C-49/88

Applicable regulations (paragraphs 4 and 5) I - 3207

Submissions in the application (paragraph 6) I - 3207

II — Inadequacy of the reasons given (second submission) (paragraphs 8 to 13) I - 3207

III — Manifest error of appraisal (third submission) (paragraph 14) I-3208

First complaint: Lower margin of undercutting by Saudi Arabian exports (paragraphs 15 to 24) I . 3209

Second complaint: Failure to extend the investigation to imports from Canada (paragraphs 25 to 28) I - 3211

* Original language French-

I-3205

OPINION OF MR DARMON — CASE C-49/88

V — Denial of the right to a fair hearing (first submission) I-3219

Exposition of the three specific complaints (paragraphs 61 to 70) I - 3219

General review of the problems associated with the right to a fair hearing (paragraphs

Consideration of the position under American law and its possible transposition to Community law (paragraphs 114 to 120) I - 3231

Conclusion (paragraph 121) I - 3234

Mr President, I — General Members of the Court,

1. In the present action the Saudi Arabian 2. The applicant companies are joint companies Al-Jubail Fertilizer Company and ventures with a common shareholder, Saudi Saudi Arabian Fertilizer Company (here- Basic Industries Corporation, a company set inafter referred to as 'the applicants') seek a up in 1976 by the Saudi Government. declaration that Article 1 of Council Regu- According to the applicants their first lation (EEC) No 3339/87 of 4 November exports of urea to the Community began in 1987 imposing a definitive anti-dumping 1985. From May 1986 onwards the duty on imports of urea originating in Libya applicants chose to stop exporting urea in and Saudi Arabia 1 is void in so far as it order not to expose themselves to the falling concerns them. prices on the Community market.

1 — OJ 1987 L 317, p. 1.

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5. It should be added that Council Regu- lation (EEC) No 450/89 of 20 February 1989, 6which is the subject of an action for II — Inadequacy of the reasons given 2 — OJ 1986 C 254, p. 3. 3 — Commission Regulation (EEC) No 1289/87 of 8 May 1987 imposing a provisional anti-dumping duty on imports of urea originating in Czechoslovakia, the German Demo- cratic Republic, Kuwait, Libya, Saudi Arabia, the USSR, Trinidad and Tobago, and Yugoslavia (OJ 1987 L 121, p. 8. The second submission consists of a 11). 4 — Article 1(2) of Regulation No 1289/87. single complaint. The applicants accuse the 5 — Council Regulation No 2691/87 extending the provisional Council of failing to provide an adequate anti-dumping duty imposed on imports of urea originating statement of reasons for having replaced the in Czechoslovakia, the German Democratic Republic, Kuwait, Libya, Saudi Arabia, the USSR, Trinidad and provisional anti-dumping duty fixed by Tobago, and Yugoslavia (OJ 1987 L 254, p. 20). reference to a threshold price with a 6 — Imposing a definitive anti-dumping duty on imports of urea originating in the United States of America or definitive ad valorem duty. Venezuela and adjusting the definitive anti-dumping duty for Saudi Arabia laid down by Regulation (EEC) No 3339/87 (OJ 1989 L 52, p. 1). 7 — Article 2.

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O P I N I O N O F MR DARMON — CASE C-49/88

11. It may also be recalled — without dwelling on the point — that the definitive III — Manifest error of appraisal anti-dumping duty is not a correction or a revision of the provisional duty. The only connection between the two relates to the amount of the duty definitively collected, 14. The third submission calls for an which may not exceed the amount assessment of the substantive legality of the provisionally estimated or the injury suffered by Community industry. 10 11 —Judgment of 27 March 1990 in Case C-189/88 Cartororica v Ministero delle Finanze ([1990] ECR 1-1269, at paragraph 25), which deals with the identical provisions of Article 13 of Council Regulation (EEC) No 3017/79 of 20 December 8 — At that time, Council Regulation (EEC) N o 2176/84 of 23 1979 on protection against dumped or subsidized imports July 1984 on protection against dumped or subsidized from countries not members of the European Economic imports from countries not members of the European Community (OJ 1979 L 339, p. 1) the basic regulation Economic Community (OJ 1984 L 201, p. 19). in force at the time; see also the judgment of 1 1July 1990 9 — Article 3(2) of the contested regulation. in Case C-305/86 Neolypev Council ([1990] ECR 1-2945, 10 — See Article 13(3) of the basic regulation. at paragraph 58).

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AL-JUBAIL FERTILIZER v COUNCIL

contested regulation. The submission refers another, the fact that the export prices to the presence of manifest errors of charged by an undertaking in one of those appraisal in the adoption of the definitive countries are lower than those of an under- anti-dumping duty on Saudi Arabian taking established in another non-member imports. It comprises four heads of country in no way rules out the possibility complaint. that the second undertaking may be using a larger dumping margin.

18. The amount of the definitive anti- dumping duty on imports from Libya was fixed in Article 1(2) of the contested regu- lation at 34%. The replies to the ques- tionnaire given by two Italian importers, 13 16. It is true that the broad logic of the on the other hand, show that as far as they anti-dumping provisions is to identify were concerned the prices charged on the imports suspected of being dumped by Community market for Libyan urea were taking into account — initially at considerably lower than those for Saudi least — the situation on both the domestic Arabian urea. 14 As we have seen, the market and the market for exports to the applicants also point to the Eurostat stat- Community in the non-member country istics and the figures regarding price under- concerned. 12 Moreover, in view of the fact cutting which appear in the anti-dumping that production costs in particular may vary complaint. widely from one non-member country to 13 — Annex 12 to the application. 12 — The Court has recently reseated what is meant by 14 — Cereal Toscana SpA paid USD 118 (C&F price) for Saudi 'dumping', in its judgment of 11 July 1990 in Case Arabian urea and USD 82 (C&F price) for Libyan urea, C-157/87 Eleclroimpex and Others v Council / [1990] ECR whilst Attilio Cormagni 'AC' SpA shows prices of USD 3021, at paragraphs 21 and 22 84, 78, 75 and 69 in respect of Libyan urea

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OPINION OF MR DARMON —CASE C-49/88

'the anti-dumping proceeding concerning 23. It must therefore be concluded that, the importation of electronic typewriters even if discrimination between imports from manufactured by Nakajima subsequently led Libya and imports from Saudi Arabia were to the adoption of Commission Decision established, such discrimination could at 86/34/EEC 1 6 of 12 February 1 9 8 6 . . . most call in question the anti-dumping duty

17 — Case 301/85, cited above, at paragraph 21; see also Joined 15 — Judgment of 5 October 1988 in Case 301/85 Sharp Corporation v Council [1988] ECR 5813, at paragraph 22; Cases 273/85 and 107/86, cited above, at paragraph 54. judgment of 5 October 1988 in Joined Cases 260/85 and 18 — Case 301/85, cited above, at paragraph 22; see also Joined 106/86 TEC vCouncil[1988] ECR 5855, at paragraph 18; Cases 260/85 and 106/86, cited above, at paragraph 18; judgment of 5 October 1988 in Joined Cases 273/85 and and Joined Cases 273/85 and 107/86, cited above, at 107/86 Silver Seiko v Council [1988] ECR 5927, at paragraph 55. paragraph 55. 19 _ [1988] ECR 5844; see also his Opinion in the TEC case, 16 — The decision closing the proceeding. [1988] ECR 5894.

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AL-JUBAIL FERTILIZER v C O U N C I L

on Libyan imports, to the extent that they 26. The Council explains that the had enjoyed an unjustified preference, but Commission did not wish to extend the could not lead to the annulment of Regu- investigation to imports from Canada lation No 3339/87 to the extent that it because, first, they were not mentioned in applies to Saudi Arabian imports, in as far the complaint and, secondly, they amounted as it was adopted on the basis of findings in volume to only 0.7% of the Community correctly made and in accordance with the market in urea. It should be recalled that, as basic regulation. 20 a letter of the Commission dated 13 August 1987 22 shows, the market share of Saudi Arabian firms in the Community was 3.11% for the first nine months of 1987.

I-3211

OPINION OF MR DARMON — CASE C-49/88

29. In the third complaint the applicants relatively stable during the first nine months claim that inadequate account was taken of of 1986, and about the sole domestic the declining production costs of the producer in Ireland, whose production costs Community industry. It is not denied that rose by 41.6% between 1984 and 1985. those costs did decline in the course of the Similarly, recital 31 in the preamble to reference period, by 16% in Italy, 3 1 % in Regulation No 1289/87 imposing the France and 20.4% in Ireland for the first provisional anti-dumping duties states that nine months of 1986 as compared with the the production costs per unit of one of the previous year. 24 Specifically, the applicants two Italian producers were 15% higher in criticize the Commission's use of an average 1985 than in 1984, whereas the average net of those production costs during the investi- sales price decreased by approximately 2 % gation period, inasmuch as such a method during the same period. On the other hand, produces, at the end of that period, a higher whilst the costs of production per unit average cost than the production cost actually decreased by 16% during the first observable at the time, and hence a higher nine months of 1985 as compared with the anti-dumping duty than was necessary to first nine months of the previous year, the remove the injury. It is alleged that the average net price per unit after discount had Community institutions, by acting in that fallen by 27%. According to recital 32 in manner, infringed the provisions of Article the same regulation, the average production 13(3) of the basic regulation. costs of one of the French producers at its plant remained practically stable whereas the French producer whose production costs effectively decreased by 3 1 % incurred a fall in profits of approximately 83%.

33. Consideration of Article 4 of the basic time be able to recover the market shares it regulation leads me to believe that the had recently lost. Council's view is the only acceptable one. The rules laid down by Article 4 require inter alia an examination not only of the volume and prices of the dumped imports 35. The Court has, indeed, already (the volume and prices of non-dumped dismissed that possibility in its judgment in imports or contraction in demand being Toyo v Council, 26 in which it held as excluded, as far as their effects are follows : concerned, from the determination of the injury) but also of the resultant impact on the Community industry concerned. That examination can only be conducted at the same time as the examination to determine 'Regulation No 3107/79 27 makes no the dumping margin. That is, indeed, what provision for the taking into account of Article 7(1 )(c) of the basic regulation voluntary price increases made after the expressly requires when providing that the period covered by the investigation. The investigation, which must normally cover a decision-making process includes an investi- period of not less than six months gation, the initiation and course of which immediately prior to the initiation of the are governed by Article 7. By allowing proceeding, 'shall cover both dumping . . . interested parties to make known their and injury resulting therefrom'. 25 The view views, the investigation is intended to allow put forward by the applicants is therefore the establishment of incontrovertible directly at odds with the provisions of the evidence providing a basis for the termi- basic regulation. It also conflicts with the nation of the proceeding or the imposition provisions of the Second GATT Anti- of an anti-dumping duty. It is, at the same Dumping Code, Article 5(2) of which time, clear from the 14th and 15th recitals specifies that 'the evidence of both dumping in the preamble to the regulation that the and injury shall be considered simul- investigation procedure should not prevent taneously . . . during the course of the rapid and efficient action by the investigation . . . '. Community. In order to reconcile those two objectives, it is essential that the period covered by the investigation, during which the facts to be established occurred, should be of specified and limited duration.' 28

were infringed, it should be noted that price 37. Those reasons are valid in respect not increases decided upon after the end of the only of the export prices but also of the period covered by the investigation may, production costs of the Community where appropriate, give rise to a review industry. The argument put forward by the pursuant to Article 14 of that regulation or applicants that exporters in non-member result in the refunding of the duty collected, countries have no control over production in accordance with Article 15 thereof. It is costs is irrelevant. Although they cannot, of therefore impossible to accept that the anti- course, control those costs in the way that dumping proceeding may not be terminated they control the level of their export prices, or a decision to impose a definitive anti- the fact remains that their conduct as dumping (duty) may not be adopted merely traders, and in particular their pricing policy because the companies which are subject to after the end of the investigation period, the provisional anti-dumping duty have may temporarily alter the extent of the made voluntary price increases after the end injury suffered by the Community of the period covered by the investi- producers, as those producers recover for a gation.' 29 while the market shares lost on account of dumped imports.

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AL-JUBAIL FERTILIZER v COUNCIL

to Regulation No 450/89 states that 'review consideration dumped imports made after of those measures led the Commission to the end of the investigation period'. recalculate the definitive anti-dumping duty for Saudi Arabia on the basis of the new threshold of injury determined in this proceeding, with a view to taking account of changes in the costs of production of the 42. The applicants claim in the first place representative Community producer'. None that the provisions of Anicie 7(1)(c) relate the less, in view of the marked changes in to the determination of the dumping margin production costs recorded during 1984 and rather than that of the injury. 1985 (for example a decrease of 3 1 % in the production costs of a French producer) which were pointed out above, there is nothing a priori abnormal in a reduction of the anti-dumping duty from 40% to 12.8% as a consequence of the decline in the 43. As was observed above, the very production costs of the Community industry wording of Article 7 appears to rebut the over twelve months — subject, however, to applicants' claim ('such investigation shall the observations regarding the confiden- cover both dumping or subsidization and tiality of those costs which I propose to injury resulting therefrom' 32). make when considering the submission alleging denial of the applicants' right a fair hearing.

44. The applicants maintain in the second place that the basic regulation does not prevent consideration being given to events occurring after the end of the investigation 40. The fourth complaint refers to imports period. They cite a number of Commission of urea from Abu Dhabi, Libya and the decisions 33 and the judgment in the Gerlach Soviet Union by Italian producers at case. 34 dumped prices. It is claimed that, by refusing to take those imports into account, the Commission committed an error of appraisal in determining the injury.

46. However, the discussion above of the time at which the injury had to be assessed, and in particular the reference to the IV — Error of law and distortion of the judgments of the Court in the Toyo and facts Nippon Seiko cases, are equally valid in this connection as well. Imports by Community producers after the end of the investigation period were not to be taken into consideration by the Community institutions when determining the injury. 48. The fourth submission alleges an error of law and distortion of the facts. It is expressed as two complaints based on the refusal of the Community institutions to grant allowances to take account, first, of the difference in the levels of trade at which urea was sold in Saudi Arabia and the Community respectively and, secondly, of 47. As a strictly subsidiary matter, I would the quantity discounts allowed for high- point out that according to the TEC and volume sales. Silver Seiko judgments imports by Community producers at dumped prices do not contribute to the injury suffered by the Community industry provided that their volume remains relatively low. 36 Those cases concerned imports carried out to fill gaps in the range of products of the 49. On the first point the applicants argue Community undertakings in question. that most sales of urea in Saudi Arabia are However, I consider that other grounds of made directly to farmers. In the justification are not ruled out, in particular Community, however, the purchasers are (as in this case) a trader's desire not to sell trading companies, and an industrial his own products at uneconomic prices but concern which used urea as a raw material in the manufacture of glue. The request for 36 — Joined Cases 273/85 and 107/86, cited above, at paragraph an allowance under Article 2(10)(c) of the 39; Joined Cases 260/85 and 106/86, cited above, at paragraph 47. basic regulation was rejected.

53. Those facts as a whole form the necessary basis for inter alia the submission This request was not granted because it was alleging a denial of the right to a fair considered that it was not proven in a satis- hearing. As part of the first submission the factory way that there was a difference in applicants plead what may be termed a the level of trade since the bulk of the sales, 'substitution of grounds'. Pursuant to Article both on the domestic market and on the 2(10)(c) of the basic regulation, which expon side, was made to end-users. provides that differences in the level of Furthermore, it was admitted by the trade may not qualify for adjustment except producer/exporter that the customer 'in so far as no account has been taken of concerned in Saudi Arabia had not them otherwise', the Commission in its benefited from such discount during the letter of 13 August 1987 37 rejected the period under investigation.' request for an adjustment on the ground that 'this request appears to be a repetition of the argument discussed above concerning differences in prices resulting from differences in quantities'. As was observed above the only reason given in this regard in 51. For its part, the Council contends that the contested regulation is the lack of there are no differences in level of trade evidence, no reference being made to the between the sales in Saudi Arabia, made fact that the adjustment in question had mainly to farmers, and those in the been taken into account in another context. Community to industrial concerns using the I propose to consider the point later, urea as a raw material, inasmuch as the urea together with the other complaints based on is not resold as such on the market and may the denial of the right to a fair hearing. be said to disappear from commercial channels. Accordingly, the Council argues 37 — Application, Annex 9.

55. Recital 18 of the contested regulation 57. In their reply the applicants note that the original questionnaire refers to '9.1.4%' contains some reference to that request: and not '9.14%', on account of a typo- graphical error. 38 They do not, however, conclude that the exact figure is 91.4% but confine themselves to asserting that sales subject to quantity discounts exceeded 20%, without supplying the precise figure. 'The producer/exporter in Saudi Arabia requested that an allowance be granted pursuant to Article 2(10)(b)(i) of Regulation (EEC) No 2176/84 in order to take account of the differences in the quantities sold on the domestic market and for exports 58. However, in connection with that to the Community. To this end it was complaint the application also refers to the suggested that the quantity discount, which denial of the right to a fair hearing. The was granted on the domestic market for applicants maintain that during the investi- sales of 5 000 tonnes or more, should be gation the Commission never cited lack of applied to all domestic sales in order to evidence, and had withheld the allowance make them comparable with the quantities requested solely because it had already been exported. taken into account in the determination of the normal value, through the use both of the reduced prices for large quantities and of the usual prices for low-volume sales. The problem of lack of evidence was raised for the first time in the preamble to the This request was not granted because no contested regulation. convincing evidence was supplied that all the criteria set out in Article 2(10)(b)(i) or (ii) of Regulation (EEC) No 2176/84 were met. The Council points out that account had already been taken of differences in quantities when determining normal value 59. Consideration of recital 18 prompts on the basis of the weighted average of all some further explanation. Whilst the prices actually paid and when making applicants strove during the investigation to adjustments for the differences in the conditions and terms of sale.' 38 —• Annex L to the reply, p. 11.

demonstrate that the refusal to grant an change in the method of calculating the allowance for quantity discounts on the anti-dumping duty, of which they had ground that an adjustment had already been received no prior warning. As was pointed made in the determination of the normal out above, Regulation N° 3339/87 replaced value was mistaken in point of law — citing the provisional duty determined on the basis in particular the most widely accepted legal of the difference between the threshold textbook 39 — recital 18 of the contested price and the export price with a definitive regulation, although mainly based on the duty set at 40% of the export price. lack of evidence, includes a reference to the fact that 'account had already been taken of differences in quantities when determining normal value on the basis of the weighted average of all prices actually paid'. My view is that, regardless of whether the 'substitution of grounds' is absolute or whether there ultimately appears an essential reason for the rejection which had not been discussed during the administrative 62. According to the applicants the denial proceeding, the problems are those asso- of the right to a fair hearing arises from the ciated with the right to a fair hearing. fact that they were first informed of that substitution on the publication of Regu- lation No 3339/87. In dealing with the point the Council has produced a letter dated 8 September 1987 from the Commission to Mr Van Bael, counsel for 60. I shall not at this stage adopt a position the applicants, which the applicants in their on whether there were errors of law or reply claim never to have received. The whether the facts stated were distorted. It is Council also attached to its rejoinder an first necessary to consider the refusals to account of a meeting held in Brussels on 5 grant allowances in terms of a denial of the October 1987 with Mr Abdullab S. Nojaidi, right to a fair hearing, since together with President of the Saudi Basic Industries the other three complaints they form the Corporation Marketing Limited, and Mr basis of the first submission. Van Bael (amongst others). Paragraph 8 of the account contains a summary of the Commission's position, including the following explanation: 'This solution would at least guarantee Sabic of selling a V — Denial of the right to a fair hearing substantial amount to the EEC, whereas a duty of 40% may eliminate Saudi Arabia from the EEC market' and 'ad valorem duty (40%) is significantly lower than dumping margin (55%)'. In their reply the applicants claim that their representatives who 61. According to the first of those three attended the meeting on 5 October 1987 complaints, the applicants, who charged cannot recall any reference to the adoption appreciably higher prices than the other of an ad valorem duty of 40%. They further suppliers of urea for e x p o r t to the note that the alleged communication at that Community, were adversely affected by the interview of the change in the method of calculating the duty was too late having 39 — Bescler and Williams, 'Anti-dumping and Anti-Subsidy regard to the period laid down by Article Law', The European Communities, 1986, reference 4.5.3., pp. 98 10 100. 7(4)(c)(iii) of the basic regulation.

63. The second head of complaint relates to 67. However, the letter of 8 September the failure to reply to the applicants' 1987 contains further explanation regarding questions regarding the determination of the the determination of the threshold of the threshold of injury. The question was injury. Paragraph 2 states: 'It is considered mainly one of determining the production that in so far as Article 13(3) of Regulation costs of the Community producer chosen by No 2176/84 puts a limit on the amount of the Commission for establishing the the duty (i. e. it should not be higher than threshold. what [is] adequate to remove the injury), it refers to the injury suffered during the period under investigation and not to the situation at the moment when the size of the duty is being examined. For this reason 64. The applicants criticize the Commission the level of the minimum price determined for the inadequacy of the information in recital 42 of Regulation No 1289/87 was supplied on this point, particularly as calculated on the basis of the cost of regards the comparison between Saudi production of a representative Community Arabian prices and those of Italian producer during the investigation period producers, the way in which the and not on the basis of the cost of Commission took account of the decline in production at the moment of the imposition production costs in the Community, the of the provisional duty.' Paragraph 8 also period referred to for that assessment, and includes the remark that 'As far as the costs lastly the adjustments required by the higher of production of a representative production costs entailed by a lower use of Community producer are concerned . . . , no capacity due to the loss of export markets. further information can be disclosed due to the confidentiality of such data. However, it is underlined that account was taken of the effects of possible losses of e x p o r t markets', and the passage: 'Average production costs were established with regard to the period 1 65. Here, the Council refers back to July 1985 to 30 September 1986. Such paragraph 8 of the letter of the Commission amounts reflect higher levels at the dated 8 September 1987, which reads 'more beginning and lower levels at the end of the detailed information with regard to the period. Such a method is considered to be calculation of price undercutting is at your fair and reasonable.' disposal, if you so wish'.

69. However, the applicants also criticize 'I agree of course that, in general, no one the lack of precise information about the has a right to be heard during the process of choice of the Community producer — not preparation of legislation such as he has in even the Member State in which that the process of preparation of an adminis- producer is established was given — and the trative decision affecting him individually amount of its production costs. As may also and directly. But, just as it seems to me that be seen in paragraph 8 of the letter of 8 an instrument such as Regulation No September 1987, the Commission pleads in 1778/77 42 is to some extent a hybrid, so reply the confidentiality of such infor- also it seems to me that an anti-dumping mation. investigation may also be, for present purposes, a hybrid. In so far as it may lead to a finding that a particular exporter has been guilty of dumping and, on the basis of that finding, result in the imposition of an 70. Lastly, the third complaint relates to the anti-dumping duty on his products figure used by the Commission in granting nominatim, it has enough of the charac- an allowance for warehousing, which is teristics of a procedure preparatory to a lower than the figure proposed by the decision of individual and direct concern to applicants. In its defence the Council relies him.' 43 on the letter of 8 September 1987 in which the Commission offers to make available to the applicants the figures concerning the allowance for warehousing; that offer was not taken up. Paragraph 6 of the letter of 8 September 1987 does indeed include the remark 'the figures relating to the adjustment granted for warehousing are at your disposal, if you so wish'. 73. For my part I would add that, from the viewpoint of an undertaking, the loss of the Community market as a result of the impo- sition of a high anti-dumping duty — as in 71. In view of all those complaints the this case — has financial consequences Court needs to determine the extent of the which are comparable to those which follow right to a fair hearing enjoyed by persons the imposition of a fine for an infringement involved in the administrative procedure of Articles 85 or 86 of the Treaty of Rome. regarding dumping. As was emphasized at the beginning of this Opinion, the question has yet to be the subject of the many extensive explanations which the Court has given in matters of competition.

'The differences may be explained, at least in part, by the particular nature of this field : the measures are adopted in the form of 77. Article 6 of the Agreement on legislative provisions; the investigation is not Implementation of Article VI of the General necessarily directed at specified under- Agreement on Tariffs and Trade, generally takings but may equally take issue with the known as the Second Anti-Dumping Code, conduct of governments of non-member sets out a number of rights enjoyed by countries... ; every request for the interested parties during the administrative confidential treatment of the information procedure. Article 6(2) provides that: 'The supplied must be observed. Lastly, the authorities concerned shall provide oppor- Community provisions must comply with tunities for the complainant and the the obligations of the Communities under importers and exporters known to be the GATT, which rests on the principle of concerned and the governments of the reciprocity, and there may be justification exporting countries, to see all information for aligning even the procedural rules on that is relevant to the presentation of their those of the other members of that organ- cases, that is not confidential as defined in ization'. 45 paragraph 3 below, and that is used by the authorities in an anti-dumping investigation, and to prepare presentations on the basis of this information.' Under Article 6(7): 'Throughout the anti-dumping investigation all parties shall have a full opportunity for the defence of their interests.' 75. Nevertheless, a principle as general as the one defined by the Court in its judgment in Hoffman-La Roche v Commission,46namely that the Commission may not base its decision on facts, circum- stances or documents on which the party concerned has been unable to make its 78. The basic regulation sought to embody views known, would seem to apply to the rights recognized in the Second Anti- dumping proceedings as well. 47 Dumping Code. Under Article 7(4)(a): 'The complainant and the importers and 44 — 'Le respect des droits de la défense dans le driot adminis- tratif commenantaire' Cahiers de droit européen, 1987, No exporters known to be concerned, as well as 1-2, p. 383. the representatives of the exporting country, 45 — Ibid., p. 387, note 7. may inspect all information made available 46 — Judgment of 13 February 1979 in Case 85/76 [1979] ECR 461, at paragraph 14. to the Commission by any party to an inves- 47 — The same opinion is expressed in Hans-Christoph von tigation as distinct from internal documents Heydebrand und der Lasa 'Confidential Information in Antidumping Proceedings before United States Courts and the European Court', European Law Review, Volume II 48 — Judgment of 20 March 1985 in Case 264/82 [1985] ECR 1986, p. 331. 849.

(aa) be addressed to the Commission in writing, 81. As was noted above, the Council has produced the report of a meeting held at the Commission on 5 October 1987 49 and has set out in its rejoinder 50 extracts of an (bb) specify the particular issues on internal mission report prepared by which information is sought, Commission officials following their verifi- cation visit to Saudi Arabia, together with an internal note which appears to be a report of a meeting held in Brussels on 22 May 1987. (cc) be received, in cases where a provisional duty has been applied, 49 — Rejoinder, Annex 1 not later than one month after 50 — Paragraph 83.

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rectified. Those documents, whose unilateral referred to above 51 should be eliminated character is absolute, cannot be viewed as from the present discussion. having any probative force. No extensive academic research is needed in order to find that, under the legal systems of all the Member States, such documents are not 86. The Council has also produced the treated as proof. letter of 8 September 1987 52 which, as was noted above, the applicants claim never to have received.

84. The information given orally by the though it had taken both those steps when it Commission during a meeting does not sent previous messages to the applicant. In prevent it from submitting an account, if these circumstances and taking into account one has been drafted, for the comments of those who were present. That is not an 51 — See above, paragraph 81. insuperable requirement. The phrase 'as 52 — Defence, Annex II. considered appropriate by the Commission' 53 — See the letter of 13 August 1987, Annex 9 to the application, and the letter of 3 June 1987, Annex 6 to the in Article 7 seems, indeed, to suggest that application.

88. The Court has already found that the production of an unregistered letter cannot, unless it is established that it has heen received by the addressee, 'take the place of proof'. 56 'The high dumping margin is the result of I therefore propose that the Court should one factor. Urea is delivered in Saudi Arabia take no account of the Commission's letter primarily directly to farmers with the of 8 September 1987. producers assuming a number of the costs which would otherwise be incurred by distributors. In the EEC, however, most of Samad Urea was sold to technical users which processed the product into another 89. The conclusion to be drawn is therefore product before selling it to the enduser. that the reason for the refusal to grant Despite very large differences in conditions allowances for quantity discounts and the and terms of sale, quantities sold, and the difference in level of trade, based essentially 57 — Annex 8 to the application. 54 — Judgment of 5 June 1980 in Case 108/79 [I980J ECR 58 — Annex 6 to the application. 1769, at paragraph 7, emphasis supplied. 59 — Since the publication of the regulation imposing a 55 — Judgment of 26 November 1981 in Case 195/80 [1981] provisional duty had taken place on 9 May 1987, any ECR 2861, at paragraph II written request for information was in principle, pursuant 56 — Judgment of 11 Mav 1989 in Joined Cases 193 and 194/87 to Article 7(4) (c) (i) (cc) of the basic regulation, inad- Muurinen v Cono of Auditori [1989] ECR 1045, at missible after midnight on 9 June 1987, 'extensions' are paragraph 47 allowed under Article 7 (4) (c) (iii) of the basic regulation

92. It is not denied that the question of allowances affected the defence of the applicants' interests, or that it appears 95. The criticism based on the lack of infor- among the considerations on the basis of mation about the change in the method of which the Commission recommended the calculating the definitive duty is perhaps a imposition of definitive duties. Accordingly, less sensitive matter. As was noted above, it the conclusion must be that the applicants is clear from the case-law of the Court 62 were not in a position to defend their that the Community institutions enjoy a interests effectively. wide discretion in choosing the most suitable type of duty. Whereas it is essential for a trader to know how the normal value, the export prices, the threshold of injury and the allowances were calculated, and 93. The Council contends that, even if the how the 'like product' was chosen, the allowances requested had been granted, the choice between an ad valorem duty or a amount of the duty would not have altered duty fixed by reference to a threshold price as a result. No doubt it wishes the Court to should not in theory affect the amount of apply its judgment in Distillers, 60 in which it the anti-dumping duty, which cannot be refused to examine allegations by the other than the dumping margin or the applicant of procedural irregularities since threshold of injury if a lesser duty will be the decision of the Commission would, in adequate to remove that injury. Admittedly, any case, have been identical. In my view, the Court held in a recent judgment that: that judgment merely applied the traditional principle that only infringements of essential procedural requirements are liable to lead to the annulment of an act. However, as we have seen, the Council's contention is chal- lenged by the applicants, who claim in the abovementioned letter of 17 June 1987 that 'A variable duty is generally more the high level of the dumping margin is due to favourable to the traders concerned, because the absence of an allowance. 61 it avoids any collection of anti-dumping duty provided that importation is carried out at prices above the minimum price 60 — Judgment of 10 July 1980 in Case 30/78 [1980] ECR 2229. 61 — The new basic regulation, Council Regulation (EEC) N o fixed'. 63 2423/8G of 11 July 1988 (OJ 1988 L 209, p. 1) now includes an Article 2(10) (e) under which individual adjustments having an ad valorem effect of less than 0.5% 62 — Case C-189/88, cited above, at paragraph 25; Case of the price or value of the transaction affected are treated C-305/86, cited above, at paragraph 58. as insignificant and disregarded. 63 — Case C-305/86, cited above, at paragraph 60.

However, since the fixing of the ad valorem 98. In its defence the Council relies on the anti-dumping duty is in no way unfore- Commission's letter of 8 September 1987. seeable — it is indeed the commonest type For the reasons set out above, however, that of duty — it does not appear that the letter cannot be taken into account. The change in the method of calculating the manner in which the Commission arrived at duty could have affected the applicants the figure stated above had nothing adversely. That complaint in the first confidential about it, and it is difficult to see submission cannot therefore be upheld. why the method of calculation was not disclosed. The conclusion to be drawn is that it has not been proved that the applicants received sufficient information in the matter to enable them to defend their interests. In this respect, this submission 96. In connection with the right to a fair must therefore be accepted. hearing, the applicants also refer to the amount of the allowance granted for ware- housing. Despite the express requests for an explanation of the figure used, they claim that no information was supplied by the 99. Lastly, the applicants maintain that their Commission. right to a fair hearing was not observed as regards the determination of the threshold of injury by reference to the production costs of the 'representative Community producer'. Since the Commission pleaded in reply the confidential nature of that infor- 97. In letter of 21 August 1987, 64 the mation, the applicants were unable to applicants observed: 'The warehousing ascertain either the Community undertaking allowance granted is considerably lower chosen as 'representative' or the Member than the market value and cost figures State in which that undertaking was estab- relating to the domestic warehousing. No lished, or the production costs during the explanation of the difference has been reference period. Accordingly, the Court is given'. That letter was in answer to the called upon to consider once again the Commission's letter of 13 August 1987 65 problem of reconciling confidentiality with stating that an allowance of SR 7.96 per the right to a fair hearing. tonne had been granted. The applicants' request for information, although made after 9 May 1987, 66 must nevertheless be taken into consideration because the Commission's letter of 13 August ends with the sentence: 'I would appreciate receiving 100. The Second GATT Anti-Dumping your questions or comments, if any, on the Code deals with the protection of confiden- above not later than 21 August 1987'. That tiality in Article 6(3). Confidential infor- sentence seems to indicate that the mation may not be disclosed without the applicants, as under the Commission's letter specific permission of the party submitting of 3 June 1987, had been given a further it, subject to disclosure ordered by 'a extension of the period laid down by narrowly drawn protective order'. However, Article 7(4)(c)(i)(cc) of the basic regulation. parties may be requested to furnish a non-confidential summary of the infor- 64 — Application, Annex 10, p 13 mation. If the information is not susceptible 65 — Application, Annex 9 of summary, a statement of reasons must be 66 — See footnote 58 provided.

101. Article 8 of the basic regulation repeats In that case, however, the applicant was the same provisions, apart from those taking issue only with the use of the concerning the possibility of a 'protective expedient of target prices — an expedient order'. rightly chosen by the Commission for reconstructing prices within the Community as they should have been in the absence of 102. The requirements set out in the dumping; it was not contesting the level of case-law of the Court in this matter may be the production costs of Community under- summarized as follows. In the Timex takings or the denial of the right to a fair Corporation judgment the Court declared hearing. void a regulation imposing a definitive anti- dumping duty, on the ground that the obli- gation of confidentiality '[must], however, . . . be interpreted in such a way that the rights [of the defence] . . . are not deprived of their substance'. 67 The Court held that: 104. On the other hand, if the criteria by which the Court was guided in its Timex Corporation judgment are followed, the conclusion will have to be that the refusal to 'the Commission ought to have made every disclose any information on the points effort, as far as compatible with the obli- mentioned above deprives the right to a fair gation not to disclose business secrets, to hearing, as set out in Article 7(4) of the provide the applicant with information basic regulation, of virtually all practical relevant to the defence of its interests, effect. The applicants are thereby reduced to choosing, if necessary on its own initiative, relying on the Commission's statements the appropriate means of providing such regarding the choice of the representative information. Mere disclosure of the items Community producer. Is the undertaking in referred to in the calculation of the normal question one of the least efficient in the value without any figures does not satisfy Community, whose production costs are those imperative requirements'. 68 especially high? The applicants will remain in ignorance. Have the costs which determined the amount of the injury, and 103. It is true that, in the more recent hence the anti-dumping duty, been judgment of Brother v Council, the Court calculated according to the appropriate held that: method? The applicants will remain in ignorance. Has the Commission miscal- culated this item, as the applicants main- 'Brother's argument to the effect that it had tained at the oral procedure? They will still no knowledge whatever of the manner in remain in ignorance, and so will the Court. which the target prices were calculated cannot be accepted since the method of calculating target prices was communicated to the applicant, and the production costs of Community undertakings constitute confidential data which could not in any 105. Since the amount of the duty was fixed circumstances have been communicated to in the contested regulation by reference to it.' 69 the injury and not the dumping margin, the above information is essential tothe defence 67 — Case 264/82, cited above, at paragraph 29. of the interests of those concerned within 68 — Case 264/82, cited above, at paragraph 30. the meaning of the Second Anti-Dumping 69 — Judgment of 5 October 1988 in Case 250/85 [1988] ECR 5683, at paragraph 34. Code.

109. A recent proceeding has shown that it 108. The report on the anti-dumping policy might be of value to have sight of of the European Community, 73 prepared by confidential documents in order to appraise the Committee on External Economic the merits of some of the arguments put Relations of the European Parliament, forward by the Community institutions. In reflects the same anxieties. It states: his Opinion in Cases 121/86, 122/86 and 129/86, delivered on 11 July 1989, Mr 70 — Case 264/82, cited above, at paragraph 30 Advocate General Tesauro sets out the 71 — See Horlick and Oliver, Trade Laws Regarding Imports. Recent Developments', p. 86, Documents de la Conférence following facts. 74 The Commission had Annuelle (1989) Collège de l'Europe, Bruges; Van Bael, 'Procedural Aspects of EEC Anti-Dumping Enforcement', adopted a regulation in 1982 imposing a p . 5, Documents de la Conference Annuelle (1989) Collège de provisional anti-dumping duty and asked l'Europe, Bruges; Van Bael, 'EEC Anti-Dumping Law and Procedure Revisited', Journal of World Trade, Volume 24, the Council on 9 June 1983 to adopt a No 2, p . 5, April 1990, and Taylor and Vermulst, regulation imposing a definitive anti- 'Disclosure of Confidential Information in Antidumping and Countervailing Duty Proceedings under United States dumping duty. Following the Council's Law A framework for the European Communities', The international Lawyer, Volume 21, No 1, p . 43. refusal and after continuing the investi- 72 — James A Taylor and Edwin A Vermulst, op. CIT. p. 45 73 — Session document No A3-0336/90 of 30 November 1990 74 — [1989] ECR 3934, 3942

110. In view of all those observations I should, of course, record how difficult it is to apply in practice the solution in the 'In the face of the objections raised by the Timex Corporation judgment. However, a executive, which considers those question- knowledge of the information in question is naires to be confidential and as such not essential to enable the interested parties to capable of being included in the files trans- the investigation to defend their interests, mitted to the applicants, in the absence of subject to the proviso contained in that any justification as to the lack of judgment that 'mere disclosure of the items non-confidential summaries of those ques- referred to in the calculation . . . without tionnaires and also in view of the fact that any figures does not satisfy' the imperative the Commission asserted that it had requirements of observance of the right to a supplied the applicants during the course of fair hearing. Although it may in actual fact two meetings held on 14 November and be difficult for the Commission, with its 22 December 1985 with all the necessary obligation to disclose to the applicant infor- information, the Court requested the mation which is relevant to the defence of Commission to provide it with the question- its interests, to find 'the appropriate means naires at issue. of providing such information', 75 the Court has established that it is nevertheless obliged to set up suitable machinery for ensuring the full exercise of the right to a fair hearing. In particular, the conclusion must be drawn that the use of 'non-confidential summaries' The reply was frankly entirely unsatis- has proved to be inadequate whenever the factory. The Commission in fact merely disclosure of figures is at issue. transmitted, without giving any explanation, copies of the non-confidential summaries of the questionnaires compiled by the Chinese exporters for the period of time between 1978 and the first quarter of 1983 and certain copies of communications sent by 111. Furthermore, the situation is not really importers of North Korean magnesite satisfactory in terms of fundamental rights. containing certain data on imports of that If the European Commission of Human product up to June 1985. Rights declares inadmissible applications directed against national decisions enacted pursuant to a Community act, 76 the main reason is that, through its successive judgments, the Court has established the principle that it reviews the Community In other words, the data made available by institutions' observance of fundamental the Commission on imports from China are none other than the data which were 75 — Case 264/82, cited above, at paragraph 30. covered by the first part of the investigation 76 — Application No 13258/87 M. & Co. v Federal Republic of Germany: Decision of 9 February 1990 concerning an and which form the basis for the proposal order to enforce a judgment of this Court.

114. I am of course aware of the difficulties 112. On this point there seems to be no inherent in having to reconcile the doubt that the anti-dumping proceeding, observance of the right to a fair hearing although conducted by an administrative with the protection of the confidentiality of authority, must meet the needs of a 'fair certain information. However, I would hearing', 77 which implies that an 'equality point out that, in other legal systems, of arms'must prevail between the parties. 78 solutions to those difficulties have Furthermore, observance of the principle of apparently been found. hearing arguments from both sides demands that the party or his representative have the opportunity of consulting and criticizing the case documents, and in particular the evidence on which the decision was based. 79 Accordingly, it does not appear that the procedure followed in this case met those requirements. 115. Under American law, since the Trade Agreements Act 1979 the two administrative authorities in charge of dumping investi- gations — the International Trade Adminis- tration ('ITA'), which determines the existence and extent of any dumping, and the International Trade Commission 113. All the foregoing leads me to the ('ITC'), which establishes the injury conclusion that in this case the fundamental caused — have to compile a file containing principle of the right to a fair hearing, as a copy of all the information obtained by or expounded in particular in the Timex submitted to those authorities during the Corporation judgment, has not been administrative procedure. The file also properly applied by the Commission. The includes the confidential information. That Commission did not in this case make information may not be disclosed without suitable arrangements for the disclosure to the prior consent of the person who the applicants of the information needed for produced it. However, the Trade the defence of their interests. It therefore Agreements Act 1979 introduced into American law the system of the 'adminis- 77 — Ringeisen judgment of 16 July 1971, A Series, Vol. 13, p. trative protective order'. By virtue of such 39, paragraph 95; Konig judgment of 28 June 1979, A Series, Vol. 27, pages 29 and 30, paragraphs 88 to 90. an order counsel for the interested party is 78 — Delcourt judgment of 17 January 1970, A Series, Vol. 11, p. allowed to have sight of the confidential 15, paragraph 28; Bonisch judgment of 6 May 1985, A documents subject to the proviso that he is Series, Vol. 92, p. 15, paragraph 32. 79 — Felbrugge judgment of 29 May 1986, A Series, Vol. 99, p. thereafter obliged to respect their confiden- 17, paragraph 44.; Decision of the Commission No tiality, even in dealings with bis client. The 7317/75, Lynas v Switzerland, of 6 October 1977; Rep. 1977, p. 412 at p. 445, paragraph 5. Court of International Trade issues an

80 — On access to confidential information and 'administrative protective orders', see Kaplan, Kuhbach and Lorentzen, 'Antidumping, Countervailing Duty and the National Security Provisions in the 1988 Trade Act', George Wash- ington Journal of International Law and Economics 1989, pp. 628-631; Kassinger, 'Antidumping Duty Investigations', p. — the relevance of the documents with 68, in Johnston Law and Practice of United States Regu- lation of International Trade, Oceana, 1989, pp. 23-25; regard to the decision adopted, or to Koch, Die Abwehr von Dumping: das Beispiel aes Amerì- be adopted, by the administrative kanischen Rechts, Heidelberg, 1989, p. 328; Horlick and DeBusk, 'Commerce Procedures Under Existing and authority, 84 Proposed Antidumping/Countervailing Duty Regulations', The International Lawyer 1988, pp. 110-112; Horlick, 'The United States Antidumping System* in Jackson and 81 — A typical formulation of this may be found in that court's Vermulst, Antidumping Law and Practice, A Comparative judgment in Roquette Frères v United States (554 F. Supp. Study, Harvester Wheatsheaf, 1989, pp. 111-113; Bello, 1246, 1248, 4 ITRD (BNA) 1388 (Court of International 'Access to Business Confidential Information in Anti- Trade 1982): 'This Statute [paragraph 516 A (b) (2) (B) of dumping Proceedings', in Jackson and Vermulst, op. cit., the Tariff Act of 1930, as amended] gives the court wide pp. 349-353; Vermulst, Antidumping Law and Practice in latitude in determining whether or not to release

Confidential Documents Under the Trade Agreements Act possessed by this data has become de minimis'. of 1979: A Corporate Nightmare', Law and Pol'y in Int'l Bus., 1981, pp. 465-493; Assman, 'Decision Making under 83 — James A. Taylor and Edwin A. Vermulst, op. cit., infer this the EEC and the U.S_ Antidumping Laws', ZVglRWiss, point from the interpretation by analogy of the judgment 1981, pp. 327-354; Ehrenhaft, 'What the Antidumping and in Roquette Frères v United States, in which the Court of Countervailing Duty Provisions of the Trade Agreements International Trade refused to grant disclosure of infor- Act can, will, should mean for US Trade Policy", Law and mation submitted by American producers who were not Pol'y in Int'l Bus., 1979, pp. 1361-1436; Lorenzen, applicants in the administrative procedure. 'Technical Analysis of the Antidumping Agreement and the 84 — American Spring Wise Corporation v United States (566 F Trade Agreements Act', Law and Pol'y in Int'l Bus., 1979, Supp. 1538, 4 IT.R.D_ (BNA) 2210 (Court of International p. 1430; Van Bael, 'EEC Antidumping Law and Procedure Trade (1983)) in which the court refused to allow the Revisited', Journal of World Trade Law 1990, p. 18. disclosure of information which was not 'directly relevant to the administrative determinations'.

The last point has been the subject of much discussion in academic legal texts and American case-law. Until 1983 the Court of 118. Are the legal difficulties insuperable? International Trade had refused disclosure Advocates, solicitors and barristers are to 'in-house counsels' or 'corporate required to observe the rules of professional counsels' on the ground that it did not wish ethics in all the Member States, no matter to place them 'under the unnatural and unremitting strain of having to exercise 87 — US Steel III, 730 F. 2d at 1465; on this point, see Mc Intyre, 'Can In-House Counsel be trusted with Access to a constant self-censorship in their normal Competitor's Confidential Information?: U.S. Steel Corp. v United States', 58 St John's Law Review, 890 (1984). working relations'. 8 6 That line of decisions 88 — For example, Hans-Christoph von Heydebranch und der was terminated by a judgment of the Court Lasa, op. cit. ¡ James A. Taylor and Edwin A. Vermulsi, of Appeals of the Federal Circuit, estab­ op. cit., p. 69.

whether those rules are imposed by the operating at a European level — by way of legislature or by the profession itself. A a protocol if need be. breach of confidentiality is, in principle, punished under the domestic legal 'order of 119. Certain commentators, incidentally, every Member State. Furthermore, the rules maintain that the introduction of such a of civil liability should enable undertakings system should reduce significantly the work injured by an unlawful disclosure of their load of the Commission. 92 Other author s 93 confidential information to take action also claim that Community law as it stands against the counsel or lawyer who does not prevent the Court from issuing committed the breach. It is difficult to see 'protective orders', and refer to the what arguments could support the view that, judgment in AM & S Europe Limited v even given the same guarantees, European Commission 94 in which the Court lawyers are not in a position to perform the considered in camera the documents lodged same function as officers of the court as at its request by the applicant and held them their American counterparts. Moreover, any to be confidential. That opinion may be improper conduct could be punished by valid where an action before the Court denying the guilty party further access, for a seeks the annulment of an act; on the other period to be determined, to the confidential hand, as Community law now stands there data on file in an anti-dumping proceeding. may be doubt whether the Court could be Such a penalty would be particularly asked during the administrative procedure effective since there are not many legal to consider a refusal by the Commission to firms that act in dumping cases. It could release certain confidential information. apparently be included in the basic Council regulation if the decision were taken to 120. However that may be, it is important introduce into Community law machinery to determine precisely how the two similar to the 'administrative protective imperative requirements of the protection of order'. In that event it would be appropriate confidentiality and the observance of the to involve in the establishment of the system right to a fair hearing may be reconciled in the professional lawyers' organizations this regard.

95 — OJ 1987 L 317, p 1.

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