62000TO0350_EN
Parties
Grounds
Operative part
Parties
In Case T-350/00 R,
Free Trade Foods NV, established in Curaçao (Netherlands Antilles), represented by M.M. Slotboom and R.J. van Agteren, lawyers, with an address for service in Luxembourg,
applicant,
v
Commission of the European Communities, represented by T. van Rijn and C. Van der Hauwaert, acting as Agents, with an address for service in Luxembourg,
defendant,
APPLICATION to suspend the operation of Commission Regulation (EC) No 2081/2000 of 29 September 2000 providing for the continued application of safeguard measures for imports from the overseas countries and territories of sugar sector products with EC/OCT cumulation of origin (OJ 2000 L 246, p. 64) or any other interim measure capable of protecting the interests of the applicant,
THE PRESIDENT OF THE COURT OF FIRST INSTANCE
OF THE EUROPEAN COMMUNITIES
makes the following
Order
Grounds
Relevant provisions
1 The Netherlands Antilles form part of the overseas countries and territories (hereinafter the OCT) which are subject to the provisions of Part Four of the EC Treaty. The association of the OCT with the Community is governed by Part Four of the EC Treaty and by Council Decision 91/482/EEC of 25 July 1991 on the association of the overseas countries and territories with the European Economic Community (OJ 1991 L 263, p. 1; hereinafter the OCT Decision), adopted under the second paragraph of Article 136 of the EC Treaty (now, after amendment, Article 187 EC).
2 In its original version, Article 101(1) of the OCT Decision provided:
Products originating in the OCT shall be imported into the Community free of customs duties and charges having equivalent effect.
3 Article 102 of the decision provided:
The Community shall not apply to imports of products originating in the OCT any quantitative restrictions or measures having equivalent effect.
4 The first indent of Article 108(1) of the OCT Decision refers to Annex II to the decision for the definition of the concept of originating products and methods of administrative cooperation relating thereto.
5 Under Article 1 of Annex II to the OCT Decision, a product shall be considered to be originating in the OCT, the Community or the African, Caribbean and Pacific States (the ACP States) if it has been either wholly obtained or sufficiently worked or processed there.
6 Article 6(2) of Annex II to the OCT Decision provides that, when products wholly obtained in the Community or in the ACP States undergo working or processing in the OCT, they shall be considered as having been wholly obtained in the OCT. Under this rule of EC/OCT cumulation of origin or ACP/OCT cumulation of origin sugar originating in the Community or the ACP States which is worked or processed in the OCT may be imported into the Community free of customs duties and without restrictions.
7 Article 109 of the OCT Decision reads thus:
1. If, as a result of the application of this decision, serious disturbances occur in a sector of the economy of the Community or one or more of its Member States, or their external financial stability is jeopardised, or if difficulties arise which may result in a deterioration in a sector of the Community's activity or in a region of the Community, the Commission may, in accordance with the procedure specified in Annex IV, take, or authorise the Member State concerned to take, the necessary safeguard measures.
2. For the purpose of implementing paragraph 1, priority shall be given to such measures as would least disturb the functioning of the association and the Community. These measures shall not exceed the limits of what is strictly necessary to remedy the difficulties that have arisen.
8 On 24 November 1997, the Council adopted Decision 97/803/EC amending the OCT Decision at mid-term (OJ 1997 L 329, p. 50); this came into force on 30 November 1997.
9 Decision 97/803 inserted Article 108a and Article 108b into the OCT Decision; these allowed ACP/OCT cumulation of origin, the former for rice and the latter for sugar, up to a specified annual quantity.
10 Decision 97/803 also amended Article 101(1) and Article 102 of the OCT Decision; these now read as follows:
Article 101
1. Products originating in the OCTs shall be imported into the Community free of import duty.
...
Article 102
Without prejudice to Articles 108a and 108b, the Community shall not apply to imports of products originating in the OCTs any quantitative restrictions or measures having equivalent effect.
11 On 17 December 1997, the Commission adopted Regulation (EC) No 2553/97 on rules for issuing import licences for certain products covered by CN codes 1701, 1702, 1703 and 1704 and qualifying as ACP/OCT originating products (OJ 1997 L 349, p. 26).
12 On 15 November 1999, the Commission adopted Regulation (EC) No 2423/1999 introducing safeguard measures in respect of sugar falling within CN code 1701 and mixtures of sugar and cocoa falling within CN codes 1806 10 30 and 1806 10 90 originating in the OCT (OJ 1999 L 294, p. 11). In this regulation, applicable until 29 February 2000, the Commission made imports of these products subject to minimum price arrangements for sugar and to Community surveillance procedure for mixtures of sugar and cocoa.
13 On 25 February 2000, the Council adopted Decision 2000/169/EC (OJ 2000 L 55, p. 67) extending the OCT Decision by one year, that is until 28 February 2001.
14 On 29 February 2000, the Commission adopted Regulation (EC) No 465/2000 introducing safeguard measures for imports from the OCT of sugar sector products with EC/OCT cumulation of origin (OJ 2000 L 56, p. 39). In that regulation, the Commission restricted EC/OCT cumulation of origin for products falling within CN tariff codes 1701, 1806 10 30 and 1806 10 90 to a maximum of 3 340 tonnes of sugar for the period from 1 March to 30 September 2000.
15 On 29 September 2000, the Commission adopted Regulation (EC) No 2081/2000 providing for the continued application of safeguard measures for imports from the OCT of sugar sector products with EC/OCT cumulation of origin (OJ 2000 L 246, p. 64, hereinafter Regulation No 2081/2000 or the contested regulation).
16 Recital 1 in the preamble to Regulation No 2081/2000 states:
The Commission has noted that imports of sugar (CN code 1701) and of mixtures of sugar and cocoa falling within CN codes 1806 10 30 and 1806 10 90 originating in [the OCT] increased greatly between 1997 and 1999, particularly those imports with EC-OCT cumulation of origin, which increased from zero tonnes in 1996 to more than 53 000 tonnes in 1999. Such products are imported into the Community free of import duties and are admitted without quantity limits in accordance with Article 101(1) of the OCT Decision.
17 Recital 4 notes that:
In the past few years difficulties have arisen on the Community sugar market, a market in surplus. Sugar consumption is constant at some 12.8 million tonnes per year, while production under quota is around 14.3 million tonnes per year. Any imports of sugar into the Community therefore involve a corresponding quantity of Community sugar which cannot be sold on that market having to be exported. Refunds for that sugar, within the limit of certain quotas, are charged to the Community budget (currently at around EUR 520/tonne). However, exports with refund are limited in volume by the Agreement on Agriculture concluded as part of the Uruguay round and have been reduced from 1 555 600 tonnes for the 1995/96 marketing year to 1 273 000 tonnes for the 2000/01 marketing year.
18 Since, as shown in recital 5, those difficulties may greatly destabilise operation of the common organisation of the market in sugar, the Commission decided to reduce Community quotas by some 500 000 tonnes.
19 Recital 6 states that as a result of these continuing difficulties, there is a risk that a sector of Community activity will deteriorate and the Commission therefore decided on 19 September 2000 to continue to apply the safeguard clause provided for in Article 109 of the OCT Decision in respect of imports of sugar sector products from the OCT with EC-OCT cumulation of origin.
20 Recital 8 in the preamble to Regulation No 2081/2000 reads as follows:
... EC/OCT cumulation of origin for products falling within CN codes 1701, 1806 10 30 and 1806 10 90 should be restricted to a maximum of 4 848 tonnes of sugar for the period 1 October 2000 to 28 February 2001, that figure representing the sum of the highest annual volumes of imports of the products in question in the three years preceding 1999 ... . In determining the quantities of sugar to be taken into consideration, the Commission takes note of the position adopted by the President of the Court of First Instance in his rulings of 12 July and 8 August 2000 in Cases T-94/00 R, T-110/00 R and T-159/00 R, without, however, recognising it as justified. Consequently, in order to avoid unnecessary procedures and solely for the purpose of adopting these safeguard measures, the Commission, for sugar falling within CN code 1701 and for 1997, bases itself on the figure of 10 372.2 tonnes for the total imports of sugar from the OCT with EC-OCT and ACP-OCT cumulation of origin, as recorded by Eurostat.
21 Article 1 of Regulation No 2081/2000 provides:
For products falling within tariff headings CN 1701, 1806 10 30 and 1806 10 90, EC/OCT cumulation of origin as referred to in Article 6 of Annex II to [the OCT Decision] shall be permitted for a quantity of 4 848 tonnes of sugar during the period of validity of this regulation.
For products other than unprocessed sugar, the sugar content of the imported product shall be taken into account for the purposes of complying with that limit.
22 Article 2 provides that import of the products referred to in Article 1 is subject to the issue of an import licence, to be made in accordance with the rules in Regulation No 2553/97, subject to certain specific features.
23 Article 2(3) of Regulation No 2081/2000 provides that [a]pplications for import licences shall be accompanied by a copy of the export licence, issued in accordance with Article 13 of Council Regulation (EC) No 2038/1999 [OJ 1999 L 252, p. 1] on the common organisation of the markets in the sugar sector, for the sugar in the products referred to in Article 1.
24 Lastly, Article 3 provides that Regulation No 2081/2000 shall come into force on the day of its publication in the Official Journal of the European Communities and that it shall apply from 1 October 2000 to 28 February 2001.
25 The applicant, Free Trade Foods NV, which is established in Curaçao, in the Netherlands Antilles, is a sugar processor. It was formed in 1996 and its original object was to mill sugar coming from the ACP States, to package it and to export it to the Community. After Decision 97/803 came into force, with the restriction of imports of ACP/OCT sugar into the Community, it began to import sugar coming from the Community in order to qualify under the rule on EC/OCT cumulation of origin. Its production capacity was increased in 1999 to over 50 000 tonnes a year and, during that year, it processed 24 865 tonnes of sugar. It also states that it sold 2 500 tonnes of sugar with EC/OCT cumulation of origin (hereinafter EC/OCT sugar) within the Community during 2000 and that it subsequently ceased all commercial activity.
26 The applicant has not made any application for a licence to import EC/OCT sugar into the Community under Regulation No 2081/2000.
Procedure
27 By application lodged at the Registry of the Court of First Instance on 20 November 2000, the applicant brought an action seeking annulment of Regulation No 2081/2000 and compensation for the loss incurred as a result of the adoption of that regulation.
28 By a separate document, lodged at the Registry of the Court of First Instance on 7 December 2000, it also made an application to suspend the operation of Regulation No 2081/2000 or for any other interim measure capable of protecting its interests.
29 The Commission submitted its written observations on the application for interim measures on 10 January 2001.
30 The parties were heard at the hearing on 12 January 2001. At the end of the hearing, the President of the Court of First Instance requested the parties to communicate certain information without delay. The Commission submitted this the same day. The applicant supplied the details requested on 16 January 2001 and the observations which the Commission was invited to submit on those details were lodged on 22 January.
Law
31 Under Articles 242 EC and 243 EC, in conjunction with Article 4 of Council Decision 88/591/ECSC, EEC, Euratom of 24 October 1988 establishing a Court of First Instance of the European Communities (OJ 1988 L 319, p. 1), as amended by Council Decision 93/350/ECSC, EEC, Euratom of 8 June 1993 (OJ 1993 L 144, p. 21), the Court may, if it considers that circumstances so require, order that application of the contested act be suspended or prescribe any necessary interim measures.
32 Article 104(2) of the Rules of Procedure of the Court of First Instance provides that applications for interim measures must state the circumstances giving rise to urgency and the pleas of fact and law establishing a prima facie case for grant of the measures sought. The conditions apply concurrently, so that a request for application to be suspended must be dismissed if either of these is not met (order of the President of the Court of First Instance in Case T-70/99 R Alpharma v Council [1999] ECR II-2027, paragraph 42).
Arguments of the parties
33 The applicant relies on four pleas to establish the existence of a prima facie case.
34 The first plea, infringement of Article 109 of the OCT Decision, consists of seven parts. In the first part, the applicant denies that difficulties within the meaning of this article arose on the Community sugar market. In the second part, the applicant maintains that there is no risk of a deterioration in any sector of the Community's activity. In the third part, it contends that it is not true that any imports into the Community of sugar sector products from the OCT have a visible effect on the difficulties alleged. In the fourth part, the applicant maintains that the safeguard measure in dispute breaches Article 109(2) of the OCT Decision, since its intention is not to deal, on an exceptional and provisional basis, with the emergence of exceptional difficulties. In the fifth part, the applicant considers that the introduction of an import quota, in Article 1 of Regulation No 2081/2000, in itself constitutes a breach of Article 109(2) of the OCT Decision. In the sixth part, the applicant considers that the quota of 4 848 tonnes for imports of EC/OCT sugar sector products in Article 1 of the contested regulation constitutes a breach of Article 109(2) of the OCT Decision. Lastly, in the seventh part, it maintains that the requirements for the lodging of applications for import licences specified in Article 2(2) and (3) of Regulation No 2081/2000 are contrary to Article 109(2) of the OCT Decision.
35 The second plea is failure to take account of the special and preferential position of the OCT as set down in the EC Treaty.
36 The third plea is infringement of Article 7(5) of the Agreement on Safeguard Measures annexed to the agreement establishing the World Trade Organisation (OJ 1994 L 336, p. 184) and of Article 300(7) EC.
37 In the fourth plea, lastly, the applicant alleges that Regulation No 2553/97 is unlawful.
38 The condition of urgency is also claimed to be met in that, without interim measures, the applicant would suffer grave and irreparable harm.
39 Application of Regulation No 2081/2000 prevents the applicant from selling EC/OCT sugar within the Community: if import licences were issued under Article 2 of the contested regulation the result could only be a financial loss. The applicable rules require the purchase of Community sugar in a maximum quantity of 4 848 tonnes and export of that amount to the OCT even though, in all probability, the import licences would only be issued for part of that amount. The remainder of the sugar therefore has to be stored at great expense or sold at a loss on the world market. It is for those reasons that the applicant did not submit any application for an import licence under Regulation No 2081/2000.
40 Being without income and unable to obtain any financial assistance whatever from its shareholders or associated undertakings, it is unable to repay its debts, some of which are due. In the light of the financial data produced in Annex 17 to the application for interim measures and supported by the documents supplied after the hearing, there is a real danger of it being made bankrupt by a creditor in the near future, depending on the outcome of the application for interim measures.
41 During the hearing before the President of the Court, the Commission stated that it did not dispute the admissibility of the present application but considers that the prima facie condition is not met, since none of the pleas relied on by the applicant is founded.
42 The Commission also considers that the simple fact that the applicant refrained from submitting an application for an import licence under Regulation No 2081/2000 shows that the condition of urgency is not met. In this context, a party seeking the grant of interim measures should show all due diligence to avoid grave and irreparable harm (order of the President of the Court of Justice in Case C-87/94 R Commission v Belgium [1994] ECR I-1395).
43 The reasons given by the applicant to explain its failure to apply for an import licence (paragraph 39 above) do not justify its inaction. On this, the Commission states that the export licences referred to in Article 2(3) of the contested regulation may be applied for by any interested party wishing to export Community sugar from the Community. The destination of the products must be shown, but may also be modified. It is also possible to use export licences in portions, so that the applicant could have made a contract to purchase Community sugar subject to its being granted a sufficient quantity of import licences, and the supplier could use any export licences that had not served for the transaction with the applicant for some other destination. The Commission does not understand why such an operation would necessarily produce a financial loss, adding that the quantity of sugar which the applicant would have obtained had it applied for an import licence would in all probability have enabled it to avoid incurring grave and irreparable harm.
44 As for the evidence essential for consideration of the condition of urgency, which a party seeking interim measures must always produce, the Commission considers that it has not been produced by the applicant. In particular, there is no explanation for some of the financial data mentioned in the application for interim measures, and the data supplied after the hearing are open to question.
45 Lastly, suspension of application must perforce result in a reduction in production quotas for Community producers which is even greater than that already essential. That result would be irreversible. Thus, finding a balance between the interests of the applicant and those of the Community requires clear urgency to be proved and a particularly sound prima facie case to be demonstrated (order of the President of the Court of Justice in Case C-364/98 P(R) Emesa Sugar v Commission [1998] ECR I-8815, paragraph 49), and those criteria are not met here. The Commission therefore argues that the applications for interim measures should be rejected.
Findings of the President of the Court
46 It must be observed firstly that Regulation No 2081/2000 will cease to apply on 1 March 2001. Suspension or any other measure decided upon by the President of the Court has an interest separate from that of the outcome in the principal dispute only if it is adopted before the date on which the regulation expires. However, because of the short-term validity of the act, the effects of a decision by the President of the Court to suspend it would in practice be definitive.
47 Secondly, the Commission enjoys broad discretion as regards the application of Article 109 of the OCT Decision (Case C-390/95 P Antillean Rice Mills and Others v Commission [1999] ECR I-769, paragraph 48), not merely as regards the existence of the conditions justifying the adoption of a safeguard measure but also as to whether a safeguard measure should be adopted or not (Joined Cases T-480/93 and T-483/93 Antillean Rice Mills and Others v Commission [1995] ECR II-2305, paragraph 122). Most of the pleas made by the applicant in fact relate to the manner in which the Commission has assessed the need for the safeguard measure and the detailed rules required.
48 On the basis of those considerations, and in the light of both the definitive effects likely to be produced by the order made and the nature of the contested measure, the balance of the interests involved means that the Court may substitute its own assessment for that of the Commission only in exceptional circumstances (see to that effect the order of the President of the Court of Justice in Case C-110/97 R Netherlands v Council [1997] ECR I-1795, paragraph 33), requiring a particularly sound prima facie case and clear urgency (as regards the latter criterion, see to that effect the order of the President of the Court of First Instance in Case T-179/97 R Government of the Netherlands Antilles v Council [1997] ECR II-1297, paragraph 36).
49 In this instance it must be established whether the contested regulation will, if its operation is not suspended, place the applicant in a financial situation which truly imperils its existence. That will establish whether any loss that it would incur without interim measures is irreparable (see to that effect the order of the President of the Court of Justice in Case 152/88 R Sofrimport v Commission [1988] ECR 2931, paragraph 32).
50 It cannot be denied that the contested regulation introducing a quota on imports of EC/OCT sugar sector products into the Community makes it very difficult to sell such products within the Community and, as a consequence, hinders the applicant's economic activity, since the applicant is now engaged exclusively in the processing of Community sugar.
51 However, notwithstanding the real risk of bankruptcy to which the lack of economic activity exposes it, the applicant - holding no sugar in stock - has failed to carry out one advance formality that is essential for any possibility of importing any quantity of EC/OCT sugar into the Community under the contested regulation, for it has not applied for an import licence.
52 On being questioned by the President of the Court during the hearing as to the reasons for this attitude, the applicant explained that the time for submitting applications for import licences under the contested regulation laid down in Article 2(2) - from 1 to 15 October 2000 - had been too short to enable it to make a contract to purchase Community sugar subject to obtaining such licences. The applicant added that, if the export of Community sugar outside the Community was not effected by 31 December 2000, the producer would have been required to pay a production levy. Lastly, the security to be lodged to obtain import licences was so high that it would never be possible to submit an application for issue of such licences in the absence of a positive response to the application.
53 However, those explanations are not enough to establish that it was impossible to submit an application for import licences. The applicant has not shown that it was unable to make a contract to purchase Community sugar subject to obtaining import licences.
54 In the first place, Annex 15 to the application for interim measures shows that, under a contract made for an undetermined period between the applicant and a Community purchaser of EC/OCT sugar, the latter is willing and able to take care of the purchase of C-sugar of EC origin to be processed by [Free Trade Foods] on Curaçao. Article 5(i) of the contract also stipulates that this purchaser will do the utmost to purchase C-sugar of EC origin to be processed by [Free Trade Foods] at the lowest possible prices and against the best possible conditions. It is therefore conceivable, as the Commission contended during the hearing, that the applicant might have been able, during the period for lodging applications for import licences, to secure from the other party to the contract an undertaking to supply the quantity of Community sugar desired subject to obtaining the licences.
55 Secondly, the applicant's bare assertion at the hearing that the supplier would not have been able to sell off on the world market any surplus quantity of Community sugar which in the end the applicant was unable to purchase, through failing to obtain import licences for the entire quantity of sugar purchased conditionally, is not sufficient to establish the truth of the fact alleged, and the Commission's contrary claim may be regarded as equally true.
56 Lastly, since the amount of the security to accompany applications for import licences depends on the quantity of EC/OCT sugar that is finally authorised for import into the Community, it cannot be claimed that this is a difficulty justifying the failure to apply for an import licence.
57 In refraining from lodging an application for the issue of import certificates, when it has not been established that it was unable to do so, the applicant has acted in such a manner that it has rendered itself unable to export a quantity of EC/OCT sugar to the Community, even though a quantity might have been allocated to it. On this point it is sufficient to note that a competitor of the applicant, Rica Foods, applied for import licences and was awarded the entire quota for import of EC/OCT sugar sector products provided for in the contested regulation.
58 Thus, although it cannot be denied that the safeguard measure does prejudice the applicant's economic activity, in failing to submit any application for import licences the applicant has helped to make its position distinctly more difficult than it would probably have been had it made such an application. It follows that the applicant contributed to the loss which it is relying on to establish the urgency of ordering suspension.
59 Urgency in ordering an interim measure must result from the effects produced by the contested measure and not from a lack of diligence on the part of the applicant. The latter must, if it is not to bear the loss itself, show reasonable diligence in limiting the extent of the loss. Thus, in the context of an application for interim measures the President of the Court challenged the actions which an applicant had taken in full knowledge of the market, taking the view that the reaction which those actions had drawn from the Commission was part of the risks of the undertaking (order in Case 1/84 R Ilford v Commission [1984] ECR 423, paragraph 22). Similarly, in the order in Commission v Belgium, cited above, the President of the Court observed that the defendant had itself contributed to the circumstances which compromised the requirement of safety that must govern any public service activity, stating that failure to act is in principle likely to prevent the balance of interests from tilting in favour of the party in default (see also to that effect the order of the President of the Court in Case 194/88 R Commission v Italy [1988] ECR 5647, paragraph 16).
60 In this instance, by deciding not to seek an import licence, the applicant ran the risk of having to bear the damage by not having sought to limit its extent. Such a lack of diligence makes it impossible for the President of the Court to discover what the applicant's economic situation would have been had the applicant been able to import EC/OCT sugar into the Community. In particular, the Court is not in a position to discover what sum might have become available to repay the creditors and how they would have reacted in such circumstances.
61 Furthermore, it must be noted that the applicant lodged the present application for interim measures more than two months after Regulation No 2081/2000 entered into force and that the creditors had still not demanded repayment of the sums owed at the date of the hearing before the Court on the application for interim measures. In those circumstances and because, firstly, the new decision on the association of the OCT with the Community is due to be adopted by the Council by 28 February 2001, the date until which the OCT Decision is applicable (Article 1 of Decision 2000/169, referred to in paragraph 13 above) and, secondly, this new decision will govern imports into the Community of sugar sector products coming from the OCT, it is reasonable to believe that the creditors will not proceed to enforced recovery before they know what that new decision contains.
62 Since the condition on urgency is not met, the application for interim measures must be rejected, without the need to consider whether the prima facie condition is met.
Operative part
On those grounds,
THE PRESIDENT OF THE COURT OF FIRST INSTANCE
hereby orders:
1. The application is dismissed.
2. Costs are reserved.