a question of degree. The requirements of inspection must not be excessive and disproportionate to the objective sought. Looking at the matter from this point of view, I am inclined to think that, in this case and because of these circumstances, the requirement was not excessive.
In fact, inspections on the spot had already been made, both by officials of the High Authority and by those of the Swiss Trust Company, and it was those very inspections which had raised serious doubts as to the accuracy of the figures for consumption of scrap given by certain undertakings. It seems that the detailed checks in the offices of the High Authority of all the invoices, together with the certificates requested, was a suitable procedure and probably less inconvenient for those concerned than fresh inspections on the spot, with all the disturbance to the work of the undertaking that such inspections inevitably involve while they are being carried out.
One final observation, relating to the argument put forward at the oral hearing and based on the fact that under Italian law invoices have to be kept for only five years. I would merely reply that this has no effect in itself on the legality of the disputed Decisions: it is for the High Authority to draw any conclusions from the absence of invoices as a result of their possible destruction, taking into account the circumstances in which the destruction took place.
I am of the opinion that the applications should be dismissed and that the costs should be borne by the applicant companies.
(
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