Judgment of the Court of 14 June 1967. - Koninklijke Nederlandsche Hoogovens en Staalfabrieken NV v High Authority of the ECSC. - Case 26-66.



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Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

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1 . MEASURES ADOPTED BY AN INSTITUTION - DECISION OF THE HIGH AUTHORITY - STATEMENT OF REASONS - CRITERIA

( ECSC TREATY, ARTICLE 15 )

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

( ECSC TREATY, ARTICLE 53 )

3 . COSTS - PAYMENT OF OWN COSTS - EXCEPTIONAL CIRCUMSTANCES

( RULES OF PROCEDURE, ARTICLE 69(3 ))

Summary

1 . THE STATEMENT OF REASONS FOR A DECISION MUST CONTAIN THE ESSENTIAL ELEMENTS OF THE HIGH AUTHORITY'S REASONING IN SUCH A WAY THAT THE COURT AND ALL PERSONS CONCERNED MAY CHECK THAT THE LEGAL PROVISIONS IN QUESTION HAVE BEEN CORRECTLY APPLIED .

CF . PARAGRAPH 1, SUMMARY, CASE 36/64, ( 1965 ) ECR 426 .

2 . FERROUS SCRAP WHICH HAS NOT BEEN ACQUIRED FOR A CONSIDERATION AND WHICH IS RE-USED BY THE UNDERTAKING ON WHOSE BEHALF THE PRODUCTION ACTIVITY WHICH CREATED IT WAS CARRIED OUT CONSTITUTES AN UNDERTAKING'S OWN RESOURCES .

CF . PARAGRAPH 2, SUMMARY, CASE 50/65, ( 1966 ) ECR 210 .

3 . IF THE DEFECTIVE DRAFTING OF A MEASURE FOR WHICH THE DEFENDANT IS RESPONSIBLE HAS GIVEN RISE TO AN APPLICATION, THIS AMOUNTS TO AN EXCEPTIONAL CIRCUMSTANCE ALLOWING THE COURT TO ORDER THAT THE PARTIES BEAR THEIR OWN COSTS .

CF . PARAGRAPH 4, SUMMARY, CASE 14/63, ( 1963 ) ECR 723 .

Parties

IN CASE 26/66

KONINKLIJKE NEDERLANDSCHE HOOGOVENS EN STAALFABRIEKEN NV, A LIMITED COMPANY HAVING ITS REGISTERED OFFICE AT IJMUIDEN ( VELSEN ), REPRESENTED BY P.R . BENTZ VAN DEN BERG, A MEMBER OF THE BOARD OF DIRECTORS, ASSISTED BY J . MERTENS DE WILMARS, ADVOCATE OF THE ANTWERP BAR, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF ERNEST ARENDT, 6 RUE WILLY-GOERGEN,

APPLICANT,

V

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, REPRESENTED BY ITS LEGAL ADVISER, BASTIAAN VAN DER ESCH, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT ITS OFFICES, 2 PLACE DE METZ,

DEFENDANT,

Subject of the case

APPLICATION FOR THE ANNULMENT OF THE DECISION OF THE HIGH AUTHORITY OF 20 JULY 1966 REQUIRING THE APPLICANT TO PAY A SUM OF 589 912.42 GUILDERS AS ITS CONTRIBUTION TO THE IMPORTED FERROUS SCRAP EQUALIZATION SCHEME,

Grounds

P . 123

A - ADMISSIBILITY

THE ADMISSIBILITY OF THE APPLICATION IS NOT DISPUTED BY THE DEFENDANT AND THERE ARE NO GROUNDS FOR THE COURT TO RAISE THE MATTER OF ITS OWN MOTION . THE APPLICATION IS THEREFORE ADMISSIBLE .

B - SUBSTANCE

1 . THE SUBMISSION OF INFRINGEMENT OF AN ESSENTIAL PROCEDURAL REQUIREMENT

THE APPLICANT MAINTAINS THAT THE CONTESTED DECISION DOES NOT ADEQUATELY STATE THE REASONS ON WHICH IT IS BASED . IN PARTICULAR, THIS DECISION ONLY GIVES VERY SUPERFICIAL CONSIDERATION TO THE APPLICANT'S ACTUAL POSITION AND ONLY REFERS IN GENERAL TERMS TO THE CONTRACTS CONCLUDED BETWEEN BREEDBAND OR THE NVW AND THOSE PLACING THE ORDER FOR CONTRACT-ROLLING . MOREOVER, IT COMPLETELY FAILS TO SPECIFY THE PROVISIONS OF THE CONTRACT UNDER WHICH IT IS ALLEGED THAT THE OWNERSHIP OF THE DISPUTED SCRAP PASSED TO THE APPLICANT . FINALLY, IT WHOLLY FAILS TO SHOW THAT THERE ARE NO DISCRIMINATORY EFFECTS WITH REGARD TO THE APPLICANT .

P . 124

ACCORDING TO THE DEFENDANT'S REASONING, THE PRECISE DETERMINATION AND DESCRIPTION OF THE LEGAL RELATIONSHIPS CONNECTING HOOGOVENS TO BREEDBAND AND THE NVM OR POSSIBLY TO THOSE PLACING THE ORDERS FOR CONTRACT-ROLLING, ARE IRRELEVANT FOR FIXING THE POSITION OF THE DISPUTED SCRAP WITHIN THE FRAMEWORK OF THE EQUALIZATION SYSTEM . ON THIS VIEW, AND WITHOUT PREJUDICE TO ANY DECISION AS TO WHETHER THE HIGH AUTHORITY'S CONCEPT IS WELL-FOUNDED, IT WAS UNNECESSARY TO STATE IN ANY GREATER DETAIL THE NATURE, SUBJECT - MATTER AND CONTENT OF THE ABOVE-MENTIONED CONTRACTS .

THE CONTESTED DECISION DOES NOT SHOW CLEARLY THE LEGAL TITLE WHEREBY THE APPLICANT ACQUIRED THE OWNERSHIP OF THE FERROUS SCRAP . HOWEVER THIS LACK OF CLARITY IS EXPLICABLE IN THE CONTEXT OF THE LEGAL POINT OF VIEW PROPOUNDED BY THE HIGH AUTHORITY, WHICH IS THAT THERE IS NO SIGNIFICANCE IN THE TYPE OF LEGAL RELATIONSHIPS WHEREBY THE ACQUISITION WAS MADE WHERE THE ACQUISITION IN QUESTION IS FOR A CONSIDERATION .

FINALLY, IN GIVING REASONS FOR ITS VIEW THAT THERE ARE NO DISCRIMINATORY EFFECTS, THE DECISION STATED THAT THE LEGAL, ECONOMIC AND TECHNICAL POSITION OF A STEEL UNDERTAKING WHICH CARRIES OUT CONTRACT-ROLLING IS DIFFERENT FROM THAT OF AN UNDERTAKING WHICH ON ITS OWN ACCOUNT ROLLS INGOTS WHICH IT OWNS . ALTHOUGH THIS JUSTIFICATION CANNOT BE CONSIDERED AS EXHAUSTIVE, IT DOES SET FORTH THE ESSENTIAL ELEMENTS OF THE HIGH AUTHORITY'S REASONING IN SUCH A WAY THAT THE COURT AND ALL PERSONS CONCERNED MAY CHECK THAT THE LEGAL PROVISIONS IN QUESTION HAVE BEEN CORRECTLY APPLIED .

CONSEQUENTLY, THE COMPLAINTS WHICH THE APPLICANT PUTS FORWARD AGAINST THE STATEMENT OF REASONS FOR THE CONTESTED DECISION ARE UNFOUNDED .

2 . THE COMPLAINTS OF INFRINGEMENT OF THE BASIC DECISIONS

OPPOSING THE CONTESTED DECISION WHICH REGARDS THE FERROUS SCRAP IN DISPUTE AS BOUGHT SCRAP, THE APPLICANT SUBMITS THAT THERE HAS BEEN AN INFRINGEMENT OF THE BASIC DECISIONS OF THE EQUALIZATION SCHEME . IN SUPPORT OF THIS SUBMISSION IT POINTS OUT IN PARTICULAR THAT IT HAS ITSELF PRODUCED THE FERROUS SCRAP IN QUESTION AT ITS OWN PREMISES AND IT CLAIMS THAT, ACCORDING TO NETHERLANDS LAW, THE FERROUS SCRAP BELONGED TO IT FROM THE MOMENT WHEN IT WAS PRODUCED AND THAT IT GAVE NO CONSIDERATION FOR THIS SCRAP UNDER THE CONTRACTUAL RELATIONSHIPS REFERRED TO BY THE HIGH AUTHORITY .

EXEMPTION FROM THE EQUALIZATION CHARGES ON FERROUS SCRAP CONSUMED WITHIN THE COMMUNITY CONSTITUTES AN EXCEPTION TO THE COMPULSORY EQUALIZATION SYSTEM AND THE NOTION OF OWN RESOURCES MUST THEREFORE BE STRICTLY INTERPRETED . THIS CONCEPT MUST NOT RUN CONTRARY TO THE NEED FOR THE UNIFORM APPLICATION OF THE EQUALIZATION SCHEME THROUGHOUT THE ENTIRE COMMUNITY . IN THIS CONNEXION, IT IS IMPOSSIBLE STRICTLY TO RELATE THIS CONCEPT TO THE CONCEPTS OF NATIONAL LAW GOVERNING THE RELATIONSHIPS IN CIVIL LAW BETWEEN UNDERTAKINGS CONSUMING FERROUS SCRAP . ANY DIFFERENCES EXISTING BETWEEN THE NATIONAL LAWS OF THE MEMBER STATES MIGHT IN FACT MAKE IMPOSSIBLE THE UNIFORM APPLICATION OF COMMUNITY PROVISIONS THROUGHOUT THE COMMON MARKET AS A WHOLE . IN ORDER TO AVOID SUCH A DANGER, THE APPLICATION OF THE EQUALIZATION SCHEME, TO WHICH COMMON LEGAL CONCEPTS APPLY, INDEPENDENTLY OF CONCEPTS OF PURCHASE AND OF OWNERSHIP, IS ESSENTIALLY BASED ON THE ACQUISITION OF FERROUS SCRAP FOR A CONSIDERATION .

P . 125

IN THIS CONTEXT, OWN RESOURCES MAY BE DEFINED A CONTRARIO FROM THE BROAD CONCEPT OF BOUGHT SCRAP . NEVERTHELESS A PURELY NEGATIVE CONCEPT, EVEN THOUGH UNIFORM, IS INSUFFICIENT TO SATISFY OTHER BASIC REQUIREMENTS OF THE EQUALIZATION SCHEME . IN FACT THIS SCHEME MUST FIRST AND FOREMOST PREVENT FERROUS SCRAP FROM UNJUSTIFIABLY ESCAPING EQUALIZATION CHARGES BY THE USE OF PURELY FORMAL CRITERIA . IT IS MOREOVER NECESSARY TO PREVENT EXEMPTIONS FROM DISTORTING COMPETITION IN THE COMMON MARKET . THIS WOULD BE SO IF THE EFFECT OF THIS CONCEPT WERE TO CONFER AN ADVANTAGE ON CERTAIN UNDERTAKINGS AT THE COST OF OTHER UNDERTAKINGS IN A COMPARABLE SITUATION WITH REGARD TO THE PRODUCTION AND CONSUMPTION OF FERROUS SCRAP AND CONSEQUENTLY THE ORGANIZATION OF THEIR PRODUCTION .

IN DEFINING OWN RESOURCES, THERE MUST BE ADDED TO THE NEGATIVE CRITERION THAT THERE HAS BEEN NO ACQUISITION FOR A CONSIDERATION A POSITIVE, ECONOMIC CRITERION, BASED ON THE ORGANIZATION OF THE UNDERTAKINGS CONSUMING FERROUS SCRAP . ACCORDING TO THIS CRITERION FERROUS SCRAP CAN ONLY BE REGARDED AS OWN RESOURCES IF IT IS RE - USED EITHER BY THE ACTUAL UNDERTAKING WHICH PRODUCED IT OR BY THE UNDERTAKING ON WHOSE BEHALF THE PRODUCTION ACTIVITY WHICH CREATED IT WAS CARRIED OUT .

IN THIS CASE IT IS NOT DISPUTED THAT THE CUSTOMERS PLACING THE ORDERS FOR CONTRACT - ROLLING HAD AGREED WITH BREEDBANK OR THE NVW THAT THE FERROUS SCRAP PRODUCED IN CARRYING OUT THE CONTRACTS IN QUESTION SHOULD BE RETAINED BY BREEDBAND OR THE NVW AGAINST THE PAYMENT, BY WAY OF SET-OFF, OF THE PREVAILING PRICE FOR FERROUS SCRAP IN THE NETHERLANDS . THE RIGHT TO DISPOSE OF THE FERROUS SCRAP IS THUS DEPENDENT ON THE PAYMENT OF THE PRICE FOR IT AND THE CUSTOMERS RECEIVED THE AGREED PRICE FOR THIS FERROUS SCRAP . FURTHERMORE, IT IS CLEAR FROM THE INFORMATION SUPPLIED BY THE DEFENDANT IN THE COURSE OF THE ORAL PROCEEDINGS, WHICH THE APPLICANT HAS NOT DISPUTED, THAT THE CUSTOMERS DEDUCTED FROM THE BASIS OF THEIR ASSESSMENT TO CONTRIBUTION THE TONNAGES OF FERROUS SCRAP SOLD TO THIRD PARTIES .

P . 126

EVEN IF THE CREDIT NOTES RELATING TO THE FERROUS SCRAP IN DISPUTE IN THE RELATIONSHIPS BETWEEN THE APPLICANT AND BREEDBAND WERE NOT SUCH AS TO PROVE THE PAYMENT OF A PRICE BY HOOGOVENS TO BREEDBAND, THE APPLICANT'S EXPLANATIONS REGARDING ITS ' MAATSCHAP ' ( ASSOCIATION ) WITH THE BREEDBAND COMPANY SHOW THAT HOOGOVENS WAS AT LEAST INDIRECTLY BOUND TO BEAR PART OF THE COMPENSATION OWED TO THE CUSTOMERS FOR THE ARISINGS IN QUESTION . CONSEQUENTLY IN THIS CASE THERE IS A FAILURE TO MEET THE NEGATIVE CRITERION THAT THE FERROUS SCRAP SHALL NOT HAVE BEEN ACQUIRED FOR A CONSIDERATION . FURTHERMORE, THIS SCRAP CONSTITUTES WASTE DERIVING FROM ROLLING CARRIED OUT BY THE APPLICANT ON BEHALF OF OTHER UNDERTAKINGS . ACCORDING TO THE CRITERIA STATED ABOVE, IF THIS FERROUS SCRAP HAD BEEN USED BY THE CUSTOMER, IT WOULD HAVE BEEN EXEMPT FROM EQUALIZATION AS THE OWN RESOURCES OF THAT CUSTOMER . THEREFORE, WHEN THE SAME FERROUS SCRAP IS USED BY THE ROLLING CONTRACTOR, IT CANNOT CONSTITUTE HIS OWN RESOURCES . THIS CONCLUSION MAY BE JUSTIFIED BY TAKING ACCOUNT OF THE FACT THAT ALTHOUGH THE PRODUCTION OF THIS FERROUS SCRAP WAS INDEED CARRIED OUT AT THE APPLICANT'S PREMISES, IT FORMS PART OF A PRODUCTION ACTIVITY ECONOMICALLY CONNECTED WITH THE CUSTOMERS WHO PLACED THE ORDER, AND IS THUS OUTSIDE THE PROCESS OF PRODUCING STEEL FROM FERROUS SCRAP ARISING WITHIN THE ORGANIZATION OF THE APPLICANT'S OWN PRODUCTION .

THE RULES LAID DOWN BY THE OCCF ON 9 DECEMBER 1957 CONCERNING THE POSITION WITH REGARD TO THE EQUALIZATION SCHEME OF FERROUS SCRAP DERIVING FROM ROLLING, MIGHT, IT IS TRUE, GIVE RISE TO MISUNDERSTANDINGS . NEVERTHELESS THE COMPETENT DEPARTMENTS OF THE HIGH AUTHORITY HAVE ALWAYS ADOPTED A DIFFERENT INTERPRETATION FROM THAT OF HOOGOVENS WHICH WOULD GIVE THE OCCF'S CIRCULAR A MEANING CONTRADICTORY TO THE BASIC DECISIONS OF THE EQUALIZATION SCHEME . IN ANY EVENT THE ABOVE-MENTIONED RULES LAID DOWN BY THE OCCF CANNOT PREVAIL OVER THE PRINCIPLES AND CRITERIA ARISING DIRECTLY FROM THE BASIC DECISIONS .

THERE IS THUS NO FOUNDATION IN THE APPLICANT'S CLAIM THAT THE EXCLUSION OF THE FERROUS SCRAP IN QUESTION FROM THE CATEGORY OF OWN RESOURCES CONTRADICTS THE GENERAL BASIC DECISIONS OF THE EQUALIZATION SCHEME .

3 . THE COMPLAINT OF DISCRIMINATION

THE APPLICANT COMPLAINS THAT THE CONTESTED DECISION HAS DISCRIMINATORY EFFECTS AS REGARDS THE APPLICANT BOTH IN COMPARISON WITH THE UNDERTAKINGS WHICH ROLL BOUGHT STEEL AND WITH THOSE WHO PLACE ORDERS FOR CONTRACT-ROLLING AND OBTAIN EXEMPTION IN RESPECT OF THE SCRAP RETURNED TO THEM . THE CONSUMPTION OF FERROUS SCRAP BY THE OWNER OF THE STEEL FROM WHICH IT AROSE, IN THE CONTEXT OF A PRODUCTION ACTIVITY CARRIED OUT EITHER DIRECTLY BY HIMSELF OR ON HIS BEHALF IS CLEARLY DISTINCT, BOTH LEGALLY AND ECONOMICALLY, FROM THE APPLICANT'S CONSUMPTION OF THE FERROUS SCRAP IN DISPUTE . THIS IS BECAUSE IN BOTH OF THE FIRST TWO THE FERROUS SCRAP WAS NOT AS SUCH ACQUIRED FOR A CONSIDERATION . FURTHERMORE THIS FERROUS SCRAP HAS ALWAYS REMAINED WITHIN THE LIMITS OF THE PRODUCTION CYCLE ORGANIZED BY THE OWNER OF THE STEEL, AND ON A TECHNICAL LEVEL IT IS OF LITTLE IMPORTANCE WHETHER THIS ACTIVITY WAS CARRIED ON DIRECTLY BY HIM OR THROUGH THIRD PARTIES WORKING ON HIS BEHALF . THESE DIFFERENCES ARE SUCH AS TO PROVIDE OBJECTIVE JUSTIFICATION FOR THE DIFFERENT TREATMENT GIVEN, UNDER THE EQUALIZATION SCHEME, TO SCRAP COMING WITHIN THE FIRST TWO OF THE ABOVE-MENTIONED CASES ON THE ONE HAND AND THE FERROUS SCRAP IN DISPUTE ON THE OTHER .

CONSEQUENTLY THE COMPLAINT OF DISCRIMINATION IS UNFOUNDED .

Decision on costs

THE APPLICANT HAS FAILED IN ALL ITS SUBMISSIONS .

UNDER ARTICLE 69(2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS . THE APPLICANT HAS HOWEVER REQUESTED THAT, IN ANY EVENT, THE DEFENDANT SHOULD BE ORDERED TO PAY THE COSTS OF THE PROCEEDINGS, BECAUSE OF THE UNCERTAINTY WHICH THE HIGH AUTHORITY HAS CREATED WITH REGARD TO THE LEGAL POSITION OF THE FERROUS SCRAP IN QUESTION .

THE WORDING OF THE RULES CONTAINED IN THE OCCF'S CIRCULAR OF 9 DECEMBER 1957 MAY LEND ITSELF TO MISINTERPRETATION .

UNDER THE FIRST PARAGRAPH OF ARTICLE 69(3 ) OF THE RULES OF PROCEDURE, WHEN THE CIRCUMSTANCES ARE EXCEPTIONAL THE COURT MAY ORDER THAT THE PARTIES BEAR THEIR OWN COSTS IN WHOLE OR IN PART . IN THE PRESENT CASE IT IS APPROPRIATE TO ORDER THE PARTIES TO BEAR THEIR OWN COSTS IN PART .

Operative part

THE COURT

HEREBY :

1 . DISMISSES APPLICATION 26/66 AS UNFOUNDED;

2 . ORDERS THE APPLICANT TO BEAR TWO-THIRDS OF THE COSTS OF THE PROCEEDINGS AND THE DEFENDANT TO BEAR ONE-THIRD THEREOF .