C-37/64

2. Measures adopted by Community institutions—Validity—Conditions of essen­

tial procedural requirements—Provisions relating thereto—Prohibition on the

extension of their application

3. Common financial arrangements—Equalization of ferrous scrap—Unit of account —Function (ECSC Treaty. Article 53)

4. Common financial arrangements—Equalization of ferrous scrap—Contributions —Calculation in units of account—Rate of exchange applicable during account­

ing periods (ECSC Treaty, Article 53)

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, represented by its Legal Adviser, Dr Bastiaan van der Esch, acting as Agent, 1 — Language of the Case: German.

JUDGMENT OF 13. 7. 1965 — CASE 37/64

assisted by Dr Hans Peter Ipsen, Professor at the University of Hamburg, with an address for service in Luxembourg at its offices, 2, place de Metz,

defendant,

Application for the annulment of Article 1 of the decision of 8 July 1964

relating to the financial obligations of the applicant under the ferrous scrap equalization scheme,

I — Facts — Whereas for the purposes of the ferous scrap equalization scheme the The facts may be summarized as unit of is merely a method account follows: of accounting intended to facilitate By Decision No 21/60 of 20 July 1960 the calculation of accounts in aggre­

(Official Journal of 24 August 1960, gate and does not in any way page 1177 et seq.) the High Authority operate as a guarantee against fixed the currency parities for the cal­ fluctuations in the exchange rate; culation of the equalization accounts — Whereas the EPU and the EMA for imported ferrous scrap and scrap have fixed the of parity national treated as such on the basis of Decisions currencies of the countries of the Nos 18-20/60. Community with reference to the The recitals of these decisions state, unit of account; inter alia: — Whereas this parity has not changed

'—Whereas the provisional equalization during the period mentioned above in accounts for the period 1 April 1954 relation to the German mark, the

to 30 April 1959 inclusive, as pro­ Belgianfranc, the Italian lire, the

vided by Decisions Nos 18/60, Luxembourg franc and the Dutch 19/60 and 20/60, shall be drawn guilder; therefore as far as the

up in EPU (European Payments Federal Republic of Germany, Union) or EMA (European Mone­ Belgium, Italy, Luxembourg and the tary Agreement) units of account; Netherlands are concerned the

during the period question the tribution apportioned among all the Authority stated in this decision: undertakings and calculated on the —... necessary to draw up the it is basis of their assessment to contri­

statements of account in respect of butions (Article 3). the French undertakings in French That particular innovation in these rules francs and to prescribe rules for the compared with the system applied until conversion of the unit of account then lies in the first principle. into French francs, which are con­

In the recitals to the said decision the finan­ sistent with the object of the substitution of the new system for the cial arrangements for the equaliza­

old was in particular justified having tion of ferrous scrap; regard to the fact that it 'arranges for — Whereas the object of the equaliza­

the payment of interest on provisional tion scheme is to approximate the be­ amounts due by way of principal, price of imported ferrous scrap and cause they are liable to be amended scrap treated as such to the prices later, either by an adjustment of the prevailing inside the Community statements of account or as a result of and to apportion the equalization verification of the particulars provided charges among the undertakings sub­

by the undertakings of tonnages liable ject to the equalization scheme; and judg­ to contributions, or as a result of whereas this operation must not be ments delivered by the Court of Justice; carried out in such a way that as a whereas this uncertainty means that the result of the conversion into national interest is not proportionate to the prin­ currency some undertakings obtain cipal; whereas it is therefore necessary an unjustified benefit whilst others to substitute for the system of charg­

April 1961 (Official Journal, 25 April By the present application the applicant 1961, p. 653) the High Authority laid contests this individual decision and in down new rules for the calculation of in­ addition argues, by way of objection, terest based on the following principles: under the second paragraph of Article

1. The contributions actually paid into 36 of the ECSC Treaty, that general

the Fund shall bear interest to the Decisions Nos 21/60 and 7/61 are

credit of the undertakings from the illegal.

JUDGMENT OF 13. 7. 1965 — CASE 37/64

II — Conclusions of the fact the High Authority should, in its parties enforceable decisions, base its calcula­

parties be summarized as fol­ any discrimination the debits and credits may of undertakings relating to earlier lows: periods must be calculated on the basis A —

The problem of the parity of cur­ of the parities existing during those

rencies periods. It is true that the unit of ac­

count provides no guarantee against

1. Illegality of the contested decision because otherwise the Fund with reference to general Decision fluctuations, would be able to demand from its deb­ 21/60 tors, and the creditors from the Fund, The applicant maintains that the High payment in dollars—as the dollar is the

individual de­ EMA Authority adopted the only real equivalence of the unit

official rate of must tion prices and consequently the equal­

by implication to Article 2 thereof, ization amounts, is of the opinion that which provides that the amounts it is illogical to conclude that for this credited to the German undertakings reason the contributions themselves

expressed in units of account should be must also be calculated according to converted on the basis of the parity of the parity in force during this period, DM 4.20 for one unit of account. In as there is no link between the first two

MANNESMANN v HIGH AUTHORITY

factors and the last one. The position had been altered and departs at the

is in fact as follows. same time from the principles which

Fund in Member Mem­ able by the that parity of the currency of one State but on the total expenses of ber State with reference to the EMA the Fund in the Community. units of account at the date when

3. Moreover the absence anyof quan­ the contributions were paid, which

titative connexion between equaliza­ was conversely what Decision No tion payments in one Mem­ 21/60 set out to achieve. On the received

ber State during a particular period other hand, it was necessary in order and the contributions payable by that the Fund could be operated to

consuming ferrous scrap the curren­ undertakings reduce various national

in that State is in itself a sufficient cies to a common denominator which reason why adjustments of these pay­ was the EMA unit of account. The ments could not be offset by cor­ result was that Decision No 21/60 con­ responding adjustments of the altered the aim and operation of the

all the considerations of fact and of 2. Infringement of an essential pro­

law contained in it relate solely to cedural requirement France. In case the Court should take the view Moreover these considerations are based Decision No 21/60 the in­ If that covers on unsound reasoning. the statement

dividual decision the applicant submits of the reasons on which Decision No latter be be­ 21/60 is based is read that the should annulled together with the

cause Decision No 21/60 is illegal. statement of reasons upon which the

In support of this objection of illegality individual contested decision is based forward follow­ it is dear the applicant puts the that, according to the High ing arguments: Authority, the changes of parity also

(a) Decision No 21/60 should have been affect the amounts of the equalization

bought Community scrap. The appli­ of the equalization scheme and, on the

cant criticizes this argument of 'the other hand, by adopting for French High Authority for failing to appreciate undertakings the parities in force during

that equalization contributions are uni­ the periods to which the calculation

formly apportioned between scrap which refers, Decision No 21/60 did no more

has been subject to equalization and than to prescribe the technical rules in that which has not, and that, as a re­ accordance with the objectives of the

sult, since the same charge is imposed equalization scheme, rulesfalling within on both categories of scrap, the parity the compass of the implementing pro­

not be legally contested is to apply the High Authority). parities corresponding to the periods for The applicant replies that the grounds

which the average Community price (the of this judgment deal with the powers

equalization price) is calculated. In fact of the High Authority from a substan­

'this would be a manifest interference tive point of view and do not consider

with the necessity to compare the many the question to what extent the exercise

factors which arise in fixing the equal­ by it of these powers requires the col­

sible to guarantee equality of treatment principle of equality of treatment'. Even to undertakings consuming scrap during if, as the applicant has done, one takes an 'equalization month', that is to say, only one of the calculations which have during the period to which reference to be taken into account in order to

is in determine dif­ be­ made order to the bring about equality of treatment ference between the prices of ferrous tween undertakings, namely the amount

scrap. of the contributions to be paid into the

By adopting a fixed currency parity for fund, the application of the currency

MANNESMANN v HIGH AUTHORITY

parity in force at the date of payment to adopt for the calculation and pay­

discrimination quires, which represents the equivalence

in national currencies of the units of Proceeding on the assumption that since account it has to pay which out. the Common Market came into being The defendant’s answer to this argu­ the High Authority has only used the ment is that the object of an equaliza­ unit of account for calculating the gen­

tion fund is simply not to proceed in eral levy and the levy on ferrous scrap, such a way that, even if the applicant's and that the equalization contributions debt in DM was calculated and paid can only be expressed in units of ac­

at the existing parity, the Fund has in count, the applicant maintains that by outstanding debit or credit the end no reason of the contested individual de­

balance; it is not particularly important cision, which does not take into account

to know whether the Fund receives the revaluation of the German mark, it now, if DM 1 is paid into it, the same has to pay a higher proportion of the

amounts of equalization were calculated. lowed the French undertakings to dis­

What is more these adjustments can charge their delegations to the Fund

only be incorporated in the aggregate by paying amounts which fell short of

calculation and taken into account al­ the value of the units of account pay­

together when the rate of equalization able. This modification of the key prin­

is determined in units of account. ciple of apportionment based exclusively The defendant acknowledges that this on the scrap consumed by undertakings argument is correct but says that it is discriminated unfairly against German not relevant to the problem, because undertakings and therefore against the

plied to these payments in national cur­ would enable German undertakings to

rencies. However, according to the con­ benefit from the exchange rate. In fact tested decision the applicant has to pay a payment made according to the ex­

the exact amount in DM which it change rate in force during a particular

should have paid out if the statements accounting period represents exactly the

of account had already been correctly same purchasing powers as a payment

drawn up during the period when the made later according to the exchange

equalization amounts, the treatment of disbursement in currency had national

undertakings on a basis of equality to be covered: consumers of imported

would be destroyed if the same parity scrap and consumers of . Community were not applied in each case for each scrap were comparably placed so then

particular accounting period. Equality far as the purchase price is concerned. of treatment must be extended to equal­ With regard to receipts a payment re­

ization prices, to the difference between duced to the common denominator, the i­ the relevant cost prices and equal za­ unit of account, had to be covered; the

tion prices and to equalization con­ High Authority was then under a duty tributions. to make certain that the undertakings

practicable. takings.

According to the applicant the system The defendant maintains on the other

adopted by the Fund was designed to hand that it is precisely because it has the the to be­ reduce whole of expenditure to guarantee equality of treatment a common denominator, the unit of tween individual undertakings, without account, then to apportion it in units taking into account their nationality or

of account per metric ton among all the the origin of the bought scrap, that it

consuming scrap. By is impossible parity for the modi­ undertakings to use one

fying the basis for apportionment ap­ receipts of the Fund and a different one

giving any detailed reasons, that the competition in the coal and steel

unit of account is only a method of industries, it could put this right by accounting for the purpose of equaliza­ exercising the powers granted to it

tion, a method moreover quite different under Article 67 of the ECSC Treaty. from the practice adopted hitherto and Devaluation and revaluation are methods in Decisions Nos 23/53, originating of adjusting parities available to each

56/55, 9/56, 19/58, 20/58, 18/60, State for the purpose of restoring what

19/60 and also in Decision No 3/59 it believes to be a fair balance between (Official Journal of 27 January 1959), them. The High Authority must be which was adopted with the unanimous bound by this adjustment, otherwise

assent of the Council and which fixed revaluation or devaluation of national

past, it has to be discharged the division between by paying account of powers

the original amount, even at the new the European Executives and the

parity. Member States. This is corroborated by the procedure adopted in the European (c) Interference with the monetary Communities in the matter of financial the Federal Re­ sovereignty of obligations. public of Germany The defendant replies that the equaliza­

The applicant states that it is Member tion of scrap is governed by its own

States which have the right to fix the laws and as a result it serves no useful

parities of the respective national cur­ purpose to invoke the practice followed rencies and not the High Authority, in other fields The only by the EEC. which must abide by the parities re­ thing which it is necessary to know is sulting from the implementation of the whether the decisions of the High European Monetary Agreement. Authority are compatible with the If the High Authority thought that vari­ ECSC Treaty. It refers back on this

ity on 19 April 1961 of the system for on which interest was charged could

charging interest on overdue payments, have been avoided, while at the same

which had been applied since the entry time retaining the system for charging into force of the rules governing the interest on overdue payments by adopt­

equalization of scrap. ing a rule permitting the removal, when The applicant criticizes the High the final statement of account is drawn

Authority for having modified retro­ up, of discrepancies which came to light

actively a system which was perfectly when the interest was calculated

whether a formal demand for payment 1. Infringement of an essential pro­ has been made and whether the debtor cedural requirement is liable, would, according to the appli­

cant, result in its being placed in the (a) Absence of the assent of the same economic situation as it would Council of Ministers have been if it had from the beginning defaulted in payment of its contribu­ The applicant states that Decision No tions in respect of group scrap. 7/61, which modified the system for The defendant, on the other hand justi­ charging interest employed until then

fies the modification of the system for and referred to in Decision No 16/58

charging interest as laid down by and was adopted with the unanimous

Decision No 7/61 with special refer­ assent of the Council of Ministers, also ence to the fact that the old system altered the basic structure of equaliza­

permitted discrimination between under­ tion. The High Authority should have takings because debtors whose payments obtained beforehand the unanimous

scheme. assent of the Council of Ministers.

MANNESMANN v HIGH AUTHORITY

(b) Inadequacy of the statement of old system of charging interest, was

the reasons upon which the that undertakings such as the applicant,

decision was based which had not paid all their contribu­

tions by the due date, were able to The applicant points out that according retain for quite a long time, without to the statement of the reasons upon

no logical connexion with the rules tested individual decision the defendant laid down by general Decision No 7/61, non-dis­ states that the concept of as the High Authority based its claim crimination in time is in itself per­

for payment of interest on the ground fectly clear and is in addition explained that it was only fair to the other under­

takings and on the ground of 'non­ by a reference in the same context 'to the advantages and disadvantages of discrimination in time', without however account'

these provisional statements of defining this concept. The applicant

High and by the necessity to remedy these states that the Authority could dis­ unjustified advantages and have complied with these two principles advantages. even if it retained the system for charg­ ing interest on overdue payments. 2. Infringement of the Treaty and of The defendant points out that on this the rules of law relating to its appli­

issue it is also faced with a problem, cation which has no counterpart on the na­

JUDGMENT OF 13. 7. 1965 —

CASE 37/64

It refers in addition to the principle are not responsible for any delay which confirmed by the Count in Case 19/61 may have occurred in their payment, the that an administrative authority is not loss flowing from the delay must be always bound by its previous acts. borne by the equalization scheme by The applicant replies that the previous reason of the generally accepted prin­

behaviour of the High Authority to ciple that only those debtors who have which Court referred in the said case defaulted in payment must pay interest had nothing to do with the scheme for on overdue payments.

the equalization of ferrous scrap and The defendant, after calling attention

this is the only reason why the High to the fact that the equalization scheme

interest. It had paid within tie time- in­ an unjustified advantage, and also

limits dis­ laid down the contributions cludes the removal of unjustified

relating to group scrap which the High advantages. Moreover, the old rules

Authority called upon it to pay a were not in any way designed to put

intro­ individual posteriori. However, the rules the applicant as an under­

duced by Decision No 7/61, based on taking in an advantageous position. The facts which had occurred in the past, principle of legal certainty does not

in the matter of the revocation of improve rules which are proved by administrative measures which confirmed experience to be defective, without its benefits. It also invokes the legal prin­ freedom to effect improvements being ciples in force in Member States in limited exclusively to any occasion when support of its argument that the High it might have issued illegal rules. A Authority could only have replaced the system for charging interest different earlier system by crediting interest, if from the one used in other equalization

the former were vitiated by illegality, schemes is justified by the complexity which was not in fact the case. It is of the scheme for the equalization of

not necessary for the equalization ferrous scrap.

scheme to include the arrangements in So far as the complaint or discrimination dispute with regard to interest as can is concerned the defendant submits that be seen from the other equalization the necessary equality of treatment of

schemes which operate the normal undertakings can only be achieved by system for charging interest on overdue ascertaining, in the case of those under­

payments. In to dis­ have too little or order avoid any takings which paid

active effect of an administrative legal certainty when it might, for once, measure is only possible in the case of be for the benefit of the applicant, all measures which are illegal (and not the more so because the discrepancies merely inexpedient or mistaken), the which the new arrangements with regard

High Authority was not entitled to to interest seek to offset were much less infringe the principle that taxation important than those which the Court should not be retroactive merely on the permitted to remain in being for reasons ground that the system for charging derived from the principle of legal interest on overdue payments was 'too certainty. Even if it is accepted that unjust'

and 'impracticable'. Hitherto the previous system for charging interest Court has only illegal, it only have been retro­ the allowed the was could

active revocation of rules which were revoked if the public interest in up­ illegal and even in these cases the holding the rule of law took precedence beneficiaries' Court has laid down that the principle over the interest in the

of legal certainty must be applied to­ maintenance of a situation which could

gether with the principle of legality. be regarded in law as permanent having However there was no reason why the regard to the principle laid down by High Authority should violate the prin­ the Court in Joined Cases 42 and

charge is admissible if it goes some of an exemption from payment of

way to offsetting a benefit which is interest on overdue payments but where objectively unjustifiable, and this is the applicant has been made Subject to

what happened in the case of the appli­ rules of general application which are

cant which had retained for many years also applicable to other undertakings

sums of money which, considered liable to pay contributions. With regard

objectively, were owed by it to the to the question whether the principle

The applicant relies on the principle of course. On 16 February 1965, after

legal certainty on the basis of which the hearing the preliminary report of the

JUDGMENT OF 13. 7. 1965 — CASE 37/64

Judge-Rapporteur and upon hearing the at the hearing of 1 April 1965 and

be dis­ Advocate-General, the Court decided to submitted that the application

order the oral procedure without order­ missed as unfounded. On 30 June, pur­

The application is therefore admissible.

The substance of the case

The arguments upon which the applicant has based its application may be reduced to three fundamental pro sitons: first, that the liabilities of under­

takings by way of contributions are to be fixed in units of account and not in national currencies; further, that there is no logical connexion between the basis used for calculating equalization prices and payments and the basis used for calculating equalization contributions; finally, that the contributions are

therefore to be calculated at the currency parity in force either at the date of their payment or at the date when the High Authority issues the enforceable decision.

The argument that general Decision No 21/60 did not authorize the High

general Decision No 21/60, which altered the aim and operation of the

equalization scheme, should have been adopted with the unanimous assent of the special Council of Ministers. Further it claims that the reasons given for both general Decision No 21/60 and the contested decision wrongly stated

that the same currency parities should be adopted to calculate equalization

prices and payments as well as equalization contributions. Finally in support of the submission of infringment of the Treaty the applicant uses the same

arguments as complaints of violation of the principle of non-discrimination,

MANNESMANN v HIGH AUTHORITY

only an accounting device intended to facilitate the fixing of a general

equalization price and the uniform and expeditious calculation of the accounts f­ or equalization payments and contributions. With regard to the various

undertakings the use of the unit of account is only intended to indicate the

method calculating in their national currencies the amounts which they of immedi­ owe or are owed. These amounts, calculated in units of account, are

into Therefore, undertakings'

con­ ately converted national currencies. the

determined or when they are in fact paid.

However these conclusions cannot be accepted. In order to achieve an equal

distribution of the charges arising out of the importation of ferrous scrap from third countries, the equalization scheme operated on the basis of ac­

counting periods, usually of one month, so that one equalization price was

adopted for each period and the equalization payments made during this

period were calculated on the basis of this equalization price. When this had been done the charge resulting from the said payments, which varied con­

metric ton of scrap varies from one accounting period to another, it is neces­

sary to fix the contributions to be paid on the basis of the parity of the unit

of account in force during the said periods.

As the equalization scheme consists basically on the one hand or a charge on the difference between the price of imported ferrous scrap and the price

inside the Common Market and on the other hand of the equal distribution of among undertakings consuming scrap in proportion to this charge their

it would be wrong to adopt a rate of exchange for the calcula­ consumption, tions necessary for the first stage of the operation different from the one

inadequate must also be rejected.

The method adopted does not infringe the prohibition on discrirnination. An equal apportionment of the charges presupposes the avoidance of variations

in currency parities by the adoption for all undertakings of the same period

of reference during which their debits and credits calculated in units of

account are converted at the same time into national currencies. The adoption of a system based on the date of payment or on the date on which the en­

forceable nature of the claim was established would lead to the danger that

MANNESMANN v HIGH AUTHORITY

It is also on the basis of these two false presumptions that the complaints

were made without justification that the High Authority interfered with the monetary sovereignty of Member States and acted ultra vires.

This submission must therefore be dismissed as unfounded.

A — The submissions regarding the system relating to interest

The applicant states that the general decisions contested by this application

cedural requirements for the validity of certain decisions it must be strictly construed. The effect of Article 53 (b) of the Treaty is that the unanimous assent of the Council was only necessary if the introduction of a system of

crediting interest affected or modified the very basis of the imported ferrous scrap equalization scheme.

A system for crediting interest, established in order to compensate under­

takings subject to the scheme for periods during which they had to lock up capital required to meet appears to be necessary in order their obligations,

to ensure that those unjustifiably prejudiced by delays undertakings are not

in payments made by other undertakings. This system which does not modify the essential structure of the financial arrangements for equalization was

JUDGMENT OF 13. 7. 1965 — CASE 37/64

amended, even in the case of amendments not affecting the basis of such

decisions, by a new decision also taken with the un­animo­us assent of the

Council.

Therefore the complaint based on the absence of the unanimous assent of the Council is unfounded.

The applicant states that the statement of the reasons upon which Decision No 7/61 is based is inconclusive and does not give the reasons why it would have been impossible for the High Authority to remove the disadvantages of the former system for charging interest for delay in payment and to adopt a system other than the one which is contested.

cation of the contested system and which is the reason why it adopted this

system.

This statement of reasons discloses the considerations which led the High

Authority to adopt the disputed Decision No 7/61 and the reasons upon

which that decision is based. Since the statement of the reasons upon which

the decision is based is adequate in law this submission must be rejected as

considerable.

There was therefore the danger that the former system might lead to both an intricate and investigation into all the circumstances relating to complicated

the responsibility for delay, and to the unsatisfactory situation that the charge

MANNESMANN v HIGH AUTHORITY

under the equalization scheme was in fact imposed unequally on the various undertakings. Thus the undertakings, which exact contributions could only

be determined after some delay, retained the use for a certain time of sums which should have been available to the Fund. The result was that the other undertakings had to bear additional charges without any set-off. These under­

tages mentioned above. Whilst it is true that for this purpose it treated on a

footing of equality all undertakings which were for any reason in arrears with their payments, without considering the question of blame or liability, this is

explained by the injustices and uncertainties which a more conventional

system would have introduced into the working of the equalization scheme.

It is clear moreover that the system adopted by Decision No 7/61 eliminates as far as possible the objective inequalities caused by the delays in the

liquidation of the equalization scheme.

the pretext that they established legal situations or vested rights, would

jeopardize the objectives of the said scheme.

It is therefore necessary within the framework of such a scheme to acknow­

ledge that the responsible bodies have the power to make the necessary-

amendments to such rules in order to eliminate any possible discrimination.

JUDGMENT OF 13. 7. 1965 — CASE 37/64

Under Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs. The applicant has failed in its submissions and

must be ordered to bear the costs.

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; Com­ Having regard to the Treaty establishing the European Coal and Steel munity, especially Articles 15, 33 and 53; Having regard to the Protocol on the Statute of the Court of Justice annexed to the Treaty establishing the European 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

A. Van Houtte Ch. L. Hammes Registrar President

744'