C-9/64

JUDGMENT OF THE COURT 2 JUNE 19651

Acciaieria Ferriera di Roma (Feram) and Another and Merisider - Industria Meridionale Siderurgica and Others v High Authority of the European Coal and Steel Community2 Joined Cases 9 and 25/64

In Joined Cases

9/64: ACCIAIERIA FERRIERA DI ROMA (FERAM), ROME,

SOCIETÀ INDUSTRIALE METALLURGICA DI NAPOLI (SIMET), Naples,

and

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, represented by its Legal Adviser, Italo Telchini, acting as Agent, assisted in Case 9/64 by Walter Bigiavi of the Bologna Bar, Professor at the University of Bologna, with an address for service in Luxembourg at its offices, 2 place de Metz, defendant,

Application for reparation for damage suffered by the applicants as a result of the wrongful act or omission on the part of the High Authority in the man­ agement and supervision of the compulsory equalization scheme for imported ferrous scrap; 1 -Language of the Case: Italian. 2 -CMLR.

JUDGMENT OF 2. 6. 1965 — JOINED CASES 9 AND 25/64

THE COURT

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

Advocate-General: J. Gand Registrar: A. Van Houtte

I — Facts scrap imported from third countries or scrap treated as such. 1. By its Decision No 22/54 of 26 4. Under the responsibility of the High March 1954 (Official Journal of the Authority, the working of the equaliza­ ECSC 1954, No 4, p. 286), the High tion scheme was entrusted to the Office Authority, acting under Article 53 (b) commun des consommateurs de ferraille of the ECSC Treaty, made a compul­ (Joint Bureau of Ferrous Scrap Con­ sory financial arrangement for all Com­ sumers) (hereinafter referred to as the munity undertakings which were con­ 'OCCF') and to the Caisse de péréqua­ sumers of ferrous scrap, the purpose of tion des ferrailles importées (Imported which was to ensure a regular supply Ferrous Scrap Equalization Fund) (here­ of scrap within the Common Market. inafter referred to as the 'CPFI', co­ This arrangement was extended, in par­ operative associations incorporated un­ ticular by Decisions Nos 14/55 of 26 der Belgian law. In each Member State March 1955 (Official Journal of the the working of the equalization scheme ECSC 1955, No 8, p. 685) and 2/57 was assisted by a regional office. In of 27 January 1957 (Official Journal of Italy the regional office was run by the the ECSC 1957, No 4, p. 61). Consorzio Approwigionamenti Materie 2. By these Decisions the High Author­ Prime Siderurgiche (Campsider). ity established a scheme for the pur­ 5. With effect from 1 August 1958, the chase on joint account of ferrous scrap High Authority withdrew the decision­ and a financial arrangement for the making power which it had delegated equalization of scrap imported from to the OCCF and the CPFI. third countries or scrap treated as such The compulsory equalization scheme (scrap from ship-breakers' yards and came to an end on 30 November 1958. other highly-priced scrap). Up to that date, more than 13 million 3. The equalization scheme was financed metric tons of ferrous scrap had been by contributions based on the con­ imported into the Community or ob­ sumption of bought ferrous scrap by tained from shipbreakers' yards and on each undertaking; the principal pur­ those grounds had qualified for equal­ pose of these contributions was to en­ ization. able equalization payments to be made 6. Certain rumours concerning the pos­ to undertakings which obtained ferrous sibility of fraudulent or irregular trans-

actions began to circulate in August No 109, hereinafter referred to as the 1956. 'Poher Report'). In November 1957 Mr Worms, a dealer 11. The Report of the High Authority in ferrous scrap established in the shows, in particular, that: Netherlands, reported frauds arising — at least 229 889 metric tons out of from forged certificates issued by the a total of 13 018 270 metric tons of head of the Iron and Steel Department imported ferrous scrap or scrap of the Netherlands Ministry of Econ­ treated as such were wrongly accep­ omic Affairs, as a result of which more ted for equalization; than 22 000 metric tons of ferrous scrap — it is possible, if not probable, that had wrongly acquired a right to equal­ this figure does not include all the ization. irregularities which had occurred; 7. On 15 March 1958, the directorate — the types of irregularity are extremely of the OCCF authorized the S.A. varied and were committed in several Fiduciaire Suisse to investigate whether Member States; the OCCF or the CPFI 'had accepted — it is not yet possible to state the or considered as satisfactory documents final outcome of the attempts made proving the origin' of certain types of to recover from the guilty parties ferrous scrap. The scope of this author­ the sums paid in error. ity was strictly limited: contracts con­ cerning imports from the United States 12. In its tenth, eleventh and twelfth and ferrous scrap from ship-breakers' General Reports on the activities of yards were excluded from the investiga­ the Community the High Authority tion. gave information about its action, which was at that time incomplete, as regards 8. On 14 August 1958, the CPFI made the winding-up of the equalization the S.A. Fiduciaire Suisse responsible scheme and the checking of ferrous for carrying out a complete investiga­ scrap which had qualified for equal­ tion concerning all ferrous scrap cover­ ization. ing the period from 1 April 1954 to 13. On 18 March 1964 the two appli­ 31 January 1957; the period of investi­ cant companies in Case 9/64, and on gation was subsequently extended to 25 June 1964 the five applicant com­ 30 April 1957. panies in Case 25/64, lodged an appli­ 9. On 29 September 1958 the High cation for reparation for damage suf­ Authority gave its own authorization fered as a result of 'the wrongful act to the S.A. Fiduciaire Suisse 'to carry or omission on the part of the High out the fullest investigation possible'. Authority in the management and super­ 10. On 8 April 1961, in a schedule to vision of the equalization scheme. its ninth General Report, the High Authority issued a Report on its action concerning the investigation into the II — Conclusions of the origin of ferrous scrap accepted for parties equalization by the CPFI (hereinafter referred to as the 'Report of the High The applicants claim that the Court Authority'. should: On its own account, on 15 December (a) as a preliminary point, in order to 1961 the Domestic Market Committee establish that their application is of the European Parliamentary Assembly well founded, order the High submitted a Report on the action of the Authority to reply to 21 questions High Authority in this field (Rapporteur set out in greater detail in the appli­ Mr Alain Poher, Working Document cation;

(b) as an alternative preliminary point, — Société Anonyme Fiduciaire de order the defendant to produce vari Belgique ous documents, further details of — Société Anonyme Fiduciaire Suisse; which are given in the application; 3) whether the directives issued and (c) on the substance of the case, sub the methods used in order to dis ject to the production of further cover and calculate the quantities documents, the presentation of new of ferrous scrap which were im evidence and of any other submis properly accepted for equalization sion which the applicants consider were adequate and correct from a it advisable to make, technical point of view and whether — declare the applications to be ad they can guarantee with reasonable missible; certainty that the metric tonnages — state that, within the meaning of the of ferrous scrap involved in the first paragraph of Article 40 of the frauds are comparable, even if only Treaty establishing the ECSC, the approximately, to the quantity of High Authority is liable for a wrong such scrap referred to by the High ful act or omission in that, through Authority in its Report of 8 April out the period of operation of the 1961; compulsory ferrous scrap equalization 4) whether everything possible has been scheme (that is, from 1 April 1954 done in order to avoid exceeding the to 31 March 1959), it was unable periods of limitation and of pre to prevent the commission of flagrant clusion of the right to examine the and gross frauds to the detriment of accounts and customs documents the iron and steel undertakings of involved and, if not, in order

FERAM v HIGH AUTHORITY

JUDGMENT OF 2. 6. 1965 — JOINED CASES 9 AND 25/64

For their part, the applicants maintain The applicants reply that a distinction that, by its Decisions establishing the must be made between the existence compulsory equalization scheme, the of damage and its assessment; for an High Authority accepted responsibility order for damages to be made it is for its proper functioning. unnecessary that the total damage The Report of the High Authority, the suffered foe finally established, only its Poher Report and the special schedule existence need be objectively proved. attached to the eleventh General Report It is clear at this moment that damage of the High Authority contain an has been suffered: the sums wrongly unambiguous statement as to the paid will not foe recoverable in toto and existence of numerous irregularities; the investigations have incurred heavy these constitute a serious wrongful act costs. or omission on the part of the High The fact that the applicants owe certain Authority leading to an increase in the sums to the High Authority by way of contributions required from under equalization contributions is irrelevant takings which were consumers of ferrous in this case, which concerns an applica

In fact, instead of setting out the parti and of their regional offices. cular facts on which they rely in order By accepting this compromise, which to justify their application, the appli was for a long time illegally kept secret, cants merely produce numerous parlia the High Authority was limiting ab mentary documents and refer to all the initio its supervision of the supply facts and hypotheses mentioned policy and was not concerning itself therein. directly with the management of the Although the outcome of parliamentary agencies in Brussels or even with debates may well raise the question of evidence as to 'the origin of the ferrous the political responsibility of the High scrap presented for equalization; in this Authority it is of no value when it is way the High Authority patently in necessary to establish liability based on fringed the Treaty (Article 3, (a), (b) Article 40 of the Treaty. and (c), the third paragraph of Article

5 and Article 53) and used its powers from August 1956; on 28 November for a purpose other than that for which 1957 Mr Worms reported certain frauds they were conferred. It is this com to the Netherlands legal authorities. promise which gave rise to the adminis However, it was only in March 1958 trative confusion and the squandering that the Société Anonyme Fiduciaire of public funds. Suisse was first authorized to carry out (b) In the absence of any uniform, de an inquiry; the sectors in which the tailed regulations as to the documents most frauds had been committed were to be supplied, the High Authority however excluded from the inquiry. allowed each regional office to adopt Only in August 1958 did the High its own procedure for checking the Authority realize the limited nature of origin of the ferrous scrap. the authority given and only at the end For several reasons, however, it should of September of the same year was the have ensured that this checking was Société Anonyme Fiduciaire Suisse carried out with special vigilance: for given unlimited authority to pursue its example, the great difference in price inquiry. between imported ferrous scrap or In this field the High Authority showed scrap treated as such and ferrous scrap an unwarrantable lack of diligence and available within the Common Market; excessive caution, to say the least. the nature of the trade in ferrous scrap; (d) As the defendant itself admits, the the difficulty involved in verifying the Report drawn up in April 1961 'does exact origin of ferrous scrap from not put an end to the question raised ship-breakers yards; the fact that the by the fraudulant dealings in ferrous very nature of the so-called 'substitute' scrap, or to all the actions of the High ferrous scrap lent itself to abuses of Authority in this matter'. all kinds, etc. Even at the date on which these This negligence resulted in frauds and applications were lodged, that is three irregularities of the most varied type: years after the publication of this customs receipts forged or obtained by Report, the High Authority has still not a trick, reimportation of ferrous scrap explained several important points, in acquired within the Common Market particular the exact quantity of ferrous and temporarily exported; equalization scrap which wrongly benefited from of higher tonnages than had been de equalization the exact total of the sums clared; documents falsified by photo

Its evidence; documents showing that the terms are consistent with the final para same ship had berthed in Community graph of Article 5 of the Treaty, ports at least five times during the the Community shall carry out their same week, etc. according to which the institutions of (c) Irregularities in the working of the activities with a minimum of admini equalization scheme were 'suspected' strative machinery and in close co-

operation with the parties concerned. the equalization scheme and by a lack As regards the secret nature of the of vigilance in its supervision. agreement, the defendant observes that, (a) The organization of the equalization by virtue of the provisional internal scheme was irregular from its inception regulations of the Council, the sessions by virtue of the illegal 'compromise' of that institution are not public; the made between the High Authority and defendant may not, therefore, be the Council; this compromise constitu criticized for having failed to publicize tes in itself a clear wrongful act or the discussions which took place within omission on the part of the administra the Council. tion. (b) The failure to check the origin of (b) The management and functioning of the ferrous scrap accepted for equaliza the scheme, in pursuance of this com tion is the work of the agencies in promise, were irregular, insufficient, un Brussels, not of the High Authority. wise and culpable. (c) The only concrete factor put forward The agencies in Brussels completely by the applicants in support of their neglected to check the origin of the fer complaint that the High Authority had rous scrap; the High Authority must equivocated before beginning the bear the consequences of this wrongful investigations following the discovery of act or omission. the first frauds is a passage in the The defendant's conscious failure to opinion of the Advocate-General in supervise the management of the scheme Case 33/59 (Rec. 1962, p. 760). for which it was responsible constitutes The defendant here observes first that a serious wrongful act or omission on it contests the point of view of the the part of the administration. Advocate-General which, moreover, (c) The belated intervention of the was never followed by the Court, and High Authority after the discovery of secondly, that the Advocate-General the first frauds allowed the destruction himself concluded that 'the dilatoriness of the incriminating documents and led which it (the High Authority) display to its own action being largely impeded ed in the months following the dis by the period of limitation. covery of the first frauds, somewhat Basing their argument on the case-law regrettable though it may be, has not of the Court, the applicants observe that appeared to me to be by itself capable acts of the agencies in Brussels are re of constituting a "wrongful act or garded as acts of the High Authority

FERAM v HIGH AUTHORITY

takings must have actually paid the takings subject to the payment of con contributions required of them in order tributions nor a guarantee creating con for the question of damage to be dis tractual or legal and objective liability. cussed; this does not apply in this case, Thus, liability could only be incurred with the result that the larger contri by the High Authority in the supervis bution complained of by the applicants ion of the management of the scheme. might, at the most, be required in the Basing its arguments on Italian and future, but does not exist at present. French case-law concerning the super As to the factors causing the damage vision of banking transactions by public referred to by the applicants, the de authorities, the defendant maintains that fendant observes that: in this case its liability cannot be in — the applicants must establish that

3. The damage suffered by the appli not of Article 40; cants — the allegations concerning the illegal commissions paid to certain Ameri The applicants maintain that a distinc can suppliers are entirely without tion must be made between the exist foundation. ence of the damage and its assess In conclusion, the defendant contends ment. that future and uncertain damage, or a The damage suffered is actual, certain risk of damage, such as that claimed and has arisen; recovery of all the sums by the applicants, is not calculable, with wrongly paid will be impossible; heavy the result that the element of damage expenses have been incurred as a result itself is also completely lacking. of the investigations and checks carried out; moreover, the inertia of the High IV — Procedure Authority has now made certain in quiries impossible; imports of ferrous In both cases the written procedure fol scrap from the United States have been lowed the normal course.

In its support, the defendant observes that the action undertaken to recover the sums wrongly paid and to wind up the equalization scheme are still pending. At present it is impossible to establish with certainty that the appli­ cants will suffer damage by reason of the alleged wrongful act or omission. The applications of the applicants are therefore, the defendant states, pre­ mature and consequently inadmissible.

It is not disputed that the High Authority's action in winding-up the equaliza­ tion schemes is not yet complete, and this is being regarded by the applicants as one of the factors constituting the alleged wrongful act or omission on the part of the defendant.

At this stage it is not possible to calculate exactly the effect of the irregular equalization payments on the contributions charged either to undertakings subject to this scheme in general, or to the applicants in particular. The damage referred to by the applicants has neither arisen nor is certain.

At the most it is a future damage, which can neither be assessed at this point nor even regarded as certain to occur.

Further, it will always be open to the applicants, should they be obliged by the High Authority to pay their contributions, to bring legal proceedings in order to assert their claims.

FERAM v HIGH AUTHORITY

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 Treaty establishing the European Coal and Steel Community, especially Articles 3, 5, 34, 40 and 53; Having regard to the Protocol on the Statute of the Court of Justice of the European Coal and Steel Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities,

THE COURT

hereby:

1. Dismisses the applications as inadmissible; 2. Orders the applicants to pay the costs.

Hammes Dormer Lecourt

Delvaux Monaco