C-2/57

2. Procedure — Application for annulment — Time-limit for institution of proceedings — New decision re-establishing a previous scheme

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 pe­ riod laid down in Article 33 of the Treaty (Treaty, Article 33, third paragraph).

3. Misuse of powers — Substitution of objective

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. Ferrous scrap — Equalization — Uniform rate for the sake of administrative simplicity — Misuse of powers

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).

High Authority of the European Coal and Steel Community , represented by its Legal Adviser, Gerard Olivier, acting as Agent, assisted by Professor Andre de Laubadère of the Faculté de Droit, Paris, with an address for service in Lux­ embourg at its offices, 2 Place de Metz, defendant,

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),

THE COURT

composed of: M. Pilotti, President, A. van Kleffens and L. Delvaux, Presidents of Chambers, P. J. S. Serrarens, O. Riese, J. Rueff, Ch. L. Hammes, Judges,

Advocate-General: M. Lagrange Registrar: A. Van Houtte

gives the following

Judge-Rapporteur, the First Chamber de 85 of the Treaty, the Protocol on the Statute cided to conduct certain measures of inqui of the Court of Justice and the Convention ry and in particular to put certain questions on the Transitional Provisions, in particular to the parties; the answers to these ques Article 29 thereof. tions and the final written conclusions have been placed on the file. The defendant contends that the Court At the beginning of the oral procedure the should: Court decided to deal jointly with the pres ent case and Case 15/57. 'Dismiss the application brought against The parties submitted their oral observa Decision No 2/57 inasmuch as the latter is tions at the public hearing on 22 February not vitiated by misuse of powers in respect 1958. of the applicant; At the hearing on 18 March 1958 the Advo

ty, whose offices are at 2 Place de Metz, ferrous scrap which has been bought or pro Luxembourg, be annulled under the second duced by itself but its scrap needs are sup paragraph of Article 33 of the Treaty. plied entirely from purchases of sheet scrap and turnings from regular and long-stand In its reply the applicant claims that the ing suppliers in the Lyon region. Court should: At the beginning of 1954 it was clear that the equalization arrangement set up be 'Take note that, both on the grounds set out tween the undertakings producing pig-iron in its application and those developed and and steel and authorized by Decision No specified in this reply, the applicant conti 33/53 was inadequate and could not be re nues to pursue the purpose of the applica placed on a voluntary basis under condi tion originating the proceedings and to offer tions which were satisfactory.

All under ticles 2, 3, 4, 5, 14, 15, 31, 33, 53, 65, 80 and takings which were consumers of scrap

were obliged to pay the appropriate contrib 22 June 1956 and 31/56 of 10 October 1956 utions. The Fund fixes the amount of the (JO No 7 of 15. 3. 1956, No 15 of 27. 6. 1956 contributions; in default of payment the and No 23 of 18. 10. 1956). High Authority, at the request of the Fund, By Decision No 2/57 of 26 January 1957, takes an enforceable decision. Decision No which was effective until 31 July 1958 (JO 22/54 was valid until 31 March 1955 and, No 4 of 28. 1. 1957), the High Authority by Decision No 2/55 of 26 January 1955 (JO kept the existing equalization arrangement No 3 of 31. 1. 1955) it was extended until 30 in being but it amended the implementing June 1955. rules so as to encourage the saving of fer By Decision No 14/55 of 26 March 1955 (JO rous scrap 'without thereby making it more No 8 of 30. 3. 1955), adopted pursuant to difficult to raise output capacity'.

munity. In order to guarantee regular sup electric furnaces were provisionally ex plies for the market the Joint Bureau was tended for six months. empowered to purchase on joint account Decision No 2/57'is the subject of the pres from third countries the quantities in ent application. tended to be made available subsequently to consumers. 4. Summary of the submissions In Decision No 14/55 the High Authority and arguments of the parties had already provided for measures to re duce the consumption of ferrous scrap by A — Admissibility of the application increased use of pig-iron.

In these circumstances, the hearth furnaces, liquid basic Bessemer steel submissions made are inadmissible and the being treated as pig-iron. contentions in the application are By Decision No 3/56 of 15 February 1956 considered only in the event of the Court's (JO No 4 of 22. 2. 1956), the bonus referred deciding otherwise. to in Decision No 26/55 was allotted also The arguments submitted by the applicant for ferrous scrap saved through the in are not concerned with the differences be creased use of liquid basic Bessemer steel in tween Decision No 2/57 and the previous the electric furnaces. arrangements but the very principle of Decisions Nos 14/55, 26/55 and 3/56 were equalization; since this was the same in the extended until 31 January 1957 by Deci case of Decision No 2/57 as in the case of sions Nos 10/56 of 7 March 1956, 24/56 of the previous arrangements, the applicant's

arguments are the same as those which it corresponding advantage and is not subject could have put forward against the previous to conditions capable of ensuring that the decisions. For this reason the defendant consequences prohibited by Article 29 of doubts whether the applicant is entitled to the Convention are avoided. Protective or submit such arguments since it did not in transitional measures ought to have been stitute proceedings against the previous adopted in order to make allowance for the general decisions within the prescribed applicant undertaking's particular situa period. tion, which cannot be compared with that In its rejoinder, the defendant reserves the of the steel mills. In view of this and of the right to contest the admissibility of the new local conditions under which it is supplied, submissions which, in its view, are con the applicant is the victim of discrimina tained in the reply, namely 'the extent of tion; moreover, the arrangement represents the High Authority's powers under Article an indirect subsidy for the benefit of the 53 of the Treaty bearing in mind the differ

strictions of Article 59 and Annex II. In ments of the Treaty which, in its opinion, disregarding these restrictions the High indicate the misuse of powers. Authority demonstrated its intention to avoid them and in this way it used its B — The substance powers for a purpose other than for that for which they were conferred upon it. In sup First complaint: Decision No 2/57 affects port of its argument the applicant refers to producers of pig-iron just as much as pro the case-law of national courts and tribu ducers of steel and ignores the objects of the nals, especially in France.

Market. This objective differs from the ing to bear exorbitant charges without any aims described in the High Authority's

memoranda of 6 July 1955 and of April have run contrary to the applicant's inter 1957 on the definition of the general objec ests but that cannot constitute misuse of tives, namely, the need to restore the bal powers. ance between pig-iron production and steel The defendant does not rely on the unlimit production by increasing the production of ed powers with which it is vested under Ar pig-iron. The substitution in this manner of ticle 53 but argues on the basis of the limi the legal objective by a new one is evidence tation of those powers implied by the word of a misuse of powers. It is further evi ing of that provision, namely, that the ar denced by the contributions which, owing rangements in question must be recognized to the absence of any protective measure, as necessary for the performance of the leave pig-iron produced in the Common tasks set out in Article 3 of the Treaty, a Market defenceless against imported pig- condition which was fulfilled in the present iron, regardless of the consequences which case. In any event the action taken by the Article 29 of the Convention states must be High Authority under Article 53 was not

On ent on the attitude of steel consumers; they the contrary, the application of Article 59 are supplementary, indirect measures (3) would have led to a distribution of re which are no substitute for direct and effec sources without regard to the place of pro tive measures for the maintenance, if not duction; in those circumstances, the appli the growth, of pig-iron production in accor cant could not possibly have claimed any dance with the objective laid down in the advantage as the result of the availability of High Authority's memoranda. ferrous scrap in its supply region. Thirdly, on the question of disregard of the Secondly, the defendant denies that the ob lawful objective owing to a serious lack of jective of Decision No 2/57 is different foresight and care, the applicant states that from that published in its memoranda of 6 the High Authority had been faced with the July 1955 and April 1957 on the general ob pig-iron/steel problem since 1955; at that jectives. Neither the memoranda nor Deci time it resolved it by declaring the need to sion No 2/57 were concerned with trying to ensure that there was a substantial increase strike a balance between the conflicting in in the consumption of pig-iron. When, at terests of pig-iron producers and steel pro the end of January 1957, it lost sight of this ducers but with putting into effect a series objective and deliberately concentrated on of measures required by the economic ex encouraging the production of steel, with pansion which was to be foreseen.

The ap Decision No 2/57 does no more than main plicant does not contend that, instead of tain equalization in order to ensure a rea pursuing an objective of general interest, sonable price for steel, correct the equaliza the High Authority in fact pursued an ob tion in order to avoid increased consump jective relating particularly to the applicant tion of ferrous scrap, and stimulate growth but that the individual result of the general in the use of pig-iron. decisions did not, as far as the applicant was Thirdly, the defendant states that the appli concerned, correspond to the aim which the cant seems to be contending that equaliza High Authority set itself. It is quite possible tion is a measure which cannot be adopted that the result of the measures adopted may in a so-called normal period or in the ab-

sence of the exceptional circumstances re­ equalization than the importation of other ferred to more especially in Articles 58 and categories, this is only a hypothetical argu­ 59 of the Treaty; in view of the fact that ment so that the existence of a misuse of equalization had been established since powers is not refuted. 1954, the defendant considers such an argu­ In its statement of defence, the defendant ment to be completely contradictory. explains that every category of scrap is tak­ Second complaint: For reasons which have en into account in the calculation of the nothing to do with the objective of equali­ contributions imposed by way of equaliza­ zation, Decision No 2/57 applies a uniform tion in order to avoid the dearest scrap being rate of equalization to heavy and light scrap, subject to the highest rate of contribution. which is a misuse of powers. This method is necessary because, the The applicant contends that a misuse of equalization charge being a variable one, powers arises from the fact that the uniform there could be no indication a priori which amount due per metric ton on all categories category would incur the heaviest charge. It of ferrous scrap falls more heavily on light is impossible to differentiate between the scrap, which is the only kind used by the ap­ various categories of scrap because substi­ plicant, than on other kinds, whereas before tution is always possible in the various the introduction of equalization the price of manufacturing processes. For these reasons sheet scrap and turnings was very much the defendant draws the conclusion that the lower than that of heavy scrap used in steel same considerations apply to consumers of production. Thus, the arrangement intro­ bought scrap of all kinds and this justifies duced represents an indirect subsidy for the the uniform equalization rate. benefit of consumers of heavy scrap. In its rejoinder the defendant states that the In its reply the applicant emphasizes that applicant cannot compare the price of light the High Authority, in order to justify its scrap (domestic or imported) with that of failure to provide for different rates accord­ heavy scrap (domestic or imported) but, at ing to types of scrap, with the result that one the most, the price of domestic scrap (light category of those concerned was benefited or heavy) with that of imported scrap (light at the expense of another, the High Author­ or heavy). ity gives a reason which is evidence of lack As regards the concern to avoid administra­ of foresight, namely, the administrative tive complications which, according to the complications to which different rates applicant, was the real reason for imposing would give rise. It was therefore to avoid or­ a uniform equalization rate, the defendant ganizational difficulties that the High Au­ emphasizes that it never stated that it took thority preferred to stick to a uniform rate. such a consideration into account: the deci­ While it is true that the High Authority sion to impose a uniform rate was made on tried to soften the effect of its admission by other grounds, that is to say, as mentioned stating that the importation of light scrap in the statement of defence, 'apart from any might in future make heavier demands on administrative complications'.

(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 equaliza­ tion 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 notwith­ standing the existence of an earlier decision on the same subject. For the foregoing reasons the application is admissible.

B — Substance

First the applicant considers that by introducing equalization under Article 53 (b) of the Treaty, the High Authority demonstrated its intention to avoid the safe guards, 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 Author ity 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 de cision was taken, the High Authority was faced with such a situation.

Against this background, the object of the High Authority's decision was to establish reason able 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 pub lished 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 De cision 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.

JUDGMENT OF 12. 6. 1958 — CASE 2/57

tages 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. 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 con­ sumption; it is equally beyond dispute that these two measures encouraged an in­ crease 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 ineffectiveness of the arrange­ ments 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.

HAUTS FOURNEAUX DE CHASSE v HIGH AUTHORITY

gory of scrap. For example, in its consumption of scrap, the applicant uses, accord­ ing 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% of 'turnings' and 20% of bales coming under the category of Might scrap' , whereas the steel mills in the same region use between 10% and 25% 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 cate­ gories of scrap. However, inasmuch as the steel mills have, as far as 75% 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 pre­ paratory 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 pro­ portion 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 sys­ tem 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 uni­ form 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.

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.

Pilotti van Kleffens Delvaux

Serrarens Riese Rueff Hammes

Delivered in open court in Luxembourg on 13 June 1958.

M. Pilotti A. van Kleffens President Judge-Rapporteur A. Van Houtte Registrar