C-4/65

JUDGMENT OF THE COURT <ap note>1</ap note> 15 DECEMBER 1965­

Société Anonyme Métallurgique Hainaut-Sambre

v High Authority of the European Coal and Steel Community­<apnote>2</apnote>

Case 4/65

Summary

1. Common financial arrangements — Equalization — Contributions — Exemption — Principles (ECSC Treaty, Article 53)

sented by G. Liénard, Advocate at the Charleroi Bar, and by G. Van Hecke,

Advocate at the Cour de Cassation and lecturer at the University of Louvain, with an address for service in Luxembourg at the Chambers of Ernest Arendt, Advocate at the Cour Supérieure de Justice, 6, rue Willy-Goergen,

applicant,

v

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, represented by its Legal Adviser Giuseppe Marchesini, acting as Agent, assisted by Cyr Cambier, Advocate at the Cour d'appel, Brussels, with an

address for service in Luxembourg at its offices, 2, place de Metz,

Authority of 13 November 1964 requesting the applicant to pay an

equalization contribution on 79 990 metric tons of scrap;

secondarily for damages for the defendant's wrongful act or omission, —

THE COURT

composed L. Hammes, President, L. Delvaux of Ch. and W. Strauß, Presidents Chambers, A. M. Dormer, A. Trabucchi of (Rap orteur), R. Lecourt and R. Monaco, Judges,

Advocate-Gneral: K. Roemer Registra : A. Van Houtte

sheets. weight of waste scrap arising from the

In order to secure the return of any processing of our own sheet bars. waste scrap arising from the processing Further, as regards the price fixed at

of the sheet bars into sheets, the appli­ . . . francs as set out below, the value cant first employed the legal device of of the scrap is fixed at francs per . . .

the jobbing contract, and then—over a metric ton up to 4 months after delivery in­ the including the whole period of that of sheet bars, that is, the average

decision—inser­ volved in the contested price of the scrap arising from the sheet " ted in each contract for the sale of sheet bars .

bars to Phenix-Works a clause retaining By a decision on 13 November 1964, ownership of the processing waste. This the High Authority charged on the scrap clause was formulated as fol ws: arising at Phenix-Works and consumed

applicant in an application lodged on 19 scrap

January 1965. The applicant complains that the con­

tested decision is vitiated by an error

in law, because it assimilates recovery II — Conclusions of the of the scrap in question to a transaction parties of sale, ignoring the retention of owner­

ship clause. Under Belgian law however­ The applicant claims that the Court —applicable here—such retention of

should : ownership is valid, and consequently 'annul the disputed decision; affords exemption from the contribu­

High nized the return of the scrap in order the Authority to pay the that

costs of the action'. question constituted neither a sale nor

a transfer inter vivos for valuable con­ The defendant contends that the Court sideration. should : Nor does the clause in question con­

'as regards the application for annul­

flict with the principles invoked by the ment, declare it inadmissible and in any Court in Case 19/61, when the Court case unfounded; declared that a retention of ownership as regards the application for damages, clause for a constituent and indeter­ declare it inadmissible and in any case minate part of a thing could not be unfounded; valid. For, in the first place, the amount dismiss the action accordingly and order of scrap covered by the retention of the applicant to pay the costs'. ownership clause is not indeterminate, but determined precisely by each con­

tract and, secondly, 'the waste scrap is III — Submissions and "constituent part"

JUDGMENT OF 15. 12. 1965 — CASE 4/65

on the other hand, is neither the natural the processing of the sheet bars sold, nor the artificial product of the sheet estimated in advance: this retention of

bars; rather, it is the result of a trans­ ownership clause thus corresponds to

formation of the bars themselves. By its Phenix-Works de­ an obligation on to

reference to the theory of accession, the liver an amount of scrap fixed at a flat applicant's argument questions the ex­ rate, without regard to whether this

clusive nature of the right of ownership, scrap does in fact arise from the sheet

right to relate to a which is de­ on the of the disputed waste thing ownership terminate, the substance of which is scrap is permissible under Belgian law, separable from that of any other, and refers in its reply to three opinions given which is consequently capable of separ­ on this question by experts in Belgian ate and exclusive appropriation. But that civil law consulted by it: Jean Dabin, is not the case with a share in a thing, Professor Emeritus at University of the

of a percentage fixed at a standard rate Louvain, Renard, Professor at Claude is Lim­ and which applied to what is con­ the University of Liege, and Jean

sidered to be the result of a transforma­ pens, Professor at the Universities of

tion of the thing transferred. Ghent and Brussels. (b) The reference to the national tax (a) According to the first opinion (that provisions misses the point because the of Mr Dabin), the disputed scrap is to tax authorities, in the exercise of their be considered as a product of rolling

discretionary powers, act on considera­ the bars into rough sheets. It is in fact tions of expediency rather than on pre­ as a result of its processing and by the cise legal principles. exercise of the jus abutendi that the

The reference also conflicts with the product is, in the legal sense, created:

indistinguishable from others where the sense an indeterminate inseparable con­

Court has excluded the possibility of stituent part of the sheet bars but, on

having a retention of ownership. The the contrary, a new and separated thing. dis­ Since this scrap does into ex­ quantity of waste scrap which the not come

puted clause is intended to cover is not istence until the moment of separation, even determined as 'being that which it cannot be considered as a constituent

will be present at the moment of com­ element of the bars. pletion of the transformation, but the Its existence being only future, the

amount of scrap which might arise from waste scrap belongs normally to the

of accession by production to the scrap enjoy and dispose of an object cannot

which was to foe produced. Thus it was be vested in several persons at once.

impossible for it to something to sell According to the will of the parties, the which it had renounced its tide. In union of the two elements comes to an

other words, thescrap becomes waste end when the sheet bar is divided, from the moment of its creat­ has merely declara­ instantly, which operation a

ion, the property of the applicant by tory effect. Each party must be con­

virtue of the disputed clause. sidered to have been the owner of its (b) According to a second opinion (that particular parcel since the time of the

not at any moment exist any new applicant claims that taxation practice

ownership in the separate parts of the is based on legal concepts, and must

bar, prior to their identification and not operate on considerations of mere

separation. When this occurred, Phenix- expediency as asserted by the defendant. Works acquired tide to the part of the The applicant complains of the assump­ bars which had been turned into sheet. tion in the contested decision that the

As for the waste scrap, it remained dis­ retention of ownership clause contained

tinct from the Phenix- the of a contract for thing sold and elements of sale; Works was obliged to restore it to the instance, it fixed a quantity, a price and applicant in accordance with the terms a place for delivery. When the parties

ownership of a part of the bar, the with regard to agreements for contract­

pants being as yet undetermined. By ing work out. Even if it were estab­

analogy with the second paragraph of lished—as the defendant has yet to

JUDGMENT OF 15. 12. 1965 — CASE 4/65

prove—that the scrap returned by cised by it in its acquired capacity as

Phenix-Works arose from sheet bars owner. It appears moreover from the

must be present whenever there is a which should be given precedence here, duty to deliver or to re-deliver. for instance the interpreting of the con­

As regards the opinions given by the cept of 'bought scrap'

in a sense most

three experts consulted by the applicant, likey to foster an extension of the basis the defendant makes the following ob­ of assessment to contributions, and the

servations : preference to be given in borderline

(a; As to the first opinion: the argu­ cases to charging contributions.

accession, which assumes the unification this theory relies, is not applicable to

of two things belonging to different our case, for here, contrary to what

owners. This has been confirmed, more­ was envisaged by this provision, there

over, by Professor Renard, who has been sub­ supplied no mixture of several

the second opinion. stances but the sale of a single sub­

de­ (b) As to the second opinion the stance: a sheet bar, which is a single

been there. The processing by Phenix- distinction between discretionary power Works hav­ of the thing sold, far from and arbitrary power and contends that ing been performed as part of an agree­ between the letter of the law and its ment for work under contract, repre­ practical application there lies a margin sents the right of usus and abusus exer- within which the administration may

S.A. MÉTALLURGIQUE HAINAUT-SAMBRE v HIGH AUTHORITY

act as it sees fit. This power is exer­ any particular national legal system. In cised in the guise of a controlled and addition, these principles must not con­

limited tolerance, using objective cri­ flict with the inherent requirements of

teria, determined in the interests of ex­ the scheme set up by the Community pediency by the administration. The regulations.

requirements which dictate the actions In applying these principles to the pres­

only national law can supply the criteria the firm which had not created it is itself

on the basis of which it may be decided sufficient to constitute a basis for charg­ whether or not the disputed scrap is ing contributions. Insistence on this re­

liable to contributions; and it stresses quirement is justified in view of the

the fact in the the fact that to the de­ that preamble to accord status of a

contested decision it is stated that use termining factor to provisions enabling 'ownership' of the term is not sufficient the undertakings subject to equalization

to confer on the scrap in question the freely to escape liability to pay their

It is with this in mind that the con­ in national civil law, the defendant ob­

deter­ sumption scrap is made the of serves, as a subsidiary point, that the

mining factor in charging the for contribu­ method used particular this transfer

tions. That is why Court has held the bears close resemblance to a sale proper, (in Case 19/61) that the concept of in that the quantity, price and place of

'bought does include merely delivery are fixed. scrap'

not

Court has on occasion referred to prin­ asserts—and offers to prove, in the event ciples of civil law, in particular the con­ of dispute—that during the whole

purely due ownership, this was concerned the accounts al­ cept of period were

to the pecularities of the case in hand. ways settled after the sheet bars had Regard must also 'be had to general prin­ been processed. Consequently, at the

ciples of law, if unequal treatment of time the waste scrap was created, the

undertakings is to 'be avoided, not to applicant owned the sheet bars, now

JUDGMENT OF 15. Vi. 1965 — CASE 4/65

ing the waste scrap. In addition, the 'since the applicant had owned the sheet form envisaged

by Article 7 of the bar even before this yielded waste scrap, general conditions of sale amounts to a it was not open to the defendant to

condition with retroactive effect. On accord itself, by means of a waiver by payment of the purchase price, the ob­ Phenix-Works, a right, never acquired ject remains an accretion to the buyer's by Phenix-Works prior to the creation

property; thus the applicant's theory has of the waste, over the actual thing from no relevance. which the waste arose'.

The applicant replies that on payment

3. The argument relating to infringe­ of the contract price after the creation Phenix- of the principle of non-dis­ of the sheet and waste scrap, ment

ownership of the thing sold pending consideration by the Court in Cases 17 payment becomes, moreover, of minor and 20/61. What we have here is a

importance if the defendant's theory as practice constantly observed since 1947 to the impossibility of creating a separ­ and which was not created with any ate right ofownership over the future intention of influencing the 'basis of

waste is correct. Even if it had some assessment to equalization contributions.

foundation, this theory is not applicable Secondly, the quantity of scrap covered to the present facts since the moment by the retention of ownership was at all the sheet bar was cut the sheets, as times precisely determined. Thirdly, also the waste, 'became the of there was never any transfer of capital property the applicants, payment not then having entry in the roll­ or accounts when the

been made. ing-waste was returned. The applicant

According to the case-law of the Belgian also refers the Court to Article 7 of its Cour de Cassation, payment of the pur­ general conditions of sale.

S.A. MÉTALLURGIQUE HAINAUT-SAMBRE v HIGH AUTHORITY

countries free to apply Community law a time when it was in a better position themselves in such matters, which to make them.

would be contrary to the fundamental The damages sought also cover the

principles of equalization, that is, the amount claimed by the High Authority principles of non-discrimination and the as interest for the delay caused by its equal treatment of all undertakings con­ own negligence.

suming scrap. The defendant first denies that the

The applicant replies that, if the aims High Authority was under any obliga­

the responsibility of the High Authority, resources, ought to have shown the

the result of its lack of foresight. The applicant that it could not avoid paying defendant's views may be useful as de equalization contributions in respect of

lege ferenda, but they are contrary, in the waste scrap in question. The second the existing state of the relevant regu­ check carried out in the applicant's fac­

lations, to both Community regulations tory gave rise to fresh observations con­ Phenix- and Belgian Civil Law. cerning the scrap coming from Lastly it must 'be asked what would be Works. Also, in order to check the con­ the defendant's attitude if the applicant ditions governing the return of the scrap had, after having its sheet bars proces­ in question, the High Authority reques­ sed into sheets at Phenix-Works, sold ted copies in February 1962 of the con­

the sheets to the defendant. tract(s) involved. This enabled it to

complete its investigation and to reach

to have the work contracted out, or to jobbing contract and those of a con­

refrain from retaining ownership of the tract of sale, whether or not a retention

waste and to take this into account in of ownership clauses is included, the

the sale price, or to spread payment of defendant declares it impossible to

its contributions over a period and at maintain that the two contracts are

JUDGMENT - OF 15. 12. 1965 — CASE 4/65

would have been, in fact, the economic charge the total price of 'the sheet bars, advantages and disadvantages of the which was listed, without deducting the agreement for rolling work contracted value of the waste scran.

out. The defendant replies that the check

As for 'the applicant's claim that it could carried out in the applicant's works

have waived its ownership to the waste was in no way one that the High

scrap and taken this into account when Authority was under a duty to perform fixing the price, the defendant remarks in any case, far less one that it had to

that the is usually determined by price complete within a given time; it was

to Article 60 of the Treaty. As for the cludes that no increase corresponding argument the applicant seeks to put for­ to the amount of the contribution would im­ have been in ward as regards the alternatives of possible fact, since other­

mediate payment of contributions and wise Phenix-Works would have bought payment thereof by instalments, the de­ from other undertakings.

fendant remarks that in 'this context the The fact that 'the value of the waste

applicant could have contented itself scrap in dispute might not have been with asking for partial compensation for deducted from the purchase price of the loss entailed in making the payment the Sheet 'bars, which would then have in one sum, without asking for the en­ been charged at the full price, could

tire amount of the contribution. In ad­ not have benefited the applicant, since

dition the applicant has had at its dis­ the acquisition of a corresponding posal for several years the sums owed amount of waste scrap would perforce by it as its contribution, and this is no have rendered it liable to pay the con­ mean advantage. tribution.

show that its general conditions of sale, High Authority) for the purposes of the in particular Article 7 thereof, were oral procedure.

applied in its (transactions with Phenix- The parties oral observations were

Works. The applicant complied with heard on 18 and 19 October 1965. this by producing written evidence The Advocate-General delivered his favour­ prior to the commencement of the oral opinion on 4 November 1965, proceedings. By order of 11 October ing rejection of the application.

Grounds of judgment

I — The application for annulment

The applicant claims that the scrap in the dispute constituted not bought

The general decisions applicable to this question introduced, for the benefit of all undertakings within the Community, a scheme designed to ensure them a regular supply scrap of at the Member State uniform prices whatever to

which they belonged or the origin of the scrap in question.

These decisions, aimed at spreading between undertakings the financial burden of a benefit in which all could share, accordingly made all scrap con­ sumed by Community undertakings subject to the equalization levy, with the single exception of scrap which constituted their own resources.

The scope of this exemption can be determined only by reference to the system within which it is designed to operate and in the light of the funda­ mental principles on which it is based.

Since the obligation to contribute to the equalization scheme is the rule and

exemption the exception, the latter must be interpreted strictly and must be consistent with the aims, the basic principles and the requirements for the

consideration of the method of scrap production required by the spirit and

purpose of the equalization scheme. The applicant is therefore mistaken in

thinking that the exemption can be made to apply to the scrap here in dispute simply by showing that at no time did it transfer its ownership thereof.

In doing so, it fails to appreciate that the fact that scrap arising from a trans­ fer of ownership was classified in previous similiar cases as bought scrap does not by any means indicate that the absence of any such transfer will justify exemption from the equalization levy.

Indeed, the question who holds title to the ownership of the disputed scrap, however important, cannot be the sole determining factor in the equalization

scheme.

ducive to increased productivity; scrap so used does not exemption of there­

fore distort competition within the market.

On the other hand any exemption which depends not on the way in which an

undertaking arranges its production, but on the contractual relationships

which it has with other undertakings, is not compatible with the scheme.

S.A. MÉTALLURGIQUE HAINAUT-SAMBRE v HIGH AUTHORITY

quantity of sheet bars.

This separate valuation of the sheet bars sold and of the scrap recovered

confirms that the latter do not merely represent a portion retained from the sheet bars sold, but is a new product.

Consequently consumption of this scrap by the applicant cannot be considered as a re-utilization by the producer undertaking of its own resources.

In these circumstances, the scrap in question must be subject to the payment of the equalization contributions, the affinities with private law invoked here

by the applicant being irrelevant to the matter.

II — The application for damages

The applicant claims to have suffered damage as a result of not having been informed in time that the scrap in question was liable to equalization, and

further claims that this omission on the part of the defendant constitutes a

failure to comply with Article 5 of the Treaty and is therefore a wrongful act of omission.

On the question of damage, the applicant claims that it would have been able to gain exemption from equalization contributions by having the processing done as work contracted out.

It is not certain, however, that this method would have attained the aims of both the applicant and Phenix-Works as well as a sale would have done. An agreement contracting work out serves a purpose, and implies a risk, quite different from those which characterize the contracts of sale actually used here. In view of the above it is not possible to determine either the manner in which the relationship between the two undertakings would have been

It has also not been established that real damage was constituted by the im­

possibility of settling the equalization debt in instalments.

The Court is therefore not satified that damage was suffered. This being so, the application for damages must be dismissed and it is not necessary to con­ sider the existence or otherwise of a wrongful act or omission.

III — Costs

According to Article 69 (2) of the Rules of Procedure, the unsuccessful party must pay the costs. The applicant has failed in its submissions and must

therefore bear the costs of the action.

European Communities;

THE COURT

hereby:

I. Dismisses the application as unfounded;

2. Orders the applicant to bear the costs.

Hammes Delvaux Strauß