C-1/58

STORK v HIGH AUTHORITY

notwithstanding their possible subse­ (b) The second paragraph of Article 12 of quent authorization. On the other hand, the Convention must be interpreted to agreements and decisions already in ex­ mean that agreements entered into and istence remain in force provisionally un­ decisions adopted between the entry til the expiry of the time-limit set by the into force of the Treaty and the es­ High Authority after authorization has tablishment of the common market

been refused. That emerges from the se­ must also be regarded as agreements cond paragraph of Article 12 of the and decisions already in existence and Convention. 1 Since that provision fixes therefore provisionally valid (ECSC no time-limit for bringing proceedings Treaty, Article 65. Convention, Article against agreements which are already in 1(1), Article 1(5). fourth subparagraph existence, the High Authority is entitled of Article 2(2), Article 2(3), second sub­ to use its discretion in taking action. paragraph of Article 12).

In Case 1/58

FRIEDRICH STORK & CO., Kohlengroßhandlung, of Bünde (Westphalia) represented by Mr Krengel, Mr Hollmann and Mr Stock, of Bielefeld, with an address for ser­ vice in Luxembourg at the office of Félicien Jansen, Huissier, 21 rue Aldringer,

applicant, v

gives the following

1 — Cf. paragraph 3, summary, Judgment in Case 6/54 (Government of the Kingdom of the Netherlands v High Authority), Rec. 1954-1955, p. 255).

JUDGMENT OF 4. 2. 1959 — CASE 1/58

JUDGMENT

Facts

Order No 20 of the Allied High Commission 3. In the meantime, by letters dated 25 and in Germany of 9 September 1952 (Official 31 August 1953, GEORG and the six above- Journal of the Allied High Commission, p. mentioned joint selling agencies requested 1901, et seq.) reorganized the sale of coal in the High Authority to authorize all the the Ruhr. As a result, most of the collieries agreements and decisions of 5 February in the Ruhr coalfield formed themselves into 1953 in accordance with Article 65(2) of the six independent joint selling agencies under Treaty establishing the European Coal and the control of an organization known as the Steel Community. As a result of the negotia­ Gemeinschaftsorganisation Ruhrkohle tions which followed, the Ruhr collieries GmbH (GEORG). With the approval of submitted fresh, amended requests for GEORG the joint selling agencies on 5 authorization. February 1963 adopted identical decisions By its Decisions Nos 5 to 8/56 of 15 which provided that as from the beginning February 1956 (JO of 13. 3.1956, p. 29 et of the new coal-marketing year, that is, seq.) the High Authority accepted the main

STORK v HIGH AUTHORITY

points made in the requests. Those decisions The decision was notified to the applicant were subsequently amended or on 6 December 1957. It forms the subject of supplemented as regards certain points by the present application which was lodged on Decisions Nos 10 to 12/57 (JO of 16. 4. 4 January 1958. 1957, p. 159 et seq.) and 16 to 18/57 (JO of 10.8. 1957, p. 319 et seq.). III — Submissions of the parties As a result of the judgment of the Landgericht Essen of 6 November 1953, the The submissions of the parties may be sum­ High Authority adopted the following deci­ marized as follows: sion on 27 November 1957:

date of its notification to the Landgericht 2 — Substance Essen and to the parties concerned.' That decision is based upon Article 65 of the A — First ground of complaint Treaty establishing the European Coal and The High Authority was wrong when it con­ Steel Community, Article 12 of the Conven­ sidered that the decisions adopted by the tion on the Transitional Provisions and Ruhr organizations had to be assessed in the Decision No 37/53 of the High Authority of light of Community law rather than 11 July 1953 (JO of 21. 7. 1953, p. 153). It German law. was based principally on the following recitals: (a) The applicant considers that the validity of the decisions adopted on 5 February 1953 The decisions in question adopted by the must be assessed solely by reference to the Ruhr ogranizations were adopted before law in force in Germany at that time. The the common market was established. How­ common market in coal was only established ever, the parties involved intended them on 10 February 1953. Under Article 1 of the to apply to the tonnage of fuels sold after Convention on the Transitional Provisions that date and their validity must be con­ the High Authority had no power to take sidered in the light of Community law; any decision before that date and therefore According to the abovementioned Deci­ could not apply the provisions of the Treaty. sion No 37/53, the prohibition in Article Even if reference is made to 1 April 1953, 65 was not applicable to agreements for the date on which the decisions in question which a request for authorization had took effect, the result is the same since, un­ been submitted to the High Authority der the terms of Decision No 37/53, Article before 31 August 1953, provided that the 65 of the Treaty only became applicable on High Authority had not come to a deci­ 31 August 1953. The applicable texts are, sion on such request; therefore, Article 1(2) of Order No 78 of the The members of GEORG had submitted British Military Government of 28 January such requests within the prescribed 1947 and Article 134 of the Bürgerliches period. Gesetzbuch (Civil Code). On the basis of

those provisions the decisions of 5 constitute the implementation of Article February 1953 are totally void. That being 4(d). It is true that at first Article 65 was so, the High Authority should not have not applicable without restriction to agree­ found that they were compatible with the ments concluded before 10 February 1953 Treaty, since only valid decisions may be but only applied subject to the provisions of considered from the point of view of their the Convention and in particular of Article compatibility with Community law. On the 12. That article reverses the principle laid contrary, it should have ruled that the deci­ down in Article 65 in so far as it allows such sions could not be assessed by reference to 'existing' agreements to continue to exist the provisions of the Treaty. and only declares them invalid if the High (b) The High Authority replies that it alone Authority has refused to authorize them. is competent to decide whether agreements When it adopted Decision No 37/53 the and decisions governing competition are High Authority clarified those rules by compatible with the Treaty. It is, on the providing that as regards the 'existing' other hand, for the national courts and agreements the prohibition contained in Ar­ tribunals to decide, where necessary, ticle 65 would come into force on 30 August whether such decisions were properly 1953 unless a request for the authorization adopted in accordance with the national of the agreement was submitted before that law which may then have been applicable. date, in which case the legal position The High Authority agrees with the appli­ resulting from Article 12 of the Convention cant that Community law only became would remain provisionally unchanged. applicable on 10 February 1953; it has never made any statements or decisions to B — Second ground of complaint the contrary. As a result, whatever assess­ The High Authority wrongly seeks to ment was made of the decisions at the time demonstrate the validity of the decisions of they were adopted, they were after that date 5 February 1953 by maintaining that, in ac­ subject to the Treaty 'since, from their con­ cordance with Decision No 37/53, the joint tent, they were intended to be of continuous selling agencies of the Ruhr submitted a re- and permanent application'. quest for the authorization of their agree­ It is perhaps correct that where the decisions ments within the required time and that were void from the outset it was no longer such authorization was subsequently necessary to consider whether the provisions received.

time, the authorization was never given. premises, since it wrongly assumes that They are therefore subject to the absolute Decisions Nos 5 to 7/56 are lawful. prohibition contained in Article 65 and are 1 — Admissibility void under paragraph (4) thereof. Further The High Authority maintains that the deci more, since the request relating to the agree sions in question are lawful. Although the ments actually authorized was not sub applicant was entitled to contest them mitted within the required time., that is, within the prescribed period, it did not do so before 31 August 1953, it could not cause and it cannot now do so incidenter in the the time to start to run in favour of the course of the present action. organizations of the Ruhr. The applicant replies that it only acquired (b) The High Authority replies that the the right to contest Decisions Nos 5 to 7/56 applicant's view is not justified by either the as a result of the adoption of the contested wording or the aim of Decision No 37/53. decision of 27 November 1957. According to the terms of that decision the When adopted, Decisions Nos 5 to 7/56 did entry into force of the prohibition in Article not affect the applicant, since it did not 65 is suspended by the submission of 'a satisfy the conditions laid down in the deci reasoned, written request for authorization'. sions of 5 February 1953 and at that time If such a request is submitted the prohibi those decisions had not been dealt with by tion only takes effect ex nunc from the mo the High Authority in a manner which ment the High Authority rejects the request could be contested. and on the expiry of the time-limit which 2 — The justification for the ground of it has fixed for that purpose.

beginning to pick up again in 1950-51 and before 31 August. Thus, before the adoption that the decisions of 5 February 1953 have of those decisions, the prohibition contained made the work of reconstruction impossible. in Article 65 did not apply to the organiza Most wholesalers were not able to reach a tions of the Ruhr. turnover of 48 000 metric tons again by The suspensory effect provided for by Deci 1952-1953.

The decision as a whole con coalmines of the Ruhr becoming second- hand dealers. cerned 'the manner in which the joint sale of Ruhr coal, which has so far been organized The applicant describes in detail the conse quences for it and the other wholesalers by virtue of the right of occupation,. . . is to be organized in the future within the con which, in its opinion, were caused by the text of the Treaty'. decisions of 5 February 1953. It offers to produce witnesses to prove those allegations. C — Third ground of complaint The transitional rules contained in the The contested decision is based on false foregoing decisions are also discriminatory,

since they only benefit those wholesalers The applicant's criticisms of the assessment whose annual turnover in 1955-1956 was at of the situation made by the High Authority least 48 000 metric tons. The applicant is in adopting Decisions Nos 5 to 7/56 are also thus immediately excluded. unfounded. The High Authority was If, when it adopted Decisions Nos 5 to 7/56, perfectly aware that before 5 February 1953 the High Authority had taken into account the tonnage limit for direct purchases was the repercussions of the decisions of 5 6 000 metric tons but it had at the same February 1953, it would either have been time to take account of the fact that, in the unable to authorize the increase in the meantime, the sale of Ruhr coal had been minimum level of sales to 75 000 metric tons reorganized and that it had therefore to or would have had to adopt different tran authorize commercial regulations which sitional rules. Decisions Nos 5 to 7/56 are would apply without discrimination to all thus based upon an 'incorrect assessment of the dealers in the common market. the situation obtaining when the authoriza Finally, the High Authority considers that tion was granted' and a use of the High the applicant's offers of proof are without Authority's powers for a purpose which ex purpose and that they should be rejected. ceeds that for which they were conferred, D — Fourth ground of complaint that is, therefore, on a wrong use of its dis The High Authority failed to appreciate the cretionary power. fact that the decisions of 5 February 1953 Furthermore, the High Authority failed to were adopted in order to award the prohibi respect certain fundamental rights which tion contained in Article 65 and that, for are protected under almost all the constitu that reason, they could not enjoy the protec tions of the Member States and limit the tion of the transitional rules. area of application of the Treaty.

The purposes of the solution to the present ac decisions were clearly adopted ad hoc, that tion it is unnecessary to decide whether or is, with reference to the imminent entry into not Decisions Nos 5 to 7/56 are in accor force of the provisions of the Treaty on dance with the Treaty. It is not the content agreements and concentrations, including of those decisions which is of interest; they the transitional legal provisions. are only important to the extent to which As a result, the High Authority was obliged they put an end to the procedure set in mo to make an assessment of the background tion in accordance with Decision No 37/53 situation in order to reply to the question and thus to its suspensory effect. Even if the put to it by the Landgericht Essen.

STORK v HIGH AUTHORITY

commercial rules was to benefit the If the applicant wished to take action wholesale trade carried on directly or in­ against the High Authority's provisional directly by the mines and thus to obtain for acceptance of the decisions in question, it them an additional source of revenue. By had either to contest Decision No 37/53 or, remaining supine in the face of such action, in accordance with Article 35 of the Treaty, the High Authority has in practice en­ to invite the High Authority to take action couraged the concentration of the sale of against the commercial rules. If the High coal in the mines and has contravened a Authority had refused, it would have been principle of the Treaty. open to the applicant to bring an action for (b) In reply the High Authority objects that failure to act. the date of the reorganization is rather the result of the time-limit fixed by Order No 20 IV — Procedure of the Allied High Commission. By their nature transitional rules are drawn up with The application was brought in due form reference to specific dates. Rules adopted a and within the prescribed period. The short time before such date cannot be sub­ procedure followed the normal course and jected to special treatment on the ground the Advocate-General gave his opinion that that they constitute an attempt to frustrate the application should be dismissed. the law, since it is impossible in such a situa­ The file from the Landgericht Essen was tion to fix any clear time-limit for their submitted to the Court. adoption.

Law

3. Under Article 65(4) the High Authority has jurisdiction to rule whether any agreements or decisions adopted by such groups of undertakings are compatible with the provisions of that article. That rule must be interpreted to mean that the High Authority is also entitled to rule whether the Article in principle is applicable to such agreements or decisions by virtue of other provisions of the Treaty or of the Convention on the Transitional Provisions. Therefore, no objection can be made to the fact that in this instance the High Authority did not reply directly to the ques­ tion raised by the Landgericht Essen, in its decision to stay the proceedings, whether the decisions of 5 February 1953 are in breach of the prohibition contained in Article 65(1) of the Treaty but found that the prohibitions contained in Article 65 did not apply to those decisions until the entry into force of Decisions Nos 5 to 7/56. The foregoing cannot alter the fact that the Court is required to deal with an application for annulment based upon Article 65(4) of the Treaty. On the grounds set out under Nos 1 and 2 above the Court has jurisdiction to hear the action and the applicant has the right to institute proceedings.

4. The applicant considers that a misuse of powers or an infringement of the Treaty sufficient to justify the annulment of the contested decision is to be found in that the High Authority wrongly failed to take account of the fact that the decisions in question had to be assessed from the point of view of German law, by virtue of which they were void. That argument is unfounded.

In this instance the decisions adopted on 5 February 1953 were intended to come into force at the beginning of the new coal-marketing year that is, as from 1 April 1953. It was therefore the intention of the parties concerned that they should be applied at a time when the common market was already in existence. The High Authority was therefore obliged to consider them in the manner described above, that is, without reference to their validity under national law. It had to do so on the basis of Community law which, according to the terms of the final subparagraph of Article 2(2), Article 2(3), Article 1(4) and subparagraph (a) of the second paragraph of Article 8 of the Convention on the Transitional Provisions, was the only law applicable to coal after 10 February 1953 (the day on which the common market was established).

The legal position described above was in no way modified by the fact that the prohibitions contained in Article 65 did not take effect on the establishment of the common market, that is to say, on 10 February 1953, but, in accordance with Arti­ cle 12 of the Convention and Decision No 37/53 of the High Authority which was adopted in implementation thereof, only on 31 August 1953 or even later.

5. Since the Court cannot base its judgment on legal arguments whose validity is not established, it considers it necessary to make a preliminary examination of the question whether Article 65 was applicable not only on the establishment of the common market in coal (10 February 1953) but already on the entry into force of the Treaty establishing the European Coal and Steel Community (on 25 July 1952).

As is stated in Article 1(1), the Convention was annexed to the Treaty so as to 'provide for the measures required in order to establish the common market and enable production to be progressively adapted to the new conditions, while helping to eliminate disequilibria arising out of the former conditions'. Article 12 of the Convention must be interpreted in the light of that principle.

The system established by Article 65 of the Treaty is based not only upon the prohibition of agreements laid down in paragraph (1) of that article but at the same time on the possibility of authorizing useful and necessary agreements contained in paragraph (2). That possibility of authorization is of considerable importance since, despite the restrictions set on agreements by the Treaty, it provides for and recognizes the procedure for the joint sale of coal, which has long been employed in all the countries of the Community producing coal in large quantities.

On the basis of the aim of the Convention, which is set out above and referred to in Article 1(1) thereof, Article 12 must be interpreted to mean that the second paragraph is also applicable to agreements drawn up between the entry into force of the Treaty and the establishment of the common market. That interpretation alone avoids the unsatisfactory situation described above, that is to say, the arbitrary separation of the various connected elements of Article 65 into those which are im­ mediately applicable and those which would only become applicable after an in­ definite period.

The different regulations applying to the prohibitions contained in Article 4(a) to (c) and the much clearer transitional provisions contained in Article 13 of the Convention governing the implementation of Article 66 of the Treaty on concentra­ tions between undertakings do not conflict with the above interpretation, since they concern circumstances of another type which had for good reasons to be subject to another system. Paragraph 13 in particular is based on quite different premises, since transactions bringing about concentrations effected before a certain date en­ tirely avoid the application of the Treaty, whilst Article 65 was sooner or later to apply to all agreements regardless of the date on which they were made.

Agreements made before 10 February 1953 therefore enjoy the protection of the se­ cond paragraph of Article 12 of the Convention.

6 (a) It emerges from the second paragraph of Article 12 of the Convention, together with Articles 1, 2 and 3 of Decision No 7/53 of the High Authority of 11 July 1953 (JO 1953, p. 153), that the 'existing' agreements concluded before 10 February 1953 did not become invalid on the establishment of the common market (10 February 1953) but were regarded as authorized subject to subsequent prohibi­ tion and, in the absence of any special decision adopted by the High Authority, only fell under the prohibition in Article 65 and became invalid as from 31 August 1953. If a request for authorization has been submitted before that date the said agree­ ment remained in force as long as the High Authority adopted no decision rejecting it.

Even if such an intention had encouraged the parties concerned to adopt the deci­ sions of 5 February 1953, which the Court considers to be possible but unproved, it would not be sufficient to prevent the application of Articles 1 to 3 of Decision No 37/53 of the High Authority. Order No 20 of the Council of the Allied High Com­ mission of 9 September 1952 had compelled the joint selling agencies for Ruhr coal to reorganize the sale of coal before 31 March 1953. That measure encouraged the agencies concerned to take steps at the same time to limit the ability of wholesalers to place direct orders, a fortiori since Order No 2 had expressly referred to such dealers several times. Although there was, therefore, a legal obligation on the joint selling agencies for Ruhr coal to adopt agreements on their reorganization, it is not sufficiently established in law that the decisions of 5 February 1953 were only adopted in order to avoid the application of Article 65 of the Treaty.

According to Article 1 of Decision No 37/53 of the High Authority, the decisive question is whether the agreements, decisions or concerted practices were already in existence when the common market was established (10 February 1953). That ques­ tion may be answered in the affirmative as regards the decisions of 5 February 1953.

(ii) The applicant also maintains that since the decisions of 5 February 1953 have never been authorized they are covered by the absolute prohibition in Article 65 and are therefore void. That argument is unfounded.

The High Authority in fact refused to authorize the decisions of 5 February 1953. That refusal has never been expressly stated but it was clearly implied in the authorization of the regulations on sales given by Decisons Nos 5 to 7/56.

After examining the regulations governing the sale of Ruhr coal which were sub­ mitted to it for examination and which included the decisions of 5 February 1953, the High Authority let it be understood that it could not authorize the regulations existing earlier. It had, however, to avoid a situation in which the previous legal organization governing the sale of Ruhr coal became ineffective without being replaced by new regulations compatible with the Treaty. To wait until the coal- mines of the Ruhr submitted new regulations which could be authorized before for­ mally rejecting the earlier regulations corresponded to the desire, which was based on the general aims of the Treaty and in particular on Article 3(a) thereof, to avoid that situation. All the efforts towards the adoption of regulations governing the sale of Ruhr coal form a single entity, beginning with the requests for the authorization of the decisions of 5 February 1953 and ending with the authorization given to the agreements finally adapted to the requirements of the High Authority and referred to in Decisions Nos 5 to 7/56. It is impossible for that continuous development to be artificially divided and for the first request for authorization which was presented within the required time to be thereby deprived of the suspensory effect provided for in Decision No 37/53.

(c) There is therefore no error of law in the finding made by the contested decision that the prohibitions in Article 65(1) of the Treaty were not applicable to the deci­ sions of 5 February 1953 until the entry into force of Decisions Nos 5 to 7/56 on 22 February 1956. Such a finding does not prejudge the question, which the Landgericht Essen did not raise in its decision to stay proceedings, what law to apply to those decisions during the period from 5 to 10 February and whether or not they were valid according to that law.

(a) The Court of Justice of the ECSC has already ruled that an applicant could put forward the illegality of a general decision on which an individual decision was based as a ground for an action against such individual decision. Since Decisions Nos 5 to 7/56 do not form the basis of the contested decision, the Court is not re­ quired in this instance to settle the question whether the same applies where the in­ dividual decision at issue is based upon another individual decision which is alleged to be illegal. That is already clear from the fact that, as a result of the above in­ terpretation of Article 12 of the Convention and Decision No 37/53, the contested decision had to follow the same pattern if when adopting Decision No 5 to 7/56 the High Authority started with the idea that the commercial regulations existing before the adoption of the decisions of 5 February 1953 were alone compatible with Article 65. The adoption of Decisions Nos 5 to 7/56 is only decisive for the purposes of fixing the date from which the prohibitions contained in Article 65 applied to the 'existing' agreements and decisions.

There is therefore no real link between the contested decision and Decisions Nos 5 to 7/56.

(b) In so far as the applicant contests the regularity of Decisions Nos 5 to 7/56 and, in its alternative conclusions (which, furthermore, are inadmissible since they were only put forward in the reply and therefore out of time for the purposes of Article 22 of the Protocol on the Statute of the Court and Article 29 of the Rules of

Procedure of the Court, apparently seeks their annulment, the application is inad-

THE COURT

hereby:

1. Dismisses the application for the annulment of the decision of the High Authority of 27 November 1957, notified to the applicant on 6 December 1957:

OPINION OF MR LAGRANGE — CASE 1/58

2. Orders the applicant to pay the costs of the action.

Donner Riese Rueff

Mr President, Commercial Division of the Landgericht Members of the Court, Essen made the following order: In order for my opinion to be as clear as 'The proceedings are stayed until the possible, I ask your permission to give a brief High Authority of the European Coal preliminary sketch of the essential points of and Steel Community has given a ruling the facts and the procedure. under Article 65(4) of the Treaty es­ The applicant company is a wholesale coal tablishing the European Coal and Steel dealer at Bünde (Westphalia). It satisfied Community, on the question whether the the conditions for obtaining supplies direct joint decisions adopted by the members of from the mines fixed by the organizations the defendant and the six joint selling for the joint sale of Ruhr coal — the agencies for Ruhr coal which provide that Deutscher Kohlenverkauf or DKV — which as from 1 April 1953 the agencies will no was still active on the entry into force of the longer deliver directly to wholesale coal Treaty, that is, it had an annual turnover dealers selling less than 48 000 metric exceeding 6 000 metric tons; it was, tons of fuel per year are contrary to the therefore, a 'first-hand dealer.' However, it terms of the prohibition contained in Ar­ subsequently found itself unable to reach ticle 65(1) of the abovementioned the turnover of 48 000 metric tons required Treaty.' thereafter under the rules adopted on 5 The Court is aware that under the terms of February 1953 by GEORG, the new Article 65(4) 'The High Authority shall organization set up by the coal companies of have sole jurisdiction, subject to the right to the Ruhr in implementation of the legisla­ bring actions before the Court, to rule tion of the Occupying Powers. whether any ... agreement or decision' Therefore, on 23 April 1953 the applicant prohibited by paragraph (1) 'is compatible brought an action for damages against with this Article'. Any such prohibited GEORG before the Landgericht Essen in agreements or decisions' shall be respect of the loss suffered as a result of the automatically void and may not be relied fact that after 1 April 1953, the date on upon before any court or tribunal in the which the new system came into force, it Member States'. was no longer supplied directly as a first- The High Authority only adopted its deci­ hand wholesaler. sion on 27 November 1957. The operative By a judgment of 6 November 1953, the part of that decision is as follows: