C-39/64

JUDGMENT OF THE COURT 1965<appnote>1</appnote> 13 JULY

Société des Aciéries du Temple <ap note>2</ap note> v High Authority of the ECSC­

Case 39/64

Summary

1. Measures adopted by Community institutions — Validity — Conditions of essential procedural requirements — Provisions relating thereto — Prohibition on the extension of their application

2. Financial arrangements — Equalization of ferrous scrap Discriminatory rules —

rue Philippe-II.

applicant,

v

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, represented by its Legal Advisers, Italo Telchini and Guiseppe Marchesini, acting as Agents, with an address for service in Luxembourg at its offices at 2, place de Metz,

defendant,

Application for the annulment of the decision of the High Authority of 22 July 1964 ordering the applicant to pay the sum of FF 476 963.76 under the imported ferrous scrap equalization scheme, by way of supplementary equal­ ization contributions,

JUDGMENT

Issues of fact and of law

I — Facts applicant submitted the present applica­

tion on 28 August 1964. The facts may be summarized as follows:

The High Authority, in pursuance of II — Conclusions of the Decision No 7 of 1961 (Official Journal parties of 25 April 1961) and Article 6 of De­ cision No 7/63 (Official Journal of 6 The applicant claims that the Court April 1963) issued a statement of ac­

should: count in the case of the applicant in — 'upon the applicant's objection of il­ respect of equalization of imported fer­ legality annul the following general rous scrap and of scrap treated as such decisions, at least as regards all their­

was enforceable within the meaning of founded; Article 92 of the Treaty. — order the applicant to bear the costs It was against this decision that she of the proceedings.'

ACIÉRIES DU TEMPLE v HIGH AUTHORITY

III — Submissions and Treaty and from the case-law of the

arguments of the Court, especially the judgment in Joined parties Cases 4 and 13/59. This rule was not observed upon the Admissibility any of the decisions con­ adoption of The defendant does not object that the tested by the present application. Only application is inadmissible. Decision No 16/58, which empowered

Substance of the case the High Authority to lay down the

cil, make any such financial arrange­ ser delay with which the contributor ments as are mentioned in Article undertakings pay their contributions, 53 (a). the diligence shown by the High Likewise, according to the case-law of Authority and the contributors, etc., the Court (Joined Cases 32 and 33/58), became attached to the equalization

any amendment to Decision No 2/57 scheme, whereas in the SNUPAT (which amended and prolonged the de­ case the Court insisted that the levy setting up the financial be arrange­ cisions was to calculated on an objective

ments for the equalization of ferrous basis.

scrap) requires the unanimous assent of The defendant objects that the only the Council. complaint which could in theory be It is then argued that the obligation to advanced in this case is that of an in­

obtain mis assent also applies to the fringement of an essential procedural

decisions concerning rules governing requirement. On the one hand the com­ interest, such as the decisions called in plaint that the Treaty has been infringed question by the present application. It is, in this case, included in the com­

according to which the High Authority This having been said, it should be may, with the unanimous assent of the remarked that at all events the contested

Council, 'make any financial arrange­ general decisions have been applied for ments'. Two conclusions follow from a time, and that the Court has long this provision. The first is that it is the already had occasion to examine them High Authority alone which has the several times. Since the Court could legislative authority necessary for setting of its own motion have raised the com­

up the financial arrangements provided plaint which is raised here, that com­

for by the Treaty. Admittedly the plaint should have brought about the

Council takes in the of the disputed general de­ part exercising annulling of

this power in granting its assent, but this cisions when the previous cases were

administration or in non-essential de­ ted a measure which it was not com­

tails concerning their organization. petent to adopt, and it thus encroached

The case-law of the Court cited by the on the prerogatives of the legislature. applicant does not contradict this opin­ Furthermore the infringement of the

ion. For example, the judgment in essential procedural requirement laid Joined Cases 32 and 33/58 admittedly down in Article 53 (b) of the Treaty says that an alteration to Decision No constitutes at the same time an infringe­ 2/57 should only be made with the ment of this Article and, therefore, of

unanimous assent of the Council, but the Treaty. in doing so it is referring to an altera­ The applicant states that the contested 'making' tion concerned with the of decisions are not limited to altering the financial arrangements for the equaliza­ administration of the financial arrange­ tion ferrous As for the judg­ for the ferrous of scrap. ments equalization of

ment in Joined Cases 4 and 13/59, it scrap or to setting up new rules as to

because it dealt with the making of the basis of assessment under the financial financial arrangements, and not because arrangements is constituted by the quan­ of any idea that the assent of the tities of ferrous scrap purchased. It is Council was necessary for proceeding to no purpose that the High Authority

ACIÉRIES DU TEMPLE v HIGH AUTHORITY

relies on the literal meaning of the word basis of assessment of the equaliza­

'make' in order to assert that the assent tion levy, namely the amounts of of the Council is only compulsory when bought ferrous scrap. The concept the proposed amendment is of a nature of a basis of assessment cannot be 'make' financial arrangements former in­ such as to regarded as including the

and not when the amendment only deals terest on overdue payments in con­

with 'details concerning the organization tributions in respect of principal, and of the equalization scheme'. Alterations sums required to service interest; which, as in this case, are intended to —

structure of the organization and con­ avoid useless transfers of money.

stitute a new organization. Since the applicant did not pay in The applicant also states that the prin­ sums by way of interest on overdue ciple based on the judgment in Cases payments at the time in question it 4 and 13/59 according to which the is not directly concerned by this

High Authority may, without necessarily operation. Furthermore the total

seeking the consent of the Council, re­ amount of the interest on overdue

quire sums improperly paid to be re­ payments, which was included in the

funded is to be by the fact explained principal, is derisory compared with that such refunds follow logically from the total contributions. Con­ As the system of equalization credits. regards the 'dividing up amongst

essential since Decision No 7/61, whilst to which the applicant refers is not

defi­ making indispensable alterations, is because it deals the con­ relevant with

cerned to establish the means of en­ nition of ferrous scrap subject to the

suring equality of treatment between equalization scheme, and furthermore the undertakings consuming ferrous the contested decision is in accordance

scrap, and leaves unchanged the basic with the attitude consistendy taken by elements of the equalization scheme, the High Authority. such as the undertakings liable to con­

basis B discrimina­ tribute, the of assessment, etc. In — Misuse of powers, and fact: tions —

takings, it follows that the interest on written the interest on overdue pay­

overdue payments is also divided ments into their general overheads, amongst all the undertakings subject to the abovementioned interest at 5% the financial arrangements. puts extra amounts of money at the

(b) According to Article 3 of Decision disposal of these undertakings. No 7/61 the interest due to undertak­ —

By Article 2 of Decision No 7/61 ings have (in­ interest which paid in advance at 5% is to be paid on the De­ bonuses due terest credited to undertakings by to certain undertakings

cision No 21/58) is charged to and by virtue of Decision No 26/55. The divided amongst all the undertakings result is that since Decision No 7/61 until the accounts are finally closed. was adopted six years after Decision Thus the contribution due from each No 26/55, and since no specific date undertaking varies in proportion to em­ for the payment of the interest has pirical and subjective factors such as been laid down, the recipients of

the greater or lesser promptness of the bonuses received an unforeseen

it clear which undertakings are the bene­ expected benefit accrued. ficiaries of the equalization scheme and (f) On the other hand, for the con­

of the interest on credit balances as re­ tributor undertakings called upon to pay gards undertakings which have received the supplementary contribution, which ferrous scrap at reduced prices, in cases replaces the interest on overdue pay­

where the High Authority itself has ments and which is intended to offset

in in im­ de­ taken over whole or part the these 'windfalls', the system thus

portation of ferrous scrap. scribed involves an additional charge and Fur­ (e) The High Authority gave what was therefore very serious distortions. in practice a 'bonus', for which the thermore it also involves discrimination equalization arrangements did not pro­ contrary to the provisions of Article 4 vide, to a whole series of undertakings, (b) of the Treaty, and contrary to the by reason of the following circum­ fundamental principle contained in stances : Article 2. —

According to Article 1 of Decision The defendant replies by describing the

an end, by automatic and objective equality of treatment and of a proper means, to the consequences resulting balance between the undertakings sub­ from late or part payments on the part ject to the equalization scheme.

of certain undertakings. This system is In the reply the applicant continues to

in fact based fac­ that is on entirely objective assert the contested system not

tors, namely the principle that money objective, using several arguments. It has an earning capacity, and the date points out in particular that at the basis when the contributions are paid. By of the system in question there is a

virtue of this second factor, the more factor which the High Authority has divid­ an undertaking has delayed in paying completely overlooked, namely the in its equalization contribution, the later ing up amongst all the contributor un­

will it qualify to benefit from interest dertakings of interest on overdue pay­

interest credited to them. This interest plementary contribution can automatic­

is in reality made up by the supple­ ally offset the credit interest and argues 'compensation'

mentary contributions for that purpose that the which, accord­

and furthermore it is generally accepted ing to the High Authority, any payment that amy payment made early or any made early or late calls for, cannot be surplus payment must be compensated treated as equivalent to the equaliza­

appropriately. However it is a mistake tion levy itself, or be divided amongst to assert that this system favours credi­ all those contributor undertakings

tor undertakings compared with debtor which are not responsible in any way undertakings: all it does is to strike a for the early or late payments made by balance not established be­ some of their number. previously tween the undertakings which have paid Finally tne applicant emphasizes that

tion it must be shown that it has pend on situations which are absolutely treated comparable situations differently; different, are divided amongst all the but Decision No 7/61 deals with situa­ said contributors in proportion to their

tions which are not at all comparable basis of assessment to contribution; this

inter se, but which are in contrast proportion again depends on completely (creditor undertakings and debtor un­ different factors in each case. It is clear dertakings). It also follows that the that such a system, introduced long complaint of misuse of powers too is after payment was in fact made, can

unjustified, since the High Authority's only be to the advantage of the creditor

motive was in accordance with the aims undertakings which no longer reckoned

JUDGMENT OF 13. 7. 1965 — CASE 39/64

reasons behind the High Authority's cant concerning: (a) the sums paid by decision consist of mistakes of law cal­ the High Authority wrongly or mis­

culated to cause discrimination and to takenly; (b) the unforeseen 'windfalls'; constitute a misuse of powers. (c) the infringement of the provisions

The defendant emphasizes in its re­ enjoining the High Authority to keep joinder the technical nature of the solu­ the number of its administrators down tion adopted by Decision No 7/61 to a minimum, and only to intervene in which, in its opinion, makes the system so far as absolutely necessary.

more practical and more simple, and C — Inadequate statement of reasons makes it independent of fortuitous events and subjective matters. It then The applicant emphasizes that both the denies by point that certain point criti­ recitals in the preamble to the contested cisms made by the applicant are well- decisions and 'the report of the High founded. Authority on the verification of the To the argument that the contested origin of the ferrous scrap subjected to Equaliza­ system leads to discrimination in that: the equalization levy by the

(a) the sums of interest already paid in tion Fund, make it clear that the delay respect of overdue payments affect, in which has occurred in dosing the ac­ accordance with Article 5 of Decision counts is due to several imprecisely No 7/61, the amount of the contribu­ worded passages in the provisions ap­

tions by way of principal, to the benefit plicable and to the many frauds which

been abolished; dertakings might have suffered because — as to the second example ot discrim­ of the delay which has occurred in the ination, it is true that all the con­ liquidation of the financial arrange­

tributor undertakings are liable to ments.

make a supplementary contribution to The defendant objects that in its ap-

ACIÉRIES DU TEMPLE v HIGH AUTHORITY

plication the applicant does not offer the reasons given for Decision No 7/61 the slightest argument in support of the neither renders the decision void nor

submission advanced. Furthermore, after confirms its validity because the said reminding the Court of the principles statement does not give reasons why the

debtor undertakings (such as the appli­ the text of Decision No 7/61 and in cant), and this explains and justifies the particular recitals 5 to 8 and concludes

granting of interest to the undertakings that,taking into account the previous which have paid their debts in due time judgments of the Court in Cases 18/57 or even prior to the due date. The High and 14/61, abundantly sufficient reasons Authority also states that it has already are given for the contested decision, commenced civil actions for damages since they are more than enough to en­

before national courts against those un­ able the public and the Court to under­ dertakings which have committed fraud stand the main factors underlying it. in all cases possible. It also asks that D — The illegality of the interest on arguments based upon the Treaty it overdue payments could use which, according to the appli­

cant, would enable it to obtain com­ The applicant maintains that the interest pensation from these undertakings or charged on overdue payments is illegal the payment of fines by them. in this only inasmuch as it case, not

In the reply the applicant gives par­ has been introduced without the unani­ ticulars of its submission by formulat­ mous assent of the Council, but also

ing two complaints, one of which goes because it runs counter to certain gen­

hat nothing can be said against its good not adopted any measure as regards f­ aith.Having said this the applicant em­ this matter, it follows that the above-

phasizes that the High Authority has mentioned interest cannot run auto­

made a large number of mistakes in ad- matically. It is only Decisions Nos

ninistering the financial arrangements 19/60 and 20/60 which make the Jot example, the exemptions based on interest run from the day when the he notion of 'local integration') and notice of the statement of account

hat because of these mistakes the con- is received; the other decisions make tested decisions cannot be con­ it run automatically. possibly sidered justified. (b) It is also generally accepted law that (b) As to the second complaint the ap­ interest on overdue payments is only plicant maintains that the statement of due on a failure to pay a sum which

JUDGMENT OF 13. 7. 1965 — CASE 39/64

final closing of the accounts. countancy operation which is justified The defendant replies by stating, first both by the desire to avoid useless trans­ of all, that in the system established by fers and by the principle of 'balancing Decision No 7/61 there is no interest debits against credits. Furthermore it on overdue payments. It is only credited is useless to claim that the said interest interest which is provided for by that was retained by relying on certain pro­

decision. The supplementary contribu­ visions of Decisions Nos 19/60 and

tion charged to all the contributor un­ 20/60, which introduced it, and laid dertakings is not a penalty. It constitutes down rules governing payment of the the means enabling the High Authority same, since by Article 6 of Decision to service this interest. No 7/61 these very provisions have

Secondly the defendant asserts that been abolished.

without any doubt a decision of the 'law' E — The retroactive effects of the con­

High Authority has the force of a tested decisions in the sense used by the applicant.

In its reply the applicant reaffirms its of course precede the said Decision argument that interest on overdue pay­ No 7/61; ments was maintained in the system — Article 5 has the effect of retroact­

On hand De­ in­ under criticism. the one ively converting the payment of

cision No 7/61 simply treated interest terest on overdue payments into a

on overdue payments as equivalent to payment of principal.

contributions by way of principal, which (b) As to Decision No 7/63, is tantamount recognizing their to ex­ — Article 5 lays down the rates of con­

istence in another form. On the other tribution for the periods 1954 to

measures must not take effect retro­ ment in Joined Cases 42 and 49/59, actively. and arrives at the conclusion that the

The defendant replies that principle of the non-retroaotivity of laws — the equalization scheme as introduced and administrative measures is absolute

was provisional, a fact which the in nature, and that the Court has itself Court itself has recognized, and recognized 'that it is only possible to

which the applicant could not but revoke a decision retroactively if it is know. In these circumstances, it illegal. would be a mistake to claim that this The defendant rejoins by stressing the scheme has created vested rights; fact that in its opinion the High Author­ dis­ — the system under Decision Mo 7/61 ity is endowed with a margin of

does not result in any loss to under­ cretionary power in adjudging, on the

takings which have already made basis of concrete information in its their payments; possession, whether a body of rules re­

not paid in due time the contributions right in the retention of the previous

which they owed, enjoyed many unjusti­ system. The truth is that only does not

fied advantages. Therefore the said de­ the problem examined in that judgment cision attempts after the event to re­ differ from the present issue, but that

store equality of treatment between all judgment also proves that the argu­

undertakings subject to the scheme, and ments advanced by the High Authority thus to comply with a fundamental re­ are well-founded. These arguments

quirement of the Treaty, confirmed are:

the operation involved in closing the ted rights when what is involved is accounts. The present case is not in putting right a situation which is fact about the provisional liquidation of unjust in law fact, or which or in accounts but about the opening, with comprises discriminatory situations.

retroactive effect, of a new account on

a new basis for which no provision is made in the original decisions. IV — Procedure The applicant examines the internal law of certain Member States and the case- The written procedure followed the

law of the Court, particularly the judg­ normal course.

JUDGMENT OF 13. 7. 1965 — CASE 39/64

Upon Judge- The hearing the report of the parties presented oral arguments

whereby the High Authority called upon the applicant to pay certain sums due by way of interest. By raising the objection of illegality it also contests

indirectly General Decisions Nos 21/58, 19/60, 20/60, 7/61 and 7/63 at least in so far as they lay down rules governing the question of interest form­

ing part of the financial arrangements for the equalization of imported ferrous scrap.

A The lack in­ — submissions of of competence, fringement of an essential procedural requirement

and infringement of the Treaty

The applicant asserts that the general decisions called in question by the present application are illegal on the ground that they introduced rules on

assent of the Council stems from the Treaty itself.

According to Article 53 (b) of the Treaty the High Authority may 'with the unanimous assent of the Council, itself make any financial arrangements serv­

ing the same purposes'. Since this is a provision which lays down essential

ACIÉRIES DU TEMPLE v HIGH AUTHORITY

procedural requirements for the validity of certain decisions, it must be

strictly construed. It is apparent from Article 53 (b) of the Treaty that the assent of the Council was only necessary if the introduction of credited

Moreover as regards the supplementary equalization contribution, the basis of assessment to contribution, which is ascertained according to the quantities of ferrous scrap purchased, constitutes one of the main elements of the

equalization scheme as approved by the Council. The only reason for this supplementary contribution is to ensure the payment of credited interest. It is not intended to constitute a new equalization charge, or to alter the criteria

relating to the levying of contributions. What is more, since the supplemen­

tary contribution is charged to undertakings proportionately according to the bases of their respective assessments to contribtution, it cannot possibly alter this basis of assessment which continues to depend on the amounts of ferrous

scrap consumed. Furthermore it is intended, under the very system which

was introduced by Decision No 7/61, to be applied, upon the final closure

lack of prudence tantamount to disregarding the legal objective and leading to instances of discrimination.

(a) In support of this submission the applicant relies first on Article 5 of

Decision No 7/61, according to which already by sums paid undertakings

by way of interest on overdue payments are to be treated as payments on account of the contributions by way of principal. The applicant thinks that it

can deduce from this provision that the system of interest on overdue pay­

ments has been retained, and that this interest, which is owed by certain

overdue payments which certain undertakings had already paid had to be closed off so that these undertakings should not have to pay twice over. Ac­

cordingly, instead of being refunded the said interest on overdue payments was considered as a payment on account of the contributions still due.

It follows both from the abovementioned Article 5 and from the logic of the system that this allocation takes place on an individual basis by way of separate accounts and not by means of including the whole of the interest on overdue payments in the general statement of account showing the total of the sums due by way of contributions. Therefore when the old account for interest on overdue payments relating to one undertaking is closed off, this cannot have any harmful repercussions on the accounts of the other under­

takings.

In these circumstances, this complaint of discrimination appears to be un­

founded.

undertakings subject to the scheme bear the consequences of the delay on the

part of the defaulting undertakings.

Under the old system of interest on overdue payments it became clear that it was often impossible to charge such interest, at least in respect of the whole of the contributions which were in fact due. It also became clear that the

undertakings which did not pay their debts on time often enjoyed the same

treatment as that given to the undertakings which had paid their contribu­

tions by the due date or even earlier. For this reason alone, this system was capable of altering the conditions of competition and could place in jeopardy the principle of equality of treatment. Furthermore the effect of this system was to make the undertakings which had paid their contributions on time

date of payment until the date of the final closure of the accounts. As regards the undertakings which have made their payments punctually the amount of

this interest is equal to the supplementary contribution required to service

the interest.

In the other cases the balance resulting from the difference between these

two amounts, whether it be in favour of the undertaking or of the equaliza­

tion scheme, enables the undertakings subject to the scheme to be compen­

which arises from the need to prevent the creditor undertakings from being put at any disadvantage.

JUDGMENT OF 13. 7. 1965 — CASE 39/64

Thus the contested system seeks to make the undertakings which have bene­ fited from the abovementioned delays bear the consequences of them whilst

protecting the credits in favour of the other undertakings. It does so by sharing among those subject to the scheme the burden of contributing to the servicing of interest and by introducing credited interest. Therefore this

system offers an objective solution which makes it possible to avoid the dis­ crimination caused by the system of interest on overdue payments.

For all these reasons this complaint of discrimination does not appear to be justified.

means other than the crediting of interest in cases where delay occurs in pay­

ing over sums due by certain undertakings. For these reasons no unfair

advantage is given to certain undertakings by reason of the contested system. Therefore the complaint of discrimination must, in this case also, be rejected.

For all these reasons the submission of misuse of powers which has been alleged appears to be unfounded.

C — The submission that the statement of reasons

was inadequate

by different undertakings to their advantage or disadvantage as the case may be. Recital No 8 of the preamble sets out the situation which results, in the

opinion of the High Authority, from the application of the contested system, and which was the reason why it adopted this system.

This statement of reasons thus makes it possible to learn of the considerations which led the High Authority to adopt Decision No 7/61, and the grounds on which that decision is based. Thus, since the reasons given for the said

decision are sufficient in law the present submission is rejected as unfounded.

D — The submission that the interest on overdue

payments was illegal

expressly revoked Article 5 of Decision No 19/60, and Article 6 of Decision No 20/60, both of which the applicant relies on in support of its argument.

For all these reasons, since the contested decision does not provide for the

interest on overdue payments to be retained, the present submission lacks

any substance and must therefore be rejected.

E — The submission concerning the retroactive

effects of Decision No 7/61

these arrangements, to accept that the responsible authorities have the power to make the necessary alterations to such a set of rules in order to eliminate the possibility of any discrimination.

Furthermore as these financial arrangements are in the course of being wound up, and the contributions of each participant are assessed on a accordingly provisional basis, discrimination of this kind cannot possibly be rectified

without affecting situations created by the previous set of rules which it was necessary to alter.

It is therefore necessary to conclude that the present submission is unfounded and must be rejected.

For the reasons set out above, the objection of illegality raised against General Decisions Nos 21/58, 19/60, 20/60, 7/61 and 7/63 has failed to establish that these decisions are unlawful. Therefore the applicant has failed also to

establish that the contested individual decision was illegal, since its argument

Having regard to the Treaty establishing the European Coal and Steel Community, especially Articles 15, 33, 36 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 Euro- Dean Communities;

ACIÉRIES DU TEMPLE v HIGH AUTHORITY

THE COURT

hereby

Declares the present application admissible and:

OPINION OF MR ADVOCATE-GENERAL ROEMER

DELIVERED ON 24 JUNE 1965­ <apnote>1</apnote>

Index

Facts 780

Legal consideration 780

1. Necessity for a system of interest within the ferrous scrap equalization scheme 780

(c) Does Decision No 7/61 contain unacceptable sub­

jective factors? 785

(d) Infringement of the prohibition on discrimination 786

(e) Summary 786

4. Unlawful nature of the retroactive assessment in Decision No 7/61 786

5. Failure to give reasons for the Decision 787