C-15/59

In Joined Cases 15 and 29/59

SOCIÉTÉ MÉTALLURGIQUE DE KNUTANGE, a limited liability company incorporated under French law, having its registered office in Paris, represented by its chairman and Managing Director, Jean Latourte, assisted by Jean-Pierre Aron, Advocate at the Cour d'Appel, Paris, with an address for service in Luxembourg at the office of the Chambre Syndicale de la Sidérurgie Française (French Steel Industry),

applicant, V

High Authority of the European Coal and Steel Community , represented by its Legal Adviser, Professor Julio Pasetti, acting as Agent, with an address for service in Luxembourg at its offices, 2 place de Metz,

defendant,

Application for the annulment of the alleged decision of the High Authority no­ tified to the applicant by letter of 27 February 1959, and of the decision of the High Authority of 22 April 1959, as based on Article 3 (2) of Decision No 2/57, which is void,

Issues of fact and of law

I — Conclusions of the parties B — In the interlocutory proceedings con­ cerning Case 15/59 A — In the main proceedings The High Authority claims that the Court The applicant claims that the Court should: should:

In Case 15/59 'in application of Article 69 of the Rules of Procedure of the Court of 4 March 1953 or 'annul the decision of the High Authority of Article 91 of the Rules of Procedure of 3 notified to the applicant by letter of the March 1959, dismiss the application lodged High Authority of 27 February 1959, on the on 25 March 1959 as inadmissible because ground that it is based on the provisions of it is not directed against a decision of the Decision No 2/57 which are void; High Authority.'

order the High Authority to pay the costs;' The Société Métallurgique de Knutange contends that the Court should: In Case 29/59 'hold that the letter of the High Authority 'annul the decision of the High Authority of of 27 February 1959, the subject-matter of 22 April 1959, notified to the applicant by the application, constitutes a decision of the letter of 6 May 1959, on the ground that the High Authority; said decision is based partly on inaccurate facts and partly on provisions of Decision accordingly reject the conclusions of the No 2/57 which are void; High Authority and declare the application admissible; order the High Authority to pay the costs.' hold that all legal consequences follow, par­ The defendant contends that the Court ticularly as regards payment of fees, costs should: and such other expenses as may be.'

By letters of 5 May 1958 and 3 March 1959, (a) As regards Case 15/59, the defendant, the applicant asked to be exonerated from in a pleading lodged on 23 April 1959, en­ the additional contribution, arguing that tered an objection of inadmissibility, based on Article 69 of the former or Article 91 of the purchases of ferrous scrap over the three-month period in question were of an the present Rules of Procedure, alleging exceptional nature and were counterbal­ that at the date when the application was anced by the fact that in general, and with lodged the High Authority had not yet tak­ the exception of that three-month period; it en any decision on the request by the appli­ sold substantial quantities of ferrous scrap. cant undertaking to be exonerated. The ap­ plicant replied in a pleading lodged at the registry on 27 May 1959, in which it empha­ By letter of 27 February 1959, the High Au­ sized that the terms of the contested letter thority stated that this request could not be clearly showed that it was in the nature of entertained. It referred to the provisions of a decision. Decision No 2/57, Article 3 (2) of which li­ mits the accounting period for determining In its statement of defence, the defendant, the additional contribution to three admitting that both Case 15/59 and Case consecutive months. This letter constitutes 29/59 are practically identical, states that the subject-matter of case 15/59. Further­ the objection of inadmissibility raised more, on 22 April 1959, the High Authority against Case 15/59 can no longer be main­ took a formal decision which in substance tained, and declares that the High Author­ reiterates the conclusions of the said letter. ity is ready to bear the additional costs in­ This decision was notified to the applicant herent in the bringing of two separate cases. by letter of 6 May 1959. The Knutange un­ dertaking lodged a fresh application against (b) No objection of inadmissibility con­ that decision (Case 29/59). cerning the application in Case 29/59 has been entered. (2) In a pleading lodged on 23 April 1959, the defendant entered an objection of inad­ B — Substance missibility as regards case 15/59. By Order of 13 June 1959, the Court, noting that The applicant submits merely that the Trea­ Cases 15/59 and 29/59 were obviously inter­ ty has been infringed, in particular Articles connected and that it would in any event 2, 3, 4, 5, 53 and 65 therof. It is alleged that have to pass judgment on the legality of one the said infringement arises from an inher­ or the other of the contested decisions, de­ ent defect in Decision No 2/57, consisting

in a contradiction between its fundamental The intention that the undertakings should purpose and its operative provisions, in par not obtain undue advantage in calculating ticular Article 3 (2). It is said that the High their consumption over the reference period Authority, in adopting that provision, should be counterbalanced by the intention which limits the accounting period to three not to penalize them unduly by fixing an ac months, rendered the decision more restric counting period shorter than the reference tive than was required by its purpose, and period. According to the applicant, the thus 'failed to exercise balanced judgment High Authority's assertion to the effect that and seriously failed to exercise due care'. a period of three months is sufficient in or der to offset exceptional high points in con The applicant bases its arguments on two sumption contradicts its assertion of the ne main points: cessity of choosing 'an average which elimi nates abnormal peaks in consumption' over (a) Taking into account the purpose of the a period of six months. decision—which is allegedly contained in the recital which states that 'undertakings The defendant rejects the applicant's inter consuming ferrous scrap shall be required pretation of the recital in the preamble to to pay, in addition to the contributions cal Decision No 2/57 , on which it bases its ar culated heretofore, an additional contribu

1957). The system thus envisaged is justi tion. fied by the necessity of circumscribing the liberty given to the undertakings concern (b) From this premise, the applicant de ing the choice of the reference period by the duces that the accounting period should obligation which has been imposed on them have been of the same length as the refer of choosing an average which eliminates ence period. For if it be necessary, as the periods of abnormal consumption. If the High Authority asserts, to calculate an av undertakings had been left completely free erage consumption over a reference period as regards this choice, they could have tak of six months in order to prevent undertak en the maximum consumption as the refer ings from taking advantage of a period of ence and this could have been abnormally exceptional consumption in the past, one high because of exceptional circumstances. should also recognize the necessity of cal This in turn would have jeopardized the culating an average consumption over an achievement of the fundamental purpose of accounting period of six months so as to Decision No 2/57, which, in the opinion of avoid penalizing undertakings for a short the defendant, is not to charge excessive period of exceptional consumption. consumption, but to encourage the econ omizing of ferrous scrap. In this connexion, In the present case the applicant considers the defendant mentions the following pas that it would have been exonerated from sage in the preamble to Decision No 2/57: payment, despite the technical problem 'Considering .

JUDGMENT OF 12. 2. 1960 — JOINED CASES 15 AND 29/59

It period was necessarily longer than the ac also admitted therein that the unusually counting period. In particular, the accoun high consumption of ferrous scrap by the ting period must be relatively short so as to Knutange undertaking during the three- prevent orders for excessive tonnages of fer month period February to April 1958 was rous scrap being placed over a short period, due to exceptional circumstances. which would go against the fundamental purpose of Decision No 2/57. This is why it The defendant asserts that when a large was necessary, according to the defendant, number of blast-furnaces are in service, to refuse to accept an averaging out of the which is the position as regards the appli consumption in each accounting period, as cant undertaking, periodic servicing has was requested by the applicant in its letters practically no effect, as it generally follows of 5 May 1958 and 3 March 1959. a pre-established plan ensuring continuity of production.

scrap. The High Authority declares that it is ence period and the length of the accoun in a position, if called upon so to do, to sub ting period is in 'the discretion of the High mit production figures which, it is said, run Authority because it was incumbent upon counter to that allegation, and that it is also the High Authority to assess the problems in a position to show that during the period with which the decision was intended to concerned there was even an increase, com

cation. In its application, the applicant con ducted, whereas no analogous deduc fined itself, so the defendant claims, to alle tion need be made for the reference per ging infringement of Articles 2, 3, 4, 5, 53 iod; and 65 of the Treaty without offering any explanation, whereas in its reply it alleges (b) in Article 7 that increases in stocks of that the High Authority made a mistake ferrous scrap during the accounting pe and committed a grave dereliction of duty riod need not be taken into account in consisting in a contradiction between the calculating the chargeable consump recitals in the preamble to and the provi

The parties also put forward alternative ar­ The applicant objects that those provisions guments. remain outside the dispute and that, since

KNUTANGE v HIGH AUTHORITY

they only apply in certain circumstances, contested decision of 22 April 1959. It as­ they cannot be considered as a remedy for serts, on this point, that the need to renew the imbalance which is in any event created one blast-furnace completely did not be­ by the combined effect of Articles 6(1) and come apparent as early as November 1957, 3(2). but much later on.

Finally, in case 29/59, the applicant com­ The defendant denies that such an inaccu­ plains that the High Authority is inaccurate racy exists and states that in any event it has in one of the recitals in the preamble to the no connexion with the question at issue.

Grounds of judgment

I — Admissibility

In these circumstances, Application 15/59 cannot be declared inadmissible on the grounds indicated.

2. Admissibility of Application 29/59

The admissibility of this application has not been contested and no objection may

JUDGMENT OF 12. 2. 1960 — JOINED CASES 15 AND 29/59

be raised by the Court of its own motion on this point. Therefore the application is admissible.

II — Substance

Having fixed the accounting period, the High Authority also had to fix a reference period in order to subject the consumption of bought scrap exceeding the level of the consumption over the reference period to payment of the additional contri­ bution.

In order to determine the consumption over the reference period, the High Au­ thority adopted the principle of leaving the undertakings free to choose, within certain set limits, the period which suited them best, and did so in the obvious in­ terests of the undertakings themselves.

However, in order to prevent undertakings from choosing exceptional peaks in consumption, which would have gone against the purpose of Decision No 2/57, the High Authority deemed it expedient to circumscribe the undertaking's free-

KNUTANGE v HIGH AUTHORITY

dom of choice by providing for an average, that is to say, half the consumption during the period of six months or, in other words, the average consumption over a three-month period taken from a half-yearly period chosen by the undertaking.

In these circumstances, the system established by decision No 2/57 involves a comparison between the consumption during the accounting period (three months) and the consumption during the reference period, which is not the con­ sumption over six months, but the average consumption for three months taken from a period of six months chosen by each undertaking.

Therefore that provision may not be relied upon in the present case because the applicant does not argue that the High Authority has authorized an agreement which is too restrictive, but that the decision is too restrictive as regards the un­ dertakings liable to payment of equalization charges.

Moreover, even if the applicant had argued that it was possible to find in Article 65 (2) (b) a general principle prohibiting the High Authority from taking measures more restrictive than is necessary for those purposes, that principle is not infringed

JUDGMENT OF 12. 2. 1960 JOINED CASES 15 AND 29/59

by the contested mechanism, first, because, as has already been shown, the com­ parison between the accounting period and the reference period does not set up a relationship between unequal terms and, secondly, because the High Authority was free to determine, according to considerations of expediency, the length of both the accounting period and the reference period.

The criticisms made by the applicant of the criteria followed by the High Author­ ity in determining the length of the accounting period only concern the question whether the contested decision is expedient.

Examination by the court may not include an inquiry into the expediency of the mechanism, as set up by the High Authority, for achieving the objectives of that decision, because such examination would go beyond the limits of the power to review questions of legality which the court may exercise by virtue of the Treaty.

The applicant was induced by the conduct of the defendant to lodge two appli­ cations although, had the premature letter of 27 February 1959 not been sent, one application alone would have been sufficient.

Therefore the costs incurred by the applicant in respect of Application 15/59 are costs which the defendant has unreasonably caused the applicant to incur. More­ over the defendant itself admits this because it has stated that it is willing to bear these costs.

KNUTANGE v HIGH AUTHORITY

On those grounds,

Upon reading the pleadings, Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to articles 2, 3, 4, 5, 33, 53 and 65 of the ECSC Treaty; Having regard to the Protocol on the Statute of the Court of Justice; Having regard to the Rules of Procedure;

THE COURT

Riese Hammes Catalano

A. Van Houtte A. M. Donner

Registrar President

OPINION OF MR ADVOCATE-GENERAL LAGRANGE DELIVERED ON 17 DECEMBER 19591

Mr President, self states in its letter of 3 March 1959, these Members of the Court, arisings consist of heavy scrap which is 'highly sought after'. The applicant undertaking, Société Métal­ lurgique de Knutange, produces pig iron in However, the undertaking needs to use nine blast-furnaces (50 to 100 000 metric light scrap in order to enrich the smelting tons per month) and basic Bessemer steel beds of its blast-furnaces, and this it has to (50 to 100 000 metric tons per month) in six buy. Even so, sales are usually greater than converters. It also makes heavy sections purchases, and although the undertaking and merchant steel. But instead of using the has been assessed at the basic rate for pay­ ferrous scrap so found (the 'own arisings' ment of the equalization contribution on which we have heard about so often) in a imported ferrous scrap, it was not, prior to Martin steel mill or an electric steel mill, as the first three months of 1958, assessed at is often the case, it prefers to sell it. As it it- the additional rate, which only applies, as

1 — Translated from the French.