Judgment of the Court of 15 December 1965. - Société anonyme métallurgique Hainaut-Sambre v High Authority of the ECSC. - Case 4-65.



European Court reports

French edition Page 01363

Dutch edition Page 01420

German edition Page 01448

Italian edition Page 01324

English special edition Page 01099

Danish special edition Page 00165

Greek special edition Page 00239

Portuguese special edition Page 00297



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

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1 . COMMON FINANCIAL ARRANGEMENTS - EQUALIZATION - CONTRIBUTIONS - EXEMPTION - PRINCIPLES

( ECSC TREATY, ARTICLE 53 )

2 . COMMON FINANCIAL ARRANGEMENTS - EQUALIZATION - FERROUS SCRAP - EXEMPTION - OWN RESOURCES - CONCEPT

( ECSC TREATY, ARTICLE 53 )

Summary

1 . CF . PARAGRAPH 1, SUMMARY IN CASE 3/65 ( 1965 ) ECR 1065 .

THE CONDITIONS FOR GRANTING EXEMPTION FROM CONTRIBUTIONS UNDER AN EQUALIZATION SCHEME MUST BE INTERPRETED STRICTLY AND MUST BE CONSISTENT WITH THE AIMS, THE BASIC PRINCIPLES AND REQUIREMENTS FOR THE PROPER FUNCTIONING OF SUCH A SCHEME, IN PARTICULAR THE PRINCIPLE OF THE EQUAL LIABILITY OF ALL THOSE AFFECTED TO PAY CONTRIBUTIONS SHARED IN PROPORTION TO THE AMOUNTS RESPECTIVELY CONSUMED, AND THE REQUIREMENT THAT THE SCHEME BE APPLIED IMPARTIALLY TO ALL THOSE SUBJECT TO IT .

NO EXEMPTION FROM EQUALIZATION CONTRIBUTIONS CAN BE ALLOWED WHICH WOULD TEND TO INCREASE SUBSTANTIALLY DIFFERENCES IN PRODUCTION COSTS, OTHERWISE THAN BY ALTERING THE LEVEL OF OUTPUT, AND THEREBY BRING ABOUT AN APPRECIABLE DISEQUILIBRIUM IN THE COMPETITIVE RELATIONSHIPS BETWEEN UNDERTAKINGS .

*/ 665J0003 /*.

2 . CF . PARAGRAPH 2, SUMMARY IN CASE 3/65 ( 1965 ) ECR 1065 .

ANY EXEMPTION FROM EQUALIZATION CONTRIBUTIONS WHICH DEPENDS NOT ON THE WAY IN WHICH AN UNDERTAKING ARRANGES ITS PRODUCTION BUT ON THE CONTRACTUAL RELATIONSHIPS WHICH IT HAS WITH OTHER UNDERTAKINGS IS NOT COMPATIBLE WITH THE EQUALIZATION SCHEME . CLASSIFICATION OF SCRAP AS 'OWN RESOURCES' IS NOT NECESSARILY DEPENDENT ON THE CONCEPT OF OWNERSHIP OF THE SCRAP, BUT IS INTENDED TO APPLY IN THE MAIN TO SCRAP WHICH IS GENUINELY THE PRODUCT OF AN UNDERTAKING'S OWN ACTIVITY .

*/ 665J0003 /*.

Parties

IN CASE 4/65

SOCIETE ANONYME METALLURGIQUE HAINAUT-SAMBRE, HAVING ITS REGISTERED OFFICE IN COUILLET ( BELGIUM ), REPRESENTED BY RAYMOND DERCLAYE, MANAGING DIRECTOR, AND RAOUL ELOY, DEPUTY MANAGING DIRECTOR, ASSISTED AND REPRESENTED BY G . LIENARD, ADVOCATE AT THE CHARLEROI BAR, AND BY G . VAN HECKE, ADVOCATE AT THE COUR DE CASSATION AND LECTURER AT THE UNIVERSITY OF LOUVAIN, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF ERNEST ARENDT, ADVOCATE AT THE COUR SUPERIEURE DE JUSTICE, 6 RUE WILLY-GOERGEN,

APPLICANT,

V

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, REPRESENTED BY ITS LEGAL ADVISER, GIUSEPPE MARCHESINI, ACTING AS AGENT, ASSISTED BY CYR CAMBIER, ADVOCATE AT THE COUR D' APPEL, BRUSSELS, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT ITS OFFICES, 2 PLACE DE METZ,

DEFENDANT,

Subject of the case

APPLICATION

- PRIMARILY FOR THE ANNULMENT OF THE INDIVIDUAL DECISION OF THE HIGH AUTHORITY OF 13 NOVEMBER 1964 REQUESTING THE APPLICANT TO PAY AN EQUALIZATION CONTRIBUTION ON 79 990 METRIC TONS OF SCRAP;

- SECONDARILY FOR DAMAGES FOR THE DEFENDANT'S WRONGFUL ACT OR OMISSION,

Grounds

P.1109

I - THE APPLICATION FOR ANNULMENT

THE APPLICANT CLAIMS THAT THE SCRAP IN THE DISPUTE CONSTITUTED NOT BOUGHT SCRAP WITHIN THE MEANING OF THE GENERAL DECISIONS, BUT ' OWN RESOURCES ' WHICH, AS SUCH, WERE GRANTED EXEMPTION FROM THE EQUALIZATION CONTRIBUTION .

ON THE BASIS OF THIS DESCRIPTION, IT CONCLUDES THAT THE OWNERSHIP OF THE SAID SCRAP NEVER CEASED TO BE VESTED IN IT BY VIRTUE OF THE RETENTION OF OWNERSHIP CLAUSE INCLUDED IN EACH OF THE CONTRACTS OF SALE MADE WITH PHENIX-WORKS AND IN ARTICLE 7 OF ITS GENERAL CONDITIONS OF SALE, AND THAT THE DECISION WHICH IT CONTESTS WAS THEREFORE WRONG IN SUBJECTING THE SCRAP TO EQUALIZATION CONTRIBUTIONS .

THE GENERAL DECISIONS APPLICABLE TO THIS QUESTION INTRODUCED, FOR THE BENEFIT OF ALL UNDERTAKINGS WITHIN THE COMMUNITY, A SCHEME DESIGNED TO ENSURE THEM A REGULAR SUPPLY OF SCRAP AT UNIFORM PRICES WHATEVER THE MEMBER STATE TO WHICH THEY BELONGED OR THE ORIGIN OF THE SCRAP IN QUESTION .

THESE DECISIONS, AIMED AT SPREADING BETWEEN UNDERTAKINGS THE FINANCIAL BURDEN OF A BENEFIT IN WHICH ALL COULD SHARE, ACCORDINGLY MADE ALL SCRAP CONSUMED BY COMMUNITY UNDERTAKINGS SUBJECT TO THE EQUALIZATION LEVY, WITH THE SINGLE EXCEPTION OF SCRAP WHICH CONSTITUTED THEIR OWN RESOURCES .

THE SCOPE OF THIS EXEMPTION CAN BE DETERMINED ONLY BY REFERENCE TO THE SYSTEM WITHIN WHICH IT IS DESIGNED TO OPERATE AND IN THE LIGHT OF THE FUNDAMENTAL PRINCIPLES ON WHICH IT IS BASED .

SINCE THE OBLIGATION TO CONTRIBUTE TO THE EQUALIZATION SCHEME IS THE RULE AND EXEMPTION THE EXCEPTION, THE LATTER MUST BE INTERPRETED STRICTLY AND MUST BE CONSISTENT WITH THE AIMS, THE BASIC PRINCIPLES AND THE REQUIREMENTS FOR THE PROPER FUNCTIONING OF THE EQUALIZATION SCHEME, IN PARTICULAR THE PRINCIPLE OF THE EQUAL LIABILITY OF ALL THOSE AFFECTED TO PAY CONTRIBUTIONS, SHARED IN PROPORTION TO THE AMOUNTS RESPECTIVELY CONSUMED, AND THE REQUIREMENT THAT THE SCHEME BE APPLIED IMPARTIALLY TO ALL THOSE SUBJECT TO IT .

WHEN IT PLEADS THE RIGHT OF OWNERSHIP, WHICH IT CLAIMS NEVER TO HAVE CEASED TO ENJOY IN RESPECT OF THE DISPUTED SCRAP, AND THE FACT THAT THIS ELEMENT HAS BEEN TAKEN INTO ACCOUNT IN CERTAIN SIMILAR CASES PREVIOUSLY, THE APPLICANT IS IGNORING THE FACT THAT THE CONCEPT OF ' OWN RESOURCES ' DEPENDS EQUALLY ON A CONSIDERATION OF THE METHOD OF SCRAP PRODUCTION REQUIRED BY THE SPIRIT AND PURPOSE OF THE EQUALIZATION SCHEME . THE APPLICANT IS THEREFORE MISTAKEN IN THINKING THAT THE EXEMPTION CAN BE MADE TO APPLY TO THE SCRAP HERE IN DISPUTE SIMPLY BY SHOWING THAT AT NO TIME DID IT TRANSFER ITS OWNERSHIP THEREOF .

IN DOING SO, IT FAILS TO APPRECIATE THAT THE FACT THAT SCRAP ARISING FROM A TRANSFER OF OWNERSHIP WAS CLASSIFIED IN PREVIOUS SIMILAR CASES AS BOUGHT SCRAP DOES NOT BY ANY MEANS INDICATE THAT THE ABSENCE OF ANY SUCH TRANSFER WILL JUSTIFY EXEMPTION FROM THE EQUALIZATION LEVY .

INDEED, THE QUESTION WHO HOLDS TITLE TO THE OWNERSHIP OF THE DISPUTED SCRAP, HOWEVER IMPORTANT, CANNOT BE THE SOLE DETERMINING FACTOR IN THE EQUALIZATION SCHEME .

THE AIMS OF THE SCHEME MAKE IT IMPERATIVE TO TAKE INTO CONSIDERATION THE CIRCUMSTANCES SURROUNDING THE PRODUCTION OF THE SCRAP IN QUESTION .

NO EXEMPTION FROM EQUALIZATION CONTRIBUTIONS CAN BE ALLOWED WHICH WOULD TEND TO INCREASE SUBSTANTIALLY DIFFERENCES IN PRODUCTION COSTS, OTHERWISE THAN BY ALTERING THE LEVEL OF OUTPUT, AND THEREBY BRING ABOUT AN APPRECIABLE DISEQUILIBRIUM IN THE COMPETITIVE RELATIONSHIPS BETWEEN UNDERTAKINGS .

THAT DOES NOT OCCUR WHEN AN UNDERTAKING PUTS BACK INTO ITS PRODUCTION CYCLE WASTES ARISING FROM THE PRODUCTION OR PROCESSING, CARRIED OUT BY IT OR ON ITS BEHALF, OF ITS OWN PRODUCTS .

SUCH RE-UTILIZATION CONSTITUTES IN FACT AN INTERNAL MEASURE OF ECONOMY CONDUCIVE TO INCREASED PRODUCTIVITY; EXEMPTION OF SCRAP SO USED DOES NOT THEREFORE DISTORT COMPETITION WITHIN THE MARKET .

ON THE OTHER HAND ANY EXEMPTION WHICH DEPENDS NOT ON THE WAY IN WHICH AN UNDERTAKING ARRANGES ITS PRODUCTION, BUT ON THE CONTRACTUAL RELATIONSHIPS WHICH IT HAS WITH OTHER UNDERTAKINGS, IS NOT COMPATIBLE WITH THE SCHEME .

P.1111

THE CLASSIFICATION OF SCRAP AS ' OWN RESOURCES ' IS NOT THEREFORE NECESSARILY DEPENDENT ON THE CONCEPT OF OWNERSHIP OF THE SCRAP, BUT IS INTENDED TO APPLY IN THE MAIN TO SCRAP WHICH IS GENUINELY THE PRODUCT OF THE UNDERTAKING'S OWN ACTIVITY, THE RESULT OF ITS OWN WORK .

THE SCRAP IN QUESTION DID NOT ARISE BY SEPARATION FROM THE SHEET BAR BY A JOINT PRO QUOTA OPERATION PERFORMED BY PHENIX-WORKS AND THE APPLICANT BUT IS THE OUTCOME OF THE MANUFACTURE OF SHEETS CARRIED OUT BY PHENIX - WORKS WORKING ON ITS OWN ACCOUNT AND AT ITS OWN RISK .

IN ADDITION, WHEN THE SHEET BARS WERE SOLD, A VALUATION WAS MADE OF THE SCRAP TRANSFERRED BY PHENIX-WORKS TO THE APPLICANT AND TAKEN INTO ACCOUNT WHEN THE SELLING PRICE OF THE SHEET BARS WAS FIXED .

THE VALUE SO FIXED FOR THE SCRAP IS LOWER THAN THE VALUE OF A CORRESPONDING QUANTITY OF SHEET BARS .

THIS SEPARATE VALUATION OF THE SHEET BARS SOLD AND OF THE SCRAP RECOVERED CONFIRMS THAT THE LATTER DO NOT MERELY REPRESENT A PORTION RETAINED FROM THE SHEET BARS SOLD, BUT IS A NEW PRODUCT .

CONSEQUENTLY CONSUMPTION OF THIS SCRAP BY THE APPLICANT CANNOT BE CONSIDERED AS A RE - UTILIZATION BY THE PRODUCER UNDERTAKING OF ITS OWN RESOURCES .

IN THESE CIRCUMSTANCES, THE SCRAP IN QUESTION MUST BE SUBJECT TO THE PAYMENT OF THE EQUALIZATION CONTRIBUTIONS, THE AFFINITIES WITH PRIVATE LAW INVOKED HERE BY THE APPLICANT BEING IRRELEVANT TO THE MATTER .

THE DETERMINING FACTOR LIES NOT, THEREFORE, AS THE APPLICANT CLAIMS, SIMPLY IN THE PHYSICAL TRANSFER OF THE SCRAP, BUT IN ITS INCORPORATION INTO THE CYCLE OF PRODUCTION OF AN UNDERTAKING WHICH HAS HAD NO PART IN THE PRODUCTION PROCESS FROM WHICH IT HAS ARISEN .

THE ARGUMENT PUT FORWARD BY THE APPLICANT IS THEREFORE NOT WELL FOUNDED .

FROM WHAT HAS BEEN SAID ABOVE IT IS CLEAR THAT THE REFERENCE TO THE PRINCIPLE OF NON - DISCRIMINATION IN THE STATEMENT OF REASONS FOR THE CONTESTED DECISION IS RELEVANT; ACCORDINGLY THE APPLICANT'S ARGUMENT THEREON IS LIKEWISE UNFOUNDED .

II - THE APPLICATION FOR DAMAGES

THE APPLICANT CLAIMS TO HAVE SUFFERED DAMAGE AS A RESULT OF NOT HAVING BEEN INFORMED IN TIME THAT THE SCRAP IN QUESTION WAS LIABLE TO EQUALIZATION, AND FURTHER CLAIMS THAT THIS OMISSION ON THE PART OF THE DEFENDANT CONSTITUTES A FAILURE TO COMPLY WITH ARTICLE 5 OF THE TREATY AND IS THEREFORE A WRONGFUL ACT OR OMISSION .

ON THE QUESTION OF DAMAGE, THE APPLICANT CLAIMS THAT IT WOULD HAVE BEEN ABLE TO GAIN EXEMPTION FROM EQUALIZATION CONTRIBUTIONS BY HAVING THE PROCESSING DONE AS WORK CONTRACTED OUT .

IT IS NOT CERTAIN, HOWEVER, THAT THIS METHOD WOULD HAVE ATTAINED THE AIMS OF BOTH THE APPLICANT AND PHENIX-WORKS AS WELL AS A SALE WOULD HAVE DONE . AN AGREEMENT CONTRACTING WORK OUT SERVES A PURPOSE, AND IMPLIES A RISK, QUITE DIFFERENT FROM THOSE WHICH CHARACTERIZE THE CONTRACTS OF SALE ACTUALLY USED HERE . IN VIEW OF THE ABOVE IT IS NOT POSSIBLE TO DETERMINE EITHER THE MANNER IN WHICH THE RELATIONSHIP BETWEEN THE TWO UNDERTAKINGS WOULD HAVE BEEN CREATED, OR WHETHER AN AGREEMENT FOR CONTRACTING OUT WHICH NO LONGER MET THE ACTUAL PRODUCTION REQUIREMENTS OF THE APPLICANT COULD STILL HAVE BEEN UTILIZED BY THE LATTER IN ORDER TO GAIN EXEMPTION FROM THE EQUALIZATION CONTRIBUTIONS .

MOREOVER THE APPLICANT CANNOT COMPLAIN THAT THE DEFENDANT'S CONDUCT PREVENTED IT FROM TAKING ADVANTAGE OF A LEGAL DEVICE DESIGNED PURELY TO ENABLE IT TO AVOID HAVING TO PAY ITS DUE CONTRIBUTIONS IN APPLICATION OF THE PRINCIPLE OF EQUAL TREATMENT OF SCRAP CONSUMERS .

NOR IS IT ESTABLISHED THAT THE APPLICANT WOULD HAVE BEEN ABLE, IF IT WITHDREW THE FORMULA WHEREBY IT SOUGHT TO KEEP THE SCRAP FOR ITSELF, TO OBTAIN FOR THE SHEET BARS TERMS MORE FAVOURABLE THAN THOSE ACTUALLY IN FORCE .

IT HAS ALSO NOT BEEN ESTABLISHED THAT REAL DAMAGE WAS CONSTITUTED BY THE IMPOSSIBILITY OF SETTLING THE EQUALIZATION DEBT IN INSTALMENTS .

THE COURT IS THEREFORE NOT SATISFIED THAT DAMAGE WAS SUFFERED . THIS BEING SO, THE APPLICATION FOR DAMAGES MUST BE DISMISSED AND IT IS NOT NECESSARY TO CONSIDER THE EXISTENCE OR OTHERWISE OF A WRONGFUL ACT OR OMISSION .

Decision on costs

ACCORDING TO ARTICLE 69(2 ) OF THE RULES OF PROCEDURE, THE UNSUCCESSFUL PARTY MUST PAY THE COSTS . THE APPLICANT HAS FAILED IN ITS SUBMISSIONS AND MUST THEREFORE BEAR THE COSTS OF THE ACTION .

Operative part

THE COURT

HEREBY :

1 . DISMISSES THE APPLICATION AS UNFOUNDED;

2 . ORDERS THE APPLICANT TO BEAR THE COSTS .