(21)(22)

Article 3(2), second subparagraph, third sentence, of the Shipbuilding Regulation stipulates that: ‘the Commission may, however, grant an extension of the three-year delivery limit when this is found justified by the technical complexity of the individual shipbuilding project concerned or by delays resulting from unexpected disruptions of a substantial and defensible nature in the working programme of a yard due to exceptional circumstances, unforeseeable and external to the company.’ The Commission notes that the extension is sought because Cantieri Navali Termoli could not finish the vessel referred to above on account of unexpected delays external to the company.The Shipbuilding Regulation requires that the circumstances justifying the extension of the delivery limit be (a) exceptional, (b) unforeseeable and (c) external to the company. What must also be established is (d) causality between these events and the unforeseen disruptions which caused the delay, (e) their duration and (f) the substantial and defensible nature of these disruptions. The following paragraphs set out the assessment of the arguments invoked by the Italian authorities. (i) Impact of the events of 11 September 2001 The Commission has here acknowledged that these events were unforeseeable and external to the shipyard. However, in line with past Commission's decisions, the impact of these events cannot be accepted in this case since, according to settled Commission decision-making practice, ‘reduced economic growth, or a worsening of the market situation for a type of ship, cannot be considered an exceptional circumstance in the sense of Article 3(2) of the Shipbuilding Regulation’ (15). This argument was admitted only for cruise vessels because of the direct effect of these events on such vessels, but not for other types of vessel, where such events are considered to have an indirect impact and a more general effect. In fact, the Commission noted in the decision to initiate the procedure that, according to a report by Clarkson Research of November 2003, ‘The 9/11 event certainly added problems in an already slowing world economy’ (16). Furthermore, concerning investment in chemical tankers of less than 20 000 dwt such as ship C.180, the same Clarkson Research report states that ‘Activity was fairly low over the period 1998 to 2000 and, despite a recovery in early 2001, levels did fall back in the final quarter of 2001 in line with the rest of the industry. However, the level of contracting picked up significantly in early 2002 and has been fairly strong since.’ As regards the argument of the Italian authorities which questions the relevance of the Commission’s appraisal of the impact of such events on the basis of an ex post report, the Commission notes above all that it relied on a report submitted by the Italian authorities themselves. Secondly, it emphasises that in this procedure the Italian authorities themselves rely on reports dating from late 2003. Finally, the Commission notes that none of the additional reports to which the Italian authorities refer contradict the Commission’s assessment of this point. The Commission notes that its assessment of this argument is in line with other decisions in similar cases notified by Italy concerning extensions of the three-year delivery limit for chemical tankers and LPG tankers. (ii) Need to modify the ship to meet changed market demands As to the second argument, it is initially noted that the technical modifications were made at the shipowner’s request in order to meet changed market demands. Also, as stated in the addendum of 10 December 2003 to the original shipbuilding contract, the shipyard intended to ask the shipowner for a postponement of the delivery date for ship C.180, shouldering all the costs and risks in relation to the awarding/granting of state aid for the latter. The Commission observes that a shipowner may always demand changes to the shipbuilding contract and that such changes are not uncommon in the shipbuilding sector. Such events are part of the normal commercial activity of the yard. This argument cannot, therefore, be accepted in this instance. For the sake of completeness, the Commission also notes that during this investigation the Italian authorities explained that the changes in question (concerning both ships C.173 and C.180) had already been flagged by the US charter company Novamar in its letter to the shipowner of February 2001 and were agreed between the yard and the shipowner before the contract’s suspension in 2001. It further notes that, as explained by the Italian authorities, ship C.173, according to its original specification, should have been built long before by another shipyard that got into difficulties in the 1990s; and so this ship belonged to an older generation of ships now superseded by a new generation of larger vessels with enhanced capacity. In light of the above, it is evident that the modifications were neither exceptional nor unforeseeable events. Accordingly, the Commission considers that the argument invoked by Italy here is not admissible. (iii) Impact of the natural disasters which hit the Molise region, where the yard is located It is acknowledged that earthquakes, floods and other acts of ‘force majeure’ normally constitute admissible grounds. Similarly, it is acknowledged that such events have had an impact on activity in the Molise region, as confirmed by the declaration of the state of emergency by decree of the President of the Council of Ministers, and potentially on the yard’s overall activity. Nonetheless, under the Shipbuilding Regulation, an extension of the three-year delivery limit derogates from the normal provisions authorizing the granting of contract-related operating aid, which in turn constitute an exemption from Community state aid rules. Accordingly, the principle that rules governing exemptions are to be interpreted narrowly means that a direct causal link must be established between the circumstances allegedly causing the delay and the delay in the construction of the vessel. However, the information made available to the Commission, including the information submitted by the Italian authorities after the opening of the formal investigation, is rather vague, referring in only general terms to the disruptive effects of the disasters; it fails to demonstrate or quantify the exact impact of those events on the yard’s work programme or on the construction of the vessel in question. The Commission notes that, despite its explicit requests for information and the lengthy extensions of the reply deadlines, no detailed information has been supplied concerning the disruptions caused by these disasters on the shipyard’s overall work programme and the precise causal effect on the specific work programme for ship C.180 (ex C.173). The Italian authorities have submitted copies of the letters by which suppliers of components and services to the yard revoked their contracts with the yard. However, they have failed to document in detail the causal link and have not quantified with precision the consequent delay in the yard’s work programme and in the construction of ship C.180 (ex C.173) in order to justify the request to extend the delivery limit by 10 months.