C-41/59

JUDGMENT OF THE COURT 16 DECEMBER 1960 1

Hamborner Bergbau AG and Friedrich Thyssen Bergbau AG v High Authority of the European Coal and Steel Community

Joined Cases 41 and 50/59

Summary

Procedure — Action for failure to act — Amendment of legal basis of an application — Inadmissibility

(ECSC Treaty, Article 35) sion of refusal was taken within the context When the matter was raised with the High of this claim and of the legal ground Authority within the meaning of Article 35 pleaded, an action brought against the im­ it was asked to take a decision concerning plied decision of refusal which puts forward the applicant's request on the basis of a spe­ a different claim based on a different cific legal ground. Since the implied deci­ ground is inadmissible.

High Authority of the European Coal and Steel Community , represented by its Legal Adviser, Heinrich Matthies, acting as Agent, assisted by Hans-Peter Ipsen, Professor of Law at the University of Hamburg, Hamburg, with an address for service in Luxembourg at the offices ofthe High Authority, 2 place de Metz,

defendant,

1 — Language of the Case: German.

JUDGMENT OF 16.12.1960 —JOINED CASES 41, AND 50/59

Applications

1. for the annulment of the decision notified to the applicants by the High Authority by letter of 24 July 1959 refusing the request for the refund of the levy for the financial year 1959-1960;

Issues of fact and law

I —Statement of the facts to this claim since no provision for the reimbursement of levies to individual un­ The facts which form the basis of the pres­ dertakings has been made either in the ent dispute may be summarized as follows: Treaty establishing the European Coal and Steel Community or in the general deci­ By a letter of 17 July 1959 the Hamborner sions of the High Authority concerning the Bergbau Aktiengesellschaft and the Fried- payment of levies. Consequently, you rich Thyssen Bergbau Aktiengesellschaft should advise the Ruhrkohlentreuhand claimed on the basis of their financial situ­ GmbH that, as in the past, it must settle the ation the refund of the levy relating to the levies payable by you and by Friedrich current eighth financial year (from 1 July Thyssen Bergbau AG.' 1959 to 30 June 1960). On 6 August 1959 the applicant undertak­ On 24 July 1959 the High Authority replied ings sent the High Authority the following as follows: letter:

'We acknowledge receipt of your letter of 17 'We acknowledge receipt of the letter from July 1959 whereby you and Friedrich your Levy Office dated 24 July 1959. In this Thyssen Bergbau AG claim the reimburse­ matter, which is crucial for our financial si­ ment of the levy for the financial year tuation, we naturally wish to have a binding 1959-1960. Unfortunately we cannot agree reply from the High Authority; we there-

HAMBORNER BERGBAU v HIGH AUTHORITY

JUDGMENT OF 16.12.1960 —JOINED CASES 41. AND 50/59

33/59. When the applicants contest General financial aids which the applicant undertak Decision No 33/59 by way of their applica ings obtained from the High Authority. The tion against the letter of 24 July 1959, they establishment of the guarantee fund made in no way deal with the content or details of it possible to grant those credits on favou this decision and contest it purely to call in rable terms. For all of these reasons the de question the financial policy of the High fendant considers that the applicants are

The esta ity of that decision depends upon whether the imposition of a levy for the financial blishment of the guarantee fund constitutes year 1959 to 1960 is necessary for the High a fact known to all, at least after the publi Authority to carry out its task and that such cation of the 'principles governing the ac imposition is unnecessary since the High tion of the High Authority in financing in Authority has sufficient finance for the cur vestments' in the Journal Officiel No 17 of rent year. With regard to the objection that

March 1957. The funds for the servicing of legal system. loans appear for the first time at pages 10 and 11 of the financial annex to the Fifth General Report dated 13 April 1957. The applicants also state that the objection of illegality can be raised at any time. It is Thus, although the applicants were fully ac lawful to invoke the objection without re quainted with all the facts they continued to gard for time-limits. Even if there were pay the levies without objecting to the est such time-limits they would not come into ablishment of those funds. Even if it were play in the present case which relates to the possible to invoke the objection of illegality question whether the levy was necessary to regardless of any time limits, an undertak cover the budgetary costs for the year 1959 ing is nevertheless required to do so at least to 1960. For these reasons it is impossible to as soon as payment was requested from it uphold the objection that the application is on the basis of the general decision. out of time.

3. The substance of the case The application of the provisions and prin ciples so established may be reviewed by A. The submissions of infringement of the the Court. The applicants indeed claim that Treaty and of lack of competence the absence of the normal guarantees af forded by Parliamentary control of the bud The applicants maintain that Decision No get must be counterbalanced by a wide 33/59 infringes the Treaty, in particular Ar jurisdiction for the Court of Justice with ticle 49 thereof which empowers the High regard to the protection of the individual Authority 'to procure the funds it requires interests of Community undertakings to carry out its tasks'. They maintain that when the levy is fixed. this provision prohibits the High Authority from procuring by the levy more funds than On the basis of those general factors the are necessary for carrying out its tasks. The applicants maintain that: High Authority has failed to observe this prohibition through its imposition of lthe The High Authority is nowhere empowered same levy for the financial year 1959 to 1960 under the Treaty, not even under Article 50 as in the past, although it already possesses (1), to establish funds financed by revenue sufficient funds to carry out during that pe from the levy; riod the tasks required of it by the Treaty.

the present sum. Consequently they are 50 (1) of the Treaty (cover for the servicing available to meet the estimated expenses. In of loans not covered by receipts from the its estimate for the year 1959 to 1960 the im servicing of loans granted by it); if it is un position of a levy for the eighth financial necessary to use such to the revenue for the year is not 'required' within the meaning of next financial year; Article 49 of the Treaty. Article 51 (3) of the Treaty indeed enables The applicants invoke the essential require a reserve fund to be established but only ment that taxation shall be minimized, that within the limits laid down by that provi is to say that the levy must be strictly in ac

JUDGMENT OF 16.12.1960 — JOINED CASES 41, AND 50/59

initial capital; Even if it is conceded that the guarantee fund is lawful on the basis of the High Au (b) A different opinion would be at odds thority's arguments deriving from the Act with the principle of the limited powers of of Pledge, the level of the fund is quite out the Community institutions, as the appli of proportion. The High Authority has bor cants have already stated. rowed US$ 21 5000 000 and the guarantee fund presently stands at US $ 100000 000. The High Authority cannot use the interest According to banking practice a guarantee which it collects to obtain powers which are fund should not exceed five per cent of the not expressly conferred upon it by the Trea liabilities which it covers.

levy. (1) The interest produced by the funds of the levy and in particular by the investment (4) The High Authority has transferred to of the guarantee fund is object to the same the special reserve US $258 000 stemming binding rules as those established by Article from interest on loans: this is contrary to 50 (1) of the Treaty with regard to the levy. Article 51 (3) of the Treaty which lays down The interest can no more be used for gran that the High Authority can only employ ting loans than can the levy; the High Au any proceeds from the grant of loans or of thority can only grant loans on funds which guarantees to reduce the amount of any lev

ies provided for in the third subparagraph of parliamentary supervision must be coun­ Article 50 (1) of the Treaty. terbalanced by wide jurisdiction for the Court of Justice. The applicants' argument (5) The remainder of the special reserve amounts in the present case to a criticism of was formed by transferring funds for re- the Treaty and this cannot provide grounds search amounting to US $3 000 000 and a for an application. transfer of administrative funds amounting to US$ 720 000. Since those sums consti­ The defendant maintains that the appli­ tute fractions of the levy, the applicants cants have misinterpreted the word 're­ wonder whether the High Authority can quires' used in Article 49 of the Treaty. The break down these sums as it has, although concept which this word embodies is used they do not raise formal objections regard­ to determine the transfer of the levy funds ing the use to which the sums were put. but is not intended to limit the rate of the levy, which may be reviewed by the Court. (c) The High Authority has transferred a The undertakings may institute proceed­ further US $500 000 to an account entitled ings against the High Authority in order to Estimate for the Expenses of Servicing Loans. obtain a ruling whether, with regard to the The guarantee fund already covers any div­ levies, it has acted outside its powers, there­ ergences which may occur between the re- by infringing the Treaty or the rules of law payment of loans granted to undertakings relating to its application. However this ac­ and the High Authority's liabilities regard­ tion is not open in connexion with the en­ ing loans. The applicants dispute that a spe­ tirely different question whether the funds cific provision is still necessary for servicing procured through the levy were required by loans. the High Authority to carry out its tasks. In other words, an undertaking cannot use the Since the High Authority also has complete expedient of the first paragraph of Article 49 control over this fund the sum total thus to enlarge the legal protection against the amounts to the following: decisions of the High Authority which is conferred upon it to a limited degree by the US $ 84 000 000 — guarantee fund Treaty and thus claim to set up the Court of US $ 19 182 000 — special reserve Justice as the controller of the financial pol­ US $ 500000 — estimates icy and of the management of the High Au­ thority because the undertaking considers US$ 103682 000 that there are no other supervisors.

(a) The guarantee fund has its legal basis in cial funds are instances encountered where the third subparagraph of Article 50 (1) of the interest is expressly allocated to such the Treaty. According to this provision a funds. deficit may be covered by means of the levy. When normal conditions prevail, the (2) The payment of the interest on loans to servicing of loans and the levy afford suffi the special reserve impugned by the appli cient security but lenders demanded addi cants was lawful. In the present case it is not tional security to cover a serious crisis since a question of surpluses deriving from lend the credit was granted for a period of twen ing borrowed capital at increased rates ty-five years. With this in view, when the which should in fact have been paid to the market was favourable the High Authority reserve fund provided for in Article 51 (3) of set up a reserve, the guarantee fund, ear the Treaty but of interest on loans granted marked for those purposes. On the other on the special reserve which it was conse hand, the High Authority, in the direct in quently proper to allocate to that reserve. terest of the undertakings, has not exercised its power to set up a reserve fund. (c) The estimate for the costs of servicing loans merely constitutes a sum which was Section 606 of the Act of Pledge forms the provisionally frozen with the Bank of Inter direct basis of the guarantee fund. Without national Settlements in implementation of setting up this fund it would have been im the provisions of the Act of Pledge.

powers (b) The special reserve consists of resources of the High Authority which are not allocat In the event of the Court's considering that ed under the Treaty. The conclusion which the High Authority has neither infringed the applicants draw from the first subpara the Treaty nor exceeded its powers in this graph of Article 51 (1) constitutes inadmis matter, the applicants put forward the sub sible reasoning a contrario. mission of misuse of powers. In fixing the levy for the eighth financial year and above The rule that resources deriving from loans all in its financial policy regarding the est must only be employed in granting loans is ablishment of guarantee funds, investment based on the principle that definitive ex funds and loan funds the High Authority penditure must be covered only by actual has disregarded certain basic principles of

conclusive. The budgetary law of the Mem The defendant replies that the 'basic prin ber States is, on the contrary, based on the ciples' upon which the applicants rely have principle of non-allocation. An allocation is not been sanctioned by the Treaty, which not to be presumed and must be expressly provides for an independent financial struc fixed; only in the exceptional cases of spe ture. Thus the principle of minimum inter-

According to the applicants the High Au­ The defendant remarks that it is unneces­ thority was guilty of a wrongful act or omis­ sary to produce the said documents since it sion because close examination of the pro­ has stated its reasons to the Parliamentary visions of the Treaty could not have failed Assembly and has published them in its to show that it was not empowered to im­ general and special reports. pose the levy for the eighth financial year. Application No 50/59 The defendant maintains that the appli­ cants' application is out of time, as the rea­ 1. Admissibility of the application sons on which it is based only appear in the reply, are not relevant in themselves and The defendant asserts that the application is must suffer the same fate as the main appli­ out of time. The application was received at cation. It further maintains that the appli­ the Court Registry on 11 November 1959, cants have completely failed to claim that whilst the period of two months prescribed they have suffered direct and specific harm. in the third paragraph of Article 35 began to run on 17 July 1959. The applicants reply that the damage which they have suffered consists in having to pay The applicant considers that the request un­ the levy at an excessively high rate as a re­ der Article 35 of the Treaty was only made sult of the unlawful freezing of resources for the first time in its letter of 6 August derived from the levy and the maintenance 1959, whilst the defendant considers that of the guarantee and special reserve funds. this application can already be discerned in This constitutes specific harm because, ow­ the applicant's letter of 17 July 1959. ing to their unfavourable financial circum­ stances, they were obliged to obtain a loan The application is further inadmissible be-

The applicant replies that the letter of 17 In its reply the applicant maintains that it July 1959 could not cause the period under has been wrongly refused reimbursement of Article 35 to begin to run because it did not the levy. It concedes that the Treaty es­ intend to raise the matter with the High Au­ tablishing the European Coal and Steel thority within the meaning of the first par­ Community does not make express provi­ agraph of Article 35; the High Authority sion for exemption from the levy. Ne­ was only bound to take an individual deci­ vertheless, it cannot be deduced from this sion after it received the letter of 6 August that it is unlawful to grant reimbursement 1959. Even if it is considered that the appli­ of the levy. It should instead be admitted cant has already raised the matter with the that the High Authority is empowered to High Authority through its letter of 17 July exempt from the levy certain of the persons 1959, it must in any case be admitted that concerned, in that this is a basic element of it has raised the matter a second time by its the power to fix the levy conferred upon the letter of 6 August 1959 and has also caused the period prescribed in Article 35 of the High Authority by the Treaty without its being necessary to make special provision Treaty to begin to run. for such a power since there is a principle, which must be generally conceded, that a The objection upon which the High Au­ community or one of its institutions which thority relies, namely that the action for fai­ lure to act does not relate to the same sub­ has power to levy a public tax is also em­ powered to grant a refund of such a tax. ject-matter as that of the previous request, is irrelevant. The fact that the request made Since the High Authority has erred con­ in the letters of 17 July and 6 August 1959 cerning its power to grant a refund, its de­ took the form of a request for reimburse­ cision rejecting by implication the appli­ ment is of little importance. The applicant cant's request is vitiated by a defect in the was always concerned to obtain exemption exercise of its discretionary power. from payment of the levy. The defendant considers that the sub­ 2. Substance mission is out of time since it was first made in the reply. It remarks further that the gen­ The applicant puts forward the same sub­ eral principle 'set out' by the applicant is not mission and arguments as in its application found in the legal systems of all the Mem­ in Case 41/59. ber States. On the contrary, in several Mem­ ber States such a power to make refunds The defendant maintains that in this case would be regarded as contrary to the prin­ there is an additional reason for declaring ciple of equality before the law. that the objection of illegality is inadmissi­ ble. The purpose of the request in the letter IV — Procedure of 17 July 1959 was to obtain reimburse­ ment of the levy. This request was refused The written procedure followed the normal

Further the letter of 24 July 1959 ended in this way: 'Consequently, you should advise the Ruhrkohlentreuhand GmbH that, as in the past, it must settle the lev­ ies payable by you and by Friedrich Thyssen Bergbau AG'.

The applicants are wrong in interpreting this sentence as a demand note for the levy. It must be read in conjunction with the letter of 17 July 1959 in which it con­ stitutes a logical answer and in which the applicants gave notice that they would stop the payment of the levy since they anticipated a favourable reply. The Court interprets this sentence as the logical conclusion which follows from the refusal of the request and which the applicants could have drawn themselves whether or not this sentence had appeared in the letter.

Thus the abovementioned sentence, which does not introduce any new element into the legal relations between the High Authority and the applicants, cannot be regarded by the latter as a decision independent of the decision of refusal and against which an application may be made.

The applicants criticize the letter of 24 July 1959, maintaining that it contains a decision based on a general decision at variance with the Treaty, namely Decision No 33/59 fixing the rate of the levy for the year 1959-1960.

It must first be considered whether the letter of 24 July 1959 is actually based on the abovementioned decision.

The Court holds that it is not.

Article 34 clearly indicates that such a finding can only be made if the Court rules in favour of the main application for annulment. In the present case there can be no question of such a ruling since, as is clear from the foregoing, the application for annulment must be dismissed. This claim must thus be rejected as unfounded.

Since the applicants have not made any other submissions relating to annulment the application must be dismissed.

Application No 50/59

In its letter of 6 August 1959 the applicant first emphasized that the reply to its letter of 17 July 1959 came from the Levy Office and requested the High Authority to notify it, in accordance with the second paragraph of Article 15 of the Treaty, of the decision concerning the request for a refund which it submitted in its letter of 17 July 1959.

It is clear that the applicant decided to send this letter because it was uncertain as to the status of the letter of 24 July 1959 as a final decision and not because it was in doubt over its contents.

HAMBORNER BERGBAU v HIGH AUTHORITY

On the other hand, the applicant, in its application instituting proceedings, really requests that the imposition of a levy for the current financial year should be de­ clared unlawful because Decision No 33/59 is irregular, although formally it re­ quests the annulment of the implied decision of refusal. This constitutes an im­ portant modification both of the claim and of the legal ground to which it relates.

For the abovementioned reasons the second objection of inadmissibility is well founded.

The applicant has finally requested the Court to recognize in accordance with the first paragraph of Article 34 of the Treaty that the contested decision involves a wrongful act or omission of such a nature as to render the Community liable.

The said Article 34 clearly indicates that such a finding can only be made if the Court rules in favour of the main application for annulment. In this case there can be no question of a finding of annulment since, as is clear from the foregoing, the Court considers that the application for annulment is inadmissible. This claim must also thus be dismissed as unfounded.

The application must accordingly be dismissed as inadmissible.

JUDGMENT OF 16.12.1960 — JOINED CASES 41, AND 50/59

Dismisses as unfounded the application for annulment of the decision of the High Authority contained in the letter addressed to the applicants on 24 July 1959;

2. In Case No 50/59

Dismisses as inadmissible the application for annulment of the High Authority's implied decision of refusal to be inferred from its silence regarding the applicant's letter of 6 August 1959;

3. Orders the applicants to bear the costs of the proceedings.

Donner Hammes Catalano Riese Delvaux

Delivered in open court in Luxembourg on 16 December 1960.