Opinion of Mr Advocate General Gulmann delivered on 17 March 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



Opinion of the Advocate-General

++++

Mr President,

Members of the Court,

1. On 27 June 1991 the Court of First Instance delivered judgment in an action brought by the undertaking Stahlwerke Peine-Salzgitter AG (hereinafter "Peine-Salzgitter") against the Commission. (1) By that judgment the Commission was found liable to pay the undertaking damages. In this appeal the Commission has claimed:

° that the judgment should be quashed;

° that the Court of Justice should itself give judgment in the case; and

° that part of Peine-Salzgitter' s claims at first instance should be declared inadmissible and that as regards the remainder judgment should be given for the Commission.

The problems raised by the case have been thoroughly expounded and argued. Apart from the contested judgment there is a comprehensive Opinion delivered to the Court of First Instance by Judge Biancarelli. I shall refer to it and to the Report for the Hearing and in what follows I shall try to be as brief as is appropriate.

The facts of the case

2. Article 58 of the ECSC Treaty provides that the Commission may establish a system of production quotas for products covered by the Treaty if it considers that the Community is confronted with a period of manifest crisis. At the beginning of the 1980s the Community was confronted, as far as certain products covered by the Treaty were concerned, with such a period of manifest crisis and the Commission therefore felt obliged to establish a system of production quotas within the sector. The system, the legal basis of which was a series of general Commission decisions with a limited period of validity, underwent certain alterations during its existence and came to an end on 30 June 1988. The Court of Justice is well acquainted with the system, since it has given rise to a considerable amount of case-law. (2)

3. It was a strongly interventionist system and decisively affected the undertakings' freedom of action. Its main features throughout the whole period were as follows:

It applied to certain products, which were divided into so-called categories of products. Every quarter the Commission sent every undertaking concerned an individual decision in which it laid down the production quotas applying to that undertaking. At the same time the portion of the production quotas which might be delivered on the common market was laid down, the so-called "delivery quotas". These quotas were laid down on the basis of reference production figures or quantities determined at the time of the introduction of the system and after certain abatement rates laid down quarterly had been applied to such reference productions and quantities.

The fixing of the delivery quotas and their relationship to the production quotas constitutes the crux of the case before us. The basis of the special delivery quotas was set out as follows in the preamble to the first general decision:

"Although Article 58 [of the ECSC Treaty] provides specifically only for production quotas, its basic aim is to restore the balance between supply and demand on the market. This aim would not be achieved if, even though they adhered to the production quotas, certain undertakings released relatively greater quantities on to the common market than was the case during the period July 1977 to June 1980, which served as the basis for calculating the production quotas." (3)

The ratio between the production quota ° called "Quota P" ° and the delivery quota ° called "Quota I" ° was of essential importance for the undertakings, because the part of their production which was not sold in the common market, where prices were relatively favourable, would necessarily be sold in third-country markets, where prices were lower.

4. It is uncontested in this case that Peine-Salzgitter was among the undertakings in the sector, which moreover were relatively few, for which the I:P ratio, both in absolute terms and in comparison with the Community average, was very unfavourable for several categories of products. It is also uncontested that changes in the pattern of trade and in the relationships between prices on the common market and those on third-country markets in the years after the introduction of the quota system meant that undertakings with unfavourable I:P ratios were exposed to special difficulties.

5. However, there was in the Commission' s general decisions an equity clause which made it possible, according to the circumstances, to adjust the effects of the other provisions of the general decisions. The application of that provision in the period which is relevant here ° Article 14 of Decision No 234/84 ° was conditional upon the quota system, as a result of the scale of the abatement rate set for a given quarter for a certain category of products, creating exceptional difficulties for an undertaking which, during the 12 months preceding the quarter in question had not received aids authorized by the Commission with a view to covering operating losses.

The Commission made use of that provision with regard to Peine-Salzgitter in the three last quarters of 1984. The Commission found that Peine-Salzgitter' s I:P ratio for Category III products had fallen from 52 to 44% and that that percentage was 20% lower than the Community average and concluded that that had created special difficulties for the undertaking, so that the Commission allocated to the undertaking the relevant additional quotas for Category III products.

On the other hand the Commission refused similar requests in 1985 on the ground that the undertaking, contrary to the conditions of Article 14, had received aid from the German authorities and that the undertaking' s operating results as a whole had been favourable since the fourth quarter of 1984, so that there were no longer "exceptional difficulties" within the meaning of Article 14. In its judgment in Case 103/85 (delivered on 14 July 1988) (4) the Court of Justice declared void the Commission' s individual decision refusing to adjust Peine-Salzgitter' s quotas for Category III products for the first quarter of 1985. The Court declared that the aid received by Peine-Salzgitter was not aid within the meaning of Article 14 and that in deciding whether there were "exceptional difficulties" account might be taken only of the position of the relevant category of products.

6. The Commission had stated on several occasions that it was necessary to make certain adaptations to reference production figures and reference quantities and thus also to the I:P ratio. That point of view was inter alia expressed in the Commission communication of 25 September 1985 to the Council concerning the continuation of the quota system after 31 December 1985. (5) In Section VII of the communication the Commission stated that it seemed indispensable to adjust the references and continued:

"... the basis of these references has not been changed since the quota system was first introduced and these quotas are based on production figures which date back even further.

Over the last few years there has been such a substantial structural evolution within firms and the market (both internal and external) that these references have become divorced from the reality of production despite the elements of flexibility which have been introduced and the exchanges which have been allowed under the present decision.

...

Since there has been a far-reaching change in the pattern of steel trade between the Community and the rest of the market since the introduction of the quota system, a review would also have to be made of the situation of steel makers whose ratio between the part of production quotas which may be delivered in the Community and production quotas is, for all products covered by the system, much lower than the Community average. These historical situations are no longer in line with Community steel policy objectives and the Commission intends, in respect of each firm' s production, to bring down this ratio to no more than 10% below the Community average, where this has not been the case so far" (my emphases).

However, the Council did not give its approval to the change in the I:P ratio requested by the Commission and the Commission subsequently adopted a general decision extending the system of production quotas for 1986 and 1987, (6) but not including the adaptation of the I:P ratio which the Commission had proposed to the Council.

7. Peine-Salzgitter brought an action against the Commission in which it claimed first that Article 5 of the relevant general Commission decision ° that is, the provision containing the general rules for fixing production and delivery quotas ° should be declared void and secondly that the Commission' s individual decisions concerning the first two quarters of 1986 should also be declared void in so far as they laid down the undertaking' s delivery quotas for products in Categories Ia, Ib, Ic and III. In its judgment in Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 (also delivered on 14 July 1988) (7) the Court of Justice upheld Peine-Salzgitter' s application. It emphasized that the I:P ratio for the relevant categories of products was exceptionally unfavourable for Peine-Salzgitter and decided that Article 5 of the Commission' s general decision must be declared void in so far as it did not enable delivery quotas to be fixed on a basis which the Commission considered fair for undertakings having ratios between their delivery quotas and production quotas which were significantly lower than the Community average. At the same time the Court declared void the individual decisions adopted in relation to Peine-Salzgitter in so far as they fixed its delivery quotas for Categories Ia, Ib, Ic and III for the first two quarters of 1986. (8)

8. The Commission was therefore obliged, in pursuance of Article 34 of the ECSC Treaty, to take the necessary steps to comply with the two judgments declaring its decisions void. At the time of the delivery of the said judgments the quota system had just come to an end. It was therefore impossible for the Commission to comply with the judgments, as would have been the case according to the information available, in similar cases, namely by granting the undertaking increased quotas. (9) The undertaking therefore sought damages from the Commission. As the two parties could not agree on the matter, the undertaking brought this action for damages.

9. Peine-Salzgitter claimed that during the period 1 January 1985 to 30 June 1988 ° that is, 14 quarters in all ° the Commission had adopted illegal decisions and thus rendered itself liable to pay damages. Its final application for damages is for more than DM 77 million, together with interest. The harm consists in the difference between the income the undertaking would have received if the Commission had allocated to the applicant a higher delivery quota for the common market and the income it actually received because it was required to sell at lower prices in third countries.

10. In its judgment of 27 June 1991 the Court of First Instance declared inter alia:

° that the individual decisions referred to above were vitiated by a defect of such a nature as to render the Community liable:

° that Peine-Salzgitter had suffered direct and special harm as a result of those decisions;

° that the Commission was not required to comply with the claim for payment of DM 77 603 528, together with interest, on the ground that it was premature; and

° that the case must be referred to the Commission, which was required to adopt appropriate measures to ensure equitable redress for Peine-Salzgitter.

Procedural matters

11. Peine-Salzgitter' s application was brought primarily under Article 34 and in the alternative under Article 40 of the ECSC Treaty. Article 34 provides:

"If the Court declares a decision or recommendation void, it shall refer the matter back to the High Authority. The High Authority shall take the necessary steps to comply with the judgment. If direct and special harm is suffered by an undertaking or group of undertakings by reason of a decision or recommendation held by the Court to involve a fault of such a nature as to render the Community liable, the High Authority shall, using the powers conferred upon it by this Treaty, take steps to ensure equitable redress for the harm resulting directly from the decision or recommendation declared void and, where necessary, pay appropriate damages.

If the High Authority fails to take within a reasonable time the necessary steps to comply with the judgment, proceedings for damages may be instituted before the Court."

The first paragraph of Article 40 provides:

"Without prejudice to the first paragraph of Article 34, the Court shall have jurisdiction to order pecuniary reparation from the Community, on application by the injured party, to make good any injury caused in carrying out this Treaty by a wrongful act or omission on the part of the Community in the performance of its functions."

12. The Commission claimed at first instance that Peine-Salzgitter' s claim for damages should be partially rejected as inadmissible.

It claimed first that the Court could give judgment only on the question whether the Commission had acted in such a way as to render it liable but not on the question of the assessment of any damages. That part of the objection of inadmissibility was accepted by the Court of First Instance and that portion of the judgment is not at issue in this case.

Secondly the Commission claimed that the conditions of Article 34 for instituting proceedings for damages were not met as regards the individual decisions which the Court of Justice had not declared void, that is to say, the individual decisions concerning the last three quarters of 1985, the last two quarters of 1986, all four quarters of 1987 and the first two quarters of 1988. The Commission pointed out that Article 34 expressly pre-supposes that the relevant decisions have previously been declared void. The Commission further claimed that in addition Article 40 could not be relied upon by Peine-Salzgitter. It may be seen clearly from Article 40 that its application is "without prejudice to the first paragraph of Article 34" and in the Commission' s view it follows that undertakings claiming liability for damages on grounds of the illegality of a Commission decision can do so only by virtue of Article 34.

13. That question is treated in great depth by Judge Biancarelli in his Opinion. His view is basically that Article 34 cannot be used as a basis for proceedings for damages in relation to decisions which have not been declared void. On the other hand he considers that Article 40 may be used as a basis for proceedings for damages even where the injury alleged has been caused by a decision which has not been declared void. However, he regarded it as necessary in such cases to interpret Article 40 in accordance with the conditions of Article 34, so that in such cases under Article 40 too the Court must restrict itself to first determining the Commission' s liability and give it the opportunity subsequently to take the necessary steps to ensure equitable redress for the claimant or where necessary to pay damages.

14. The Court of First Instance rejected the Commission' s objection but for reasons other than those given by Judge Biancarelli. Its reasoning originated with the judgment of the Court of Justice in Joined Cases 97/86, 193/86, 99/86 and 215/86 Asteris v Commission. (10) The facts of that case were, briefly, that the Commission had adopted for the marketing year 1983/84 a regulation fixing the coefficients to be applied to the production aid for tomato concentrates. The Court, in its judgment in Case 192/83, had declared that regulation void in so far as it led to discriminatory treatment between producers in Greece and those in other Member States. To comply with the judgment the Commission adopted a new regulation applying to the 1983/84 marketing year. However, the Commission saw no reason to repeal regulations with a content entirely similar to the regulation declared void for marketing years subsequent to 1983/84. The Court took the view that as a result the Commission was failing to comply with its obligations under Article 176 of the EEC Treaty. The relevant paragraphs of the grounds of judgment are as follows:

"In cases such as this one, where the effect of the annulled regulation is limited to a clearly defined period (namely the 1983/84 marketing year), the institution which adopted the measure is first of all under an obligation to ensure that new legislation adopted following the judgment annulling the previous measure and governing the marketing years subsequent to that judgment contains no provisions having the same effects as the provisions held to be illegal.

However, by virtue of the retroactive effect of judgments by which measures are annulled, the finding of illegality takes effect from the date on which the annulled measure entered into force. It follows that in the present case the institution concerned is also under an obligation to eliminate from the regulations already adopted when the annulling judgment was delivered and governing marketing years after 1983/84 any provisions with the same effect as the provision held to be illegal" (paragraphs 29 and 30, my emphasis).

In that connection the Court of First Instance declared: "It follows from the judgment of the Court of Justice in Asteris ... that, for the application of Article 176 of the EEC Treaty, express or implied measures which are essentially the same as an annulled measure and were adopted between the date on which the annulled measure entered into force and the date of the judgment annulling them must be treated in the same way as the annulled measure. That approach must also be adopted in applying Article 34 of the ECSC Treaty, in so far as that provision is drafted in terms similar to those of Article 176 of the EEC Treaty as regards the obligation of the institution which adopted the annulled measure to take the measures necessary to comply with the annulling judgment." (11) On that basis the Court of First Instance concluded that the substance of the application for damages made by Peine-Salzgitter could be fully dealt with by virtue of Article 34.

15. The Commission claimed in that respect that the Court of First Instance had given to the solution selected by the Court of Justice in the judgment in Joined Cases 97/86, 193/86, 99/86 and 215/86 a wider scope than that decision could justify. Article 176 of the EEC Treaty, in the Commission' s view, can only be equated with the second sentence in the first paragraph of Article 34 of the ECSC Treaty, concerning the Commission' s duty to take the necessary steps to comply with the judgment declaring a decision void. On the other hand Article 176 differs from the third sentence of the first paragraph of Article 34 concerning the conditions for the admissibility of an application for damages to make good the harm suffered.

16. I shall not disguise the fact that I find it hard to show any understanding of the Commission' s view regarding this objection of inadmissibility. It seems clear to me that Peine-Salzgitter must have a right to consideration of the substance of its claim for damages for the harm it alleges it has suffered during the whole period from 1985 to the middle of 1988.

17. In my view it is possible to admit a claim for damages on the basis of both Article 34 and Article 40.

It may be appropriate to mention that the Court of Justice, in its judgment in Joined Cases C-363/88 and 364/88 Finsider and Falck v Commission, (12) gave its views on the essentials of the Commission' s objection of inadmissibility, namely that Article 40 cannot be used as an alternative to Article 34 in cases in which the harm has resulted from a Commission decision which is open to a declaration that it is void. The Court agreed in that case to consider the substance of an application for damages under Article 40 even though it was based on decisions which had not been declared void. The Court declared inter alia:

"The Commission claims that Article 40 of the Treaty does not make it possible to have the Community declared liable on the basis of the illegality of decisions; however, nothing in the wording of that provision or in its general structure makes it possible to restrict its field of application in that way" (paragraph 16).

18. I might also mention that Advocate General Van Gerven, in his Opinion in the Finsider case, expressed the view that in this case the Court of First Instance had correctly applied the case-law arising from the Asteris judgment. He was aware of the Commission' s appeal against the judgment of the Court of First Instance in this case but did not think it necessary to discuss the Commission' s objection to that Court' s decision on this question, since his view was that the claim for damages was in any case admissible under Article 40. (13)

19. There is therefore no doubt that the result arrived at by the Court of First Instance ° that is, to regard Peine-Salzgitter' s claim for damages as wholly admissible ° was correct. The opposite result moreover would have conflicted with "the fundamental requirement, consistently expressed in the Court' s case-law in various fields, of appropriate protection by the courts". (14)

There is only a question whether the authority for the claim is to be found in Article 34 or Article 40. It is possible that the Court of Justice based its Finsider judgment on the concept that the authority to claim damages for harm resulting from decisions not declared void was Article 40. The Court thus seems in paragraphs 17 and 18 of the judgment to be determining that Article 34 is the authority for claims for damages for harm resulting from decisions declared void, whilst Article 40 is the authority for claims based on other conduct causing injury.

20. As far as I can see it is not a matter of very great practical importance whether one provision or the other is used as the legal basis in a case such as this. In my view the Court was showing in its Finsider judgment that the choice has no practical importance as far as concerns the principles for establishing liability. In addition, if the Court were to find that Article 40 is the correct basis, I should be inclined to agree with Judge Biancarelli that it must follow from a reasonable interpretation of that provision in the light of Article 34 that in a case where the reparation is based on identical decisions, some of which are declared void and others not, the position must be that the "procedural requirements" of Article 34 must be fully applicable, that is, also for that part of the claim for damages concerning decisions not declared void.

21. Moreover the Court should, in my view, accept the reasoning of the Court of First Instance in regarding Peine-Salzgitter' s claim for damages as fully admissible on the basis of Article 34.

The differences between Article 34 of the ECSC Treaty and Article 176 of the EEC Treaty to which the Commission calls attention are not such as to weaken what is basically correct in the reasoning of the Court of First Instance.

22. The Commission also criticizes the reasoning of the judgment of the Court of First Instance inasmuch as, in its opinion, the Court wrongly interpreted the exchange of correspondence between Peine-Salzgitter and the Commission on the basis of which Peine-Salzgitter refrained from bringing an action for a declaration that the individual decisions were all void.

However, as I see it, that correspondence is not decisive for the admissibility of Peine-Salzgitter' s claim for damages. That claim would have been admissible even if the exchange had not taken place. Nor did the Court attach independent and decisive importance to it in reaching its decision. In my opinion the Court used the exchange of letters to show that the Commission itself was clear as to its obligation to take the necessary steps to comply with any judgments declaring its decisions void, and thus only to support the conclusion the Court reached on the basis of an interpretation of Article 34.

Against that background I do not think it necessary to consider the importance which such an exchange of letters might have in other circumstances for restricting the Commission' s opportunities for making objections of inadmissibility. I shall simply say that the correspondence in my view only emphasizes how difficult it is to understand the Commission' s objection of inadmissibility.

The substance

23. The parties discussed in detail before the Court of First Instance how best to describe the standard which should apply to the Community' s liability for damages. The question is dealt with in paragraphs 71 to 78 of the contested judgment and the decision at which the Court of First Instance arrived was that the standard developed in the field of the EEC Treaty on the basis of the second paragraph of Article 215 should also apply in the context of the ECSC Treaty.

The Court referred to Articles 33 and 34 of the ECSC Treaty and concluded that it followed from those provisions "that the mere annulment by the Court of Justice of a legislative measure of the Commission is not sufficient to render the Community liable" (paragraph 76), and that "that conclusion, which is based on the very terms of the ECSC Treaty, is very close to what was decided by the Court of Justice in relation to the EEC Treaty regarding liability resulting from unlawful legislative measures" (paragraph 77). The Court further declared: "In view of the need, within a single legal order, albeit one established by three different Treaties, to ensure as far as possible the uniform application of Community law relating to non-contractual liability of the Community resulting from unlawful legislative measures and the consistency of the system of judicial protection created by the various Treaties (see most recently the judgment in Case C-221/88 Busseni v Commission [1990] ECR I-519, paragraphs 13 to 16), it is appropriate, where a legislative measure is unlawful, to interpret the term 'fault of such a nature as to render the Community liable' in the first paragraph of Article 34 of the ECSC Treaty in the light of the criteria laid down by the Court of Justice in its decisions on the second paragraph of Article 215 of the EEC Treaty" (paragraph 78).

Moreover the Court had summarized the case-law of the Court of Justice regarding the second paragraph of Article 215 as follows: "It follows from decisions of the Court of Justice that there can be no fault of such a nature as to render the Community liable under the second paragraph of Article 215 of the EEC Treaty unless the unlawful measure involves a sufficiently serious breach of a superior rule of law for the protection of the individual ... or where the institution, by adopting the unlawful measure, manifestly and gravely disregarded the limits imposed on the exercise of its powers ..." (paragraph 74).

On that basis the Court of First Instance considered whether the Commission in adopting its decisions had manifestly and gravely disregarded the limits imposed on the exercise of its powers and decided that it had, as I have mentioned.

24. The Commission agrees with the Court of First Instance in its decision as to the standard applicable for liability, but has claimed that the Court applied it wrongly on several points.

25. However, there is no reason to consider whether the Court of First Instance was right in applying the standard of liability laid down in the case-law of the Court of Justice regarding the second paragraph of Article 215 of the EEC Treaty, since it is clear that in the meantime the Court has given its view on this question. It did so in the judgment in Joined Cases C-363/88 and 364/88, Finsider, previously cited, in which the Court of Justice laid down the standard of liability in the context of the ECSC Treaty in a manner different from the view of the Court of First Instance. It may be advisable to quote the following paragraphs from the judgment:

"It is appropriate to make some observations in limine on the conditions in which the Community may be rendered liable on the basis of Articles 34 and 40 of the ECSC Treaty" (paragraph 19).

"In the first place, according to their actual wording, the aforesaid Articles 34 and 40 of the ECSC Treaty require the existence of a fault before the Community may be rendered liable, and consequently the illegality of a decision alone is not enough" (paragraph 20).

"Thus, 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, neither of which, as has been stated, gives any details in that connection, it is appropriate to refer 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 institutions must regulate, the difficulties of applying the legislation and the discretion available to the institution under that legislation" (paragraph 24).

"Lastly, Community liability does not depend solely on the existence of fault as thus defined and of injury, but also on a direct causal link between that fault and that injury, the burden of proof of which lies upon the applicant ..." (paragraph 25).

26. It is thus on the basis of that determination of the standard of liability that it is necessary to enquire whether the Community has incurred liability towards Peine-Salzgitter. It is thus already clear before the substance of the case is considered that the ground of judgment set out in the contested judgment cannot be fully upheld.

Even though the Court of Justice has declared that the revision of a ground of judgment does not require the contested judgment to be quashed (15) provided that it is possible to confirm the operative part, it might, in my view, be a matter for consideration whether the Court of Justice should examine the substance of the case. A revision of the standard of liability applicable might at first sight appear to be of such importance that it might be necessary to refer the matter back to the Court of First Instance for reconsideration. I shall nevertheless not propose that for several reasons. In the first place because it must appear doubtful how far a different manner of expressing the standard of the Community' s liability for damages would in itself entail a different specific result and also because, as I see it, there is, from a practical point of view, scarcely a decisive difference between the two formulations of the standard of liability. In the second place because from the point of view of economy of procedure it is advisable for the Court of Justice itself finally to resolve the dispute in this case, and in the third place because no additional factual information is required here. In addition it does not seem, either, that the parties have attached decisive importance for the resolution of the problem to the fact that in the Finsider case the Court of Justice laid down a different standard of liability from that applied by the Court of First Instance.

27. In my opinion the basic premise of the arguments Peine-Salzgitter has put forward in support of its claim for damages is that under the second paragraph of Article 58 of the ECSC Treaty the Commission has an express and fundamental duty, in a system of quotas, to fix the undertakings' quotas "on an equitable basis with due regard to the principles set out in Articles 2, 3 and 4" ° including in particular the principle of equal treatment of producers ° and the Commission' s breach of that duty entails the obligation to ensure redress.

28. If that is the basic premise it is appropriate to consider first of all what the Court of Justice has laid down, as regards the Commission' s duties, in its judgment in Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 which, by reference to Article 58, declared void inter alia Article 5 of the general Decision No 3485/85.

As I have already mentioned, the essential point in that case was that during the period of validity of the general Decision No 234/84, the Commission had become aware that certain undertakings had a particularly unfavourable I:P ratio. Among those undertakings Peine-Salzgitter was in a special position inasmuch as it was the only undertaking with a particularly unfavourable I:P ratio in all four categories of products, both in absolute terms and in relation to the Community average. In the communication of 25 September 1985 previously quoted, the Commission stated that it was "indispensable" to make adjustments to the delivery quotas so that no undertakings would have quotas which were more than 10% below the Community average. As stated, the Council, which, under Article 58(1), is required to give its assent to the introduction of a quota system, did not assent to that point in the Commission communication. According to the information available, the Council did not give any reason. Subsequently the Commission adopted the general Decision No 3485/85 not containing the adjustment of the I:P ratio which the Commission itself in its communication had regarded as indispensable. It appears that the reason for that was not that the Commission had changed its view as to what was necessary in an adjustment of the I:P ratio, but that the Commission regarded itself as bound to respect the Council' s opposite view.

After considering the structure of Article 58 and the case-law regarding it, the Court of Justice declared:

"In this case the Commission examined the specific situation of undertakings such as Stahlwerke Peine-Salzgitter and Hoogovens as it is required to do by Article 58(2), and concluded that in order to determine the quotas on an equitable basis, the I:P ratios of those undertakings should be adjusted. However, instead of adopting the requisite provisions pursuant to Article 58(2), the Commission merely submitted a proposal to the Council pursuant to Article 58(1). Having failed to obtain the Council' s assent, it adopted a new general decision, No 3485/85, which maintained the quota system unchanged. By failing to alter the I:P ratio which it considered necessary in order to determine the quotas on an equitable basis pursuant to Article 58(2), the Commission pursued a purpose different from that laid down by that provision and thus committed a misuse of power. Since the Commission had established that it was necessary to eliminate the imbalance in the I:P ratio which characterized the particular situation of undertakings such as the applicants, it must be considered that it committed a misuse of power affecting the applicants" (paragraph 27).

29. According to the Commission the fault which it committed in assuming that the Council' s assent was necessary for a modification of the I:P ratio was not a grave one. The Commission claims that it acted in good faith as far as concerns the need to obtain the Council' s assent and that a misconception concerning a procedural rule of that nature cannot involve a liability to pay damages.

30. I may say that Advocate General Mischo, in his Opinion relating to Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86, gave quite convincing reasons for the view that the general Decision No 3485/85 and the individual decisions adopted on the basis thereof should be declared void even if the Council' s assent to a modification of the I:P ratio had been required. (16) Advocate General Mischo' s main argument was that the rule set out in Article 58(2) was so basic that a disregard thereof must in any event be disapproved by the Court in pursuance inter alia of Article 31 of the ECSC Treaty. That article provides that in the interpretation and application of the Treaty the Court shall ensure that the law is observed. Just as any requirement to obtain the Council' s assent could not prevent a declaration that a decision of the Commission was void, similarly that could not, as I see it, exclude a liability for damages. The rule laid down in Article 58(2) with regard to equitable quotas is an expression of a basic principle in ECSC law to the effect that there must be no discrimination against undertakings. In its case-law the Court of Justice has consistently attached decisive importance to the Commission' s compliance with that duty. (17) It is obvious that compliance with the obligation under Article 58(2) is decisive for the acceptance, by those affected by the scheme, of the rules adopted and is also the cornerstone of the whole quota system. The fact that the rule infringed is a basic rule of law means, I am sure, that liability for damages is involved whether or not the Council' s assent was required.

31. That was the basis on which the Court of First Instance, rightly, I think, declared:

"... that the defendant could not have been unaware that it was under an obligation to determine the delivery quotas on an equitable basis, under its own responsibility alone, ensuring that the principle of equality in the field of public charges is always most scrupulously observed (see the judgment in Joined Cases 14/60, 16/60, 17/60, 20/60, 24/60, 26/60 and 27/60 and 1/61 Meroni and Others v High Authority of the ECSC [1961] ECR 161), and, secondly, that it could not 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).

32. The Commission has contended that it would be an unreasonable failure to appreciate the discretion available to the Commission if the Court of Justice were to hold it liable. There can be no doubt that the Commission has a considerable discretion with regard to the detailed determination of what constitutes equitable quotas. However, the position in this case is that the Commission had exercised its discretion as to what was equitable and had found that an adjustment of the I:P ratio was indispensable to preserve equity. The Commission has not denied that; it has not subsequently indicated or explained that its discretion thus exercised was mistaken. When the Court of Justice therefore declares that Peine-Salzgitter' s I:P ratio was exceptionally unfavourable there is no question of disapproving the Commission' s discretion but of following it. The fact that the contested rule thus leaves the Commission freedom of assessment does not in this specific case detract from the Commission' s liability for damages.

33. In addition, the rule regarding the fixing of quotas on an equitable basis clearly aims at protecting the individual undertaking. It is natural that such protection should also involve an entitlement to compensation, the more so as, according to the information available, it may be assumed that Peine-Salzgitter, as already mentioned, would have received one form or another of "compensation in kind" by the allocation of larger quotas if the quota system had still been in force at the time of the Court' s declaration that the Commission' s decisions were void.

34. When account is taken of the factual and legal background to the Commission' s decisions and to the limited margin of discretion available to the Commission in the specific situation, my opinion is that in adopting the decisions in question the Commission committed a serious illegality in relation to Peine-Salzgitter.

To summarize the position therefore, I find that the Commission acted in such a way as to render it liable for damages by adopting the general Decision No 3485/85 without modifying the I:P ratio and that the Commission therefore owes compensation in so far as concerns the losses which Peine-Salzgitter may have suffered as a result of the illegal decisions during 1986, 1987 and the first half of 1988.

35. The reasoning leading to this conclusion applies to a considerable extent also to the individual decisions for 1985, which were declared void by the Court in its judgment in Case 103/85 or the illegality of which directly follows from that judgment. As mentioned, that judgment concerned the Commission' s refusal to give Peine-Salzgitter additional quotas in spite of the fact that the undertaking' s I:P ratio was at that time too incontestably exceptionally unfavourable as regards products in Category III. The general Decision No 234/84 which was applicable at that time contained, as already stated, authority in Article 14 to give an undertaking additional quotas in so far as it was in exceptional difficulties. According to the Court' s judgment in Case 14/81 Alpha Steel (18) the precise purpose of Article 14 was to be an equity clause making it possible to alleviate the effects of the general decision' s other provisions. Nevertheless the Commission refused to allow Peine-Salzgitter additional quotas.

It is clear that there are differences between the legal situation in 1985 as compared with that in 1986 to 1988, on which the Court adjudicated in Case 103/85 and Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 respectively. However, from the point of view of entitlement to damages it is more important that the two situations, in my view, correspond to one another in two decisive respects which I regard as decisive. In both situations it was for the Commission to administer the quota system in a manner which was equitable and equal for the undertakings and in both situations the position was that the I:P ratio applicable to certain categories of products was exceptionally unfavourable for Peine-Salzgitter, as was acknowledged by the Commission. When in addition it is considered that the reason the Commission gave in 1985 for refusing to give Peine-Salzgitter supplementary quotas was disapproved by the Court as unlawful, I find that the conditions rendering the Commission liable for damages were met also as regards the four quarters of 1985. That is emphasized by the fact that, as stressed by the Court of First Instance, in respect of that refusal, "the defendant has manifestly infringed the principle of equality of treatment as between economic agents" (paragraph 92).

36. It is true that the Commission has emphatically contended that the error of law which it made in respect of the refusal to grant Peine-Salzgitter additional quotas was excusable, particularly as regards that part of the reasoning on which the refusal was based, according to which Article 14 could not apply because Peine-Salzgitter as a whole was showing a profit. The Commission points out that it cannot be blamed for not taking the Court' s judgment in Case 317/82 Usines Gustave Boël v Commission (19) into account in deciding whether there were exceptional difficulties. According to the Commission it was only in the Court' s judgment in Case 103/85 that the Court specified that account was not to be taken of the situation with regard to other categories of products which might contribute to the undertaking as a whole yielding a profit. The Commission further claims that the reasoning in question was in agreement with its consistent administrative practice according to which, in the application of Article 14, account was taken of the undertaking' s situation as a whole because inter alia it was not a matter of overcoming the crisis for certain markets but for all the European iron and steel undertakings.

There are various reasons why those arguments cannot be accepted. In my opinion it is not in itself necessarily decisive whether the error in question here, seen in isolation, is to be regarded as more or less manifest or grave, in view of the fact that the standard of liability which the Court laid down in the Finsider judgment rests upon an overall appraisal of the Commission' s conduct and regard being had also to the fact that, in my view, in the context of such an overall appraisal in particular it should be stressed that in relation to Peine-Salzgitter the Commission failed in its duty to administer the quota system in an equitable and equal manner.

Moreover the Court of First Instance rightly relied in its reasoning on the fact

° that the Court of Justice in its judgment in Case 103/85 referred to its judgment in Case 317/82 Usines Gustave Boël v Commission to confirm that in determining whether "exceptional difficulties" exist the Commission may not take account of the position of other categories of products (paragraph 18) and

° that the Court expressly declared: "it is apparent from the documents produced at the Court' s request that in several cases the Commission has granted additional quotas pursuant to Article 14 although the undertakings concerned were profitable" (paragraph 19).

37. Thus as regards the Commission decisions concerning 1985 there is no reason, either, to change the decision at which the Court of First Instance arrived in its judgment.

38. Finally we must consider whether Peine-Salzgitter suffered direct and special harm, as required by Article 34 of the ECSC Treaty. The Court of First Instance found that that was undoubtedly the case. I agree with that assessment and regard the Commission' s arguments to the contrary as untenable.

As I have already said, it may be assumed that if the quota system had remained in force Peine-Salzgitter would in any case have received, in the form of the allocation of larger quotas, a certain redress for the harm it had suffered. It is hard to see why the termination of the quota system should decisively alter the Commission' s duty to ensure redress for the harm Peine-Salzgitter had suffered as a result of its conduct rendering it liable for damages.

The Commission' s argument that there was no loss to be made good in view of the fact that Peine-Salzgitter made profits during the period of crisis in the course of which the quota system applied is not tenable. It was expressly established in the judgment in Case 103/85 that the fact that profits were made does not preclude an undertaking from receiving equitably fixed quotas. It is precisely the loss resulting from the fact that these were not received which the Commission must make good. The fact that the harm suffered by Peine-Salzgitter exceeds the limit of economic sacrifice with which an undertaking should generally reckon must already be regarded as established in view of the Court' s judgment in Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 declaring that "it is an ... undisputed fact that these unfavourable I:P ratios entail exceptional economic difficulties" for the undertakings concerned (paragraph 7). The Commission has not attempted to show that the losses were within the limits which an undertaking in the sector of industry concerned must generally expect to bear itself.

39. To sum up, I shall therefore propose that the Court of Justice confirm the contested judgment and order the Commission to pay the costs of the appeal.

(*) Original language: Danish.

(1) ° Case T-120/89 [1991] ECR II-279.

(2) ° For a survey of the case-law see Charles Funck: Le régime de crise de la CECA dans les arrêts de la Cour de Justice des Communautés Européennes , Cahier de Droit Européen, 1989, No 3/4, p. 251.

(3) ° See Decision No 2794/80 of 31 October 1980 establishing a system of steel production quotas for undertakings in the iron and steel industry, point 6 of the preamble (OJ 1980 L 291, p. 1).

(4) ° [1988] ECR 4131.

(5) ° Doc. COM(85)509. The Danish version of the communication is dated 8 October 1985.

(6) ° See Decision No 3485/85, OJ 1985 L 340, p. 5.

(7) ° [1988] ECR 4309.

(8) ° Subsequently the Court also declared void Article 5 of the general Decision No 194/88, which superseded the said Decision No 3485/85 and the period of validity of which was the first six months of 1988; see the judgment in Joined Cases 218/87 and 223/87 and 72/88 and 92/88 Hoogovens Groep and Others v Commission [1989] ECR 1711.

(9) ° In this connection see Judge Biancarelli' s Opinion in Case T-120/89, where it is stated, towards the end of Part I:

Throughout the currency of the quota system, situations of that kind were resolved fairly simply by the Commission' s granting additional quotas to companies which had successfully pleaded their cases before the Court of Justice. That restitution in kind, moreover, is in conformity with the concept of equitable redress referred to in the first paragraph of Article 34 of the Treaty.

(10) ° [1988] ECR 2181.

(11) ° See paragraph 47 as regards the 1985 decisions not annulled. Paragraph 58 contains corresponding reasoning as regards the 1986 to 1988 decisions not annulled.

(12) ° [1992] ECR I-359.

(13) ° See section 17 of his Opinion. At the end of section 19 he said:

Contrary to the Commission, I think that an action for damages under the first paragraph of Article 40 may be brought to make good an injury which has been caused by a decision, recommendation or an implied decision of refusal not declared void by the Court. Contrary to the Commission' s contention, the saving clause contained in the first paragraph of Article 40 regarding the provisions of the first paragraph of Article 34 relates solely to the harm caused by the measures declared void, which are mentioned therein. With regard to measures which have not been declared void (except for measures assimilated to those declared void) that saving clause does not apply and the provisions of the first paragraph of Article 40 ° of which it may be stated that in ECSC matters it contains the common rules of law as regards liability of the Community ° is applicable in its entirety.

(14) ° See section 20 of Advocate General Van Gerven' s Opinion in the Finsider case.

(15) ° See the judgment in Case C-30/91 P Lestelle [1992] ECR I-3755.

(16) ° See paragraph 43 et seq. of that Opinion, at p. 4329.

(17) ° In his Opinion Judge Biancarelli summarized the case-law of the Court as follows:

Referring to settled case-law and relying in particular on Articles 3, 4 and 5 of the ECSC Treaty, which prohibit all discrimination as between the undertakings covered by the Treaty, the Court of Justice stressed the need, in a period of crisis, where, as a result of administrative control, quantitative competition between undertakings is de facto eliminated and where an artificial balance is created between supply of and demand for steel, to respect in full the principle of fairness laid down in Article 58 of the Treaty. As early as 1961 in its judgment in Meroni et Cie and Others v High Authority (Joined Cases 14/60, 16/60, 17/60, 20/60, 24/60, 26/60 and 27/60 and 1/61, [1961] ECR 161), the Court held that the High Authority must take particular care to ensure that the principle of equality in the field of public charges is always most scrupulously observed and from this it is inferred that the High Authority had been right to give precedence to the principle of distributive justice rather than to that of legal certainty. Similarly, in its judgment of 3 March 1982 (Case 14/81 Alpha Steel v Commission [1982] ECR 749), the Court recognized the Commission' s freedom of choice concerning determination of the reference period, whilst at the same time making it clear that such a choice must not lead to breach of the principle whereby total production must be shared on an equitable basis between the various Community undertakings. That finding was confirmed by the judgment of 19 September 1985 (Joined Cases 63/84 and 147/84 Finsider v Commission [1985] ECR 2857) in which the Court laid particular emphasis on the criterion of equitable distribution of the production and delivery quotas between the various Community undertakings, by the judgment of the Court of 21 February 1984 (Joined Cases 140/82, 146/82, 221/82 and 226/82 (Walzstahl-Vereinigung and Thyssen v Commission [1984] ECR 951) and, finally, by the judgment of 6 July 1988 (Case 236/86 Dillinger Huettenwerke v Commission [1988] ECR 3761) in which the Court held expressly that the purpose of the quota system ... is ... to spread in the most equitable manner possible amongst all undertakings the limitations on production required by the steel crisis .

(18) ° [1982] ECR 749.

(19) ° [1983] ECR 2041.