C-7/71

JUDGMENT OF 14. 12. 1971 — CASE 7/71

2. An action seeking to establish that a to achieve one of the objectives of the Member State has not complied with Treaty. Even an abstention by the obligations arising from provisions of Council from exercising the powers the Treaty which the Commission which it holds under the second considers to be in force serves to paragraph of Article 76 with a view ensure the application of the Treaty, to adapting the provisions of Chapter and cannot constitute a misuse of VI of Title II of the Treaty in the procedure. light of experience, cannot have the 3. It cannot be presumed that provisions effect of causing these provisions to of the Treaty have lapsed. The lapse, either immediately or at any Member States agreed to establish a subsequent date. Until tie Council's Community of unlimited duration, decision, the provisions of Chapter having permanent institutions invest­ VI are only maintained on a tem­ ed with real powers, stemming from a porary basis, so that at any moment limitation of authority or a transfer there may be substituted for them a of powers from the States to that set of new provisions constituting a Community. Powers thus conferred different supply system. cannot, therefore, be withdrawn from 5. It is not possible to justify a failure the Community and restored to the to fulfil an obligation by invoking the Member States except by virtue of uncertainty of the legal situation in an express provision of the Treaty. which the defendant Member State 4. The object of Article 76 of the Eura­ found itself. tom Treaty is to permit the supply 6. Article 141 does not require that system to be adapted to changing other Member States should have circumstances, and cannot, therefore, been prejudiced as a condition for the be interpreted as depriving the Com­ use of the procedure for a declaration munity of a means of action designed of a failure to fulfil an obligation.

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

gives the following

JUDGMENT

Issues of fact and of law

I — Summary of the facts and It also regulates certain of the means procedure of cooperation between the Agency and the competent authorities of the Mem­ 1. By Article 2 (d) of the Euratom ber States. Article 55 requires the Treaty, the Community shall 'ensure Member States to communicate or cause that all users in the Community receive to be communicated to the Agency all a regular and equitable supply of ores the information necessary to enable it and nuclear fuels'. The implementation to exercise its right of option and its of this obligation forms the subject- exclusive right to conclude supply con­ matter of Title II, Chapter VI (Articles tracts. Article 56 requires them to ensure 52 to 76), which creates a common that the Agency may operate freely in supply system for ores, source materials their territories, and the third paragraph and special fissile materials. The func­ of Article 70 specifies that the Member tioning of this system is entrusted to an States must submit annually to the Agency with a right of option on ores, Commission a report on the development source materials and special fissile of prospecting and production, on prob­ materials produced in the territories of able reserves and on investments in Member States and an exclusive right mining which has been made or is to conclude contracts relating to the planned in their territories. supply of ores, source materials and 2. The authors or the Treaty took into special fissile materials coining from account the possibility of adaptations or inside the Community or from outside', modifications of the system they were (Article 52 Euratom Treaty), and with establishing. For this reason, Article 76 the duty, after balancing demand against provides that: supply, of meeting the orders it receives On the initiative of a Member State

request made by a Member State. and in particular of Articles 52 and Seven years after the entry into force 64, which give the Agency the ex of this Treaty, the Council may con clusive right to conclude contracts firm these provisions in their entirety. relating to the supply of nuclear Failing confirmation, new provisions materials coming from inside the relating to the subject-matter of this Community or from outside, of Article Chapter shall be adopted in accord 57, which gives the Agency a right ance with the procedure laid down in of option on such materials, and of the preceding paragraph.' Article 60, which imposes the obliga This period of seven years expired on tion on users and producers in the

year. of Chapter VI of the Euratom Treaty lapsed on 31 December 1964, since 3. On 24 April 1969 the Commission these provisions have not up to now addressed to the French Atomic Energy been either confirmed or amended by Commission (CEA) a letter in which it the Council of Ministers of the Euro stated inter alia: pean Communities in application of 'The Commission has been informed Article 76 of this Treaty'. of the direct conclusion by the CEA The Commission replied to the French of contracts concerning the import of Government on 12 March 1970 that it 3 555 kg of 1.15% enriched uranium did not share that government's view. coming from the Kahl centre, of It added that the annual reports prescrib quantities of plutonium coming from ed by Article 70 were no longer being Canada, of 116 kg of plutonium com submitted to it, and that, in addition to ing from ENEL1 and the supply to the contracts mentioned in the letter of CNEN2 of about 2 000 kg of 4.7% 24 April 1969, a contract for the

1 — Ente Nazionale per l'Energia Elettrica. 2 — Comitato Nazionale per l'Energia Nucleare.

COMMISSION v FRANCE

opinion at the hearing on 18 November «—Declare the action of the Com­ 1971. mission inadmissible;

JUDGMENT OF 14. 12. 1971 — CASE 7/71

time-limits to in Article 70, which it allegedly did not communicate to the Commission, is The consequences of exceeding the time- published annually in the reports of the limits set out in Article 76 are twofold: French Atomic Energy Commission the Council is guilty of a failure to act which are sent to the Euratom Com and the Member States are in an mission. equivocal situation. It does not deny that the import, export (i) With regard to the Council's failure and processing contracts were concluded to act, it was not obliged to confirm the by the AEC without the intervention of provisions of Chapter VI but if it did the Agency. not confirm them it was under an obliga The applicant replies that the informa tion to amend them as the terms of tion supplied in the CEA reports does Article 76, 'new provisions shall be not contain all the information required. adopted', are mandatory.

This would to confirm or amend these provisions deprive a decision of confirmation of any must be taken before 31 December scope even if the continued application 1964, or that it must be taken at the without confirmation was qualified as latest at this time, or that it must be 'provisional' as opposed to 'definitive' taken after this date, but within a suffi applicability which would be produced ciently short time, otherwise it would by a decision of confirmation. no longer be 'seven years after'. The Moreover, implied confirmation would defendant maintains that the first inter be contrary to the wishes of the Council pretation is the correct one and that this, which undertook to amend the provisions moreover, is in conformity with the de which had become inappropriate in the cided cases of the Court which, in its opinion even of the Commission.

visions confirmed by the means of this provisions of Chapter VI remain in present action, it is admitting its own force. failure to act in that it did not submit (a) The interpretation of Article 76 to the Council any proposal to this effect. The word 'after' cannot be interpreted In these circumstances, the Member as referring to a date before 31 Decem States were no longer under an obliga ber 1964 as the authors of the Treaty tion to apply the provisions of Chapter intended to try out the supply rules for VI all the less so as they had in fact a period of at least seven years.

taken. Treaty may not be transposed to Article (iii) Doubtless the slowness of the Coun 76 as in this provision the event is not cil led to the creation of a legal void but the final date for the implementation of this fact is not enough to rule out the obligations imposed on Member States point of view adopted by the defendant. but the date of commencement for As this legal void had considerable effects establishing an institutional procedure one might be tempted to fill it in by for adopting new provisions which by reference to the doctrine of 'l'effet utile'. its very nature implies time-limits. However, this is not the case, on the one The Commission believes that it recon hand because in practice there is no ciled its obligation to allow the period inconvenience, since the provisions which of seven years to run as far as possible the Commission seeks to maintain have and the necessity to finish on a date as lost all significance, and on the other close as possible to the limit of 1 January hand because the provisions giving rise 1965 by submitting its proposal to the to the legal void have the reasonable and Council on 28 November 1964. valuable effect of preventing the exten (b) The consequences of exceeding the sion of the purely formal application of

JUDGMENT OF 14. 12. 1971 — CASE 7/71

In this set out in the second paragraph of case there is only a divergence of inter Article 76 also requires the concept pretation on the legal consequences of the Council's failure to take a decision. of provisional applicability. Indeed the fact that any confirmation may The Commission clearly defined its posi be made by a simple majority deci tion on this point as from 28 November sion of the Council in contrast with 1964. For its part as from November the requirement of unanimity for the 1965 the French Government adopted adoption of new rules shows that this a clear position by unilaterally deciding confirmation can only, ratione to refuse to be subject to the application materiae, relate to provisions which of Chapter VI, thus taking the law into have provisionally remained in force

The alternative As from 1 January 1965 the provi sional application of the provisions of decisions set out in the second para Chapter VI is essentially of a pre graph of Article 76 require in any carious nature, liable to be altered event an express and formal measure of the Council. at any moment, while confirmation would exclude any subsequent altera — The defendant is wrong in arguing tion. Moreover, in order not to pre that if the authors of the Treaty had judge decisions of the Council, the intended that the former provisions provisional supply scheme should be of Chapter VI should continue to applied in such a way that the future apply after the expiry of the time- developments may be left open as limit set out in Article 76, they far as possible. would have inserted this expressly. 3. In its rejoinder the defendant replies The argument rebounds on the as follows: defendant.

COMMISSION v FRANCE

These cir in force indefinitely or else, preferring cumstances have caused the Community the interpretation chosen by France, to give up its idea of undertaking a they were to regard these rules as having long-term supply policy as the Member lapsed. In both cases, however, they did States preferred to rely for their supplies no more than interpret the Treaty with on the agreement concluded in 1958 out its being possible to allege in one between the United States and Euratom. case more than the other that they were France on the other hand, anxious not taking the law into their own hands. to be dependent on a foreign monopoly, This difference of opinion could not be decided to establish an isotope separa resolved by condemning one of the tion plant itself. opinions as the Council alone could say From this time it became impossible to whether the former provisions should apply the original provisions of Chapter have been retained or not after more VI in toto since the other Member than six years. There was, therefore, an States wished to benefit from the 'dump equivocal situation and a Member ing' prices on the international market State could not be required to apply a rather than to purchase the temporary rule which, for lack of confirmation, was surpluses at the normal price resulting clearly no longer applicable. from the secured supply policy adopted (ii) The failure to apply Chapter VI is a by France. consequence of the absence of the con

1. The defendant alleges that the appli formal role in the conclusion of supply cant has no interest, whether practical contracts for enriched uranium granted

by the American Atomic Energy Com the triptych, common supply, super mission which held an absolute mono vision and ownership, of special fissile poly for such supplies. materials. The Commission was actively Since the Commission itself had to give working towards the effectiveness of the up the application of Chapter VI if only safeguard against diversion set out in in a partial and purely formal manner, Chapter VII of the Treaty. the defendant deduces that it cannot be Moreover, the Commission did not fail found guilty of any default. Moreover to prepare a long term common supply no Member State had suffered any sub policy even if, for reasons of price, it stantial economic prejudice from the was unable to accept in 1959 an offer attitude of France. from the French Commission for the (b) Nor is there any legal interest in supply of enriched uranium. finding France guilty since the condi (b) Furthermore the Commission did tions for the adoption, putting into not content itself with" a purely formal force, and the application of the new application of Chapter VI. Chapter VI can only be altered by a — The fact that the Agency has the decision of the Court of Justice. exclusive right to conclude supply

76). This system, which was in the first period where supply was particularly place based upon the satisfaction of the abundant, Article 5 of the Regulation needs of consumers in order to supply of 5 May 1960 established a simple them at the market price (Article 67) procedure putting the users in direct precisely enabled this objective to be contact with their chosen supplier. achieved. The agreement concluded with This simplified procedure, which the USA in 1958 enabled Europe to be until now has not been contested, in supplied with enriched uranium on no way implies that the Agency good terms. renounced the exercise of the duties The fact that, according to the applicant, assigned to it by the Treaty (Articles France built its own isotope separation 52, 60, 67 and 68) and does not plant to cover the requirements resulting mean that the users are given absolute from its military programme in no way freedom. affects the interest which existed from Negotiation is only left to the users the beginning and still exists in dealing under the double condition that they with the American monopoly through a respect the general conditions issued system of joint buying. Moreover by the Agency relating to the content Chapter VI is an indispensible panel of of contracts and. that they submit

these contracts to the Agency which, standpoints. To the argument invoked without being strictly speaking a by the French Government as to the party, is deemed to conclude them if absence of prejudice resulting from it does not object to them within the position of that government, the eight days. Comission further replies that the This substantial formality, without French decision breached the un­ which the contracts are void on the animity of action which the Member ground of public policy, is a means States sought to ensure by estab­ of exercising the exclusive right lishing the Community, particularly granted to the Agency by Article 52 in the area of supply policy in ex­ of the Treaty. ternal markets which could also place — For special fissile materials the role the relevant undertakings of other of the Agency essentially consists in Member States in a position of assuming control of deliveries made serious inequality. under the agreement between Eura­ — The Commission concludes by stating tom and the United States. that by encouraging its nationals to To the complaints of the French evade the application of Chapter VI Government that the balancing of the French Republic established a supply and demand was not applied discriminatory situation to which the in this sector, it may be replied that Commission was under an obligation each negotiation by the Community to put an end. for the revision of the quantitative 3. In reply to the objections raised by limits set in the American agreement the applicant, the French Republic de­ was always preceded by careful veloped its arguments relating to the in­ investigations by the Agency amongst appropriateness of the common supply the users in the Community who system and the purely formal nature of were enabled in good time to make forecasts as to their needs. the intervention by the Agency. The negotiation of the conditions (a) With regard to the first point, it applicable was therefore made in alleges that there was never any com­ tripartite form (USAEC, Agency, mon purchase of natural uranium and users). that while the Supply Agency always intervened in contracts concluded with In addition demands from the users did not exceed the maximum avail­ the Americans for special fissile materials able under the Euratom United there had nevertheless never resulted any common contracts with several users. States Agreement. In this respect the Commission states that it did not This was due to the conditions set out authorize the conclusion of contracts by the USAEC (Atomic Energy Com­ establishing commitments of twenty mission) which, for each purchase, re­ to twenty-five years to the American quired the name of the user and the use seller without possibility of giving for which the special fissile material was notice of termination. intended.

reply of the Commission that these con avoiding in certain market situations tracts contain clauses for giving notice the application of the balancing of in compensation for the length of the supply and demand in transactions contracts neglects to mention that this relating to natural uranium. right of giving notice was provided only — With regard to special fissile mater in favour of the users and not of the ials, too, there was no balancing of Agency itself. supply and demand; thus in par The links set up by Euratom and the ticular one Member State had been practices of the Agency reveal themselves able to obtain from the United States to be extremely unfavourable not only the chance of acquiring uranium for for the users but also for Community stockpiling without the Agency's in producers. forming other users who might have

From this the defendant deduces that ent functioning of the safeguard laid the Commission had no interest in down in Chapter VII since the provisions taking proceedings since it did not of this chapter are self-sufficient. itself apply provisions which had in (b) With regard to the second point, the fact become inapplicable. defendant re-emphasizes that the Agency had ceased to apply Chapter VI: D — The delay in bringing the action — For natural uranium the simplified 1. The French Republic observes that

The Commission replies that the pro Moreover, the defendant alleges that cedure under Article 141 is not subject in practice, the Agency never exer to set time-limits and that there is a cised the diminished power of super margin of discretion taking into account vision remaining to it under the considerations of suitability before put Regulation of 1960, particularly by ting it into operation. the possibility of rejecting certain For a long time the Commission has contracts. thought that the procedure under the Moreover, in a note of 30 Novem

COMMISSION v FRANCE

Grounds of judgment

1 By an application lodged at the Registry on 11 March 1971, the Commission has brought before the Court, under Article 141 of the Euratom Treaty, an action seeking a declaration that the French Republic has failed to fulfil its

JUDGMENT OF 14. 12. 1971 — CASE 7/71

obligations under the provisions of Title II, Chapter VI, of that Treaty, by refusing to submit to the Commission the annual reports prescribed by Article 70 of the Treaty, by concluding, without knowledge of the Supply Agency, contracts relating to the importation from the Federal Republic of Germany, from Canada and from Italy, and to the supply to Italy of special fissile materials, and finally by refusing to notify to the Agency the existence of an undertaking relating to the processing of uranium imported from South Africa, and the quantities involved in the delivery in question.

Admissibility

2 The Government of the French Republic challenges the admissibility of the action and contends that it has been commenced too late.

COMMISSION v FRANCE

9 The French Government maintains that the action is inadmissible on the further ground that it constitutes a misuse of procedure.

10 The situation created as from January 1965 by the fact that the Council had neither confirmed the provisions of Chapter VI of the Treaty, nor adopted new provisions, ought to have given rise to an action on the ground of failure to act directed against that institution.

11 The French Government further alleges that by substituting for this an action for a declaration of a failure to fulfil Treaty obligations directed against a Member State, the Commission is seeking to have it decided 'that Chapter VI, although not confirmed by the Council, has remained applicable', whereas it is necessary on the contrary 'to reinforce the obligation to act which the Treaty imposes on the Council'.

12 The fact that the Council has not reached a decision on the question whether it was necessary, after 31 December 1964, to confirm the provisions of Chapter VI or to substitute for them a different supply system, cannot pre­ vent the Commission from ensuring respect for provisions which it considers to be still in force.

13 Therefore, in so far as the Member States were, for the period in question, bound to comply with the provisions of Chapter VI of the Treaty—on which the Court will have to decide hereafter—an action seeking to establish that a Member State has not complied with the obligations arising from the said provisions serves to ensure the application of the Treaty, and cannot constitute a misuse of procedure.

17 Hence, it is said that the failure to apply them cannot amount to a failure to fulfil an obligation within the meaning of Article 141.

18 It cannot be presumed that provisions of the Treaty have lapsed.

19 The Member States agreed to establish a Community of unlimited duration, having permanent institutions invested with real powers, stemming from a limitation of authority or a transfer of powers from the States to that Com­ munity.

20 Powers thus conferred could not, therefore, be withdrawn from the Com­ munity, nor could the objectives with which such powers are concerned be restored to the field of authority of the Member States alone, except by virtue of an express provision of the Treaty.

21 This is not within the scope of Article 76.

22 The object of this provision, which is placed at the end of Chapter VI, and which puts into effect the general obligation imposed on the Community institutions by Article 2 (d) to ensure that all users receive a regular and equitable supply of ores and nuclear fuels is precisely to enable the supply system to be adapted to changing circumstances and cannot therefore be interpreted as depriving the Community of a means of action designed to achieve one of the objectives of the Treaty.

28 Until the decision is taken either to make the existing rules permanent, or to replace them by new rules, the provisions of Chapter VI are only maintained on a temporary basis, so that any moment there may be substituted for them a set of new provisions constituting a different supply system.

29 The submission based on Article 76 of the Treaty must therefore be rejected.

(b) On the factual basis of the alleged contraventions

30 The Commission complains, first of all, that since 1965 the defendant has failed to submit to the Commission the annual reports prescribed by Article 70 of the Treaty.

31 The French Government states that the information required to be furnished under this article is published annually in the reports of the French Atomic Energy Commission, which are sent to the Commission.

32 The applicant has then contended that these reports do not 'cover the whole of the information required', without however specifying in what respect the information contained in the reports of the French Commission is insufficient.

37 Since the French Government has not disputed that the transactions alleged have been effected without the intervention of the Agency, it must be held that the prerogatives of the latter have not been respected.

(c) On other circumstances which might exclude a declaration of a failure to fulfil an obligation

38 The French Government then contends that, even if the provisions of Chapter VT have remained in force, they have always been applied in a purely formal manner without real effect.

39 Since the alleged defaults essentially concern the purchase or sale of special fissile materials, the defendant government objects that the quasi-monopolistic position of the principal supplier of the Community has prevented in this sphere any balancing of supply and demand, whereas it was just this balanc­ ing which justifies the Agency's right of option and its exclusive right to conclude supply contracts.

40 There is no doubt that, by reason of the structure of the market in special fissile materials, the balancing of supply and demand by the intervention of the Agency has not, in the course of the period in question, resulted in establishing a market price.

41 It does not follow, however, that the intervention of the Agency, as a Com­ munity body acting on behalf of all users, no longer makes any contribution to the attainment of the objectives of the Treaty.

46 In these circumstances, according to the French Government, there can be no failure to fulfil an obligation within the meaning of Article 141.

47 It is not possible to justify a failure to fulfil an obligation by invoking the uncertainty of the legal situation in which the Member State found itself, and against which the Treaty affords it means of action.

48 On the one hand, the general obligation of cooperation imposed by Article 192 should have induced the defendant to put an end to the uncertainty on which it relies, by making use of the means offered to it by the Treaty, which puts at the disposal of each interested State, particularly by Article 148, suitable methods for remedying any lack of action on the part of the Council.

49 On the other hand, the procedure for a declaration of a failure on the part of a State to fulfil an obligation itself affords a means of determining the exact nature of the obligations of the Member States in case of differences of interpretation.

50 Finally, Article 141 does not require that other Member States should have been prejudiced as a condition for the use of the procedure for a declaration of a failure to fulfil an obligation.

51 The submission must therefore be rejected.

Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Atomic Energy Com­ munity, especially Articles 52, 55, 57, 64, 70, 75, 76 and 141, 148 and 192; Having regard to the Protocol on the Statute of the Court of Justice of the European Atomic Energy Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities,

THE COURT

hereby rules:

I. By concluding contracts without consulting the Supply Agency relating to the import of 3 555 kg of 1.15% enriched uranium coming from the Kahl centre, quantities of plutonium corning from Canada, 116 kg of plutonium coming from the Ente Nazionale per l'Energia Elettrica, and the supply to the Comitate Nazionale per l'Energi Nucleare of about 2 000 kg of 4.7% enriched uranium and

by failing to notify to the Supply Agency the existence of an under­ taking relating to the processing of uranium imported from South Africa and the quantities involved in the delivery in question,

the French Republic has failed to fulfil its obligations under Tide II, Chapter VI, of the Treaty establishing the European Atomic Energy Community, especially Articles 52, 55, 57, 64 and 75;