Fabbrica italiana accumulatori motocarri Montecchio SpA (FIAMM) and Fabbrica italiana accumulatori motocarri Montecchio Technologies LLC (C-120/06 P), Giorgio Fedon & Figli SpA and Fedon America, Inc. (C-121/06 P) v Council of the European Union and Commission of the European Communities.
Date: 2008-09-09
1. By their appeals, Fabbrica italiana accumulatori motocarri Montecchio SpA and Fabbrica italiana accumulatori motocarri Montecchio Technologies LLC (together referred to as ‘FIAMM’) and Giorgio Fedon & Figli SpA and Fedon America, Inc. (together referred to as ‘Fedon’) respectively request the Court to set aside the judgment of the Court of First Instance of the European Communities of 14 December 2005 in Case T-69/00 FIAMM and FIAMM Technologies  v Council and Commission  [2005] ECR II‑5393 (Case C‑120/06 P) and the judgment of the Court of First Instance of 14 December 2005 in Case T-135/01 Fedon & Figli and Others  v Council and Commission  (Case C‑121/06 P). By those judgments (‘the FIAMM  judgment’ and ‘the Fedon  judgment’ respectively or, together, ‘the judgments under appeal’), the Court of First Instance dismissed the actions brought by FIAMM and Fedon seeking compensation for the damage allegedly suffered by them on account of the increased customs duty which the Dispute Settlement Body (‘the DSB’) of the World Trade Organisation (WTO) authorised the United States of America to levy on imports of their products, following a finding by the DSB that the Community regime governing the import of bananas was incompatible with the agreements and understandings annexed to the Agreement establishing the WTO.
90. The question whether the grounds of a judgment of the Court of First Instance are contradictory or inadequate is a question of law which is amenable, as such, to judicial review on appeal (see, inter alia, the judgment of 11 January 2007 in Case C-404/04 P Technische Glaswerke Ilmenau  v Commission , paragraph 90).
91. It should however be recalled, first, that, as the Court of Justice has repeatedly held, the requirement that the Court of First Instance give reasons for its decisions cannot be interpreted as meaning that it is obliged to respond in detail to every single argument advanced by the appellant, particularly if the argument was not sufficiently clear and precise (see, inter alia, Case C-274/99 P Connolly  v Commission  [2001] ECR I‑1611, paragraph 121; Case C-197/99 P Belgium  v Commission  [2003] ECR I‑8461, paragraph 81; and Technische Glaswerke Ilmenau  v Commission , paragraph 90).
96. Second, it should also be recalled that the obligation to state reasons does not require the Court of First Instance to provide an account which follows exhaustively and one by one all the arguments put forward by the parties to the case and that the reasoning may therefore be implicit on condition that it enables the persons concerned to know why the Court of First Instance has not upheld their arguments and provides the Court of Justice with sufficient material for it to exercise its power of review (see, in particular, Joined Cases C-204/00 P, C‑205/00 P, C-211/00 P, C-213/00 P, C-217/00 P and C-219/00 P Aalborg Portland and Others  v Commission  [2004] ECR I-123, paragraph 372, and the judgment of 25 October 2007 in Case C-167/06 P Komninou and Others  v Commission , paragraph 22).
106. The Court has consistently interpreted the second paragraph of Article 288 EC as meaning that the non-contractual liability of the Community and the exercise of the right to compensation for damage suffered depend on the satisfaction of a number of conditions, relating to the unlawfulness of the conduct of which the institutions are accused, the fact of damage and the existence of a causal link between that conduct and the damage complained of (see, inter alia, Case 26/81 Oleifici Mediterranei  v EEC  [1982] ECR 3057, paragraph 16, and Case C-146/91 KYDEP  v Council and Commission  [1994] ECR I‑4199, paragraph 19).
107. Here, the applicants essentially contended in support of their claim for compensation before the Court of First Instance that the Community institutions acted unlawfully, and therefore wrongfully, in failing to bring the Community legislation into conformity with the WTO agreements within the reasonable period of time that the Community was allowed for that purpose after a decision of the DSB had found that legislation to be incompatible with the WTO agreements.
108. It is to be observed in that regard that the effects within the Community of provisions of an agreement concluded by the Community with non-member States may not be determined without taking account of the international origin of the provisions in question. In conformity with the principles of public international law, Community institutions which have power to negotiate and conclude such an agreement are free to agree with the non-member States concerned what effect the provisions of the agreement are to have in the internal legal order of the contracting parties. If that question has not been expressly dealt with in the agreement, it is the courts having jurisdiction in the matter and in particular the Court of Justice within the framework of its jurisdiction under the EC Treaty that have the task of deciding it, in the same manner as any other question of interpretation relating to the application of the agreement in question in the Community (see, in particular, Case 104/81 Kupferberg  [1982] ECR 3641, paragraph 17, and Portugal  v Council , paragraph 34), on the basis in particular of the agreement’s spirit, general scheme or terms (see, to this effect, Case C‑280/93 Germany  v Council  [1994] ECR I‑4973, paragraph 110).
110. As is apparent from its case-law, the Court considers that it can examine the validity of secondary Community legislation in the light of an international treaty only where the nature and the broad logic of the latter do not preclude this and, in addition, the treaty’s provisions appear, as regards their content, to be unconditional and sufficiently precise (see, in particular, Case C‑308/06 Intertanko and Others  [2008] ECR I-0000, paragraph 45 and the case-law cited).
111. As regards, more specifically, the WTO agreements, it is settled case-law that, given their nature and structure, those agreements are not in principle among the rules in the light of which the Court is to review the legality of measures adopted by the Community institutions (see, in particular, Portugal  v Council , paragraph 47; Biret International  v Council , paragraph 52; and Van Parys , paragraph 39).
112. It is only where the Community has intended to implement a particular obligation assumed in the context of the WTO, or where the Community measure refers expressly to the precise provisions of the WTO agreements, that it is for the Court to review the legality of the Community measure in question in the light of the WTO rules (see Biret International  v Council , paragraph 53, and Van Parys , paragraph 40 and the case-law cited).
113. The Court has already held that the common organisation of the market in bananas, as introduced by Regulation No 404/93 and subsequently amended, is not designed to ensure the implementation in the Community legal order of a particular obligation assumed in the context of the GATT and does not refer expressly to specific provisions of the GATT either (order in OGT Fruchthandelsgesellschaft , paragraph 28).
114. As regards, in particular, Regulation No 1637/98 and the regulations adopted to implement it, the Court stated in Van Parys , paragraph 52, that they do not expressly refer to specific provisions of the WTO agreements.
115. The Court also held in that judgment that, by undertaking after the adoption of the DSB’s decision of 25 September 1997 to comply with the WTO rules and, in particular, with Articles I(1) and XIII of the GATT 1994, the Community did not intend to assume a particular obligation in the context of the WTO, capable of justifying an exception to the principle that WTO rules cannot be relied upon before the Community courts and enabling the Community courts to review the legality of Regulation No 1637/98 and the regulations adopted to implement it in the light of those rules (see, to this effect, Van Parys , paragraphs 41 and 52).
116. It should be remembered that the decisive factor here is that the resolution of disputes concerning WTO law is based, in part, on negotiations between the contracting parties. Withdrawal of unlawful measures is admittedly the solution recommended by WTO law, but other solutions are also authorised ( Omega Air and Others , paragraph 89).
117. The Court thus held in Van Parys , paragraph 51, that the expiry of the period granted by the DSB for implementation of its decision of 25 September 1997 does not imply that the Community had exhausted the possibilities under the DSU of finding a solution to the dispute between it and the other parties. In those circumstances, to require the Community courts, merely on the basis that that period has expired, to review the legality of the Community measures concerned in the light of the WTO rules could have the effect of undermining the Community’s position in its attempt to reach a mutually acceptable solution to the dispute in conformity with those rules.
118. Referring in particular to the memorandum of understanding concluded with the United States of America on 11 April 2001, the Court observed more specifically that such an outcome, by which the Community sought to reconcile its obligations under the WTO agreements with those in respect of the ACP States, and with the requirements inherent in the implementation of the common agricultural policy, could have been compromised if the Community courts had been entitled to review the legality of the Community measures in question in the light of the WTO rules upon the expiry of the reasonable period of time granted by the DSB (see, to this effect, Van Parys , paragraphs 49 and 50).
119. The Court also pointed out that to accept that the Community courts have the direct responsibility for ensuring that Community law complies with the WTO rules would effectively deprive the Community’s legislative or executive organs of the scope for manoeuvre enjoyed by their counterparts in the Community’s trading partners. It is not in dispute that some of the contracting parties, including the Community’s most important trading partners, have concluded from the subject-matter and purpose of the WTO agreements that they are not among the rules applicable by their courts when reviewing the legality of their rules of domestic law. Such lack of reciprocity, if accepted, would risk introducing an imbalance in the application of the WTO rules ( Van Parys , paragraph 53).
120. As is apparent from the Court’s case-law, there is also no reason to draw a distinction in these various respects according to whether the legality of the Community action is to be reviewed in annulment proceedings or for the purpose of deciding an action for compensation (see to this effect, with regard to the period preceding the expiry of the reasonable period of time allowed for implementing a decision of the DSB, Biret International  v Council , paragraph 62).
121. First, as the Court has pointed out, the prospect of actions for damages is liable to hinder exercise of the powers of the legislative authority whenever it has occasion to adopt, in the public interest, legislative measures which may adversely affect the interests of individuals (Joined Cases 83/76, 94/76, 4/77, 15/77 and 40/77 Bayerische HNL Vermehrungsbetriebe and Others  v Council and Commission  [1978] ECR 1209, paragraph 5, and Joined Cases C-46/93 and C-48/93 Brasserie du pêcheur and Factortame  [1996] ECR I-1029, paragraph 45).
125. The distinction which the appellants seek to draw between the ‘direct effect’ of the WTO rules imposing substantive obligations and the ‘direct effect’ of a decision of the DSB, asserting that it should be open to individuals to have the legality of the conduct of the Community institutions reviewed by the Community courts in the light of the DSB decision itself if such a review is not possible in the light of the WTO rules which that decision has found to have been infringed, calls for the following comments.
126. Even though the Court has not yet been required to rule expressly on such a distinction, it nevertheless necessarily follows from its case-law mentioned above that there is no basis for the distinction.
127. In holding that the WTO rules which have been found by a decision of the DSB to have been infringed cannot, notwithstanding the expiry of the period of time laid down for implementing that decision, be relied upon before the Community courts for the purpose of having the legality of the conduct of the Community institutions reviewed by the Community courts in the light of those rules, the Court has necessarily excluded such a review in the light of the DSB decision itself.
128. A DSB decision, which has no object other than to rule on whether a WTO member’s conduct is consistent with the obligations entered into by it within the context of the WTO, cannot in principle be fundamentally distinguished from the substantive rules which convey such obligations and by reference to which such a review is carried out, at least when it is a question of determining whether or not an infringement of those rules or that decision can be relied upon before the Community courts for the purpose of reviewing the legality of the conduct of the Community institutions.
129. A recommendation or a ruling of the DSB finding that the substantive rules contained in the WTO agreements have not been complied with is, whatever the precise legal effect attaching to such a recommendation or ruling, no more capable than those rules of conferring upon individuals a right to rely thereon before the Community courts for the purpose of having the legality of the conduct of the Community institutions reviewed.
130. First, as is apparent from paragraphs 113 to 124 of the present judgment, the considerations linked to the nature of the WTO agreements and to the reciprocity and flexibility characterising them continue to obtain after such a ruling or recommendation has been adopted and after the reasonable period of time allowed for its implementation has expired. The Community institutions continue in particular to have an element of discretion and scope for negotiation vis-à-vis their trading partners with a view to the adoption of measures intended to respond to the ruling or recommendation, and such leeway must be preserved.
165. The Court has also repeatedly pointed out that that liability cannot be regarded as having been incurred without satisfaction of all the conditions to which the duty to make good any damage, as defined in the second paragraph of Article 288 EC, is thus subject ( Oleifici Mediterranei  v EEC , paragraph 17).
166. The Court has accordingly held that, where the Community courts find that there is no act or omission by an institution of an unlawful nature, so that the first condition for non-contractual Community liability under the second paragraph of Article 288 EC is not satisfied, they may dismiss the application in its entirety without it being necessary for them to examine the other preconditions for such liability, namely the fact of damage and the existence of a causal link between the conduct of the institutions and the damage complained of (see, in particular, KYDEP  v Council and Commission , paragraphs 80 and 81).
169. As the Court of Justice noted in particular in Dorsch Consult  v Council and Commission , paragraph 18, a judgment to which the Court of First Instance refers in paragraph 160 of the FIAMM  judgment and paragraph 153 of the Fedon  judgment, the Court has on the contrary hitherto limited itself, as set out in settled case-law, to specifying some of the conditions under which such liability could be incurred in the event of the principle of Community liability for a lawful act being recognised in Community law (see also, in similar terms, Case 59/83 Biovilac  v EEC  [1984] ECR 4057, paragraph 28). It was solely on that basis that the Court noted in Dorsch Consult  v Council and Commission , paragraph 19, that if the principle of such liability came to be recognised, at the very least three conditions, comprising the fact of damage, the existence of a causal link between it and the act concerned and the unusual and special nature of the damage, would all have to be satisfied in order for liability to be incurred.
170. Secondly, as regards the liability regime recognised in Community law, the Court, while noting that it is to the general principles common to the laws of the Member States that the second paragraph of Article 288 EC refers as the basis of the non-contractual liability of the Community for damage caused by its institutions or by its servants in the performance of their duties, has held that the principle of the non-contractual liability of the Community expressly laid down in that article is simply an expression of the general principle familiar to the legal systems of the Member States that an unlawful act or omission gives rise to an obligation to make good the damage caused ( Brasserie du pêcheur and Factortame , paragraphs 28 and 29).
172. The Court has therefore held in particular that, in view of the second paragraph of Article 288 EC, the Community does not incur liability on account of a legislative measure which involves choices of economic policy unless a sufficiently serious breach of a superior rule of law for the protection of the individual has occurred (see, inter alia, Joined Cases 9/71 and 11/71 Compagnie d’approvisionnement, de transport et de crédit and Grands Moulins de Paris  v Commission  [1972] ECR 391, paragraph 13; Bayerische HNL Vermehrungsbetriebe and Others  v Council and Commission , paragraph 4; Case 50/86 Les Grands Moulins de Paris  v EEC  [1987] ECR 4833, paragraph 8; and Case C-119/88 AERPO and Others  v Commission  [1990] ECR I‑2189, paragraph 18).
173. It has further pointed out, in this connection, that the rule of law the breach of which must be found has to be intended to confer rights on individuals (see to this effect, inter alia, Case C-352/98 P Bergaderm and Goupil v Commission  [2000] ECR I‑5291, paragraphs 41 and 42, and Case C-282/05 P Holcim (Deutschland)  v Commission  [2007] ECR I‑2941, paragraph 47).
174. The Court has, moreover, stated that the strict approach taken towards the liability of the Community in the exercise of its legislative activities is attributable to two considerations. First, even where the legality of measures is subject to judicial review, exercise of the legislative function must not be hindered by the prospect of actions for damages whenever the general interest of the Community requires legislative measures to be adopted which may adversely affect individual interests. Second, in a legislative context characterised by the exercise of a wide discretion, which is essential for implementing a Community policy, the Community cannot incur liability unless the institution concerned has manifestly and gravely disregarded the limits on the exercise of its powers (see, in particular, Brasserie du pêcheur and Factortame , paragraph 45).
178. It is immaterial in this regard whether that conduct is to be regarded as a positive act, namely the adoption of Regulations No 1637/98 and No 2362/98 following the DSB’s decision of 25 September 1997, or as an omission, namely the failure to adopt measures calculated to ensure the correct implementation of that decision. Failure on the part of the Community institutions to act can also fall within the legislative function of the Community, including in the context of actions for damages (see, to this effect, Les Grands Moulins de Paris  v EEC , paragraph 9).
181. First, the finding in paragraph 179 of the present judgment is made without prejudice to the broad discretion which the Community legislature enjoys where appropriate for the purpose of assessing whether the adoption of a given legislative measure justifies, when account is taken of certain harmful effects that are to result from its adoption, the provision of certain forms of compensation (see to this effect, with regard to agricultural policy, Joined Cases C-20/00 and C‑64/00 Booker Aquaculture and Hydro Seafood  [2003] ECR I‑7411, paragraph 85).
183. With regard, more specifically, to the right to property and the freedom to pursue a trade or profession, the Court has long recognised that they are general principles of Community law, while pointing out however that they do not constitute absolute prerogatives, but must be viewed in relation to their social function. It has thus held that, while the exercise of the right to property and to pursue a trade or profession freely may be restricted, particularly in the context of a common organisation of the market, that is on condition that those restrictions in fact correspond to objectives of general interest pursued by the Community and that they do not constitute, with regard to the aim pursued, a disproportionate and intolerable interference which infringes upon the very substance of the rights guaranteed (see, inter alia, Case 265/87 Schräder HS Kraftfutter  [1989] ECR 2237, paragraph 15; Germany  v Council , paragraph 78; and Case C-295/03 P Alessandrini and Others  v Commission  [2005] ECR I‑5673, paragraph 86).
185. Having regard to the features of the present cases, it should also be noted that it follows from the Court’s case-law that an economic operator cannot claim a right to property in a market share which he held at a given time, since such a market share constitutes only a momentary economic position, exposed to the risks of changing circumstances (see to this effect, in particular, Germany  v Council , paragraph 79, and Alessandrini and Others  v Commission , paragraph 88). The Court has also stated that the guarantees accorded by the right to property or by the general principle safeguarding the freedom to pursue a trade or profession cannot be extended to protect mere commercial interests or opportunities, the uncertainties of which are part of the very essence of economic activity (Case 4/73 Nold  v Commission  [1974] ECR 491, paragraph 14).
187. Although it follows from paragraphs 176 and 179 of the present judgment that the Court of First Instance erred in law, it is settled case-law that, if the grounds of a judgment of the Court of First Instance disclose an infringement of Community law but its operative part is shown to be well founded on other legal grounds, the appeal must be dismissed (see, in particular, Case C-320/92 P Finsider  v Commission  [1994] ECR I‑5697, paragraph 37; Case C-150/98 P ESC  v E  [1999] ECR I‑8877, paragraph 17; and Case C-210/98 P Salzgitter  v Commission  [2000] ECR I‑5843, paragraph 58).
188. That is the case here. The Court has held that Community law as it currently stands does not provide for a regime enabling the liability of the Community for its legislative conduct to found an action in a situation where any failure of such conduct to comply with the WTO agreements cannot be relied upon before the Community courts. The claims for compensation by the applicants sought in particular to put in issue the liability of the Community for such conduct. Accordingly, the Court of First Instance could only dismiss those claims, whatever the arguments put forward by the applicants to support them (see, by analogy, Salzgitter  v Commission , paragraph 59). The Court of First Instance would thus have been obliged to dismiss the applicants’ claims on that basis if it had not made the error of law that led it to dismiss them on other grounds (see, by analogy, Finsider  v Commission , paragraph 38, and ESC  v E , paragraph 18).
189. It follows that, although the first plea relied upon in support of the cross-appeals is well founded, it is of no consequence and must therefore be dismissed (see, by analogy, Salzgitter  v Commission , paragraph 60).
The second plea in the main appeals and the second and third pleas in the cross-appeals
203. As regards FIAMM’s claim, it must be pointed out that, where there is no indication that the length of the proceedings affected their outcome in any way, a plea that the proceedings before the Court of First Instance did not satisfy the requirements concerning completion within a reasonable time cannot as a general rule lead to the setting aside of the judgment delivered by the Court of First Instance (see, to this effect, Baustahlgewebe  v Commission , paragraph 49).
205. As is apparent from Article 113(1) of the Rules of Procedure, any appeal is to seek to set aside, in whole or in part, the judgment of the Court of First Instance and, as the case may be, to seek the same form of order, in whole or in part, as that sought at first instance.
208. After holding that such a period had, in the case in point, been exceeded by the Court of First Instance, the Court of Justice decided, for reasons of economy of procedure and in order to ensure an immediate and effective remedy regarding a procedural irregularity of that kind, that in the circumstances the requisite reasonable satisfaction could be granted by setting aside and varying, solely in relation to determination of the amount of the fine, the judgment of the Court of First Instance ( Baustahlgewebe  v Commission , paragraphs 47, 48 and 141).
212. It should, moreover, be pointed out that, even though in this instance the proceedings before the Court of First Instance did last a considerable time, the reasonableness of a period must be appraised in the light of the circumstances specific to each case and, in particular, the importance of the case for the person concerned, its complexity and the conduct of the applicant and of the competent authorities (see, inter alia, Baustahlgewebe  v Commission , paragraph 29, and Joined Cases C‑238/99 P, C‑244/99 P, C-245/99 P, C-247/99 P, C-250/99 P to C‑252/99 P and C-254/99 P Limburgse Vinyl Maatschappij and Others  v Commission  [2002] ECR I‑8375, paragraph 210).