C-9/60

applicant,

v

High Authority of the European Coal & Steel Community , represented by its Legal Adviser, Gerard Olivier, with an address for service in Luxembourg at its of­ fices at 2 place de Metz,

defendant,

Application for

Pecuniary reparation from the Community for damage claimed to have been caused by a wrongful act or omission of the High Authority; the annulment of the decision of the High Authority contained in its letter, sent on 16 June 1960 by its President to the applicant.

JUDGMENT

Issues of Fact and of Law

VLOEBERGHS v HIGH AUTHORITY

in value and the commercial loss tain stocks frozen since 1957. suffered by the applicant; give their By an answer of 16 June 1960, the High reasoned opinion on all other points Authority denied that the Vloeberghs com which the Court considers proper as pany had the capacity to set in motion the well as replying to all the questions procedure under Article 35, and maintained of the parties in that respect; that it was not an undertaking within the make an appropriate order as to meaning of the Treaty and raised an objec

(Case 12/60). In Case 12/60, the applicant claims that the Court should: II — Conclusions of the parties 'annul the decision contained in the letter dated 16 June 1960 sent by the High In Case 9/60 the applicant claims that Authority to the applicant in so far as by the Court should: that letter the High Authority refused to 'hold the application to be admissi adopt a decision requiring the said ble and well-founded; French Government to authorize the free circulation in France of anthracite im consequently award the applicant ported by the applicant from third provisional damages of FB countries and allowed into free circula 64 852 973; tion in Belgium, as the applicant had in vited it to do by its letter of 30 April hold that such damages are to bear 1960, and more especially of stocks of interest at 5.5% on the principal, anthracite put into store by the applicant from the date of judgment until the at Strasbourg (30 000 metric tons), at date of payment.

date of the expert's report, following ecution of the annulling judgment and es-

JUDGMENT OF 14. 7. 1961-JOINED CASES 9 AND 12/60

pecially to take measures appropriate to High Authority is annulled persons not ensure equitable reparation of the mentioned in Article 34 cannot put in damage directly consequent upon the an­ issue by means of Article 40 the finan­ nulled decision.' cial liability of the High Authority for a The defendant contends that the Court wrongful act or omission following should: from the irregularity of the annulled decision. 'dismiss the application made by the com­ pany Antoine Vloeberghs with all conse­ (b) If the possibility of applying Article 40 quences in law, especially as regards when there has not been a prior ap­ costs'. plication for annulment is accepted, it is necessary to accept the co-existence of two different systems of liability dependent upon whether there has or III — Submissions and arguments has not been a prior application for an­ of the parties nulment.

(c) If the financial liability following from The submissions and arguments of the par­ non-compliance with the Treaty of the ties may be summarized as follows; acts or failures to act of the High Authority could be put in issue by 1. Admissibility means of Article 40 of the Treaty, those concerned would have a means of set­

VLOEBERGHS v HIGH AUTHORITY

to 35), for other forms of action, in­ It would, furthermore, deprive of all mean­ cluding those mentioned in Article 40. ing the reservation made by the first (b) In the second place, the applicant dis­ paragraph of Article 40, concerning the ap­ putes the meaning attributed to Article plication of Article 34, to accept that in case 34 by the defendant which considers of the annulment of a decision of the High that this provision is applicable where Authority persons not referred to in Article an application for damages calls in is­ 34 may put in issue, by means of Article 40, sue the legality not only of a decision the financial liability of the High Authority but, more widely, 'of any act or omis­ for an unlawful act or omission stemming sion of the High Authority'. Article 34 from the irregularity of the annulled deci­ on the contrary refers only to an action sion.

of the present proceedings it is a matter of lowing from the argument of the applicant assessing not the conduct of the High relating to Article 35, according to which Authority, taken as a whole, concerning the only the provisions of Article 40, to the ex­ problem of free movement, but only the clusion of those of Article 34, allow the question how the High Authority by refrain­ financial liability consequent upon an omis­ ing from using Article 88 against the French sion to act to be put in issue. The defendant Government as soon as it received the com­ considers, on the contrary, that the provi­ plaint of Mr Vloeberghs (May 1959), was sions of Article 34 and only those, apply in guilty of a wrongful act or omission which every case where the liability of the High caused damage to the applicant. Authority is put in issue on the ground of Lastly, the applicant states it has the the non-conformity of an omission with the capacity to make an application under Arti­ provisions of the Treaty and that the cle 34, but since the defendant disputes its liability of the High Authority for the non­ capacity as a Community undertaking it conformity with the Treaty of an omission is observes that in these circumstances the linked to the use of the action established by High Authority cannot, except at the risk of Article 34 of the Treaty. The Treaty has denial of justice, deny it the right to bring tightly bound financial liability for non­ an action under Article 40. conformity with its provisions to the institu­ The defendant replies that the Treaty has tion of proceedings for annulment. The con­ not established a complete system of legal sequence is that undertakings not entitled to protection for private persons. institute proceedings pursuant to Article 35

have neither directly nor indirectly the op confines itself to treating it in order to make portunity of having an act or omission of a product capable of being distributed. the High Authority reviewed. In its statement in defence, the defendant The defendant further disputes that Article emphasizes first that the application in Case 31 gives the Court the power to exercise in 12/60 brings a new factor into the presenta all kinds of action the judicial review of tion of the problem raised by the applicant legality by considering the conformity of the in its application in Case 9/60.

of the Treaty. Furthermore Article 36 shows regarded as a Community producer of coal only that the unlimited jurisdiction which it the coal thus produced by it would therefore establishes allows the Court greater scope be a product originating in the Community. than in the action for annulment established The defendant observes further that the ap by Articles 33 and 35. This is therefore a plicant has thus presented in parallel two concept which is the opposite of that es arguments which are quite different and poused by the applicant. even contradictory: one based on a claimed Lastly as regards Article 40, the defendant status as a Community producer; the other disputes that by using the expression 'injury based on the status of importer-reseller of caused in carrying out this Treaty by a coal from third countries. wrongful act or omission' the authors of the On this subject the defendant maintains: Treaty wished to restrict the jurisdiction of (a) That the operations of processing coal the Court to cases where the liability of the carried out by the Vloeberghs firm institutions of the Community is put in comes within the normal activity of a question on the ground of the non dealer and cannot confer upon it the conformity of their conduct with the provi status of an undertaking within the sions of the Treaty; because, starting from meaning of Article 80 of the Treaty. this criterion, it is not possible to explain the According to the defendant, the authors Court's jurisdiction, laid down in the second of the Treaty, when speaking of produc paragraph of Article 40 in case of damage tion activities as opposed to distribution caused by a servant in the performance of activities, intended to limit the normal

VLOEBERGHS v HIGH AUTHORITY

ECSC Treaty. In fact he sends, pur operations of crushing, washing and screen suant to Article 60, to the High ing and, in another division of its undertak Authority the price lists only for his ing, the manufacture of compressed fuel, sales of compressed fuels, and not for result directly in transforming a raw sales of anthracite such as those in ques material into a finished product suffices to tion in the present case. Further, Mr bring its activities within the production Vloeberghs has never made investment cycle. declarations to the High Authority in The applicant states also that the argument

Ac since it is precisely in respect of the present cording to the case-law of the Court in application that the question arises and Cases 7/54 and 9/54 on the one hand must be resolved. The applicant states that and 18/57 on the other, undertakings it is ready to accept the legal consequences carrying out distribution activities have which may follow for it from the recognition not the capacity to make an application of its status as a producer. on the basis of Article 35. The defendant disputes that the operations To these arguments the applicant replies of crushing, washing and screening of that, both in its application for damages and anthracite carried on by Vloeberghs alter in its application for annulment, it put itself the substance of the product thus treated to forward 'in its sole and real capacity as an the point of transforming a raw material importer of coal from third countries in into a finished product.

consequence that the coal which is the sub­ pressed fuel. The defendant also finds in the ject of such activity becomes, through this, a applicant's argument a contradiction of the product originating in the Community. In view held by the applicant that the product order that an undertaking which treats coal coming from his factory must not be coming from outside the Common Market regarded as originating in the Community may be regarded as an undertaking within (that argument is furthermore irreconcilable the meaning of the Treaty it is not neces­ with the very wording of Annex I to the

JUDGMENT OF 14. 7. 1961-JOINED CASES 9 AND 12/60

brought into question. It would be necessary principle is one of the rules of the Common therefore in the present proceedings in any Market.

case to deny to Mr Vloeberghs the capacity Since it is not disputed that the American to bring an action for annulment in order to coal treated by the applicant had been im­ claim a right to free movement which in his ported in lawful circumstances which pre­ own opinion has nothing to do with the vent the High Authority and the Council treatment to which he subjects the coal from using in respect of it the powers set out which he imports. in Articles 71 to 75 of the Treaty, it follows, Furthermore, the applicant's argument that according to the applicant, that this coal there are, in respect of the Treaty, different must be able to circulate freely within the classes of production undertakings subject Community in the same way as coal to different rules, is in contradiction with originating in the territory of the Com­ the very letter of the Treaty where the word munity, and that the French Government, 'undertakings' was used in referring to a by prohibiting its nationals from purchasing general definition given once and for all in this coal because of its origin, has therefore Article 80 and drawing a distinction only infringed the rule of free movement. between production and distribution. In these circumstances the High Authority Further, that argument also runs counter to had the duty, in accordance with Articles 8, the very concept of the Treaty by which 14 and 88 of the Treaty, to take action to freedom of movement, escaping the restric­ ensure respect for the rules of the Treaty, tions which may apply to products from but although its attention had on numerous third countries, finds its counterpart inter occasions been drawn to this fact, it alia in subjecting production undertakings deliberately failed to take the necessary to a body of closely interlocking rules. measures.

to rely on the rules of the ECSC Treaty That explains why the defendant confines regarding freedom of movement. But in the its defence to a purely formal plane and meanwhile, faced with the crisis on the carefully avoids the substance of the market in coal, the High Authority had ac problem. Furthermore the High Authority cepted that the Belgian, German and itself, as appears from its letter of 16 June Netherlands Governments, which had made 1960 to the applicant company, had on its an appropriate request, were entitled to sus own initiative made contact with the French pend the free movement of coal from third Government on the subject of the importa countries across the internal frontiers of the tion into France of anthracite treated by

ment. The departments of the High proached by Mr Vloeberghs, as the appli Authority replied to the letter claiming that cant does in its reply, amounts to altering this question did not concern the High the subject-matter of its application. Authority, but was within the exclusive The defendant contests furthermore that competence of the national governments. the question of the right of free movement The applicant reaffirms further that it was within the Community for coal from third its reliance on the application of the Treaty countries was raised before 23 May 1959 by which made it decide in 1954 to add to its Mr Vloeberghs. In his letter of 14 March crushing and re-screening installations a 1953 Mr Vloeberghs proceeded on the basis large modern dense-liquid washing plant. that coal treated by him became Belgian After the difficulties encountered because of coal and had, because of this, the right to the ATIC in 1957, the departments of the free movement like coal originating within High Authority caused it to hope that the Community.

JUDGMENT OF 14. 7. 1961-JOINED CASES 9 AND 12/60

out this installation at its own risk. In fact it press reference to this problem. The High was only in 1955 that it finally settled its Authority does not therefore claim that by position concerning the free movement of adopting the decision of 18 December 1957 goods from third countries in respect of the in respect of the French Government, it six governments. Furthermore, the Treaty took the actions necessary to require that does not in the least guarantee, according to Government to accept the principle of free the defendant, free movement for the said movement within the Community of coal products in all circumstances. from third countries'. It accepts never­ The defendant does not dispute the verbal theless the existence of an indirect link

manent policy of directing imports from third that since coal imported from America by countries (which in the present case finds the applicant was intended from the begin­ expression in the ATIC monopoly) comes ning for France and not for Belgium it was within the competence of the Governments in Belgium as coal in transit and that in these of the Member Countries and cannot in circumstances, according to Article 73, the itself be regarded as contrary to the Treaty' administration of import licences came and that 'supposing even that the principle within the competence of the French of freedom of movement within the Com­ Government. The question raised by the ap­ munity for coal from third countries is ac­ plication has therefore no relationship with cepted by the Government concerned, it still that of free movement within the Com­ remains to decide whether the Treaty offers munity of coal originating in third countries in practice a way to reconcile its application properly imported into a Member State. with the conduct of a permanent policy of The applicant contests that argument by as­ direction of imports'. The defendant serting that the 73 000 metric tons which specifies that 'by adopting (on 18 December the Vloeberghs firm had purchased in the 1957) the decision which was the subject of United States and which was intended for Application No 2/58 by the French Govern­ the French State had not been in transit

ment the High Authority did not intend to through Belgium either legally or econo­ decide the question of freedom of movement mically. This 73 000 metric tons had in within the Community for coal from third fact been released into free circulation in countries. Neither the recitals nor the Belgium and left Belgium with export operative part of that decision include an ex­ licences.

the procedure laid down in Article 35 is not necessary also, by referring to all the facts set in train, the choice of the time to take ac­ and circumstances at the time, to point to tion. Furthermore, it is not for private special factors which justify the conclusion persons to open before the Court a discus­ that there is a wrongful act or omission on sion on the diligence shown by the High the part of the High Authority'. Authority in putting Article 88 into prac­ The defendant further denies the ex­ tice. istence of a causal nexus between the The obligation to act and the commence­ criticized behaviour of the High Authority ment of financial liability do not coincide. and the damage suffered by the applicant This fact is furthermore confirmed by Arti­ until May 1959, because, even if the High cle 88 which lays down a procedure making Authority, following the complaints of Mr it possible to annul with retroactive effect Vloeberghs as from May 1959, had set in Government regulations which are contrary train the procedure laid down in Article 88 to the Treaty but which gives the High in respect of the French Government, his ac­ Authority the means of requiring Member tion could not have resulted in compensa­ States to put an end to legal situations tion for the wrong caused to the applicant, which are contrary to the Treaty. The because that procedure has no retroactive defendant expressed doubts on the question scope and merely gives the High Authority whether an individual is entitled to behave the means of requiring the Member States as if a Government regulation, regarded by to put an end to situations of law contrary him as contrary to the Treaty but not con­ to the Treaty. Further, since the High tested by the High Authority under Article Authority was not in any case in a position 88, could not be used against him. immediately to ensure the application by the French Government of the principle of free The damage movement within the Community of coal The applicant states that it had envisaged from third countries, it would be very dif­ deliveries of the order of 70 000 metric tons ficult to assess the link between the as from the second quarter of 1957. The im­ criticized conduct of the High Authority possibility of selling this tonnage in 1957, and the impossibility which Mr Vloeberghs which was caused as a result of the opposi­ always encountered since May 1959 of tion of the ATIC, caused it damage which it sending third countries' coal coming from estimates in total and provisionally as a sum another Community State into France and between a minimum of FB 69 962 979 and a the more so since at that time the coal maximum of FB 99 162 973. market was such as to justify, on the part of The applicant offers to prove by all legal the Member States, measures restricting im­ means the facts and circumstances which it ports from third countries. has set out in support of its application, to In its reply, the applicant although ac­ the extent to which they are disputed. It cepting the distinction between illegality

and wrong, maintains that for a public ad­ it founds on the argument that the contested ministration to commit an illegality is in decision is general in nature. principle a wrong, except where the il­ Referring to the judgments in Joined Cases legality is purely formal in the sense that it 7 and 9/54, it maintains that the decision applies only to matters external to the deci­ which the High Authority would have to sion and does not affect in any way the con­ adopt under Article 88 in respect of the tents of the decision. On the other hand, it is French Government in case of annulment of always a wrong 'when it renders illusory the its refusal to act could not be regarded, if ac­ legal certainty to which the party subject to count is taken of the contents of the duty the administration is entitled, or when it which that Government is said to have shows that the public service is not neglected, as an individual decision; for the operating in the conditions of efficiency and real subject-matter of the proceedings is the legal certainty which one is normally en­ general rules adopted by the French titled to expect of it'. Government at the opening of the Common According to the applicant the prolonged Market (Decree of 9 February 1953) which failure to act of the High Authority which limited free movement of products from has not required one of the Governments to other Member States to products adhere to such an essential rule as that of originating in the Community. free movement is evidence of wrongful con­ In its reply the applicant puts forward two duct. arguments against the proposition that the With regard to the existence of a causal contested decision is a general decision. It states that on the one hand what it re­ nexus between the damage and the conduct of the High Authority, the applicant men­ quested from the High Authority was not to tions that the requirement imposed on the lay down a rule, but merely to require a par­ High Authority to ensure respect for the ticular party, in this instance the French Treaty is not subject to the condition of a Government, 'to comply with and to apply a prior complaint from the applicant. Conse­ pre-existing rule in one or more individual cases' and that on the other hand the con­ quently that obligation was already in ex­ istence in 1957 and 1958. tested measure is the High Authority's refusal of the applicant's request that it should take action. It is therefore a matter

VLOEBERGHS v HIGH AUTHORITY

every decision adopted by the High before the procedure under that article is set Authority under Article 35 of the Treaty in motion. On the contrary, only the must necessarily be of an individual nature. reasoned decision taken under Article 88 has, as to the extent of the disputed duty, Misuse of powers the character of a declaration which, subject to a right to bring the matter before the The applicant further complains that the Court, is binding upon those to whom it is High Authority has been guilty of a misuse addressed. of powers. Contesting the complaint of deliberate in­ Referring to the assertions of the High fringement of Articles 14 and 88 of the Authority contained in the statement in Treaty, the defendant denies that in dealing defence in Case 9/60, it observes that the defendant shows itself conscious of the fact with the French Government concerning that if the French Government had no need the problem raised by Mr Vloeberghs it ac­ cepted through this the validity of the lat­ to call for mutual assistance, as have the ter's position. On the other hand the High Belgian, German and Netherlands Govern­ Authority cannot in any way be regarded as ments, it is because it had already infringed legally bound by a declaration made outside the principle of free movement with im­ the procedure laid down in Article 88 of the punity. The High Authority therefore Treaty. knowingly accepts discrimination between the Governments which conform to the IV — Procedure

The applicant maintains it has the character of an undertaking producing coal by reason of the activities which it pursues by way of crushing, screening and washing of the imported anthracite.

JUDGMENT OF 14. 7. 1961-J0INED CASES 9 AND 12/60

These operations cannot be regarded as production activities as described by Article 80 of the Treaty. In addition to extraction, the Treaty regards as production ac­ tivities only those which it expressly recognizes as such. To decide whether a par­ ticular activity constitutes a 'production' activity it is necessary to refer to the nomenclature of Annex I to the Treaty. If the activity involves a certain degree of processing of the raw material, the decisive criterion is in particular whether after the processing operation the product in question falls within the said nomenclature under a heading different from that under which it appeared previously.

However this is not so in the present case for the original product and the product obtained after crushing etc., come under the heading 'Hard coal' (heading 3100 of the nomenclature).

The activities of crushing, screening and washing consist, as the applicant itself stated during the oral proceedings, in sorting operations enabling pieces of different size, quality and specific weight to be separated, these operations covering neither the processing of a particular product nor the manufacture of a new product. The fact that operations similar to those carried on by the applicant company may be carried on by mining undertakings and that in that case they are considered as forming part of the production of coal, cannot be taken into account because in that context it is an ancillary activity which is concerned and which cannot in any case in itself constitute a coal-producing activity.

liability of the High Authority under the conditions laid down in Article 34 of the Treaty. Otherwise those concerned would be able to obtain a judicial review of legality even in a case where the time-limit for commencing annulment proceedings is past.

1. The meaning of the first paragraph of Article 40

The first paragraph of Article 40 deals with disputes concerning the liability of the Community for wrongful acts or omissions.

The action for reparation referred to in Article 40 differs from an application for annulment both in its subject-matter and in the nature of the grounds which may be pleaded. As regards its subject-matter, an action for reparation is directed not to the abolition of a particular measure but only to reparation of damage caused by an act or failure to act amounting to a wrongful act or omission. As regards the grounds on which an action for reparation may be based only the existence of a wrongful act or omission can lead to a finding against the High Authority whereas an application for annulment enables the four grounds mentioned in Article 33 to be pleaded.

Article 40 consequently confers on the Court a jurisdiction which is clearly different from that which it exercises in disputes concerning legality.

In the present case the Court is not asked to rule on the question whether it may be pleaded that the alleged illegality of a measure which has not been annulled con­ stitutes in itself a wrong capable of giving rise to a right to reparation under Article 40.

That literal interpretation is confirmed by the following considerations.

An application for annulment makes possible a direct review of the activities of the High Authority leading, where appropriate, to the annulment of illegal acts, whereas an application for reparation can give rise only to an order directed to the High Authority to make good the injury caused by its conduct. An application for annulment has a much more marked impact on the High Authority's field of ac­ tivity whilst an application for reparation can deal only with the consequences of that activity.

On the other hand the problem arises in a different manner in the case of an action for reparation,

on the one hand because the subject-matter of the application for repaaration is much more limited than that of an application for annulment, and because the basis of the action is subject to proof of the existence of a wrongful act or omis­ sion;

on the other hand because no reason can justify the refusal of any legal protec­ tion to natural or legal persons who are not subject to the jurisdiction of the Community, when such damage is caused by a wrongful act or omission com­ mitted in the implementation of the Treaty, a matter in which the Court has ex­ clusive jurisdiction, whilst any natural or legal person may by application to the competent national courts obtain reparation for damage caused by Community institutions outside the application of the Treaty (third paragraph of Article 40).

For the reasons set out above, the objection of inadmissibility raised by the defen­ dant must be dismissed.

C— On the substance of the case

(a) The applicant maintains that when the Treaty prescribes the free movement of products of the Member States, this implies also the free movement of products originating in third countries, which are lawfully granted by one of the Member States the right of entry into its own territory.

The defendant does not contest this view, which was adopted officially by the High Authority as from 1955 and formulated by it in its letter sent on 28 May 1955 to the Governments of the Member States in the following terms:

'The Community is based, in its own sphere, on the principle of unity, that is to say on that of the Common Market which assumes unrestricted movement of all coal and steel products coming within the jurisdiction of the Community. This principle of the free movement of products laid down in Article 4 (a) of the Treaty applies not only to products originating from a Community country but

JUDGMENT OF 14. 7. 1961-JOINED CASES 9 AND 12/60

also to coal and steel products of third countries, on condition however that they have been imported properly into any country of the Community' (Document No 12 annexed to the application in Case 9/60).

Consequently if the High Authority, which is required to have Article 4 (a) respected by the Member States and Community undertakings, does not carry out that duty, those who are subject to it are entitled to consider themselves to have suf­ fered damage to their legitimate expectations or to their rights and to ask for reparation of the damage which has thus been done to them. It is otherwise when products originating in third countries are concerned because although in certain circumstances these products are allowed to benefit from the application of Article 4 (a) that advantage is only a reflection of the guarantee which the Treaty intended to grant to Community products, so that producers in third countries and traders dealing in their products are therefore not entitled to put forward claims for repara-

VLOEBERGHS v HIGH AUTHORITY

tion on the basis of the infringement of some alleged personal right vested in them if it should happen that the above rule is not applied and they suffer damage as a result.

Article 73 assigns the administration of import licences for trade with third countries to the Government in whose territory the place of destination for imports is situated. It emerges from the allegations of the applicant itself, and especially from the document annexed to the application in Case 9/60, that the coal in ques­ tion was never intended for movement within Belgium or the Community in general, but only for France. The fact of having subjected the coal to washing, screening and crushing in Belgium in no way changes this first and final destination of the coal. The admission of this coal to free circulation in Belgium could be effected without difficulties or charges of any kind. In these circumstances the applicant cannot rely on a possible breach of duty by the High Authority in order to claim compensation for the damage thereby said to be caused to it.

JUDGMENT OF 14. 7. 1961—JOINED CASES 9 AND 12/60

In the present case the applicant has been unsuccessful in all its submissions.

It must therefore bear the costs of the proceedings.

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to Articles 2, 3, 4, 33, 35, 40, 71 and 73 of the Treaty establishing the European Coal and Steel Community; Having regard to the Protocol on the Statute of the Court of Justice of the Euro­ pean Coal and Steel Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities;

THE COURT

hereby:

A. Van Houtte A. M. Donner

Registrar President