C-14/60

JUDGMENT OF THE COURT 13 JULY 19611

Meroni & Co. and Others v High Authority of the European Coal and Steel Community 2

Joined Cases 14, 16, 17, 20, 24, 26 and 27/60 and 1/61

Summary 1. Liability of the ECSC—Financial arrangements—Equalization—Normal disadvantages —Absence of injury (ECSC Treaty, Article 40, 53)

2. Liability of the ECSC—Conditions for the application of Article 40—Actual and specific injury

3. Liability of the ECSC—Wrongful act or omission within the meaning of Article 40—­ Inherent defects in decisions of the High Authority—Limits ofjudicial review

JUDGMENT OF 13.7.1961—JOINED CASES 14, 16, 17, 20, 24, 26, AND 27/60 AND 1/61

16/60, Acciaieria Ferriera DI Roma (FERAM), a company limited by shares, Rome, represented by its sole director, M. V. Frigerio,

17/60, Fer.Ro ( Ferriere Rossi ), an individual undertaking, Magliano Alpi (Cuneo), represented by its owner Gino Rossi, engineer,

20/60, SOCIETÀ INDUSTRIALE METALLURGICA di Napoli (SIMET), a company limited by shares, Naples, represented by Pio Fantini,

24/60, Fonderie Officine Meccaniche (FOM), a company limited by shares, Turin, represented by its sole director, Riccardo Alice,

26/60, Acciaieria Laminatoi di Magliano Alpi (ALMA), a company limited by shares, Turin, represented by its sole director, Giuseppe Passalacqua,

THE COURT

composed of: A. M. Donner, President, Ch. L. Hammes and N. Catalano, Presi­ dents of Chambers, O. Riese (Rapporteur), L. Delvaux, J. Rueff and R. Rossi, Judges,

MERONI v HIGH AUTHORITY

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

gives the following

JUDGMENT

1. Rule that the present application is ad­ missible, declare that the High Authority II—Submissions and arguments is liable for a wrongful act or omission in of the parties that the latter did not notify the appli­ cant in good time of the amount, which The submissions and arguments of the par­ moreover was only provisional, of the ties may be summarized as follows: equalization contribution in respect of Under the heading 'preliminary observa­ ferrous scrap for the period from 1 April tions' the applicants 1954 to 31 March 1959 with the result 1. Recall the case-law of the Court relating that the applicant was forced to publish to the compulsory publication of price-lists its price-list and conditions of sale and conditions of sale as well as the aims without being in any way able to take and scope of this publicity (Judgment in into account the rate at which it would Case 1/54). later be charged; 2. Give an account of the history and organization of the equalization scheme, the 2. Cause to be established by an expert to inadequacy whereof the Court be appointed by the Court of its own mo­ acknowledged in its judgments in the tion, the damage suffered by the appli­ Meroni Cases (Cases 9/56 and 10/56). cant as a result of having been compelled 3. Emphasize that during those proceedings to sell its iron and steel production the applicants Meroni & Co. had already without having been able to pass on to criticized the delay in notifying the persons the purchasers the amount of the concerned of the actual amount of the sums equalization contribution and the exact due by way of equalization. amount which will have to be credited to 4. Maintain that when, following the said the applicant's equalization account for Meroni judgments, the High Authority the period from 1 April 1954 to 31 reviewed the structure of the equalization March 1959; machinery, it should have worked out a system designed to reconcile the need, on the 3. Order the High Authority to pay the one hand, for prior and accurate publication costs. of prices by undertakings and, on the other The other applicants submit, with some hand, for accurate notification in good time minor variations, the same conclusions. of the amounts payable by way of equaliza-

tion. It was all the more imperative to take Article 60 in that it placed the under these factors into consideration as the rate takings in the dilemma of either not of equalization has continued to increase complying with the principle set out in and in a way which the undertakings could this article according to which the prices not have foreseen, namely from $0.75 to charged must correspond exactly to the $ 13 per metric ton, an increase of 1600%. published prices or not selling their On the basis of these 'preliminary observa products in order to obviate the risk of tions' the applicants put forward claims for trading at a loss. compensation for a wrongful act or omission

a posteriori. The applicants' criticisms are adversely affected the legitimate interests of in fact therefore directed against the actual the latter undertakings by making it impos nature and structure of the equalization sible for them when they fix their prices and scheme and not against its implementation; draw up their price-lists to take account of moreover the system as such, altered in the the amount of their equalization contribu light of the earlier decisions of the Court, tions and to pass it on to their purchasers. cannot now be called in question, as its In this way it has 'placed the directors of the legality has been acknowledged. undertakings in an embarassing position in The requirement that when making the final that it has conceivably caused them to make calculation of the equalization contributions mistakes, forced them to interfere with the the charges are to be apportioned accurately normal pattern of their production opera and fairly implies that the High Authority tions and made any normal and honest ad needs a certain amount of time.

known in 1961. shorter period) after the month to which they refer. It must not be forgotten that the The High Authority has therefore infringed: rate of equalization could not be fixed Article 5 of the ECSC Treaty which re- without prior knowledge of a number of fac quires it to publish the reasons for its ac tors, especially of the respective quantities tions and to take the necessary measures to ensure the observance of the rules of and prices of imported scrap and scrap purchased on the home market.

MERONI v HIGH AUTHORITY

Moreover there has been no loss. Since the tion charges is to ask themselves which undertakings were aware that the equaliza­ movement they could have adopted. For if tion system imposes obligations and at any account is taken of the judgments in the given moment knew the amount of the con­ Meroni Cases (Cases 9/56 and 10/56) 'it tributions for the immediately preceding must be conceded that even if the applicant periods and could follow the trends of the undertakings did have the gift of prophecy market, they were always, when calculating attributed to them by the defendant, they their production costs, able to take account nevertheless could not have foreseen either

of the major portion of the charges in ques­ the future or the earlier charges which have tion. They could and should have taken ac­ never had any valid existence and which the count also, by displaying a minimum of undertakings should have treated as null commercial prudence and experience, of the and void'. The first proper notification was risk that there might be slight increases of the publication of Decisions Nos 18 to 21/60 these charges. If they did not do so they which gave effect to the judgments in ques­ have only themselves to blame. tion.

In reply to arguments based on Article 60 former prices without being able to take ac­ the defendant calls attention to the fact that count of the increased rate. the undertakings are entirely free to amend Moreover it may happen that undertakings their price-lists, if necessary every day, as such as the applicants which only produce and when any of the relevant factors such as steel ingots and bars for reinforced concrete the equalization rate change. undergo periodic crises. In such circum­ The applicants deny that they received the stances an undertaking which does not provisional calculation of equalization know its production costs precisely, charges within the period of two months. In definitively and in good time finds it impos­ their applications they allege an average sible to check at any given time whether it is delay of 3 to 4 months and in their replies a operating at a loss. The Italian iron and delay of 4 to 5 months. steel industry, in particular, experienced The applicants' reply to the argument that crises of this kind between 1954 and 1958. the undertakings could have reasonably It went through periods when ingots and foreseen the actual movement of equaliza­ bars for reinforced concrete were sold at a

JUDGMENT OF 13. 7. 1961—JOINED CASES 14, 16, 17, 20, 24, 26, AND 27/60 AND 1/61

profit margin of one lira and less per kilo­ rates did not always have any effect on the gramme and sometimes at no profit and even price-lists lodged by various undertakings on below the cost price. If during such periods different dates'. undertakings had known in good time the exact equalization rate, which for some III—Procedure months had been eight lire per kilogramme. they would probably have shut down their The procedure followed the normal course. furnaces and waited for better conditions. However attention must be drawn to the The defendant replies that the notion that fact that by an order of 17 February 1961 an entrepreneur should have a definitive the Court authorized Italian to be used as

and the only question to be answered is whether there is evidence of a wrongful act or omission during the administration of the financial arrangements for which the defendant is responsible.

II — On the existence of injury

The Court cannot accept that the normal disadvantages which are bound to be in­ herent in the system of equalization amount to an injury giving rise to a claim for reparation and is reinforced in its view because these disadvantages affect every Community undertaking and because equalization on the other hand gives substan-

MERONI v HIGH AUTHORITY

tial advantages to all consumers of ferrous scrap, especially by maintaining the price of Community scrap at a reasonable level and by preventing much larger fluc­ tuations of this price. In the present cases it has not been shown that the disadvan­ tage suffered by undertakings owing to the fact that they were for a time uncertain as to the final amount of their equalization contributions is greater than the disad­ vantage normally inherent in the system which was chosen.

Moreover there can be no injury for which the defendant can be held liable in so far as the applicants could take into account the equalization levy when they fixed their selling prices in spite of the uncertainty as to the final rate. In this connexion it must be borne in mind that the applicants knew that the statements of account were only provisional and that consequently any alterations to them might take the form of increases.

Moreover the tables of statistics produced to the Court by the parties show clearly that in many cases the successive alterations of the rate applicable to a single period did not reflect a constant increase but were characterized either by alternating rises and falls (for example April, September to December 1955) or even by progressive reductions (for example July to December 1956). Therefore the applicants claim that they were exposed throughout the entire period when the financial arrange­ ments were operating to the risk of underestimating their cost prices. On the con­ trary they were sometimes led to overestimate them so that it must logically be ad­ mitted that the disadvantage pointed out was to some extent offset by a certain compensation which was also built in to the equalization scheme. Finally, even in those cases where there were fairly large increases in the rate applicable to a single period the Court takes the view that the effect of the amount of these increases on the total price of scrap, that is to say on the cost price, is not such that they would be presumed to exceed any reasonable estimate by an experienced producer. It fol­ lows from all the foregoing considerations that the applicants have not shown that there has been any injury giving rise to a claim for compensation.

III — The wrongful act or omission

The complaints raised by the applicants are connected with two aspects of the at­ titude of the High Authority or of the agencies in Brussels, namely:

JUDGMENT OF 13. 7. 1961—JOINED CASES 14, 16, 17, 20, 24, 26, AND 27/60 AND 1/61

The Court takes the view that these particulars do not justify the conclusion that there has been negligent administration if account is taken of the complicated nature of the factors to be taken into consideration. Although the delay of 411 days in notifying the rate applicable to December 1958 can be regarded as excessive, it must nevertheless be admitted that this single exception is not itself sufficiently serious to justify the inference that there has been a wrongful act or omission. In short no evidence of undue delays has been adduced or tendered.

2. So far as the various later corrections are concerned it is advisable to bear in

mind that, for the reasons given above, the decisions whereby these corrections were prescribed and the decisions of which these corrections were, directly or indirectly, the inevitable consequence, do not come within the province of review by the Court in the context of the present proceedings. Therefore the Court must merely consider whether these modifications were caused by circumstances in no way connected

MERONI v HIGH AUTHORITY

with the legal structure of the equalization scheme or by a deficient organization of the departments or work of the administration.

(a) The applicants proceed from the proposition that, having regard to their number, scope and the periods over which they were spread, the corrections, which were made, amount in themselves to irrefutable evidence of unjustifiably bad ad­ ministration.

Contrary to the view of the applicants the fact that it was not known when the later alterations would be made and what their scope would be does not justify the finding that the High Authority is liable for a breach of the rules relating to publication set out in Article 60, because it made it impossible for undertakings to comply with these rules. It is difficult to see how the mere fact that undertakings do not yet know with any accuracy the whole of their final cost price would prevent them from selling at prices which they had freely inserted in their price-lists and this would be even less likely as they were free to alter these price-lists as frequently as they thought was necessary.

JUDGMENT OF 13. 7. 1961—JOINED CASES 14, 16, 17, 20, 24, 26, AND 27/60 AND 1/61

(b) Although it is not possible to criticize the High Authority for having rectified er­ rors committed in calculating the basis of assessment to the equalization contribu­ tions it is however necessary to consider whether these errors could have been avoided by good administration as they may indicate the existence of a wrongful act or omission on the part of the High Authority or the Brussels agencies, which amounts to the same thing.

Upon reading the applicants' pleadings it appears that they attribute the errors or defects which they regard as constituting a wrongful act or omission primarily to two facts: to the delegation of powers to the Brussels agencies and the withdrawal of this delegation carried out pursuant to the Meroni judgments (Cases 9 and 10/56), on the one hand, and to the frauds whereby the basis upon which the equalization is calculated was falsified, on the other hand.

MERONI v HIGH AUTHORITY

column). The High Authority cannot however be criticized for having waited for the result of pending actions before finally making up its mind in this connexion. Nor do the other recitals of the said decision, which are designed to justify some of the corrections of which the applicants complain, disclose any facts which might amount to prima facie evidence of negligent administration. Finally, as a general observation, it must be said that, to the extent to which previous errors or defects in the calculation of the actual bases of assessment to the equalization levy, for exam­ ple the total amount of scrap subject to equalization, may have called for certain corrections, those errors and defects do not amount ipso facto to a wrongful act and omission. They may just as well be for example the result of difficulty of solution of intricate legal problems or of the carelessness of the undertakings themselves which are subject to the High Authority's administration. In any case the applicants have not specifically demonstrated that there have been inexcusable mistakes.

The foregoing considerations taken as a whole, lead to the conclusion that the ap­ plicants have not proved the existence of a wrongful act or omission.

IV — Whether the actions are time-barred and whether the in­ jury had the nature of special damage

Since the applications have to be dismissed as unfounded on the grounds that there is no wrongful act or omission and also that no injury has been suffered there is no need to rule on the question whether the claims made by the applicants are in part time-barred.

OPINION OF MR LAGRANGE—JOINED CASES 14, 16, 17, 20, 24, 26, AND 27/60 AND 1/61

Having regard to Articles 33, 34, 40, 50, 51, 53, 60 and 80 of the Treaty es­ tablishing 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, especially Article 69;

THE COURT

hereby:

1. Dismisses the applications;

2. Orders the applicants to pay the costs.

DELIVERED ON 7 JUNE 19611 Mr President, These actions for damages are based on Ar­ Members of the Court, ticle 40 of the Treaty. The applicants all take the view that there has been a wrongful The applications which are before you and act or omission on the part of the High which have been joined by order of the Authority, for which the Community is Court, all have the same purpose: to obtain liable, because the High Authority failed to judgment against the High Authority for notify them in good time of the amount, compensation for the damage suffered by which moreover was only provisional, of the each of the applicant undertakings through equalization contribution, and this meant the delayed receipt of incomplete data con­ that they were forced to publish their price- cerning the rate of equalization and the lists and conditions of sale without being amount of the contributions towards the able to take into account the rate at which equalization of ferrous scrap recovered in­ they would later be charged. The loss has ternally and used by these undertakings not been quantified, even approximately: between 1 April 1954 and 31 March 1959. you are asked to appoint an expert for this 1 — Translated from the French.