1 BY AN APPLICATION OF 27 NOVEMBER 1969, LODGED AT THE COURT REGISTRY ON 29 NOVEMBER 1969, THE FERAM UNDERTAKING OF ROME BROUGHT BEFORE THE COURT : ( A ) AN APPLICATION FOR THE ANNULMENT UNDER THE COMBINED PROVISIONS OF ARTICLES 33 AND 36 OF THE TREATY ESTABLISHING THE EUROPEAN COAL AND STEEL COMMUNITY OF THE DECISION OF THE COMMISSION OF THE EUROPEAN COMMUNITIES OF 9 OCTOBER 1969, TAKEN IN IMPLEMENTATION OF THE PROVISIONS CONCERNING THE EQUALIZATION OF IMPORTED FERROUS SCRAP AND SCRAP TREATED AS SUCH AND REQUIRING THE FERAM COMPANY TO MAKE SUPPLEMENTARY EQUALIZATION PAYMENTS; AND ( B ) AN ACTION FOR DAMAGES UNDER ARTICLE 40 OF THE SAME TREATY AGAINST THE EUROPEAN COAL AND STEEL COMMUNITY . THE APPLICATION FOR ANNULMENT
2 THE APPLICANT REQUESTS THE ANNULMENT OF THE CONTESTED DECISION ON THE GROUND THAT GENERAL DECISIONS NOS 7/63 AND 19/65, OF WHICH THE CONTESTED DECISION CONSTITUTES THE APPLICATION, ARE ILLEGAL IN SEVERAL RESPECTS .
3 A - THESE DECISIONS ARE SAID TO BE DISCRIMINATORY TO THE EXTENT TO WHICH THEY EXCLUDE FROM THE OBLIGATION TO PAY CONTRIBUTIONS AND FROM THE RIGHT TO RECEIVE EQUALIZATION PAYMENTS, THE TONNAGES OF PURCHASED ALLOY STEEL SCRAP AND, IN THE CASE OF UNDERTAKINGS HAVING A STEEL FOUNDRY, THE PROPORTION OF BOUGHT SCRAP CONSUMED CORRESPONDING TO THE PROPORTION OF PRODUCTION OF CRUDE STEEL FOR CASTINGS .
4 THE DEFENDANT HAS ARGUED THAT THE EXEMPTION OF ALLOY STEEL SCRAP IS JUSTIFIED BY THE DIFFERENCE BETWEEN THE ALLOY SCRAP MARKET AND THAT OF ORDINARY SCRAP, THE PRICE OF ALLOY SCRAP DEPENDING RATHER ON THE PROPORTION OF NOBLE METALS FOUND IN IT THAN ON THAT OF FERROUS SCRAP . THE INCLUSION OF ALLOY SCRAP IN THE EQUALIZATION SCHEME HAD, ACCORDING TO THE DEFENDANT, AN UNDOUBTED INFLUENCE ON THE MARKET IN NON-FERROUS METALS WHICH DO NOT FALL WITHIN THE ECSC TREATY . THE DEFENDANT HAS GIVEN AS A REASON FOR THE EXCLUSION OF SCRAP INTENDED FOR INTEGRATED FOUNDRIES, THE NECESSITY NOT TO CHANGE THE NORMAL CONDITIONS OF COMPETITION BETWEEN THEM AND THE INDEPENDENT FOUNDRIES .
5 THESE EXPLANATIONS, WHICH ARE NOT DISPUTED BY THE APPLICANT, IN SUBSTANCE APPEAR ACCEPTABLE . THE HIGH AUTHORITY, BY ADOPTING GENERAL DECISIONS NOS 7/63 AND 19/65 WHICH FURTHERMORE ONLY RE-ENACTED PREVIOUS PROVISIONS, WAS ENTITLED TO TAKE THE VIEW THAT A PROPER APPLICATION OF THE PRINCIPLES OF THE TREATY REQUIRED THE EXCLUSION OF THE SAID SCRAP FROM THE EQUALIZATION SCHEME AND THAT THERE IS NOTHING TO SHOW THAT IN DOING THIS IT DISTORTED THE SCHEME AND MADE IT DISCRIMINATORY .
6 CONSEQUENTLY THE COMPLAINT MUST BE REJECTED .
7 B - FURTHER, ACCORDING TO THE APPLICANT THE COMPETENT AUTHORITIES DISREGARDED THE RECOMMENDATIONS WHICH THE COUNCIL OF THE ECSC MADE WHEN GIVING ITS ASSENT TO DECISION NO 14/55 OF THE HIGH AUTHORITY OF 26 MARCH 1955 ESTABLISHING FINANCIAL MACHINERY DESIGNED TO ENSURE A REGULAR FLOW OF SCRAP FOR THE COMMON MARKET ( OJ NO . 8 OF 30 . 3 . 1955, P . 685 ).
8 RECOMMENDATIONS DRAWN UP BY THE COUNCIL UPON THE GIVING OF AN ASSENT SUCH AS THAT PRESCRIBED IN ARTICLES 28 AND 53 OF THE TREATY CANNOT HAVE THE EFFECT OF RESTRICTING OR MODIFYING THE EXPRESS POWERS CONFERRED BY THE DECISION WHICH IS THE SUBJECT OF THAT ASSENT . THE LEGALITY OF DECISIONS TAKEN IN IMPLEMENTATION OF A GENERAL DECISION WHICH HAS BEEN THE SUBJECT OF AN ASSENT CAN THEREFORE BE EXAMINED ONLY ON THE BASIS OF THE ACTUAL PROVISIONS OF THAT GENERAL DECISION .
9 CONSEQUENTLY EVEN IF IT WERE ESTABLISHED, WHICH THE DEFENDANT DENIES, THAT IN EXERCISE OF THE POWERS CONFERRED BY DECISION NO 14/55 THE COMPETENT AUTHORITIES DISREGARDED THE RECOMMENDATIONS OF THE COUNCIL, THIS WOULD HAVE CONSEQUENCES ONLY AS REGARDS THE RELATIONS BETWEEN THOSE AUTHORITIES AND THE COUNCIL, BUT COULD NOT INVALIDATE DECISIONS TAKEN IN CONFORMITY WITH THE PROVISION IN RESPECT OF WHICH THE ASSENT WAS GIVEN . FURTHERMORE, DECISION NO 14/55 WAS SUPPLEMENTED AND AMENDED BY SEVERAL LATER DECISIONS WHICH ALSO OBTAINED THE REQUISITE ASSENT OF THE COUNCIL, PARTICULARLY DECISION NO 16/58 OF THE HIGH AUTHORITY OF 24 JULY 1958 ( OJ NO . 10 OF 30 . 7 . 1958, P . 275 ), BY WHICH THE SCHEME WAS RENEWED . THERE IS NOTHING TO INDICATE THAT ON THESE OCCASIONS THE COUNCIL FOUND THAT ITS INITIAL RECOMMENDATIONS HAD BEEN DISREGARDED .
10 THE COMPLAINT MUST THEREFORE BE REJECTED .
11 C - THE APPLICANT GOES ON TO ALLEGE THAT THE DATA USED AS THE BASIS OF THE AVERAGE WEIGHTED EQUALIZATION PRICES FIXED BY DECISIONS NOS 7/63 AND 19/65 ARE CORRECT . IT SAYS THAT THE AVERAGE WEIGHTED COSTS OF INTERNAL RECOVERED SCRAP WERE EXCESSIVELY REDUCED WHILST THE AVERAGE COSTS OF IMPORTED SCRAP WERE INCREASED SO THAT THE EQUALIZATION RATE WAS RAISED TO AN UNNECESSARILY HIGH LEVEL . ACCORDING TO THE EXPERIENCE OF THE APPLICANT ITSELF THE PRICES OF INTERNAL RECOVERED SCRAP WERE CONSISTENTLY HIGHER THAN THE AVERAGE PRICES ADOPTED BY DECISIONS NOS 7/63 AND 19/65 .
12 THE DEFENDANT REPLIES THAT THE BASIC DATA FOR FIXING AVERAGE PRICES OF IMPORTED SCRAP WERE TAKEN DIRECTLY FROM CONTRACTS OF PURCHASE MADE BY THE JOINT BUREAU OF FERROUS SCRAP CONSUMERS, THE ONLY BODY COMPETENT TO MAKE PURCHASES OF SCRAP ON THE INTERNATIONAL MARKET ON BEHALF OF UNDERTAKINGS WHICH REQUESTED IT TO DO SO AND THAT THIS FIXING OF PRICES CONSEQUENTLY CANNOT ATTRACT ANY CRITICISM . AS REGARDS THE AVERAGE PRICES OF SCRAP BOUGHT WITHIN THE MARKET, THE NECESSARY DATA WERE DERIVED FROM THE MONTHLY DECLARATIONS OF THE UNDERTAKINGS CONTAINING INFORMATION CONCERNING THE PRICES PAID . THESE DECLARATIONS WERE STRICTLY SUPERVISED BY THE CHECKING OF PURCHASE INVOICES . THE DEFENDANT FURTHER STATES THAT IT IS IN THE NATURE OF THE SCRAP MARKET TO CAUSE, PARTICULARLY ON THE BASIS OF THE LOCATION OF CONSUMING UNDERTAKINGS, PRICE DIFFERENCES WHICH ARE IN THEMSELVES COMPATIBLE WITH THE UNITY OF THE MARKET .
13 THE APPLICANT HAS SUBMITTED NOTHING CAPABLE OF CONSTITUTING EVEN THE BEGINNINGS OF PROOF OF ITS ALLEGATIONS . IN PARTICULAR IT HAS FAILED TO PROVE THAT THE PRICE DIFFERENCES IN THE MARKET WERE CHANGED THROUGH THE FUNCTIONING OF THE EQUALIZATION SCHEME OR THAT THE FUNCTIONING OF THE SCHEME AGGRAVATED THE DISADVANTAGES WHICH IT SUFFERED IN COMPARISON WITH BETTER SITUATED UNDERTAKINGS .
14 THE COMPLAINT MUST THEREFORE BE REJECTED .
15 D - THE APPLICANT LASTLY ALLEGES THAT THE REASONS FOR DECISIONS NOS 7/63 AND 19/65 ARE INADEQUATELY STATED . IN ITS REPLY IT STATED THAT BY THIS COMPLAINT IT DID NOT INTEND TO REQUIRE THAT THE DOCUMENTS JUSTIFYING THE VARIOUS FIGURES LAID DOWN BY THESE DECISIONS SHOULD BE ANNEXED TO THE DECISIONS OR PUBLISHED, BUT ASKS THAT THE DEFENDANT SHOULD SUBMIT THE BOOKS OF ACCOUNT RELATING TO THE EQUALIZATION SCHEME TO AN OFFICIAL AUDITOR OF ACCOUNTS OR TO A COMMITTEE OF REPRESENTATIVES OF UNDERTAKINGS AND THAT THE DEFENDANT SHOULD PUBLISH THE RESULTING REPORT .
16 THE REASONS FOR THE PROVISIONS OF DECISIONS NOS 7/63 AND 19/65 ARE GIVEN IN BOTH THE PREAMBLES AND ANNEXES TO THOSE DECISIONS . THE REQUIREMENT OF A FINAL CHECK OF THE ACCOUNTING OF THE EQUALIZATION SCHEME IS CONCERNED NOT WITH THE SUPERVISION OF THE LEGALITY OF THE DECISIONS IN QUESTION BUT WITH THE EFFICIENCY OF THE WORKING OF THIS SCHEME WHICH IS A MATTER FOR OTHER INSTITUTIONS AND AUTHORITIES OF THE COMMUNITIES AND PARTICULARLY THE PARLIAMENT AND THE AUDITOR .
17 FURTHER, THE DEFENDANT HAS STATED THAT ALL THE FIGURES SET OUT IN THE ANNEXES TO DECISIONS NOS 7/63 AND 19/65 WERE SUBMITTED BY ITS OFFICERS TO REPEATED EXAMINATIONS AND CHECKS AND THAT THE AUDITOR OF THE ECSC ALWAYS EXERCISED HIS SUPERVISION OVER THE MANAGEMENT AND THE ANNUAL ACCOUNTS OF THE EQUALIZATION SCHEME .
18 THE COMPLAINT MUST CONSEQUENTLY BE REJECTED .
19 E - THE APPLICANT FURTHER REGARDS DECISIONS NOS 7/63 AND 19/65 AS ILLEGAL BECAUSE THEY WERE NOT SUBMITTED TO THE COUNCIL AND DID NOT RECEIVE ITS ASSENT AS REQUIRED BY ARTICLE 53 OF THE TREATY .
20 HOWEVER, THAT ARTICLE REQUIRES THE UNANIMOUS ASSENT OF THE COUNCIL ONLY FOR DECISIONS BY WHICH THE HIGH AUTHORITY INSTITUTES FINANCIAL ARRANGEMENTS . THE CONTESTED DECISIONS AMOUNT ONLY TO MEASURES IMPLEMENTING DECISIONS NO 18/58 WHICH ITSELF WAS GIVEN THE REQUISITE ASSENT OF THE COUNCIL .
21 IT FOLLOWS THAT THE OBJECTION OF ILLEGALITY RAISED AGAINST DECISIONS NOS 7/63 AND 19/65 MUST BE DISMISSED . CONSEQUENTLY THE PRINCIPAL APPLICATION FOR ANNULMENT MUST ALSO BE DISMISSED . THE APPLICATION FOR DAMAGES
22 IN ITS ORIGINATING APPLICATION THE APPLICANT ASKS THE COURT TO HOLD THE DEFENDANT LIABLE FOR WRONGFUL ACTS OR OMISSIONS WITHIN THE MEANING OF ARTICLE 40 OF THE TREATY . A FIRST UNLAWFUL ACT OR OMISSION IS SAID TO BE CONSTITUTED BY THE FACT THAT ON THE ONE HAND THE COMMISSION VALIDLY NOTIFIED IT FOR THE FIRST TIME ON 18 OCTOBER 1969 OF THE AMOUNT OF ITS EQUALIZATION CONTRIBUTIONS, WHILST ON THE OTHER HAND, THE APPLICANT WAS OBLIGED TO PUBLISH ITS PRICE LISTS FOR THE PERIOD SUBJECT TO EQUALIZATION ( APRIL 1954 TO NOVEMBER 1958 ) WITHOUT KNOWING THE AMOUNT OF THOSE CONTRIBUTIONS . THE DAMAGE SUFFERED BY THE APPLICANT UNDER THIS HEAD AMOUNTS TO 15 PER CENT OF ITS TOTAL SALES OF STEEL DURING THE CONTRIBUTION PERIOD .
23 A SECOND WRONGFUL ACT OR OMISSION IS SAID TO BE CONSTITUTED BY THE FACT THAT BECAUSE OF ITS COMMITMENTS TO THE COUNCIL, THE HIGH AUTHORITY WAS SERIOUSLY IN BREACH OF THE DUTY OF SUPERVISION WHICH IS IMPOSED UPON IT BY THE TREATY AND GROSSLY FAILED TO EXERCISE THE NORMAL DILIGENCE WHICH ANY PUBLIC ADMINISTRATION MUST SHOW, THUS FACILITATING THE PERPETRATION OF LARGE-SCALE FRAUDS WITHIN THE FRAMEWORK OF THE EQUALIZATION SCHEME . IN ITS CONCLUSIONS THE APPLICANT STATED LASTLY THAT IT WOULD ACCEPT ANY SOLUTION CAPABLE OF FIXING THE AMOUNT OF DAMAGE WHICH IT HAD SUFFERED .
24 AS CONCERNS THE FIRST HEAD OF THE CLAIM, THE VERY NATURE OF ANY EQUALIZATION SCHEME WHICH COULD LEGALLY HAVE BEEN ESTABLISHED BY THE GENERAL DECISIONS OF THE HIGH AUTHORITY NECESSARILY IMPLIED A POSTERIORI CALCULATIONS . IN FACT THE EQUALIZATION RATE COULD BE FIXED ONLY FOLLOWING CONSIDERATION OF A SERIES OF FACTORS SUCH, IN PARTICULAR, AS THE PRICES AND THE RESPECTIVE TOTAL QUANTITIES OF IMPORTED SCRAP AND OF SCRAP PURCHASED WITHIN THE MARKET .
25 IN ORDER TO ASCERTAIN THESE FACTORS THE COMPETENT AUTHORITIES DEPENDED PARTICULARLY ON THE CARE WITH WHICH THE UNDERTAKINGS CONCERNED CARRIED OUT THEIR DUTY TO MAKE THE NECESSARY DECLARATIONS . IT IS COMMON KNOWLEDGE AND FURTHERMORE PROVED BY THIS VERY CASE THAT CERTAIN UNDERTAKINGS HAVE NOT ALWAYS SHOWN ALL THE CARE REQUIRED . THE APPLICANT HAS NOT HOWEVER ALLEGED THAT THE ADMINISTRATION WAS GUILTY OF NEGLIGENCE BY FAILING TO USE THE REQUISITE VIGOUR IN REMINDING THOSE SUBJECT TO ITS ADMINISTRATION OF THEIR DUTIES .
26 IN FACT THE DISADVANTAGES COMPLAINED OF WERE INEVITABLE AND INHERENT IN THE EQUALIZATION SCHEME . SUCH DISADVANTAGES CANNOT AMOUNT TO DAMAGE GIVING RISE TO A RIGHT TO COMPENSATION ESPECIALLY AS THEY AFFECT ALL IRON AND STEEL UNDERTAKINGS IN THE COMMUNITY AND EQUALIZATION HAS ON THE OTHER HAND BROUGHT CONSIDERABLE BENEFITS TO USERS OF SCRAP AS A WHOLE .
27 IN THE PRESENT CASE IT HAS NOT BEEN ESTABLISHED THAT THE DISADVANTAGE SUFFERED BY THE APPLICANT EXCEEDED THAT NORMALLY INHERENT IN THE CHOSEN SCHEME OR THOSE SUFFERED BY ITS COMPETITORS . IT CANNOT BE DISPUTED, FURTHERMORE, THAT WHILE THE SCHEME WAS FUNCTIONING THE APPLICANT WAS REGULARLY INFORMED OF THE AMOUNT OF ITS CONTRIBUTIONS AS APPEARED ON THE ONE HAND FROM PROVISIONAL CALCULATIONS BY THE ADMINISTRATION AND ON THE OTHER HAND FROM DECLARATIONS MDE BY ITSELF REGARDING ITS PURCHASES OF SCRAP . IN DECEMBER 1965 AT THE LATEST IT RECEIVED ITS VIRTUALLY DEFINITIVE STATEMENT OF ACCOUNT WHICH WAS, OF COURSE, SUBJECT TO ITS OBLIGATION TO PAY INTEREST WHICH WAS LEGALLY DUE FROM IT .
28 SINCE NEITHER THE EXISTENCE OF A WRONGFUL ACT OR OMISSION NOR OF DAMAGE SPECIAL TO THE APPLICANT HAS BEEN ESTABLISHED, THE FIRST HEAD OF THE ACTION FOR DAMAGES MUST BE DISMISSED .
29 AS REGARDS THE SECOND HEAD OF THE ACTION IT APPEARS FROM THE ORIGINATING APPLICATION THAT BY THE COMMITMENTS WHICH IT MENTIONS THE APPLICANT HAS IN MIND THE RECOMMENDATION OF THE COUNCIL, FORMULATED AT THE TIME OF THE ASSENT TO DECISION NO 14/55 MENTIONED ABOVE, THAT THE HIGH AUTHORITY SHOULD LIMIT VERY STRICTLY THE ACTIONS TAKEN IN RESPECT OF SUPERVISION EXERCISED OVER THE MEASURES ADOPTED BY THE BRUSSELS ORGANIZATIONS AND THEIR NATIONAL OFFICES . ACTING IN ACCORDANCE WITH THAT RECOMMENDATION THE HIGH AUTHORITY IS STATED TO HAVE FAILED IN ITS DUTY TO ENSURE THE ACHIEVEMENT OF THE OBJECTIVES BOTH OF THE TREATY AND OF THE FINANCIAL ARRANGEMENT .
30 THE POSSIBLE EXISTENCE OF THE ALLEGED COMMITMENTS IS IN ANY EVENT IRRELEVANT IN THE PRESENT CASE, SINCE THE RESPONSIBILITY OF THE COMMUNITY AUTHORITIES MUST BE CONSIDERED IN THE LIGHT OF THE ESTABLISHED RULES AND THE VALID PRINCIPLES APPLYING TO THE MATTER . THE HIGH AUTHORITY, FURTHERMORE, HAS NEVER SOUGHT TO EXONERATE ITSELF BY RELYING ON SUCH RECOMMENDATIONS OF THE COUNCIL, NOR COULD IT DO SO .
31 THE APPLICANT BASED ITS COMPLAINTS OF LACK OF SUPERVISION AND OF CARE ON NOTHING MORE THAN THE FACT THAT VERY SERIOUS FRAUDS TOOK PLACE IN THE MANAGEMENT OF THE EQUALIZATION SCHEME .
32 THE DEFENDANT CONSIDERS THE CLAIM TO BE INADMISSIBLE ON THE GROUND THAT IT IS NOT POSSIBLE TO SEE EXACTLY WHICH FACTS THE APPLICANT INTENDS TO RELY UPON, AS THE BASIS OF ITS RIGHT TO COMPENSATION .
33 THE MERE FACT THAT FRAUDS TOOK PLACE DOES NOT BY ITSELF PROVE THAT THE ADMINISTRATION FAILED IN ITS DUTIES OF SUPERVISION AND CONSEQUENTLY WAS GUILTY OF A WRONGFUL ACT OR OMISSION . THE COMMISSION HAS STATED THAT THE TONNAGES OF SCRAP WRONGFULLY ACCEPTED FOR EQUALIZATION AMOUNT TO APPROXIMATELY 2 PER CENT OF THE TOTAL TONNAGE ACCEPTED AND THAT THE FRAUDS COMPLAINED OF, ALTHOUGH THEY AMOUNTED TO A SERIOUS HANDICAP, WERE NOT OF SUCH A CHARACTER AS TO DISTORT THE EQUALIZATION SCHEME OR THROW IT OUT OF BALANCE . IT HAS STATED ALSO THAT AT PRESENT FOUR-FIFTHS OF THE WRONGLY PAID SUMS HAVE BEEN RECOVERED AND THAT AS TO THE REST, PROCEEDINGS FOR RECOVERY ARE STILL PENDING .
34 HAVING REGARD TO THESE OBSERVATIONS, WHICH WERE NOT DISPUTED DURING THE PROCEEDINGS, THE COMPLAINTS PUT FORWARD MUST BE SUPPORTED BY MUCH MORE PRECISE PARTICULARS THAN THE GENERAL ASSERTIONS TO WHICH THE APPLICANT HAS CONFINED ITSELF, IN ORDER TO BE TAKEN INTO CONSIDERATION AS PROOF OF THE EXISTENCE OF A WRONGFUL ACT OR OMISSION . THIS HEAD OF THE ACTION FOR DAMAGES MUST CONSEQUENTLY ALSO BE REJECTED .