Keywords

Summary



Keywords

1. Actions for damages – Purpose – Compensation for the damage resulting from increased customs duty levied pursuant to a World Trade Organisation authorisation on imports from the Community – Incompatibility of the Community regime governing the import of bananas with WTO rules – Action brought against the European Parliament – Inadmissible

(EC Treaty, Art. 43(2), third subpara. (now, after amendment, Art 37(2), third subpara., EC); Council Regulation No 1637/98; Commission Regulation No 2362/98)

2. Non-contractual liability – Conditions – Sufficiently serious breach of a rule intended to confer rights on individuals – Institution having no discretion – Sufficiency of the mere infringement of Community law

(Art. 288, second para., EC)

3. Actions for damages – World Trade Organisation – Not possible to rely on the WTO agreements in order to challenge the legality of a Community measure – Exceptions – Community measure designed to ensure implementation of a WTO obligation or referring to it expressly and specifically – Community regime governing the import of bananas – Regime found by the WTO Dispute Settlement Body to be incompatible with WTO rules – Judicial review of the legality of the regime in the light of WTO rules – Precluded

(Art. 288, second para., EC; Council Regulations Nos 404/93 and 1637/98; Commission Regulation No 2362/98)

4. Non-contractual liability – Conditions – No unlawful conduct of the Community institutions – Actual damage, causal link and unusual and special damage – Conditions cumulative

(Art. 288, second para., EC)

5. Non-contractual liability – Conditions – Retention of a Community regime governing the import of bananas that was incompatible with the WTO agreements – Damage resulting from the imposition of a retaliatory measure by the United States authorities – Causal link

(Art. 288, second para., EC)

6. Non-contractual liability – Conditions – No unlawful conduct of the Community institutions – Damage resulting from the incompatibility of the Community regime governing the import of bananas with the WTO agreements – Unusual damage – None – Community liability – Precluded

(Art. 288, second para., EC)

Summary

1. An action for compensation in respect of the damage allegedly caused by the increased customs duty on an economic operator’s imports, the levying of which by the United States of America was authorised by the Dispute Settlement Body (DSB) of the World Trade Organisation (WTO) following a finding that the Community regime governing the import of bananas was incompatible with the WTO agreements, is inadmissible in so far as it is brought against the European Parliament.

An applicant seeking compensation is justified in bringing his action against the Community, as represented by the Commission and the Council, where, in accordance with the third subparagraph of Article 43(2) of the Treaty (Article 43 is now, after amendment, Article 37 EC), the former has proposed, and the latter adopted, the Community agricultural legislation whose unlawfulness is claimed to be at the origin of the damage alleged. This provision does not confer any decision-making power on the Parliament and allows it to act only as a consultative organ in the course of the procedure for adoption by the Council alone of regulations, directives and decisions relating to the common agricultural policy.

It does not therefore appear that the Parliament could have contributed to creating any non-contractual liability which the Community might incur as a result of the incompatibility that was found, because both (i) the adoption of Regulation No 1637/98 amending Regulation No 404/93 on the common organisation of the market in bananas and of Regulation No 2362/98 laying down detailed rules for the implementation of Regulation No 404/93, which were found by the DSB to be incompatible with the WTO agreements, and (ii) the alleged failure to bring the Community regime governing the import of bananas into conformity with the agreements must be regarded as falling within the competence of the Council and the Commission alone.

(see paras 69-70, 73-75)

2. In order for the Community to incur non-contractual liability under the second paragraph of Article 288 EC for unlawful conduct of its institutions a number of conditions must be satisfied: the institutions’ conduct must be unlawful, actual damage must have been suffered and there must be a causal link between the conduct and the damage pleaded. If any one of those conditions is not satisfied, the action must be dismissed in its entirety and it is unnecessary to consider the other conditions.

With regard to the first of those conditions, the unlawful conduct alleged against a Community institution must consist of a sufficiently serious breach of a rule of law intended to confer rights on individuals. The decisive test for finding that that requirement is fulfilled is whether the Community institution concerned manifestly and gravely disregarded the limits on its powers. Where an institution has only a considerably reduced, or even no, discretion, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach.

(see paras 95-99)

3. The World Trade Organisation (WTO) agreements are not in principle, given their nature and structure, among the rules in the light of which the Community courts review the legality of action by the Community institutions.

Consequently, the Community cannot in principle incur non-contractual liability by reason of any infringement of the WTO rules by the institutions.

It is only where the Community intends to implement a particular obligation assumed in the context of the WTO or where the Community measure refers expressly to specific provisions of the WTO agreements that the Community courts can review the legality of the conduct of the institutions in the light of the WTO rules.

However, notwithstanding the existence of the decision of the WTO Dispute Settlement Body finding that the regime governing the import of bananas into the Community, as established by Regulation No 404/93 on the common organisation of the market in bananas and subsequently amended by Regulations Nos 1637/98 and 2362/98, was incompatible with WTO rules, neither of those exceptions is applicable so as to allow the Community courts to review the legality of the Community legislation in question in the light of WTO rules.

Neither expiry of the period of time set by the WTO for the Community to bring the measure declared incompatible into conformity with WTO rules nor authorisation given by the WTO to the member harmed to adopt, vis-à-vis the Community, measures granting compensation and suspending trade concessions has any bearing in this regard.

(see paras 127, 130-132, 142)

4. When damage is caused by conduct of a Community institution not shown to be unlawful, the Community can incur non-contractual liability if the conditions as to sustaining actual damage, to the causal link between that damage and the conduct of the Community institution and to the unusual and special nature of the damage in question are all met.

(see para. 174)

5. The principles common to the laws of the Member States to which the second paragraph of Article 288 EC refers cannot be relied upon to found an obligation on the Community to make good every harmful consequence, even a remote one, of conduct of its institutions. The condition under that provision relating to a causal link requires there to be a sufficiently direct causal nexus between the conduct of the Community institutions and the damage.

A direct link of that kind exists between the retention in force by the Council and the Commission of a banana import regime incompatible with the World Trade Organisation (WTO) agreements and the damage suffered by an economic operator by reason of imposition by the United States of America of increased customs duty on its products. The unilateral decision by the United States to impose the increased duty is not such as to break the causal link. The conduct of the institutions in question necessarily led to adoption of the retaliatory measure by the United States authorities in compliance with the WTO dispute settlement system accepted by the Community, so that their conduct must be regarded as the immediate cause of the damage suffered.

(see paras 192-193, 198-200, 204)

6. In the case of damage which economic operators may sustain as a result of the activities of the Community institutions, damage is, first, unusual when it exceeds the limits of the economic risks inherent in operating in the sector concerned and, second, special when it affects a particular circle of economic operators in a disproportionate manner by comparison with other operators.

It has not been established that an economic operator, whose activities consist in selling folding paperboard boxes on the United States market, suffered, as a result of the incompatibility with the World Trade Organisation (WTO) agreements of the Community regime governing the import of bananas that led the United States authorities to withdraw tariff concessions in relation to the Community, damage in excess of the limits of the risks inherent in its export operations. The possibility of tariff concessions being suspended as provided for by the WTO agreements is among the vicissitudes inherent in the current system of international trade. Accordingly, the risk of this vicissitude has to be borne by every operator who decides to sell its products on the market of one of the WTO members.

It follows that, since the damage suffered by the abovementioned operator cannot be classified as unusual, its claim for compensation founded on the rules governing non-contractual Community liability in the absence of unlawful conduct must be dismissed.

(see paras 208-209, 211, 215, 217)