Judgment of the Court of 12 June 1958. - Compagnie des Hauts Fourneaux de Chasse v High Authority of the European Coal and Steel Community. - Case 2-57.



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Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

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1 . PROCEDURE - APPLICATION FOR ANNULMENT - ADMISSIBILITY OF NEW SUBMISSIONS

2 . PROCEDURE - APPLICATION FOR ANNULMENT - TIME-LIMIT FOR INSTITUTION OF PROCEEDINGS - NEW DECISION RE-ESTABLISHING A PREVIOUS SCHEME

3 . MISUSE OF POWERS - SUBSTITUTION OF OBJECTIVE

4 . FERROUS SCRAP - EQUALIZATION - UNIFORM RATE FOR THE SAKE OF ADMINISTRATIVE SIMPLICITY - MISUSE OF POWERS

Summary

1 . A DISTINCTION MUST BE DRAWN BETWEEN THE INTRODUCTION OF NEW SUBMISSIONS IN THE COURSE OF THE PROCEEDINGS AND THE INTRODUCTION OF CERTAIN NEW ARGUMENTS .

THERE IS NOTHING TO PREVENT THE COURT FROM CONSIDERING NEW ARGUMENTS PUT FORWARD IN SUPPORT OF SUBMISSIONS ALREADY MADE IN THE APPLICATION

( TREATY, ARTICLE 33; PROTOCOL ON THE STATUTE OF THE COURT, ARTICLE 22 ).

2 . A NEW DECISION MAY BE THE SUBJECT OF AN APPLICATION EVEN IN RESPECT OF THOSE OF ITS PROVISIONS WHICH ARE INCORPORATED FROM AN EARLIER DECISION WHICH HAS NOT BEEN IMPUGNED WITHIN THE PERIOD LAID DOWN IN ARTICLE 33 OF THE TREATY

( TREATY, ARTICLE 33, THIRD PARAGRAPH ).

3 . THE LEGALITY OF A DECISION CANNOT DEPEND ON ITS CONFORMITY OR OTHERWISE WITH THE PROVISIONS OF A MEMORANDUM PUBLISHED BY THE HIGH AUTHORITY BUT ONLY ON ITS CONFORMITY OR OTHERWISE WITH THE PROVISIONS OF THE TREATY . IN ORDER TO PROVE A MISUSE OF POWERS, THE CONTESTED DECISION MUST BE SHOWN TO HAVE BEEN PURSUING AN OBJECTIVE OTHER THAN THAT FOR THE PURPOSES OF WHICH THE HIGH AUTHORITY WAS ENTITLED TO ACT

( TREATY, ARTICLE 33 ).

4 . SINCE THE UNIFORM EQUALIZATION RATE WAS HELD TO BE CONSISTENT WITH THE PROVISIONS OF THE TREATY, THE CONTESTED DECISIONS WOULD STILL BE IN ORDER EVEN IF IT WERE PROVED THAT THIS UNIFORMITY WAS ALSO SELECTED OUT OF CONCERN TO AVOID ADMINISTRATIVE COMPLICATIONS

( TREATY, ARTICLES 33 AND 53 ).

Parties

IN CASE 2/57

COMPAGNIE DES HAUTS FOURNEAUX DE CHASSE, REPRESENTED BY PIERRE CHOLAT, PRESIDENT-DIRECTOR GENERAL, ASSISTED BY ROGER LEVILION, ADVOCATE AT THE COUR DE PARIS, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF BERNARD DELVAUX, ADVOCATE, 11 AVENUE PESCATORE, APPLICANT,

V

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, REPRESENTED BY ITS LEGAL ADVISER, GERARD OLIVIER, ACTING AS AGENT, ASSISTED BY PROFESSOR ANDRE DE LAUBADERE OF THE FACULTE DE DROIT, PARIS, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT ITS OFFICES, 2 PLACE DE METZ, DEFENDANT,

Subject of the case

APPLICATION FOR THE ANNULMENT OF DECISION NO 2/57 OF THE HIGH AUTHORITY DATED 26 JANUARY 1957 INSTITUTING A FINANCIAL ARRANGEMENT TO ENSURE A REGULAR SUPPLY OF FERROUS SCRAP TO THE COMMON MARKET ( JO NO 4 OF 28.1.1957, P . 61/57 ),

Grounds

P . 205

A - ADMISSIBILITY

( A ) IN THE DEFENDANT'S VIEW, THE APPLICANT DESCRIBES AS MISUSE OF POWERS A SERIES OF GROUNDS FOR COMPLAINT WHICH, FOR VARIOUS REASONS, ARE GERMAN, NOT TO THIS GROUND FOR ANNULMENT, BUT TO AN INFRINGEMENT OF THE TREATY . FOR THIS REASON THE DEFENDANT MAINTAINS THAT THE APPLICANT CANNOT PUT FORWARD THESE GROUNDS OF COMPLAINT UNDER ARTICLE 33 .

THE COURT REJECTS THIS ARGUMENT .

IN THE APPLICATION THE APPLICANT CLAIMED THAT IT HAD BEEN THE SUBJECT OF A MISUSE OF POWERS AND SET OUT A SERIES OF ARGUMENTS WHICH, IN ITS VIEW, SUPPORTED THIS CLAIM .

P . 206

THESE ARGUMENTS MAY NOT PROVE MISUSE OF POWERS BUT, IN ORDER TO ASCERTAIN WHETHER THIS IS SO, CONSIDERATION MUST BE GIVEN TO THE SUBSTANCE OF THE CASE; IN THESE CIRCUMSTANCES, ACCORDING TO THE CASE-LAW OF THE COURT, THE OBJECTION ON WHICH THE DEFENDANT RELIES CANNOT STAND IN THE WAY OF THE ADMISSIBILITY OF THE APPLICATION .

( B ) THE DEFENDANT CONSIDERS THAT THE REPLY CONTAINS CERTAIN NEW SUBMISSIONS BASED ON " THE EXTENT OF THE HIGH AUTHORITY'S POWERS UNDER ARTICLE 53 OF THE TREATY, BEARING IN MIND THE DISTINCTION BETWEEN A NORMAL SITUATION AND AN EXCEPTIONAL SITUATION " AND " THE USE OF ARTICLE 53 INSTEAD OF ARTICLE 59 ".

ON THIS POINT THE COURT TAKES THE VIEW THAT A DISTINCTION MUST BE DRAWN BETWEEN THE INTRODUCTION OF NEW SUBMISSIONS IN THE COURSE OF THE PROCEEDINGS AND, ON THE OTHER HAND, THE INTRODUCTION OF CERTAIN NEW ARGUMENTS . IN THE PRESENT CASE THE COURT'S VIEW IS THAT THE APPLICANT DID NOT INTRODUCE NEW SUBMISSIONS BUT MERELY DEVELOPED THOSE MADE IN ITS APPLICATION BY INVOKING A NUMBER OF ARGUMENTS SOME OF WHICH WERE ADDUCED FOR THE FIRST TIME IN THE REPLY . IN THOSE CIRCUMSTANCES, THERE IS NOTHING TO PREVENT THE COURT FROM CONSIDERING THEM .

( C ) AGAIN, WITHOUT DEFINITELY INVOKING THE POINT AS A BAR TO THE PROCEEDINGS, THE DEFENDANT ASKS WHETHER THE APPLICANT OUGHT NOT TO HAVE IMPUGNED THE EQUALIZATION SCHEME AT THE TIME WHEN EQUALIZATION BECAME COMPULSORY, THAT IS TO SAY IN 1954 .

THIS QUESTION MUST BE ANSWERED IN THE NEGATIVE BECAUSE, ALTHOUGH THE CONTESTED DECISION RE-ESTABLISHED AN EQUALIZATION SCHEME, IT BECAME ONCE MORE SUBJECT TO THE PERIODS PRESCRIBED UNDER ARTICLE 33 FOR THE INSTITUTION OF PROCEEDINGS NOTWITHSTANDING THE EXISTENCE OF AN EARLIER DECISION ON THE SAME SUBJECT .

FOR THE FOREGOING REASONS THE APPLICATION IS ADMISSIBLE .

B - SUBSTANCE

FIRST COMPLAINT : DECISION NO 2/57 AFFECTS PIG-IRON PRODUCERS TO THE SAME EXTENT AS STEEL PRODUCERS AND DISREGARDS THE OBJECTIVES OF THE TREATY; THIS CONSTITUTES A MISUSE OF POWERS .

THE APPLICANT CLAIMS IN ITS APPLICATION THAT EQUALIZATION DOES NOT ACCORD WITH THE GENERAL OBJECTIVES OF THE TREATY, NORMAL COMPETITION TENDS TO ENCOURAGE THE CONSUMPTION OF FERROUS SCRAP TO THE DETRIMENT OF PIG-IRON, IMPOSES EXORBITANT CHARGES ON THE APPLICANT WITHOUT ANY CORRESPONDING BENEFIT AND IS NOT SUBJECT TO DETAILED RULES DESIGNED TO AVOID THE CONSEQUENCES PROHIBITED UNDER ARTICLE 29 OF THE CONVENTION . PROTECTIVE MEASURES OUGHT TO HAVE BEEN TAKEN IN ORDER TO TAKE ACCOUNT OF THE SPECIAL SITUATION OF THE APPLICANT, WHICH CANNOT BE COMPARED WITH THAT OF STEEL PRODUCERS . IN THESE CIRCUMSTANCES AND HAVING REGARD TO THE LOCAL CONDITION GOVERNING ITS SUPPLIES, THE APPLICANT IS THE VICTIM OF DISCRIMINATION, WHICH GIVES RISE TO THE ALLEGED MISUSE OF POWERS .

AGAINST THIS BACKGROUND, AND IN MORE DETAIL, THE APPLICANT EXPLAINED THAT THE ALLEGED MISUSE OF POWERS ARISES FROM THE FOLLOWING CIRCUMSTANCES .

P . 207

FIRST THE APPLICANT CONSIDERS THAT BY INTRODUCING EQUALIZATION UNDER ARTICLE 53 ( B ) OF THE TREATY, THE HIGH AUTHORITY DEMONSTRATED ITS INTENTION TO AVOID THE SAFEGUARDS, SUCH AS THOSE IN ARTICLE 59 OF THE TREATY, LAID DOWN IN THE PROVISIONS OF THE TREATY TO DEAL WITH EXCEPTIONAL SITUATIONS .

ON THIS POINT IT MUST BE RECOGNIZED THAT THERE MIGHT HAVE BEEN A MISUSE OF POWERS IF, FACED WITH A SITUATION COVERED BY THE PROCEDURE IN ARTICLE 59, THE HIGH AUTHORITY HAD NEVERTHELESS, IN ORDER TO AVOID THE SAFEGUARDS IN ARTICLE 59, DELIBERATELY PREFERRED TO ACT IN ACCORDANCE WITH ARTICLE 53 ( B ) AND THE FINANCIAL ARRANGEMENTS PROVIDED FOR THEREIN . BUT IT HAS NOT BEEN ESTABLISHED THAT, WHEN THE CONTESTED DECISION WAS TAKEN, THE HIGH AUTHORITY WAS FACED WITH SUCH A SITUATION . IN THESE CIRCUMSTANCES, THERE IS NO EVIDENCE THAT, AS A FINANCIAL ARRANGEMENT WITHIN THE MEANING OF ARTICLE 53 ( B ), THE EQUALIZATION SCHEME WAS VITIATED BY MISUSE OF POWERS . THIS GROUND OF COMPLAINT IS UNFOUNDED .

SECONDLY, THE APPLICANT HAS CONTENDED THAT, ACCORDING TO THE WORDING OF THE CONTESTED DECISION, ITS OBJECTIVE WAS THE REGULAR SUPPLY OF FERROUS SCRAP TO THE COMMON MARKET BUT THAT THIS OBJECTIVE WAS SUBSTITUTED FOR THE OBJECTIVE SET OUT IN THE HIGH AUTHORITY'S MEMORANDA OF 6 JULY 1955 AND OF APRIL 1957 DEFINING THE GENERAL OBJECTIVES, PUBLISHED IN THE JOURNAL OFFICIEL OF 19 JULY 1955 AND OF 20 MAY 1957, NAMELY, THE ATTEMPT TO BALANCE THE PIG-IRON/STEEL MARKET . THE APPLICANT CONTENDS THAT THIS SUBSTITUTION IS EVIDENCE OF MISUSE OF POWERS . THE DEFENDANT REPLIED THAT NEITHER THE MEMORANDA NOR DECISION NO 2/57 INVOLVED ANY ATTEMPT TO STRIKE A BALANCE BETWEEN THE CONFLICTING INTERESTS OF PIG-IRON AND STEEL PRODUCERS BUT TO PUT INTO EFFECT A SERIES OF MEASURES WHICH, IN THE HIGH AUTHORITY'S VIEW, WERE NECESSARY TO PROVIDE FOR THE ECONOMIC EXPANSION WHICH WAS TO BE FORESEEN . AGAINST THIS BACKGROUND, THE OBJECT OF THE HIGH AUTHORITY'S DECISION WAS TO ESTABLISH REASONABLE PRICES FOR SCRAP WITH A VIEW TO ENSURING A REGULAR SUPPLY IN THIS FIELD AND AN INCREASE IN OUTPUT CAPACITY FOR PIG-IRON .

THIS GROUND OF COMPLAINT MUST BE REJECTED BECAUSE THE LEGALITY OF THE CONTESTED DECISION CANNOT DEPEND ON ITS CONFORMITY OR OTHERWISE WITH THE MEMORANDA PUBLISHED BY THE HIGH AUTHORITY BUT ONLY ON ITS CONFORMITY OR OTHERWISE WITH THE TREATY . IN NO SENSE DO THE MEMORANDA CONTAIN THE ONLY POSSIBLE DEFINITION OF THE LEGAL OBJECTIVE WHICH THE HIGH AUTHORITY IS ENTITLED TO PURSUE . TO PROVE A MISUSE OF POWERS THE APPLICANT WOULD HAVE HAD TO DEMONSTRATE THAT THE DECISION ITSELF WAS IN FACT PURSUING AN OBJECTIVE OTHER THAN THAT FOR THE PURPOSES OF WHICH THE HIGH AUTHORITY WAS ENTITLED TO ACT; THE VARIATION WHICH THE APPLICANT HAS POINTED OUT BETWEEN THE WORDING OF THE MEMORANDA AND THAT OF THE CONTESTED DECISION DOES NOT SUFFICE TO CONSTITUTE SUCH EVIDENCE .

THIRDLY, THE APPLICANT CONSIDERS THAT THERE HAS BEEN A SERIOUS LACK OF FORESIGHT AND CARE, AMOUNTING TO DISREGARD OF THE LEGAL OBJECTIVE, IN THE FACT THAT, IN ADOPTING DECISION NO 2/57 THE HIGH AUTHORITY FAILED TO TAKE ACCOUNT OF THE UNBALANCING EFFECT WHICH EQUALIZATION WOULD HAVE ON PIG-IRON DESPITE THE FACT THAT IT HAD BEEN FACED WITH THE SAME PROBLEM SINCE 1955 .

THE DEFENDANT CONCEDES THAT EQUALIZATION TENDED TO ENCOURAGE AN INCREASE IN THE CONSUMPTION OF SCRAP AND THAT THERE WAS A POSSIBILITY OF CONSEQUENTIAL DISADVANTAGES FOR PRODUCERS OF PIG-IRON; FOR THIS REASON IT TRIED TO CORRECT THE SITUATION, FIRST OF ALL BY THE INTRODUCTION OF A BONUS PAYABLE FOR INCREASED CONSUMPTION OF PIG-IRON AND, LATER, BY THE SUPPLEMENTARY RATE INTRODUCED BY DECISION NO 2/57 .

P . 208

THERE CAN BE NO DISPUTE THAT THE HIGH AUTHORITY INTRODUCED THE BONUS AND THE SUPPLEMENTARY RATE AS AN INDIRECT METHOD OF REDUCING THE VOLUME OF SCRAP CONSUMPTION; IT IS EQUALLY BEYOND DISPUTE THAT THESE TWO MEASURES ENCOURAGED AN INCREASE IN PIG-IRON CONSUMPTION . NEITHER IN THE COURSE OF THE WRITTEN PROCEDURE NOR DURING THE HEARING WAS IT ESTABLISHED THAT THE HIGH AUTHORITY ADOPTED THE TWO MEASURES REFERRED TO WITH ANY OBJECT IN VIEW THAN THAT FOR WHICH THE EQUALIZATION SCHEME WAS ESTABLISHED AND LAWFULLY COMPLETED .

NOR FURTHERMORE WAS IT ESTABLISHED THAT THE ALLEGED EFFECTIVENESS OF THE ARRANGEMENTS FOR THE BONUS AND THE SUPPLEMENTARY RATE INVOLVED A DISREGARD OF THE LAWFUL OBJECTIVE OF THE DECISION .

IN THESE CIRCUMSTANCES A MISUSE OF POWERS HAS NOT BEEN ESTABLISHED AND THIS GROUND OF COMPLAINT MUST BE REJECTED .

SECOND COMPLAINT : FOR REASONS WHICH HAVE NOTHING TO DO WITH THE OBJECT OF EQUALIZATION, DECISION NO 2/57 MAKES HEAVY AND LIGHT SCRAP SUBJECT TO A UNIFORM EQUALIZATION RATE AND THIS CONSTITUTES MISUSE OF POWERS .

THE APPLICANT CLAIMS THAT THE APPLICATION OF A UNIFORM EQUALIZATION RATE IS AN EXAMPLE OF MISUSE OF POWERS . IT CONSIDERS THAT THERE WAS NO NEED FOR THIS UNIFORMITY IN ORDER TO ATTAIN THE OBJECTIVE PURSUED BUT THAT IT WAS DECIDED UPON IN ORDER TO AVOID THE ADMINISTRATIVE COMPLICATIONS WHICH WOULD HAVE BEEN CREATED BY THE APPLICATION OF A GRADUATED RATE, WHICH WOULD HAVE HAD A BALANCED EFFECT ON THE PRICE OF THE VARIOUS QUALITIES OF SCRAP, PARTICULARLY THOSE USED EXCLUSIVELY BY INDEPENDENT PIG-IRON PRODUCERS .

BEFORE A DECISION IS TAKEN ON THIS GROUND OF COMPLAINT, CONSIDERATION MUST BE GIVEN TO THE QUESTION WHETHER THE APPLICATION OF A UNIFORM CHARGE IS COMPATIBLE WITH THE PROVISIONS OF THE TREATY . ON THIS QUESTION THE APPLICANT CONTENDS THAT THE APPLICATION OF SUCH A RATE GIVES RISE TO DISCRIMINATION CONTRARY TO THE PROVISIONS OF ARTICLE 4 ( B ) OF THE TREATY . IT CLAIMS TO USE ONLY LIGHT SCRAP, WHICH IT OBTAINS CHEAPLY AND ON WHICH THE UNIFORM EQUALIZATION RATE FALLS RELATIVELY MORE HEAVILY THAN IN THE CASE OF THE HEAVY SCRAP USED BY THE STEEL MILLS . THE COMPAGNIE DE CHASSE IS ACCORDINGLY NOT IN A POSITION WHICH COMPARES WITH THAT OF THE STEEL MILLS AND IN THOSE CIRCUMSTANCES THE APPLICATION OF UNIFORM RULES IS ALLEGED TO CONSTITUTE UNLAWFUL DISCRIMINATION .

ON THE OTHER HAND THE DEFENDANT STATES THAT THERE IS MUCH IN COMMON BETWEEN THE VARIOUS CATEGORIES OF FERROUS SCRAP AS A RESULT OF THE FACT THAT THEY ARE INTERCHANGEABLE AND THAT THEY ARE USED JOINTLY BY THE VARIOUS CONSUMERS . ACCORDINGLY, THE DIFFERENT EFFECTS OF THE EQUALIZATION RATE ON THE VARIOUS CATEGORIES OF SCRAP PUT THE APPLICANT IN A POSITION COMPARABLE TO THAT OF OTHER CONSUMERS SO THAT THERE CAN BE NO QUESTION OF THE SCHEME'S BEING DISCRIMINATORY .

IT IS CLEAR FROM THE DOCUMENTS PUT IN BY THE PARTIES DURING THE PREPARATORY INQUIRY THAT NEITHER THE APPLICANT NOR ANY OTHER SCRAP CONSUMER EXCLUSIVELY USES ONE CATEGORY OF SCRAP . FOR EXAMPLE, IN ITS CONSUMPTION OF SCRAP, THE APPLICANT USES, ACCORDING TO THE NOMENCLATURE ESTABLISHED BY THE HIGH AUTHORITY ( DECISION NO 28/53, JO NO 5 OF 15.3.1953, PP . 98 AND 99 ), APPROXIMATELY 80 PER CENT OF " TURNINGS " AND 20 PER CENT OF BALES COMING UNDER THE CATEGORY OF " LIGHT SCRAP ", WHEREAS THE STEEL MILLS IN THE SAME REGION USE BETWEEN 10 PER CENT AND 25 PER CENT OF " TURNINGS " AND, IN ADDITION, " HEAVY " AND " LIGHT " SCRAP IN VARYING PROPORTIONS .

THERE ARE, THEREFORE, TWO GROUPS OF PURCHASERS USING TO SOME EXTENT THE SAME CATEGORIES OF SCRAP . HOWEVER, INASMUCH AS THE STEEL MILLS HAVE, AS FAR AS 75 PER CENT OF THEIR PURCHASES ARE CONCERNED, BOUGHT CERTAIN CATEGORIES WHICH THE APPLICANT DOES NOT USE, IT IS CONCEIVABLE THAT A UNIFORM RATE MAY HAVE DIFFERENT EFFECTS . BUT THE PREPARATORY INQUIRY DID NOT REVEAL ANY SPECIFIC EVIDENCE THAT SUCH A DIFFERENCE EXISTS . CONSIDERING THAT ANY DIFFERENCE COULD ONLY MAKE ITSELF FELT IN THE CASE OF A PROPORTION OF THE PURCHASES AND BEARING IN MIND THE GENERAL TENDENCY TOWARDS THE ALIGNMENT OF PRICES APPLICABLE TO THE CATEGORIES OF SCRAP OF FOREIGN AND DOMESTIC ORIGIN THE APPLICANT HAS NOT ADVANCED SUFFICIENT LEGAL PROOF THAT THE APPLICATION OF A UNIFORM RATE CONSTITUTED DISCRIMINATION TO ITS DETRIMENT .

AS REGARDS THE MISUSE OF POWER ALLEGED BY THE APPLICANT, THE COURT FINDS THAT THE DEFENDANT, IN ITS PLEADINGS AND ALSO DURING THE PREPARATORY INQUIRY, DESCRIBED THE DIFFICULTIES AND ADMINISTRATIVE COMPLICATIONS WHICH WOULD HAVE ENSUED IF A SYSTEM OF GRADUATED RATES HAD BEEN APPLIED . THERE IS NOTHING HOWEVER TO JUSTIFY THE STATEMENT THAT THE MAIN REASON WHICH LED THE HIGH AUTHORITY TO INTRODUCE A UNIFORM RATE WAS THE DESIRE TO AVOID COMPLICATIONS OF THAT NATURE; SINCE THIS RATE WAS CONSISTENT WITH THE PROVISIONS OF THE TREATY, THE CONTESTED DECISION WOULD STILL BE IN ORDER EVEN IF IT WERE PROVED THAT A UNIFORM RATE WAS ALSO SELECTED OUT OF CONCERN TO AVOID ADMINISTRATIVE COMPLICATIONS .

THIS GROUND OF COMPLAINT MUST THEREFORE BE REJECTED .

Decision on costs

UNDER ARTICLE 60 OF THE RULES OF PROCEDURE OF THE COURT OF JUSTICE, THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS; THE APPLICANT MUST THEREFORE BE ORDERED TO PAY THE COSTS OF THE ACTION .

Operative part

THE COURT

HEREBY :

1 . DISMISSES THE APPLICATION FOR ANNULMENT OF DECISION NO 2/57 OF THE HIGH AUTHORITY DATED 26 JANUARY 1957;

2 . ORDERS THE APPLICANT TO PAY THE COSTS .