C-108/63

THE COURT

composed of: Ch. L. Hammes, President, A. M. Donner (Rapporteur) and R. Lecourt, Presidents of Chambers, L. Delvaux and A. Trabucchi, Judges,

Advocate-General: K. Roemer Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

bankruptcy and of the preferential brought to the attention of the appli­ creditors together with a dividend of cant by two decisions of 30 October 40% for the unsecured creditors. By an 1963, notified on 15 November 1963, order of 5 May 1961, the judge in one of which fixed the assessable ton­ charge of the proceedings (giudice dele­ nage of ferrous scrap bought by the gato) authorized the applicant to pro­ Merlini company, whilst the other con­ pose this arrangement which was ap­ tained the order to pay the sums owed. proved by the Tribunale di Torino by These two individual decisions are the its judgment of 4 September 1961. subject of the present application, filed For the period from April 1954 to Feb­ on 20 December 1963. ruary 1957 (when the Merlini company ceased to function in the iron and steel II — Conclusions of the parties industry) the applicant had declared the purchase of 25 763 metric tons of fer­ The applicant claims that the Court should: rous scrap. In order to prove the debt in the winding-up on the basis of the 'As a preliminary measure, in accord­ ance with Articles 39 and 33 and Annex said declarations, the High Authority provisionally fixed the amount owed by II to the Treaty and with Article 83 the applicant by way of equalization (1) of the Rules of Procedure, order the contributions at 102 649 693.75 lire. By operation of the presently contested its judgment of 10 May 1963, the Tri­ decisions of 30 October 1963 to be sus­ bunale di Torino excluded this claim pended; against the assets 'as it was not certain, Accept as prima facie admissible the liquid and due'. relevant facts and submissions which Checks carried out in the meantime on may be submitted when the defendant's the accuracy of these declarations led statement of defence is known; In accordance with Article 33 of the the High Authority to find that the assessable tonnage of ferrous scrap Treaty declare void the decisions of 30 bought by the Merlini company during October 1963 taken with regard to the the period in question had amounted applicant company; to 54 263 metric tons (an earlier assess­ Order the defendant to pay the costs.' ment, communicated to the adminis­ The defendant contends that the Court trator of the winding-up (curatore del should: fallimento) on 18 August 1961, having 'Dismiss the proceedings instituted on fixed the consumption of ferrous scrap 14 December 1963 by the undertaking at 40 678 metric tons). This finding, Officine Elettromeccaniche Ing. A. Mer­ based on the ratio of 950 kilowatt-hours lini, a limited liability company in per metric ton of liquid steel produced, liquidation; having its registered office in was communicated to the administrator Turin, and order it to pay the costs.' on 4 July 1962. In pursuance of the equalization provisions in force in 1962, the applicant's debt was thus increased III — Submissions and argu­ to 238 700 861.00 lire, in accordance ments of the parties with the statement of account in the The applicant puts forward the following decision of 25 July 1963. By virtue of submissions in support of its con­ Decision No 7/63 laying down new clusions: criteria for calculation, the previous — Infringement of the rules of law decision of 25 July 1963 was revoked arising from national laws;

— Failure to state reasons; siderably from the position taken up in — Barring of the right to claim new the application. debts for the period in question in view of the independent checks carried out; On the substance of the case — Misuse or powers. A — Infringement of the rules of law arising from national laws On admissibility The applicant states that, in its judg (a) The defendant disputes the admissi ment of 4 September 1961 the Tribunale bility of the following submissions: di Torino approved the scheme of

It has thus debts relating to the period in ques adopted a measure plainly at variance tion, in the absence of any rule which with Italian fiscal law. It could not be could be used as an argument pre maintained that the High Authority had cluding the High Authority from limited and would limit itself at the pleading such a bar against the appli stage of execution to collecting 40% of cant for recovery of the sums due by its debt contained in the contested de way of equalization contributions. cision. The title was established after the The applicant does not define its position approval of the arrangement, and the with regard to the merits of these text of Article 4 of the contested de objections. cision states that it amounts to an en (b) The defendant finds that the appli forceable order in the sense of Article cant's Counsel inserted in the reply a 92 of the Treaty. statement in the form drawn up by the In the statement annexed to the reply, Merlini company, and added his signa the applicant adds that the new rate of ture to it, on the pretext that he had equalization provided for by Decision been unable to revise it owing to cir No 7/63, as opposed to that indicated cumstances which had arisen in the in Decision No 19/60 includes the in meantime and in view of the expiry of terest added under various provisions to the period of time for submitting the the equalization debt and due — or so it reply. is at least presumed — on 31 March The defendant considers that the state

1 -Translator's Note: Article 20 appears to be meant.

MERLINI v HIGH AUTHORITY

Taking 40%. It has no intention of infringing account of the powers accorded to the the conditions laid down in the arrange High Authority by Article 47 of the ment, since the recovery in full of the Treaty and of the obligation arising debt was excluded by Article 51 of the therefrom on undertakings to provide Italian Bankruptcy Law and Decision the High Authority with the facts neces No 7/63 in itself contains a special sary to accomplish its task, the reason provision intended to cover the increase for the estimated assessment which it in charges arising from the impossibility made is to be found in the Merlini of recovering all debts for reasons simi company's failure to produce its ac lar to those set forth in the present counting documents as can be seen from dispute. the fourth, fifth and seventh recitals of The defendant finally claims that the the decision. Moreover, the fact that the plea raised in the statement annexed to applicant had perfectly well understood the reply is inadmissible, both because it the reasoning followed by the High amends the 'petitum' of the application Authority when the latter made its assess by disputing the legality of the General ment proves that the contested decisions Decision No 7/61 which governs the adequately state the reasons on which question of interest, and because it does they are based. not come within the jurisdiction of the Court to consider the legality of a de C — Preclusion of the right to claim cision of the High Authority in relation to Italian law.

As the winding-up proceedings same basis as the cost of its manage were under way the High Authority was ment. precluded from instructing its inspec tors to carry out a new check. In fact such checks were only permitted before B — Failure to state reasons the Merlini company ceased its opera The applicant maintains that the two tions in the iron and steel industry and decisions of 30 October 1963 do not thus, owing to the winding-up, was un have a sufficient statement of reasons able to supply the required information with regard to establishing both the for the check. Owing to this fact alone, quantities of assessable ferrous scrap and the defendant is precluded from mak the contribution due and that it has con ing assessments on the basis of the said sequently been unable to check the High checks. Moreover, once the quantity of Authority's statements of account, to draw assessable ferrous scrap was fixed at up its observations or, if appropriate, to 40 678 metric tons, the High Authority define the scope of the dispute. was not entitled to increase it to 54 263

metric tons. The High Authority was 19/60 only related to the costs incurred thus estopped from increasing the earlier by the Caisse de Bruxelles to which were debt from a sum of approximately added the charges for the costs of man 102 000 000 lire to approximately agement of the Caisse de Luxembourg, 315 000 000 lire, more than six years mentioned in Decision No 20/60, with after the date when the undertaking which the applicant must be acquainted. ceased operations in the iron and steel To these sums are still to be added those industry. which became due on the same grounds According to the defendant, the pro in the course of the three years elapsing visional nature of the initial assessments between the calculation of the rates is in no way due to an administrative established in Decisions Nos 19/60 and blunder by the High Authority but to 20/60 and the calculation in Decision the fact that they were based on the No 7/63. quantities declared by the Merlini com pany, and on the rates in force at the time when it was urgendy required to D — Misuse of powers prove the debt in the winding-up of the

powers. Any estimated or provisional tion. The defendant thus refers to the assessment must be subject to rules basic principle of the equalization capable of precluding arbitrariness, scheme and to the case-law of the Court which is precisely the principle in to demonstrate the legality of the earlier fringed in this case. In Case 18/62, assessments. Consequently, no discrimi the Court accepted calculations on the nation was committed against the Mer basis of the ratio between electricity lini company, which is in the same posi consumed and ferrous scrap used, since tion as the other undertakings which in that case there were no other criteria declared their consumption of ferrous available in consequence of the alleged scrap to be lower than it really was and destruction of the undertakings ac which, after the checks of 1958, failed counting documents. Since the Merlini to produce the accounting documents company properly filed its declarations relating to their purchases of ferrous and did not destroy any documents, it

justified. In fact the charges for the notified to the applicant. It is imposs costs of management and of supervision ible to presume that the High Author taken into consideration in Decision No ity derived the information relating to

the consumption of electricity from the bankruptcy of the Merlini company, its 'Consumi B' forms sent to the I.S_A_ principal furnace was hired to the (Industrie Siderurgiche Associate, of S.A_C_S_ company. All this information Milan), since in the contested decisions could have been supplied in good time it refers to the assessments carried out to the High Authority, if it had enabled by 'the inspectors of the High Author the applicant to inform itself of the

of 23 654 000 kilowatt-hours. The ab of the Treaty. When the checks were stract and theoretical criterion adopted carried out in September 1958, the by the High Authority (the parameter Merlini company did not comply with of electricity/ferrous scrap used) in no the request for documentary evidence way takes into account the irregularity for the purposes of verifying the cor of the rhythm of production from one respondence between the declared month to the next, but limits itself to a consumption of ferrous scrap and the fictional division of an aggregate figure actual consumption (which request by the number of months in the entire moreover did not exceed the require period under consideration. Even if for ments of Article 2214 of the Italian the sake of argument the accuracy of the Civil Code) and in consequence the consumption of electricity fixed by the estimated assessments carried out by High Authority for the period from the High Authority are entirely justi

The under moulds, all operated electrically. During taking did not react in any way to these the period in question, the undertaking communications, all addressed to the produced ferrosilicon for its own use, administrator of the winding-up (who giving rise to a considerable consump under Italian law administers the in tion of electricity, and, since for a cer solvent debtor's assets). It has therefore tain period the supply company cut off not been proved that a misuse of powers the electricity owing to the imminent has been committed against the appli-

cant, either as regards Decision No countries, as several other Italian under 13/58, or a fortiori as regards the in takings, even smaller than the Merlini dividual decision of 30 October 1963. company, had requested and obtained enormous quantities of such ferrous scrap, which met up to 50% of their 2. Error in fixing the equalization total requirements. The applicant was rate applicable unable to supply itself from the market in third countries only because it did After stating that large undertakings not have the necessary funds and it were better placed to supply themselves was impossible for it to obtain loans with ferrous scrap from third countries from the banks. The observation that —since purchases made outside the large undertakings obtained favourable Common Market had to be made by conditions for their purchases of ferrous payment in advance and the purchaser scrap outside the Common Market is had to have a bonded warehouse at its not only unwarranted but does not take disposal—the applicant declares that account of the fact that the High these undertakings naturally had an in Authority has no power to regulate terest in wording their declarations so competition in this connexion, since as to derive the maximum advantage suppliers of ferrous scrap in third coun from the recovery of the expenses re- tries are not undertakings coming under lating to these purchases, with the con

account. In its reply, the applicant sub The written procedure followed the mits a series of technical considerations normal course. and tries, in reliance upon a certain On hearing the report of the Judge- number of material factors, to show how Rapporteur and after hearing the Ad the large undertakings attempted, at the vocate-General, the Court invited the expense of the small ones, to derive the parties to submit certain evidence re- maximum profit from the equalization lating to various points of fact, and the scheme (declaration of a price lower applicant and the defendant lodged than the actual price) with the aim of notes in reply thereto on 13 and 15 July maintaining equalization prices at very 1964 respectively.

city. In the second place it is not quite On 2 December 1964 the Advocate- correct to allege that only large under General delivered his opinion that the takings were able to supply themselves application should be dismissed and the with ferrous scrap imported from third applicant ordered to pay the costs.

The applicant merely refers to an annexed statement which, as its counsel has admitted, was drafted by his client, and goes beyond the bounds of the application and the statement of defence by raising fresh submissions and arguments.

The requirements of Article 20 of the Statute of the Court of Justice annexed to the ECSC Treaty and Articles 37 et seq. of the Rules of Procedure do not permit the said statement to be accepted as a reply.

On the submissions

1. Infringement of rules of law derived from national laws

The applicant contests the disputed decisions on the ground that they infringe rules of law deriving from national laws and in particular from the Italian Law on Bankruptcy because of the fact that, by the said decisions, the High Authority created an enforceable title to the entire amount of its debt.

The defendant claims that the submission is inadmissible, since Article 33 of the Treaty, on which the application is based, only recognizes the grounds of infringement of the Treaty or of any rule of law relating to its application. In any event, the fixing, pursuant to Article 92 of the Treaty, of the full amount of the debt would in no way release the High Authority, when it in fact proceeds to enforcement, from the limitations and conditions of the arrangement approved in accordance with the national law applicable, so that its claims would be reduced to the percentage fixed by the said arrangement. On the other hand the fixing of this amount would form a necessary con­ dition for calculating that percentage.

3. Preclusion of the right to present fresh claims in accordance with the new findings

The applicant claims that the High Authority was precluded from carrying out checks and inspections in September 1958, that is to say, after the appli­ cant became bankrupt and ceased to operate its business. The High Authority is moreover said to be estopped from fixing the total amount of contributions due on the ground that it had earlier asked for a smaller sum.

The defendant argues that this submission is inadmissible, as such estoppel of a claim for the recovery of the sums due by way of equalization contribu­ tions does not exist in law. However the fact that such a rule is not men­ tioned in written law is not sufficient proof that it does not exist. Conse­ quently this submission cannot be dismissed from the outset as inadmissible and the applicant's arguments must be considered.

MERLINI v HIGH AUTHORITY

With regard to the first head of the submission, there is nothing to prove that the powers of checking and supervision vested in the High Authority with regard to undertakings end when the latter cease to operate their business. On the contrary, it is obvious that these powers remain vested in it in so far as they relate to normal verification and checking of the operation of that business. This also holds good in the case of bankruptcy.

In the circumstances, the second head of the submission is unfounded.

JUDGMENT OF 21. 1. 1965—CASE 108/63

4. Misuse of powers

(a) The applicant commences by disputing the High Authority's right to make an estimated assessment in this case.

According to Article 13 of Decision No 16/58 the High Authority is entitled to amend declarations which cannot be supported by valid proof.

It is not disputed that in the case of the checks carried out in September 1958 the Merlini company was unable to supply the documents necessary to prove its earlier declarations.

MERLINI v HIGH AUTHORITY

the supplies of electricity corresponds to the capacity of the undertaking's small furnaces, excluding the large furnace in question, and secondly that when checks were made in September 1958 the High Authority's agents were informed that the said large furnace had never been in operation, so that they did not take it into consideration in calculating the undertaking's capacity.

When the Court requested either production of the statements of account drawn up in connexion with the other party to the contract regarding the consumption of electricity or the production of documents relating to the payment of rent — which according to the contract was calculated in terms of the use of the large furnace — the applicant was unable to produce this evidence.

Consequently the complaint must be dismissed.

(c) The applicant takes strong exception to what in its view are the exces­ sively high rates of equalization laid down for the consecutive years for the period 1954-1957 and claims that the increase in the rates from 1.65 lire per kilogramme of ferrous scrap purchased in March 1954 to 12 lire per kilo­ gramme in March 1957 is only explicable through errors committed by the bodies running the equalization scheme which the High Authority ought to have put right. Such an allegation is not sufficient of itself for the rate to be considered illegal, the more so since the defendant explains that on the con­ trary this was not a permanent increase in the rate, but that it was increased and diminished in terms of the fluctuating prices on the world market of ferrous scrap.

Costs

Under the first paragraph of Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs if they have been asked for in the successful party's pleadings. The applicant must therefore be ordered to pay the costs of the present action.

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 the second paragraph of Article 33 and to Articles, 36, 53 and 92 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 European Coal and Steel Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, especially Articles 37 to 45 and 69;

THE COURT

hereby:

I — Remarks on the procedure 16

II — The individual submissions 17

I. Infringement of Article 135 of the Italian Bank- ruptcy Law 17

1 -Translated from the German.