C-2/63

JUDGMENT OF THE COURT 16 DECEMBER 1963

Società Industriale Acciaierie San Michele, Ferriere Rossi (FEE. RQ.), Meroni & Go. (Milan), Acciaierie Laminatoi Magliano Alpi (A­ .L .M.A.), Società Industriale Metallurgica di Napoli (S.I.M.E.T.),

Meroni & Co. (Erba), Acciaieria Ferriera di Roma (F.E.R.A.M.), Safim Siderurgica and Acciaierie e Ferriere Siciliane Bonelli 2 v High Authority of the European Coal and Steel Community

Joined Cases 2/63 to 10/63

Summary

1. Procedure — Application — Requirements of form (Rules of Procedure, Article 38)

In Joined Cases 2/63 to 10/63

1) 2/63, SOCIETÀ Industriale Acciaierie San Michele , a company limited

by shares, governed by Italian law, having its registered office in Turin, represented by its sole director Bartolomeo Aragno;

2) 3/63, Ferriere Rosse (Fer. Ro.), an individual undertaking governed by Italian law, having its registered office in Magliano Alpi (Coni), represented

by its owner Gino Rossi;

3) 4/63, Meroni & Co., a company limited by shares, governed by Italian law, having its registered office in Milan, represented by its sole director Aldo Meroni;

6) 7/63, Meroni & Co., a limited partnership, governed by Italian law, having its registered office in Erba (Como), represented by its managing partners Ambrogio and Aldo Meroni,

7) 8/63, Acciaieria Ferriera di Roma (F.E­ .R.A.M.), a company limited by shares, governed by Italian law, having its registered office in Rome, repre­

sented by Aldo Alliata, Chairman of the Board of Directors;

8) 9/63, SAFIM Siderurgica a company limited by shares, governed by ,

Italian law, having its registered office in Milan, represented by Francesco

Bonelli, Chairman of the Board of Directors;

sented by its Legal Adviser Italo Telchini, acting as Agent, assisted by Mario Giuliano, advocate of the Milan Bar and at the Corte di Cassazione of the ItalianRepublic, Professor at the University of Milan, with an address for service in Luxembourg at its offices, 2 Place de Metz, defendant,

Application

primarily for annulment of the individual Decisions of 18 December 1962; —

secondarily for annulment of the periodic penalty payments and reduction of —

the amount of the fines.

SAN MICHELE v HIGH AUTHORITY

Issues of fact and of law

I — Facts under the power conferred on it by Article 47 of the Treaty; fol­ left High de­ The facts may be summarized as — it to the Authority to

lows: termine whether in the present cases

failure in­ By Decisions of 23 February 1962, the the to produce certain

High Authority had ordered the appli­ voices was justified having regard to

cant undertakings in the present cases the law applicable, and to come to

The applicants pleaded the illegal nature Treaty. of the request addressed to them and in It thereby imposed on them:

the course of the oral procedure claimed — a fine of 0.5% of their annual

transmission the in­ that the of said turnover; voices might not be possible because —

a periodic penalty payment of 2.5% under Italian law invoices only have to (5% in the case of the applicant in be retained for five years. Case 3/63) of the daily turnover for The Court decided on these applications each day's delay in the transmission

by its judgment of 14 December 1962 of the invoices or copies thereof with

in which, inter alia, it: effect from the date of notification

— The applications are in fact made primarily against the Decisions of 18 December annul the contested Decision and order 1962. The issues of fact and of law on the High Authority to make a full which the Court gave its judgment of and proper re-examination of the ques­

14 December 1962 differ from those on tion whether the failure to produce the which the present applications are based. electricity invoices was justified having These applications differ, both as regards regard to the law applicable; the petitum and causa petendi, from secondarily those made against the Decisions of 23 annul the periodic penalty payment and February 1962 and therefore cannot be order a reduction of the fine to the confronted with the argument that the

following extent: said judgment operates against them

with the force of res judicata. Nor can (a) four-fifths in Cases 2, 3 and 6/63; this judgment affect questions (fines and (b) five-sixths in Cases 4, 7, 8, 9 and periodic penalty payments) which had 10/63: not arisen and were unknown to the

applicants. Moreover whilst it is true (c) nine tenths in Case 5/63; that in the previous cases the applicants

and in addition order the defendant to have already claimed that Italian law bear the costs of the proceedings. only requires them to retain business The defendant contends that the Court invoices for five years, it cannot be should: denied either that the Court gave no

Submissions and argu­ — The indication or the grounds or the

ments of the parties applications is implicit therein.

From the arguments developed it is The submissions and arguments of the clear:

parties may be summarized as folows: (a) that the Decisions addressed to the

Admissibility applicants in Cases 2, 3, 5 and

6/63 infringe Articles 14 and 15 The defendant maintains that the appli­

duty not affect the validity of the contested

to produce the invoices at Decisions and thus has already ruled on

issue; this same issue which the applicants

raising afresh in the present appli­ imposes sanctions, are pecuniary —

whereas in the present cases it cations. Moreover although it is correct should have calculated the quan­ that in this judgment the Court left it to tities of ferrous scrap used by a the High Authority to assess the appli­

deduction; responsibility in the circumstances, cants'

defence proves that the grounds fact brought out only in the reply, since

of the applications were sufficiently it is quite impossible to find them in the indicated. original applications. Indeed, following — It is clear from the conclusions in the the decisions of the Court in Joined

secondary submission that the appli­ Cases 19 and 21/60 and 2 and 3/61, the cations are founded on Article 36 of the application must specify the grounds on Treaty in conjunction with Article 33. which it is based. This is an essential Moreover be disre­ as the Court accepted in the requirement which cannot

Joined Cases 7/56 and 3 to 7/57, an garded particularly in the present case

applicant is not specify the obliged to where the applications do no more than

Articles invoked in support of his appli­ invoke in a general and vague way the

The omission or any reference to

applications against the Decisions of 23 Article 36 of the Treaty and of any February 1962. Thus the applicants argument as to the applicability of this

have already made the point that it was Article in the present case results in the

in fact impossible for them to produce secondary conclusions appearing ambig­

the electricity invoices at issue, stressing uous and contradictory. Further, even

JUDGMENT OF 16. 12. 1963 — JOINED CASES 2 TO 10/63

Common Assembly. impose this obligation whilst the

Decisions of 18 December 1962 are

limited to the imposition of pecuniary On the substance of the cast sanctions for infringement of this obli­

gation. Moreover, the defendant adds, A As to the principal conclusions even the opportunity provided for by the —

third paragraph of Article 36 is not

1. In Cases 2, 3, 5 and 6/63 available in the present case since on the one hand the legality of the Decisions of The applicants state that since the period 23 February 1962 can no longer be during which they have been engaged in questioned following the judgment of the the iron and steel industry covers a Court of 14 December 1962 and on the limited period in comparison with that other hand the legality of these Decisions of the equalization scheme (1 April 1954 is not called in issue by the Decisions of to 30 November 1958) the contested 18 December 1962 which impose pecuni­ Decisions are illegal in that they require ary sanctions for the infringement of this production of invoices for electricity obligation independently of the actual

after the sanctions at issue were applied ties they quite properly believed: dis­ whereas the principles of administrative (i) that they were thenceforward

law require that the reasons on which a charged from their duties towards

decision is based must be contained in the High Authority provided for the decision itself, and not be given by Article 47 of the Treaty; a posteriori. (11) that the information they gave to The defendant rejoins first that the the High Authority and the national pecuniary sanctions in question were not fiscal authorities would not be fixed according to the period during further checked for its accuracy; which each applicant was engaged in the (111) that they were not required to keep iron and steel industry. The Decisions at the electricity invoices at issue any

issue censure the persons to whom they longer because this obligation had

solely for having by virtue of Italian law. pro- are addressed not ceased

SAN MICHELE v HIGH AUTHORITY

cised only within the time-limits fixed old. They so informed the High Author­

by law. Under Italian law ('testo unico') ity and it was at this point that the

on tax adjustment of 29 January 1958, High Authority asked for the invoices at No 645 (Articles 32 and 35) these time- issue to be sent to it. limits are three and four years respec­ following the judgment or the Court of tively from the year during which the 14 December 1962, the applicants asked taxpayer's return was made or should the electricity supply companies for have been made. Article 42 of this law copies of these invoices. Two under­

stipulates further that the authorities takings, FER. RO. and F.E.R.A.M., need not take into consideration account­ have already obtained these copies. As ing documents which the person con­ to the other undertakings, account must

cerned refuses to produce and that a be taken of the delays and difficulties in declaration that he does not possess the matter, especially as a result of the

these documents amounts to a refusal to nationalization of the electricity industry produce them. in Italy currently being carried out; Therefore since in this case the issue these difficulties ought to be known to was the correction of certain particulars the High Authority. In these circum­

Authority to verify the correctness which lays down the obligation to keep of these declarations. accounting books and documents, trade The applicants have produced these invoices etc. for a period of five years. declarations in proper form and under­ This is the more specific law as com­

gone several inspections and checks in pared with Article 2220 of the Civil course of which they have submitted to Code, derogating from the latter in ac­

the High Authority the originals of the cordance with the principle 'in toto jure invoices for electric energy issued by generi per speciem derogatur'.

JUDGMENT OF 16. 12. 1963 — JOINED CASES 2 TO 10/63

(d) The obligation laid down in Article the present case since the Treaty con­

2220 is moreover not a true obligation: tains no provision for keeping trade this provision lays down quite simply invoices and accounting documents, so 'onere' the (burden) of keeping account­ that the High Authority ought in these ing documents for ten years for eviden­ circumstances either to have applied 'obbligo' tial purposes, in the sense that failure to Italian law, by distinguishing 'onere'

undertaken by the administration within the other hand, that the power of recti­

prescribed time-limits. On the other fication vested in the High Authority

hand it is only the provisions of Article should be exercised within the same

26 of the Law of 19 June 1940 men­ time-limits as those fixed for the Italian tioned above, applicable to trade invoices fiscal authorities. In no circumstances

subject to turnover tax, which lay down the could such an error justify the severity 'obligation' to keep these for five years. of the pecuniary sanctions imposed. For (e) In these circumstances, since the the same reason it is impossible to

High Authority refers to the provisions accept as well-founded the defendant's of Article 2220 of the Civil Code, it is argument that the applicant ought to

because it was brought about by the de­ issue in the present case. fendant itself which, after a considerable Proceeding from an objection raised by lapse of time, requires the production of the defendant, the applicants moreover

invoices already shown to it. seek to prove that the equalization is

(f) Moreover the duty of making an scheme, whatever it may be called, official rectification in such circumstances fiscal in character and so must be sub­

arises also under Article 2 of Decision ject to the Italian fiscal laws mentioned

No 13/58 of the High Authority already above. Relying on numerous quotations applied in other cases (Case 18/62) and from legal doctrine they develop several not in the present case, despite the fact arguments to prove that this scheme

that the position of the applicants is fulfils the three essential conditions of

made by way of equalization are of Italian Civil Code. the nature of direct taxes, only general —

The High Authority has taken the

provisions concerning such taxes are view that these provisions of the Italian 'reasonable' applicable to them and this explains Civil Code fix a wholly why, in the present case, the applicants limit for its action and that the pro­

refer to the provisions of the Laws of ceedings instituted by the applicants

19 June 1940 and 29 January 1958. could therefore only possibly have been The defendant replies with the following justified if the Decisions of 23 Feb­ points: ruary 1962 and the contested Decisions — The High Authority, in accordance envisaged only the imposition and the

with the judgment of the Court of 14 enforcement by way of sanctions of the docu­ December 1962, has assessed the factual obligation to produce accounting position on which the present appli­ ments which the applicants were not

well-founded. whether the provisional character of this —

Starting from the principle, several financial arrangement is not such as to

times confirmed by the Court and ac­ interrupt the running of any prescribed

by the applicants, whereby the cepted period of limitation in this matter.

Community must base its actions on — The discussion on the differences 'onere' 'obbligo'

Community law and take account of the between and is irrele­

did not place them under a more cants claim, that traders are not required onerous duty than that laid down to keep acounting documents; it simply

JUDGMENT OF 16. 12. 1963 — JOINED CASES 2 TO 10/63

shows that the legislature left it to on the one hand, in Community law the certain authorities to give concrete form estimated assessment provided for in to this duty and, if need be, provide Article 2 of Decision No 13/58 does the necessary sanctions to enforce it. not preclude the application of Decisions These authorities must be deemed to Nos 19 and 20/60 by virtue of which include, apart from the organs of the the basis of assessment to contribution

State, the High Authority by virtue of is fixed according to the notifications

the adaptation of Italian law to the made by each undertaking in question

provisions of the ECSC Treaty. and the special notifications of group — As to the obligations ('obblighi') scrap asked for and obtained under Article arising, as regards the applicants, from 47; and that on the other hand for cases the application of the equalization of this kind several Italian fiscal laws scheme, it is incorrect that these are two make provision not only for an estimated in number and that the applicants have assessment but also for sanctions under observed them. First it must be noted civil and criminal law. that the Treaty many more provides After drawing attention to a whole

they were subjected clearly showed, as January 1958 on direct taxes (and not

the Court recognized in that judgment, on tax adjustment) have the sole aim of

that there were serious doubts about the subjecting to a period of limitation the truth of declarations made by certain fiscal authorities'

power to make or

(accord­ undertakings as to the quantities of correct assessments of income; ferrous scrap used. ing to the incorrect quotation by the

— The applicants moreover accuse the applicants it is a matter of power to 'particulars' High Authority of not having carried correct already established); out an official rectification and having they do not derogate from the obligation on the contrary imposed pecuniary to keep the accounting documents re­

ceeded on the basis of Article 2220 of proper that the authorities, whilst ob­

the Civil Code because this seemed to serving the time-limits laid down for it to be the only one compatible with making assessments of income or cor­

the system of Article 47 of the Treaty. recting them, should make inspections Moreover it must not be forgotten that, and checks relating even to an earlier

SAN MICHELE v HIGH AUTHORITY

period of the business activities of tax­ (i) the equalization levy is not com­

payers. Moreover it is sufficient to parable with a direct tax and

kept and produced for the purposes of present proceedings are not comparable

collection of turnover tax. because in the first case the High The defendant also makes known its Authority had already taken account of attitude to the question whether the the amounts of electricity consumed by

equalization scheme is fiscal in character. the applicant and it was precisely It devotes several pages of its pleadings because of the disputes on this issue to refuting the argument of the appli­ that the Court of its own motion

cants, and refers not only to the general ordered the production of electricity principles of tax law but also to the de­ invoices. The decision of the Court, it cisions of the Court, especially in Joined concludes, indirectly confirms that the

Cases 17 and 20/61 and in Case 19/61. obligation imposed on by the applicants

It also quotes the decisions of the Italian the High Authority to produce to it the Corte di Cassazione to show that the invoices at issue is well-founded. purposes of the equalization levy are not the same as those which the Corte di Cassazione attributes to levies of a fiscal B — The subsidiary conclusions defen­ character. Having that, the said

if the equalization scheme be of a fiscal invoices have been asked for within the

nature, it must not be overlooked by law, that: time-limits prescribed this

JUDGMENT OF 16. 12. 1963 — JOINED CASES 2 TO 10/63

assessment being deemed a sufficient The defendant first makes the point that sanction. the amount of the pecuniary sanctions

They stress moreover that pecuniary imposed falls far short of the maximum

sanctions cannot be imposed on them laid down in Article 47 of the Treaty because the electricity supply com­ and is moreover proportionate to the

invoices for Decisions of 23 February 1962 laying keep trade only the

five down the obligation to produce the period of years prescribed by Law 19 June invoices in question to the High Author­ the of 1940, and at

the present time the nationalization ity terminated a correspondence between in the applicants and the High Authority in of the electricity industry now

process makes it difficult to which the production of these documents very refer to their records; had been asked for in vain. The defendant then objects that the

(iii) in these circumstances, the High reference to Article 10 of the Law of

Authority could have consulted its 5 January 1956 is irrelevant in the pres­

Finally the applicants submit that the applicants, the electricity supply com­

pecuniary sanctions at issue are illegal panies only made the point that the

and unjustified even when account is necessary investigations could not be taken of the economic capacity of the made quickly. Moreover even if the

applicants. applicants have actually destroyed the

SAN MICHELE v HIGH AUTHORITY

invoices in question because they were mission of these documents they refer

were notified of the Decisions of 18 tire correspondence between the parties

December 1962 they would have in each case on the same question be avoided, at least in part, exposing them­ submitted to the Court. The applicants

selves to the consequences of which they in the other cases have reserved the

complain in the present applications. right to produce like documents if need

should arise.

Order Court 14 March IV —

Admissibility

1. The defendant contests the admissibihty of the present applications pointing out first that they are made in fact against the Decisions of 23 February 1962 judg­ and that they bring before the Court questions already settled by it in its ment of 14 December 1962.

The applications made against the Decisions of 23 February 1962 on which the Court ruled in its judgment of 14 December 1962 concerned the power of the High Authority to require production of the invoices for electric energy consumed by the applicants. In the first applications the applicants maintained that such a power had no basis in Article 47 of the Treaty.

The present applications on the other hand are concerned with the pecuniary sanctions imposed by the Decisions of 18 December 1962 for failure to pro­

duce these invoices. As to this the applicants make the point that failure to produce these invoices cannot be considered as an infringement of the

Decisions of 23 February 1962, the invoices having been destroyed in accord­

2. The applicants in Cases 2/63, 3/63, 5/63 and 6/63 make the point that the contested Decisions impose pecuniary sanctions on them for not having produced the electricity invoices relating to the whole period of the operation of the equalization scheme, whilst they have been engaged in the iron and steel

industry for only part of this period.

The defendant contests the admissibility of this submission, making the point that, as the Decisions of 18 December 1962 were limited to drawing the legal conclusions flowing from the Decisions of 23 February 1962, it is against the last-mentioned Decisions and the obligation they contain that the applicants

should have raised such a submission.

However, the judgment which settled the applications made against the

Decisions of 23 February 1962 accepted as well-founded the power of the High

The submission made by the applicants in Cases 2/63, 3/63, 5/63 and 6/63 is therefore admissible.

3. The defendant then makes the point that the present applications do not

satisfy the conditions of admissibility set out in Article 38 (1) (c) of the Rules of Procedure of the Court, as they do not contain a brief statement of the grounds on which they are based.

The applicants maintain in their applications that the pecuniary sanctions imposed by the contested Decisions are out of proportion both to the serious­

ness of the offiences of which they are accused and to the economic capacity of each undertaking.

Certain of the applicants further maintain that the pecuniary sanctions have also been imposed for failure to produce electricity invoices relating to a period during which they were not engaged in the iron and steel industry.

According to the Rules of Procedure of the Court it is unnecessary for an applicant to indicate, for the purpose of admssibility, the provisions of the

Treaty under which he is entitled to bring his action. Any appeal against pecuniary sanctions imposed by the High Authority is by its very nature based on Article 36 of the Treaty and there is no need to invoke that Article

expressly.

Having regard to the purpose of the present applications, it is abundantly clear that these are based on Article 36 of the Treaty.

JUDGMENT OF 16. 12. 1963 — JOINED CASES 2 TO 10/63

As the appeals provided for in this Article confer unlimited jurisdiction upon the Court, the applicants are entitled to avail themselves of the grounds set forth in Article 33 of the Treaty.

However, neither the letter nor the spirit of these Decisions justifies such an interpretation. They are limited by Article I thereof to requiring production of 'all invoices for electric energy . .. relating to the activity of the undertaking for the period from April 1954 to November 1958 inclusive' without specifying that they must be originals only.

Further, taking account of the fact that the purpose of producing the invoices at issue was to enable the High Authority to check the information required for the application of the equalization scheme for imported ferrous scrap, the applicants had no reason to think that only production of the original accounts would have served this purpose.

In addition, in the letters of 27 November 1961 addressed to the applicants,

the High Authority had expressly stipulated that in the absence of the original

electricity invoices the applicants were required to produce 'certified copies or photocopies'. Enclosed with these letters were several forms for completion by

the addressees in which 'copies or photocopies'

cants should have taken the precaution of keeping the electricity invoices in anticipation of the Decisions which the High Authority might take in the matter.

It is clear from the answers given to the questions asked by the Court that the destruction of the invoices took place only after these letters had reached the applicants.

It therefore follows that even if the applicants had destroyed or lost or had never kept the originals of the invoices at issue, they ought to have asked the

electricity supply companies for copies of them upon being notified of the Decisions of 23 February 1962, thus endeavouring to comply with these Decisions. Instead, the applicants instituted annulment proceedings alleging that the power of theHigh Authority to require transmission of accounting documents had no foundation in the Treaty. Only between December 1962 and

January 1963, that is at least ten months after being notified of the Decisions of 23 February 1962, did they for the first time ask the electricity supply com­

panies to furnish them with a copy of each invoice.

2. The applicants further maintain that the contested Decisions discriminate against them, as pecuniary sanctions were not imposed on the applicant in Case 18/62 who was in a similar position.

JUDGMENT OF 16. 12. 1963 — JOINED CASES 2 TO 10/63

It appears however from the foregoing considerations that the imposition of

pecuniary sanctions is fully justified in the present case by reason of the infringement of the Decisions of 23 February 1962. In these circumstances it is of little consequence to determine whether in allegedly comparable cases the High Authority should have imposed the same pecuniary sanctions.

Therefore the complaint of discrimination raised must be dismissed as

unfounded.

B — Reduction of the amount of the fines

In their alternative conclusions the applicants request a reduction in the

amount of the fines having regard on the one hand to the fact that the uncertain and equivocal conduct of the High Authority led them to commit a justified error in law and on the other hand to the fact that this amount is out of pro­ portion to the economic capacity of each undertaking.

As regards the first argument, the preceding considerations show that no error in law can validly be invoked by the applicants since the obligation to produce certified copies of the invoices at issue, in the absence of the originals, is plain from the Decisions of 23 February 1962 as well as from the letters of 27 November 1961.

SAN MICHELE v HlGH AUTHORITY

As regards the second argument, the applicants have not furnished the Court with a shred of factual evidence to show that the amount of the fines is out of

payment of the periodic penalty payments imposed by the contested Decisions should be granted.

In furtherance of this claim they raise the point that, as production of copies of the invoices at issue to the High Authority could only be made after delivery of these copies by the electricity supply companies, the applicants cannot be held responsible for the delay in producing them.

To justify this delay the applicants refer to the physical difficulties alleged in the answers to the letters asking for delivery of the copies of the invoices at

issue.

Without regard to the question whether the invoices were in fact destroyed it can be said that the delay in production of these copies is due in large measure to the fact that the applicants only applied to the electricity supply companies in December 1962 at the earliest, that is, after a considerate lapse of time from their being notified of the Decisions of 23 February 1962.

Therefore the physical difficulties which the electricity supply companies

Under the terms of the first subparagraph of Article 69 (3) of the Rules of Procedure, where each party succeeds on some and fails on other heads, the Court may order that the parties bear their own costs in whole or in part.

The defendant has been unsuccessful in part in the submission relating to

the annulment of the periodic penalty payments.

On those grounds,

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 33, 36 and 47 of the Treaty establishing the Euro­ pean Coal and Steel Community;

months from the notification of the latter;

3. Four fifths of the costs are to be borne by the applicants and the remaining one fifth thereof by the defendant.

Donner Hammes Trabucchi

Delvaux Rossi Lecourt Strauß

Delivered in open court in Luxembourg on 16 December 1963.

A. Van Houtte A. M. Donner