Judgment of the Court of 18 May 1993. - Commission of the European Communities v Stahlwerke Peine-Salzgitter AG. - Appeal - ECSC - Non-contractual liability of the Community. - Case C-220/91 P.



European Court reports 1993 Page I-02393



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

++++

1. Actions for damages ° ECSC ° Harm arising from decisions ° Basis of the claim ° Coexistence of Article 34 and the first paragraph of Article 40 of the Treaty

(ECSC Treaty, Art. 34 and Art. 40, first para.)

2. Non-contractual liability ° ECSC ° Conditions ° Appraisal of fault of such a nature as to render the Community liable ° Taking into account situations to be regulated, difficulties of applying legislation and discretion available to the institution

(ECSC Treaty, Arts 34 and 40)

3. Non-contractual liability ° ECSC ° Legislative measure ° Community liability ° Conditions ° Similarities between conditions for liability laid down by ECSC and EEC Treaties ° Relevance ° Limits

(ECSC Treaty, Arts 34 and 40; EEC Treaty, Art. 215, second para.)

4. Non-contractual liability ° ECSC ° Appeal against a judgment of the Court of First Instance declaring the Community liable on grounds of improper conduct by the Commission (Case T-120/89) ° Dismissal

5. Non-contractual liability ° ECSC ° Conditions ° Undertaking not having received, within the system of steel production and delivery quotas, the quotas corresponding to its situation ° Direct harm ° Evaluation ° Factors to be taken into consideration ° Special harm

(ECSC Treaty, Arts 34 and 40)

Summary

1. The ECSC Treaty has provided two legal remedies, that under Article 34 and that under the first paragraph of Article 40, making it possible to seek to have the Community declared liable on the basis of the same requirement, which is that of the existence of fault. Although the first remedy relates specifically to the case of illegal measures declared void, there is nothing to justify limiting the scope of the second solely to cases in which the issue does not relate to the illegality of decisions.

Where an undertaking, which has brought proceedings to obtain damages as redress for harm which it alleges it has suffered by reason of decisions which it regards as involving a fault of such a nature as to render the Community liable, has relied primarily on Article 34 and in the alternative on Article 40, it is not necessary, in the context of an appeal, to determine whether the action was wholly or partially admissible on the basis of one or the other of those articles, since both provisions make it equally possible to obtain redress for the harm alleged by the undertaking. Whether the legal basis of its claim is Article 34 or Article 40, the undertaking was in any event entitled to seek to have the Community declared liable for that purpose.

2. In appraising the nature of the fault required by the provisions of Articles 34 and 40 of the ECSC Treaty in order to render the Community liable, reference should be made, in the absence of any details in the said provisions, to the areas and conditions in which the Community institution acts. In that respect it is necessary to take into account in particular the complexity of the situations which the institution must regulate, the difficulties of applying the legislation and the discretion available to the institution thereunder.

3. Even though it is possible to point to similarities between the conditions for liability laid down by the ECSC and the EEC Treaties and to be guided, in giving judgment in an action putting in issue the liability of the European Coal and Steel Community, by principles common to different situations in which an institution possesses a wide discretion to settle complex problems, it is in the light of the criteria evolved for the application of Articles 34 and 40 of the ECSC Treaty that the Community judicature must define the facts and characterize the fault or faults of such a nature as to render the Community liable.

4. The Court of First Instance, in the context of the findings and appreciations of fact which were a matter for itself alone and which it made in its judgment of 27 June 1991 in Case T-120/89, in holding that the facts submitted for its appreciation constituted such a manifest fault as to render the Community liable, applied the rules under which the Community' s liability may be put in issue in a manner which the Court of Justice does not regard as calling for criticism in the context of an appeal against the said judgment.

5. An undertaking which, in the context of the system of steel production and delivery quotas, has been compelled, by reason of the Commission' s unlawful and wrongful refusal to grant it adjustments of its delivery quotas, to sell a considerable part of its production on third country markets in unprofitable conditions, has suffered harm within the meaning of the first paragraph of Article 34 of the ECSC Treaty, the evaluation of which must take account of all the factors related to the matters from which the harm arises and for which, if appropriate, compensation may be provided. However, when the harm suffered by the undertaking arises solely from the refusal with which it has met and not from the application of the quota system as a whole, the advantages which the undertaking as a whole has derived from the system are not to be taken into account.

Since the harm suffered arises from illegalities constituting faults on the part of the Commission, it could not have been normally foreseeable by the undertaking, which has therefore suffered harm going beyond the bounds of the risks inherent in the activities of the sector concerned.

Parties

In Case C-220/91 P,

Commission of the European Communities, represented by Rolf Waegenbaur, Principal Legal Adviser, acting as Agent, assisted by Eberhard Grabitz, Ehrenbergstrasse 17, D-1000 Berlin 33, with an address for service in Luxembourg at the office of Nicola Annecchino, of its Legal Service, Wagner Centre, Kirchberg,

appellant,

APPEAL against the judgment of the Court of First Instance of the European Communities of 27 June 1991 in Case T-120/89 Stahlwerke Peine-Salzgitter AG v Commission of the European Communities [1991] ECR II-279, seeking to have that judgment set aside,

the other party to the proceedings being:

Stahlwerke Peine-Salzgitter AG, a company governed by German law, having its registered office in Salzgitter (Federal Republic of Germany), represented by Deringer, Tessin, Herrmann and Sedemund, Rechtsanwaelte, Cologne, with an address for service in Luxembourg at the Chambers of Aloyse May, 31 Grand-Rue,

THE COURT,

composed of: O. Due, President, G.C. Rodríguez Iglesias and M. Zuleeg (Presidents of Chambers), G.F. Mancini, R. Joliet, J.C. Moitinho de Almeida and F. Grévisse, Judges,

Advocate General: C. Gulmann,

Registrar: D. Louterman-Hubeau, Principal Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 19 January 1993,

after hearing the Opinion of the Advocate General at the sitting on 17 March 1993,

gives the following

Judgment

Grounds

1 By application lodged at the Court Registry on 3 September 1991, the Commission of the European Communities brought an appeal under Article 49 of the Statute of the Court of Justice of the ECSC against the judgment of the Court of First Instance of 27 June 1991, Stahlwerke Peine-Salzgitter v Commission (T-120/89 [1991] ECR II-279) inasmuch as it declared several Commission decisions relating to the applicant' s delivery quotas between 1985 and 1988 to involve faults of such a nature as to render the Community liable, declared that that undertaking had suffered direct and special harm as a result of those decisions and ordered the Commission to bear the major part of the costs of the proceedings.

2 It may be seen from the findings made by the Court of First Instance in its judgment (paragraphs 1 to 22) that in pursuance of the general Commission Decision No 234/84/ECSC of 31 January 1984 on the extension of the system of monitoring and production quotas for certain products of undertakings in the steel industry for the years 1984 and 1985 (OJ 1984 L 29, p. 1) the Commission fixed each quarter and for each undertaking the production quotas and the part of such quotas which might be delivered in the common market (hereinafter "the delivery quotas") on the basis of the production and reference quantities determined by that general decision and after applying to those production and reference quantities certain abatement rates fixed quarterly.

3 Article 14 of that general decision allows the Commission to adjust certain provisions where the production or delivery restrictions imposed create exceptional difficulties for an undertaking. The Commission was aware of the difficulties encountered by the German steel undertaking Stahlwerke Peine-Salzgitter AG (hereinafter "Salzgitter") by reason of an unfavourable ratio between its delivery quota and its production quota (the so-called "I:P ratio"), and proceeded to adjust the delivery quota for the last three quarters of 1984. However, the Commission, by decision of 11 June 1985, refused to grant that undertaking quota adjustments for the first two quarters of 1985 on the ground that the authorities of the Federal Republic of Germany had granted it aid during the fourth quarter of 1984 and that since then its results as a whole had been favourable.

4 The Court of Justice, by judgment in Case 103/85 Stahlwerke Peine-Salzgitter v Commission ([1988] ECR 4131), delivered on 14 July 1988, declared the Commission decision of 11 June 1985 void inasmuch as it refused to adjust Salzgitter' s delivery quotas under Article 14 of the general Decision No 234/84 for the first quarter of 1985. That judgment was based, on the one hand, on the fact that the Commission, in determining whether there were exceptional difficulties, might take account only of the situation of categories of products subject to a high abatement rate but not of the situation of the undertaking as a whole and, on the other hand, on the fact that the aids from the Federal Republic of Germany could not be regarded as aid intended to cover operating losses and excluding the granting of additional quotas.

5 Independently of the course of those first proceedings before the Court of Justice, the Commission several times expressed its willingness to reconsider the question of the I:P ratio before extending the quota system for a fresh period of two years. After consulting the ECSC Consultative Committee, it requested the Council to give its assent to new provisions envisaged on the subject.

6 However, the Council refused its assent and on 27 November 1985 the Commission adopted the general Decision No 3485/85/ECSC extending the system of monitoring and of production quotas for certain products of undertakings in the steel industry for 1986 and 1987 (OJ 1985 L 340, p. 5). That general decision did not contain the adjustment of the I:P ratio which the Commission itself had proposed to the Council.

7 Article 5 of the general Decision No 3485/85 provided that the Commission was to fix each quarter and for each undertaking the production quotas and the part of the quotas which might be delivered on the common market, on the basis of the reference production and quantities fixed in other respects and by applying thereto abatement rates referred to in another article. It authorized the Commission, within certain limits, to take steps to adjust the quotas thus fixed, so, however, that the quotas did not exceed a certain ceiling per quarter for all the categories of an undertaking. In pursuance of that article, the Commission addressed to Salzgitter on 30 December 1985 and 21 March 1986 individual decisions fixing, for the first and second quarters of 1986, the delivery quotas applicable to it.

8 By a second judgment, in Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 Stahlwerke Peine-Salzgitter and Others v Commission [1988] ECR 4309 (also delivered on 14 July 1988), the Court declared void Article 5 of the general Decision No 3485/85 and the aforesaid individual decisions based on that article. In that judgment the Court first recalled that Article 58 of the ECSC Treaty required the assent of the Council only for the establishment and the essential features of the quota system and that it was for the Commission, acting under its own powers, to lay down the details of the system in order to determine the quotas on an equitable basis. The Court then declared that by not proceeding, pursuant to Article 58(2) of the ECSC Treaty, to modify that I:P ratio, as the Commission itself thought necessary in order to determine the quotas on an equitable basis, the Commission had pursued a purpose different from that laid down by that provision and had thus committed a misuse of power affecting the applicant undertakings.

9 Other individual decisions concerning Salzgitter' s delivery quotas were adopted between 1985 and 1988, the year during which the quota system was terminated. No application was made to the Court for annulment of those decisions. In fact, in order to avoid pointless litigation, the undertaking had thought it sufficient to obtain an assurance that the Commission would draw the same conclusions, concerning those decisions, as those resulting from any declaration that the decisions actually contested before the Court were void.

10 It should, however, be pointed out that by judgment in Joined Cases 218/87 and 223/87 and 72/88 and 92/88 Hoogovens Groep and Others v Commission [1989] ECR 1711, the Court declared void Article 5 of the general Commission Decision 194/88/ECSC of 6 January 1988 on the extension of the system of monitoring and production quotas for certain products of undertakings in the steel industry for the first half of 1988 (OJ 1988 L 25, p. 1); that article repeated the substance of Article 5 of the general Decision No 3485/85 and was the legal basis for the individual decisions adopted by the Commission for the first and second quarters of 1988.

11 Shortly after the delivery of the judgments in Case 103/85 and in Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 Salzgitter attempted, in pursuance of the first paragraph of Article 34 of the ECSC Treaty, to obtain damages or equitable redress for the harm which the Commission' s unlawful decisions had caused it. However, neither meetings between representatives of the undertaking and the Commission' s officers nor exchanges of correspondence between the directors of the company and representatives of the Commission were able to produce agreement.

12 By application lodged at the Registry of the Court of Justice on 3 July 1989, which was referred to the Court of First Instance by order of 15 November 1989, pursuant to Article 14 of the Council Decision of 24 October 1988 establishing a Court of First Instance of the European Communities, Salzgitter claimed, on the basis primarily of Article 34 of the ECSC Treaty and in the alternative of Article 40 thereof, a declaration that the decisions declared void by the Court of Justice and the other decisions concerning its delivery quotas between 1985 and 1988, which had not been the subject of proceedings, involved faults of such a nature as to render the Community liable and that the Commission was required to pay it damages in redress for the harm caused by those unlawful and wrongful decisions.

13 According to the applicant that harm consisted in the difference between the receipts which it might have obtained if the Commission had duly allocated to it a higher delivery quota for the Community market, where prices were higher, and the receipts it actually obtained by being required to sell at low prices in third countries. It estimated the harm at a total of DM 73 065 405, together with interest. It subsequently increased its claims, assessing them at a total of DM 77 603 528.

14 By judgment of 27 June 1991 the Court of First Instance declared the aforesaid decisions to involve a fault of such a nature as to render the Community liable, declared that the applicant had suffered direct and special harm as a result of those decisions, dismissed as premature Salzgitter' s claim for damages, referred the case to the Commission in order that it might adopt appropriate measures in order to ensure equitable redress for the harm and ordered the Commission to bear its own costs and 90% of the applicant' s costs.

15 In claiming that that judgment should be set aside the Commission calls in question in turn the admissibility of the application to the Court of First Instance, the nature of the fault required to render the Community liable, the consequences of the illegalities established by the judgment of the Court of Justice in Case 103/85, the consequences of the illegalities established by the judgments of the Court of Justice in Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 and in Joined Cases 218/87 and 223/87 and 72/88 and 92/88 and finally the existence of harm giving a right to redress.

16 Salzgitter contends that the appeal should be dismissed and does not call in question the dismissal by the Court of First Instance of its claim for damages.

17 Reference is made to the Report for the Hearing for a fuller account of the procedure and the pleas in law and arguments of the parties, which are hereinafter mentioned or discussed only in so far as is necessary for the reasoning of the Court.

The admissibility of the application before the Court of First Instance

18 The Court of First Instance dismissed an objection of inadmissibility based on the fact that some of the decisions at issue had not previously been declared void. It took the view that the approach adopted by the Court of Justice in Joined Cases 97/86, 193/86, 99/86 and 215/86 Asteris v Commission [1988] ECR 2181 for the application of Article 176 of the EEC Treaty might be extended to the application of Article 34 of the ECSC Treaty and that in consequence express or implied measures having the same content as the measure annulled which were adopted between the date on which the annulled measure entered into force and the annulling judgment should be treated in the same way as the annulled measure (paragraph 47).

19 The Commission challenges the rejection by the Court of First Instance of its objection that Salzgitter' s application was inadmissible. It contends, in substance, that the analogy between Article 176 of the EEC Treaty and Article 34 of the ECSC Treaty is only partial and does not concern the conditions of admissibility of an action for damages referred to by Article 34, which requires that the decision at issue shall first have been declared void.

20 Salzgitter, on the other hand, approves the reasoning followed by the Court of First Instance on this point, but claims that even if its application were not admissible on the basis of Article 34 of the ECSC Treaty it would be so on the basis of Article 40 on which it relied in the alternative.

21 The Court of Justice points out that the ECSC Treaty has provided two legal remedies enabling the Community' s liability to be put in issue and that it had already held that the existence of the specific provisions of Article 34 cannot debar an undertaking which regards itself as having suffered direct harm by reason of a Community decision which has not been declared void from seeking a declaration that the Community is liable on the basis of the first paragraph of Article 40. Nothing in the wording of that provision or in its general structure makes it possible to restrict its field of application solely to cases in which the issue does not relate to the illegality of decisions (judgment in Joined Cases C-363/88 and 364/88 Finsider and Falck v Commission [1992] ECR I-359, paragraphs 15 and 16).

22 Furthermore, by virtue of the actual wording of Article 34 and the first paragraph of Article 40 of the ECSC Treaty the two legal remedies provided by those provisions make it possible to seek to have the Community declared liable on the basis of the same requirement, which is that of the existence of a fault (see the judgment in Joined Cases C-363/88 and 364/88 Finsider and Falck v Commission, previously cited, paragraph 20).

23 In this case, as may be seen from paragraph 23 of the contested judgment and as the Court has stated in paragraph 12 of this judgment, the application before the Court of First Instance sought, pursuant primarily to Article 34 of the ECSC Treaty and in the alternative to Article 40 thereof, the award of damages in reparation for the harm suffered by reason of allegedly wrongful decisions of the Commission.

24 As regards the right to damages thus claimed by Salzgitter, it is immaterial which of the two articles relied upon is applied since both remedies make it possible to obtain damages for harm caused by decisions involving faults of such a nature as to render the Community liable.

25 In those circumstances it is pointless to enquire whether or not some of the decisions at issue could be assimilated to decisions declared void by the Court or whether or not, for the harm which they have caused, the Community might be rendered liable on the basis of Article 34 of the ECSC Treaty, which applies where a decision has been declared void. Whether the legal basis of the claim, as regards the decisions not declared void by the Court of Justice, is Article 34 or Article 40, Salzgitter was in any event entitled to seek to have the Community declared liable with a view to redress for the harm arising from those decisions.

26 Consequently the Commission' s first plea in law must be rejected.

The fault of such a nature as to render the Community liable

27 The Court of First Instance took the view that it was appropriate, in order to ensure greater uniformity of application of Community law relating to liability resulting from unlawful legislative measures, to interpret the concept of fault of such a nature as to render the Community liable within the meaning of the first paragraph of Article 34 of the ECSC Treaty in the light of criteria laid down by the Court of Justice in its case-law relating to the second paragraph of Article 215 of the EEC Treaty (paragraph 78).

28 The Commission, whilst approving that reference, complains that the contested judgment diverges on several points from the case-law of the Court of Justice with regard to liability arising from the illegality of legislative measures and stresses that the application of very strict conditions for invoking such liability is linked not so much to the legislative nature of the measure at issue as to the scope of the discretion available to a Community institution.

29 According to the case-law of the Court of Justice, in order to appraise the nature of the fault required to render the Community liable, whether on the basis of Article 34 or of Article 40 of the ECSC Treaty, neither of which gives any details in that connection, reference should be made to the areas and conditions in which the Community institution acts. In that respect, it is necessary to take into account in particular the complexity of the situations which the institution must regulate, the difficulties of applying the legislation and the discretion available to the institution thereunder (judgment in Joined Cases C-363/88 and 364/88 Finsider and Falck v Commission, cited above, paragraph 24).

30 Even though the Court of First Instance was able to point correctly to similarities between the conditions for establishing liability laid down by the ECSC and EEC Treaties, and even though it was entitled to be guided by principles common to different situations in which a Community institution possesses a wide discretion to settle complex problems, the Court of Justice must consider in the light of the criteria evolved for the application of Articles 34 and 40 of the ECSC Treaty whether the Court of First Instance, regard being had to the findings and assessments which come within its jurisdiction alone, has provided an accurate legal definition of the facts and has sufficiently characterized the fault or faults of such a nature as to render the Community liable.

The consequences of the illegalities established by the judgment of the Court in Case 103/85

31 The Court of First Instance first observed that the Commission, having regard to the judgment of the Court of Justice in Case 317/82 Boël v Commission [1983] ECR 2041, could not have been unaware, when adopting the decisions refusing to adjust the quotas, that it was not authorized to take into account, in determining the existence of exceptional difficulties required by Article 14 of the general Decision No 234/84, previously cited, the position of categories of products other than those covered by the quotas and consequently that it could not lawfully base its refusal on the fact that the undertaking as a whole was making a profit (paragraph 89). It drew the conclusion that the interpretation adopted by the Commission was vitiated by a manifest error, regard being had to the wording of Article 14 and the interpretation thereof by the Court of Justice (paragraph 90). The Court of First Instance added that the seriousness of that error was aggravated both by the change of approach which the Commission adopted and by the infringement of the principle of equality of treatment as between economic agents which it revealed (paragraphs 91 and 92). On the latter point the Court of First Instance also observed, as the Court of Justice had found in its judgment in Case 103/85, that the Commission had in several cases granted additional quotas to undertakings which had achieved profits.

32 The Court of First Instance next held that, having regard to the judgment of the Court of Justice in Case 250/83 Finsider v Commission [1985] ECR 131, the Commission could not be unaware, either, that the effect which an aid may have on the profit and loss account of an undertaking cannot be regarded as a valid criterion for the purpose of identifying aid granted with a view to covering operating losses within the meaning of the said Article 14, since the result of any aid may be to offset, wholly or in part, such operating losses as may arise (paragraphs 93 and 94).

33 The Court of First Instance deduced from those findings and assessments that by denying Salzgitter the benefit, for the four quarters of 1985, of the application of Article 14 of the general Decision No 234/84, the Commission had committed a fault of such a nature as to render the Community liable (paragraph 96).

34 In contesting the consequences thus drawn by the Court of First Instance from the illegality established by the judgment of the Court of Justice in Case 103/85 Stahlwerke Peine-Salzgitter v Commission, previously cited, the Commission contends first that the Court of First Instance did not fully take account of the fact that the case-law of the Court of Justice requires, for the Community to be rendered liable, a manifest and grave disregard of the limits imposed on the exercise of its powers. It next complains that the Court of First Instance equated that requirement of the case-law with a criterion of negligence and proceeded by subjective assertions, whereas the application of the criteria defined by the Court of Justice depends on the existence of objective circumstances. Finally, it claims that the Court of First Instance failed to have regard to the Commission' s administrative practice, which took account of the overall position of undertakings and not only that of the categories of products concerned.

35 Those arguments cannot be upheld.

36 On the first point it is sufficient to point out that, contrary to the Commission' s contention, the Court of First Instance, which moreover was not required, for the reasons mentioned in paragraph 30 of this judgment, to refer precisely to that criterion, dealt not only with the manifest nature of the infringement alleged against the institution but also considered its seriousness, expressly mentioned in paragraph 91.

37 On the second point it should be borne in mind that the definition of an error in the context of a system of liability based on fault calls for an appraisal of the circumstances which must necessarily be based on a subjective approach.

38 As regards the third point, it need only be observed that the administrative practice to which the Commission refers, which was moreover declared unlawful by the Court of Justice in its judgment in Case 103/85, cannot be a substitute for a rule of law.

39 The Commission has not therefore established that ° in the context of the findings and assessments of fact by the Court of First Instance, which were moreover derived from the findings and assessments of the Court of Justice in the aforementioned judgments, and regard being had to the rules under which the Community' s liability may be put in issue ° the Court of First Instance gave an inaccurate legal definition of such facts in taking the view that they constituted a sufficiently serious fault to give rise to such liability.

The consequences of the illegalities established by the judgments of the Court of Justice in Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 and in Joined Cases 218/87 and 223/87 and 72/88 and 92/88

40 For an understanding of the nature of those illegalities it is appropriate, in the first place, to recall the division of powers instituted by Article 58 of the ECSC Treaty. Article 58(1) provides that a system of quotas may be established by the Commission either on its own initiative after consultation with the Consultative Committee and with the assent of the Council or when required by the Council, acting unanimously, when the Commission has failed to act and a Member State has brought the matter before the Council. Under Article 58(2) it is for the Commission, on the basis of studies made jointly with undertakings and associations of undertakings, to determine the quotas on an equitable basis, taking account of the principles set out in Articles 2, 3 and 4 of the Treaty.

41 As regards the consequences of the illegalities established by the judgments of the Court of Justice in Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 and in Joined Cases 218/87 and 223/87 and 72/88 and 92/88, the Court of First Instance first referred to the finding by the Court of Justice in its judgment in Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 that the Commission, by not taking steps to modify the I:P ratio which it regarded as necessary itself in order to establish the quotas on an equitable basis, had committed a misuse of power. The Court of First Instance took the view that by declaring that Article 5 of the general Decision No 3485/85 was unlawful by reason of a misuse of power, the Court of Justice had clearly criticized a legislative measure characterized by the exercise of a discretionary power of appraisal and that that observation applied also to Article 5 of the general Decision No 194/88, declared void for the same reasons by the judgment of the Court of Justice in Joined Cases 218/87 and 223/87 and 72/88 and 92/88 (paragraph 109). It also took the view that the individual decisions adopted in implementation of those general decisions were necessarily affected by the same misuse of power as that which vitiated the general decisions providing the legal basis for them (paragraph 110).

42 The Court of First Instance therefore considered that, in the circumstances of the case, the misuse of power established by the Court of Justice and the patent disregard of both Article 58(2) of the ECSC Treaty and of the principle of equal treatment constituted a fault of such a nature as to render the Community liable (paragraph 111).

43 To justify that conclusion the Court of First Instance pointed out in the first place that in its judgment in Case 244/81 Kloeckner-Werke v Commission [1983] ECR 1451 the Court of Justice had clearly established that Article 58 of the ECSC Treaty required the Council' s assent only for the establishment of the system of production quotas based on the said Article 58 (paragraph 112).

44 In the second place the Court of First Instance observed that the Commission had itself considered in Case 119/81 Kloeckner-Werke v Commission [1982] ECR 2627 that, according to the wording of paragraph 4 of that judgment, "the requirement of assent laid down in Article 58 is therefore satisfied once the Council has approved in principle the introduction of a quota system" and that "it is not necessary, however, for the Council to give its assent to the details of the system" (paragraph 113).

45 The Court of First Instance pointed out, thirdly, that in its judgment in Joined Cases 140/82, 146/82, 221/82 and 226/82 Walzstahl-Vereinigung and Thyssen v Commission [1984] ECR 951 the Court of Justice had clearly indicated that the powers conferred on the Commission by the ECSC Treaty would be diverted from their legal purpose if it appeared that the Commission had made use of them with the exclusive, or at any rate main, purpose of evading a procedure specifically prescribed by the Treaty for dealing with the circumstances with which it was required to cope (paragraph 114).

46 The Court of First Instance therefore found that the Commission, after concluding, in discussions within the Consultative Committee and in particular in its communication to the Council of 25 September 1985 that the I:P ratio should be adjusted with a view to placing the quotas on an equitable basis, nevertheless did not adopt, on the basis of Article 58(2) of the ECSC Treaty, the provisions which would have been necessary to give effect to that conclusion. Despite the fact that the Council had already given its assent to the principle of the establishment of the quota system, the Commission merely submitted a draft to the Council on the basis of Article 58(1), even though it could not have been unaware that it was not necessary for the Council to express its view on the fixing of production and reference quantities for the purpose of determining the quotas, and then, not having obtained the Council' s assent on the matter, adopted the general Decisions No 3485/85 and No 194/88 without making any adjustment to them regarding the delivery quota system (paragraphs 115 and 116).

47 In view of all those considerations the Court of First Instance found, on the one hand, that the Commission could not have been unaware that it was under an obligation to determine the delivery quotas on an equitable basis on its own responsibility alone nor, on the other hand, could it have been unaware that as a result of its failure to discharge that obligation, the principle of equitable allocation of delivery quotas had not been observed in the case of a limited number of undertakings for which the I:P ratio had become exceptionally unfavourable (paragraph 117). The Court of First Instance concluded that, by adopting Article 5 of the general Decisions Nos 3485/85 and 194/88 and the individual decisions adopted in implementation of those articles, the Commission had committed a fault of such a nature as to render the Community liable within the meaning of the ECSC Treaty (paragraph 118).

48 The Commission complains that the Court of First Instance, in the first place, did not inquire into or establish a fault within the meaning of Article 34 of the ECSC Treaty, in the second place did not check whether the Commission' s conduct verged upon the arbitrary and, finally, that it failed to recognize the scope of the discretion granted to the Commission by Article 58 of the Treaty and regarded as a serious fault a mere error relating to procedural law.

49 Those arguments cannot be upheld.

50 In the first place, the Court of First Instance had considered, in paragraph 108 of the contested judgment, whether the decision at issue was the result of an erroneous, but excusable, approach or of an inexcusable error and then, after making the findings already referred to, decided, in paragraphs 111 and 118, that the misuse of power established by the Court of Justice and the other facts established against the Commission constituted a fault of such a nature as to render the Community liable within the meaning of Article 34 of the Treaty.

51 In the second place, the Court of First Instance was not required, for the reasons mentioned in paragraph 30 of this judgment, to refer to the criteria evolved by the case-law of the Court of Justice, within the framework of the EEC Treaty, concerning the putting in issue of the Community' s liability for unlawful legislative acts. Furthermore, the concept of arbitrary conduct as mentioned only in the judgments in Joined Cases 116/77 and 124/77 Amylum v Council and Commission [1979] ECR 3497 and in Case 143/77 Koninklijke Scholten-Honig v Council and Commission [1979] ECR 3583, the latter of which is referred to by the Commission, does not provide a basis for holding that a finding of conduct verging on the arbitrary represents a necessary condition or formulation for the Community to be rendered liable within the framework of the EEC Treaty according to the abovementioned case-law of the Court of Justice.

52 Finally the findings and assessments of fact by the Court of First Instance, which moreover are based upon the findings and assessments of the Court of Justice in the judgments which have been previously cited, in particular as regards the Commission' s knowledge of the exact scope of Article 58 of the ECSC Treaty, allowed the Court of First Instance to take the view that those facts constituted a sufficiently serious fault to render the Community liable. The Commission is therefore wrong in challenging such a legal characterization as regards the rules under which the Community' s liability may be put in issue.

The harm

53 The Court of First Instance took the view, on the one hand, that the Commission' s improper conduct was the cause of the harm of which Salzgitter complained (paragraph 126) and on the other hand that the same conduct had affected a limited and clearly defined group of economic agents and that the damage alleged went beyond the bounds of the economic risks inherent in the activities of the sector concerned (paragraph 136).

54 The Commission claims, first, that the mere difference between the receipts obtainable on the Community market and those actually obtained on the markets of third countries cannot be regarded as harm within the meaning of Article 34 of the ECSC Treaty. Next it complains that the Court of First Instance failed to take into account the whole of the consequences for Salzgitter of the application of the quota system, which brought Salzgitter more advantages than disadvantages. Finally the Commission considers that the harm alleged cannot be regarded as special because, contrary to the views of the Court of First Instance, it did not exceed the bounds of the economic risks inherent in the activities of undertakings in the sector concerned.

55 Those arguments cannot be upheld.

56 In the first place, whilst contending that an unfavourable I:P ratio is not the result of the quota system but of the production and sales structure of the undertaking itself, the Commission concedes that the adjustment of quotas on the one hand and the modification of the I:P ratio which it had itself proposed to the Council on the other were measures intended to remedy the unaccustomed difficulties of the undertakings concerned in the context of the implementation of the quota system. It cannot therefore validly contend that the Court of First Instance did not inquire whether there was a direct causal link between the absence of such measures and the harm suffered by Salzgitter.

57 In the second place, as may be seen from the judgments delivered on 4 October 1979, in particular in Case 238/78 Ireks-Arkady v Council and Commission [1979] ECR 2955 and in Joined Cases 261/78 and 262/78 Interquell Staerke-Chemie v Council and Commission [1979] ECR 3045, cited by the Commission, the evaluation of the harm must take account of all the factors related to the facts from which the damage arises and for which, if appropriate, compensation may be paid. In this case, however, the harm suffered by Salzgitter arises solely from the decisions at issue and not from the implementation of the quota system as a whole. The Commission cannot therefore complain that the Court of First Instance did not take account of the advantages which, as a whole, the undertaking received from the system.

58 Finally, since the harm arises from illegalities constituting faults on the part of the Commission it could not have been normally foreseeable by the undertaking. The Court of First Instance referred moreover in paragraph 132 of the contested judgment to the finding of the Court of Justice in its judgment in Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 that "it is an established and undisputed fact that these unfavourable I:P ratios entail exceptional economic difficulties for the applicants" and, in paragraph 134, to the amount of the additional tonnage which the application for 1985 of Article 14 of the general Decision No 234/84 might have allowed, and which was assessed by the Commission itself in 1988. The Commission is not therefore justified in contending that the harm suffered by Salzgitter did not go beyond the bounds of the economic risks inherent in the activities of the undertaking or in contesting the seriousness of that harm by claiming that its own point of view on the matter in 1985 was "erroneous and subjective".

59 It follows from the foregoing considerations that the Commission' s appeal must be dismissed.

Decision on costs

Costs

60 Under Article 69(2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs. Since the Commission has been unsuccessful, it must be ordered to pay the costs.

Operative part

On those grounds,

THE COURT

hereby:

1. Dismisses the appeal;

2. Orders the Commission to pay the costs.