T-120/89

OPINION OF MR BIANCARELLI — CASE T-120/89

OPINION OF JUDGE BIANCARELLI OF THE COURT OF FIRST INSTANCE delivered on 30 January 1991 *

Contents

Introduction II-286

I — Factual and legal background II-286

1. The production and delivery quota system for steel II-286

3. Relations between the applicant company and the Commission II-294

(a) Before the judgments of the Court of Justice of 14 July 1988 II-294

(b) After the judgments of the Court of Justice of 14 July 1988 II-295

4. The forms of order sought II-296 5. Brief details of the unlawful acts criticized by the Court of Justice in its abovemen- tioned judgments II-297

II — The problems of admissibility arising in the present action in relation to both Article 34 and Article 40 of the ECSC Treaty II-299

A — The objections of inadmissibility concerning the applicability of Article 34 II-300

(c) The Commission did not infringe the principle of the protection of legitimate expectations II-302

(d) The effect of the subsequent annulment of a provision of a general decision on the status of individual decisions adopted earlier on the basis of that provision II-303

2. The objection of inadmissibility based on the contention that claims for annulment and claims for compensation cannot be the subject of the same proceedings under the ECSC Treaty II-305

3. The objection of inadmissibility based on the contention that the judgments of the Court of Justice of 14 July 1988 did not find that the annulled decisions involved a fault of such a nature as to render the Community liable II-305

4. Provisional conclusions as to the admissibility of the application in relation to Article 34 II-308

B — The objection of inadmissibility raised by the Commission under Article 40 of

(b) 3. The Usinor judgment of 10 June 1986 II-317 (c) Extremely divided views in legal literature as to whether an action for compensation may be based on Article 40 in respect of the harm caused by the illegality of a decision which has not been annulled II-317

(c) 1. Negative answers to this question II-317

(c) 2. Positive answers to this question II-318

(c) 3. Circumspect analyses of this issue II-319

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(a) 2. The misconceived distinction between illegality and wrongful acts or omissions II-323

(a) 3. An incorrect interpretation of the effects of a judgment estab- lishing the Community's liability following a finding of illegality involving fault II-325

(a) 4. An incorrect analysis of the preconditions for liability to be incurred under Article 34 and Article 40 respectively II-325

(b) Arguments as to the need for appropriate judicial protection of the indi- vidual II-326

(b) 1. The case where the harm becomes apparent only after the period for bringing an action has expired II-326

(b) 2. The case where it would hardly be logical to bring an action for

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3. Conclusions concerning the admissibility of all the claims made in the application and the relationship between the remedies and the procedural provisions of Articles 34 and 40 II-332

III — The problems concerning the existence in this case of a fault of such a nature as to

render the Community liable II-334

A — What system of liability is to be applied under the ECSC Treaty II-334

C — Is the condition concerning a manifest and serious disregard of the duties incumbent upon the Commission satisfied in the present case? II-343

1. The illegality criticized by the judgment of the Court of Justice of 14 July 1988 in Joined Cases 33/86, 44/86, 110/86, 226/86 and 256/86 II-343

2. The illegalities criticized by judgment of the Court of Justice of 14 July 1988

in Case 103/85 II-350

IV — The problems concerning the alleged harm II-355

1. The background to the problem II-355

It is appropriate to consider successively:

Before the Court is an application brought by Stahlwerke Peine-Salzgitter AG ('Peine-Salzgitter') based on both the first I — The factual and legal background; paragraph of Article 34 and the first paragraph of Article 40 of the ECSC Treaty for a declaration that the Community has incurred non-contractual liability as a result of a number of illegal acts committed by the II — The problems of admissibility arising Commission in applying the quota system in the present action in relation to both for steel. The application seeks, first, declar- Article 34 and Article 40 of the ECSC ations that several Commission decisions are Treaty; vitiated by faults of such a nature as to render the Community liable and, secondly, an order that the Commission pay the applicant the principal sum of D M III — The problems concerning the 77 603 528 plus interest. It follows on existence in this case of a fault of such a directly from two judgments of the Court of nature as to render the Community liable; Justice of 14 July 1988: the first was given and finally, in Case 103/85 [(1988] ECR 4131) and the second in Joined Cases 33/86, 44/86, 110/86, 226/86 and 285/86 ([1988] ECR 4309). IV — The problems concerning the damage alleged by the applicant.

Those difficulties, which are often described quota system for the Community steel as short term, were exacerbated by other undertakings. 1 That system involved, for problems, in particular the arrival in the each of the categories of product covered by common market of very competitive it, the application of a uniform abatement products manufactured in non-member rate to the actual production of all the countries and by the structural difficulties undertakings concerned in a given reference experienced by the Community steel period, namely the years 1977 to 1980. The industry associated with the fact that much system also involved the application of of its plant was extremely outdated. This abatement rates to that part of the under- combination of factors led to substantial takings' production which might be excess capacity at a time of considerable delivered in the common market. However, fall-off in demand for steel, giving rise to a that general decision allowed certain fall in prices which jeopardized the viability exceptions to the system of uniform of a large number of the steel undertakings abatement: thus, reference production was in the Community. increased for undertakings in certain clearly defined situations arising, in particular, from their having taken measures in conformity with the Community steel policy; moreover, Article 14 of that decision conferred on the Commission the power to adapt certain of its provisions, at the request of the under- In order to remedy that situation, or at least taking concerned, where the restrictions on mitigate its effects, the Commission adopted production or delivery imposed by the certain measures which initially involved the general decision or by its implementing observance of certain minimum prices and measures created exceptional difficulties for affected the volume of imports from that undertaking. non-member countries. The Commission also took measures for the purpose of reor- ganizing the industry, one of which involved drawing up an aids code to coor- dinate at Community level the aid granted by the Member States which was liable to distort competition in a market that was already in turmoil.

It is thus apparent from the outset that the 27 November 1985, 7which was modified ratio between the production quota (the 'P on two occasions, in particular by quota') and the delivery quota (the 'I Commission Decision No 1433/87/ECSC quota') was of essential importance since the of 20 May 1987, on converting a production that was not disposed of within proportion of the production quotas into Community territory, where the prices were quotas for delivery in the common market, 8 attractive, necessarily had to be disposed of and finally by Commission Decision in non-member countries where the prices N o 194/88/ECSC of 6 January 1988, 9 were substantially lower than the which was the last extension, lasting until Community prices. the system was abolished on 30 June 1988. The damage which the applicant claims to have suffered relates to the conditions for the application of the last four decisions and covers the period from the first quarter of 1985 to the second quarter of 1988 inclusive.

2 — See Dr J. F. Meinhold, 'Nichtigkeitsurteil, Widergutma- chungsmaßnahmen und Schadensersatz gemäß Anikei 34 The first action for annulment related to an EGKSV', Recht der Internationalen Wirtschaft 1989, No 6. individual decision implementing Article 14 of 3 — OJ 1982 L 191, p. 1. 4 — OJ 1983 L 177, p. 5. 7 — OJ 1985 L 340, p. 5. 5 — OJ 1983 L 208, p. 1. 8 — OJ 1987 L 136, p. 37. 6 — OJ 1984 L 29, p. 1. 9 — OJ 1988 L 25, p. 1.

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The applicant's action was successful in both cases. Referring to settled case-law and relying in particular on Articles 3, 4 and 5 of the ECSC Treaty which prohibit all In such circumstances, when the economic discrimination as between the undertakings crisis had thus brought about the emergence covered by the Treaty, the Court of Justice of two new general principles of law stressed the need, in a period of crisis, relating to the European Coal and Steel where, as a result of administrative control, Community, first, that of solidarity as quantitative competition between under- between the various undertakings and, takings is de facto eliminated and where an secondly, that of equitable distribution of artificial balance is created between supply the sacrifices to be made, how were the two of and demand for steel, to respect in full actions for annulment brought by the the principle of fairness laid down in Article applicant presented? 58 of the Treaty. As early as 1961 in its judgment in Meroni, 1 0the Court held that 11 — Case 14/81 Alpha Slee/v Commission [1982] ECR 749 'the High Authority must take particular 12 — Joined Cases 63/84 and 147/84 Fmsider v Commission care to ensure that the principle of equality [1985] ECR 2857 13 — Joined Cases 140/82, 146/82, 221/82 and 226/82 Walzstahl-Vereinigung and Thyssen v Commission [1984] 10 — Joined Cases 14/60, 16/60, 17/60, 20/60, 24/60, 26/60, ECR 951 27/60 and 1/61 Meroni et Cte and Others v High Authority 14 — Case 236/86 Dillmger Hüttenwerke AG v Commission [1961] ECR 161 [1988] ECR 3761

That was indeed so, in that case, with the The Court of Justice went on to examine result that the Commission had committed a the substance of the two grounds relied two-fold error of law and the Court of upon by the Commission, namely, first, that Justice proceeded to annul its decision of the applicant was not experiencing any 11 June 1985 refusing to adjust, pursuant to exceptional difficulties and, second, that it Article 14 of General Decision No 234/84, had received aid intended to cover its the applicant's quotas for category III operating losses. products for the first quarter of 1985.

On the first point, the Court of Justice had no difficulty in rejecting the Commission's (c) The second action for annulment, brought view, referring to its earlier decision 15 both by Peine-Salzgitter and Hoogovens, was entirely different in scope. In that case, the 15 — Case 317/82 Usines Gustave Böel and Fabrique de Fer de Matibeuge vCommission [1983] ECR 2041. 16 — Case 250/83 Finsider vCommission [1985] ECR 131.

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average. With regard to that issue, the documents before the Court of Justice included one which was of great signifi- cance, being the communication submitted In paragraph 2 of section VII, the by the Commission to the Council on Commission went on to say: 'Since there 25 September 1985 concerning the intro- has been a far-reaching change in the duction of a system of production quotas pattern of steel trade between the under Article 58 of the ECSC Treaty after Community and the rest of the market since 31 December 1985. 17 the introduction of the quota system, a review would also have to be made of the situation of steel makers whose ratio between the part of production quotas which may be delivered in the Community and production quotas is, for all products covered by the system, much lower than the In that document, the Commission, after Community average.

It therefore proposed that the Council extend the quota system once again but, first, should adopt a number of liberal measures with respect to certain products and, secondly, should make it its concern to remedy the most manifest However, the Commission, fully aware of inequalities which had been created by the the difficulties of that kind experienced by a quota system, affecting in particular the small number of undertakings and on delivery quotas. Thus, in section VII of that several occasions expressing its willingness document, the Commission considered that to reexamine the question of the I:

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Council's assent on that point. It was Community is confronted with a period of against that background that, on manifest crisis and that the means of action 27 November 1985, it adopted General provided for in Article 57 are not sufficient Decision No 3485/85, which merely to deal with this, it shall, after consulting repeats, in essence, the corresponding the Consultative Committee and with the provisions of the previous general decision assent of the Council, establish a system of and makes no provision for any adjustment production quotas, accompanied to the of the I: P ratio, as submitted by the necessary extent by the measures provided Commission to the Council. for in Article 74.

As to whether or not the Commission was required — as it did — to seek the assent of the Council in order to adopt measures which it itself considered necessary for the purpose of achieving an equitable distri- It did so, secondly, by referring to its own bution of quotas, the Court of Justice had decisions and, in particular, its judgment of no difficulty in giving an answer. 11 May 1983, 18 and to its judgment in Walzstahl-Vereinigung and Thyssen AG, cited above, from which it was clearly apparent that Article 58 should be inter- It did so, first, by reference to a literal preted as requiring the assent of the Council analysis of the text of Article 58 of the only for the establishment of the essential ECSC Treaty, which provides as follows, in features of the quota system and that it was the first subparagraph of paragraph 1 and for the Commission, acting under its own the first subparagraph of paragraph 2: powers, to lay down the details of the system in order to determine the quotas on an equitable basis. ' 1 . In the event of a decline in demand, if 18 — Case 244/81 Klöckner Werke AC v Commission [1983] the High Authority considers that the ECR 1451.

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is required to cope. The same is true if the Commission wrongly uses the procedure laid down for the establishment of the quota In that case, Hoogovens and the Federation system and thereby fails to exercise its own of Italian Steel Producers sought, on the powers to adopt the rules which it considers one hand, the annulment of Decision necessary to ensure that the quotas are No 1433/87 and, on the other, the equitable' . Finding, in that case, first, that annulment of Articles 5, 6 and 17 of the adjustment which the Commission itself Decision No 194/88, which extended the considered necessary affected only the system of monitoring and production quotas quotas of a small number of undertakings for steel for the last time. and not the quotas of an entire group of undertakings characterized by their

was not necessary. It thus considered that some cases be regarded as outdated (see the applicant company had been the victim of paragraph 12 of the judgment of the Court), a misuse of powers and therefore it had been taken without the assent of the proceeded, first, to annul Article 5 of Council being sought. By that decision, the General Decision No 3485/85 'in so far as Commission had endeavoured to establish a it does not enable delivery quotas to be system which could be described as an fixed on a basis which the Commission 'averaging' system, authorizing under- considers fair for undertakings having ratios takings, to a limited extent, to convert between their delivery quotas and production quotas into delivery quotas each production quotas which are significantly quarter within a clearly defined category of lower than the Community average' and, products, subject to a number of very secondly, to annul the individual decisions precise reservations. The Court, noting that addressed by the Commission to Peine-Salz- Article 5 of Decision No 194/88 had gitter fixing delivery quotas for that under- repeated the provisions of Article 5 of taking for the first and second quarters of General Decision No 3485/85, referred to 1986 since those individual decisions, being the Peine-Salzgitter case cited above, Joined based on Article 5 of the general decision, were necessarily vitiated in the same way. 19 — Joined Cases 218/87 and 223/87, 72/88 and 92/88 [1989]

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Cases 33/86, 44/86, 110/86, 226/86 and annulled, and Article 17 of Decision 285/86, before adding that it was the No 194/88 which merely, in turn, repeated responsibility of the Commission, in A r t i c l e1 of Decision No 1433/87. It is compliance with that judgment, to adopt, apparent both from the scheme of those on its own responsibility, provisions judgments and from perusal of the Opinion adjusting the I: P ratio to the extent of Mr Advocate General Lenz that those required by the situation on the export articles were annulled only because they did markets with a view to ensuring an not make it possible to establish delivery equitable distribution of quotas. In the quotas on a basis which the Commission absence of such a decision based on an regarded as equitable for the undertakings assessment by the Commission of the for which the ratio between the production situation on the export markets, the Court quota and the delivery quota was substan- could only find that the adjustment of the I: tially lower than the Community average. P ratio made by Decision No 1433/87 did not reflect what the Commission itself had considered necessary in its 1985 communi- cation to the Council to ensure the equitable 3. It is appropriate at this stage to examine distribution required by Article 58(2). the relationship between the applicant and the Commission before and after the annulling judgments of 14 July 1988

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should reserve its decision on the of the judgment and will, if necessary, applications for adjustments for the third modify the decisions taken by it previously. and fourth quarters of 1985 until the Court This applies to the first quarter of 1986 and of Justice had given judgment in Case to the following quarters'. 103/85. In its reply of 12 July 1985, the Commission confirmed that, once judgment had been given by the Court in Case 103/85, it would without delay draw the consequences and adopt a decision in order to modify, if necessary, the decisions (b) The relationship between the parties de- previously taken by it. The Commission also teriorated somewhat after the judgments confirmed that it would reserve formal of 14 July 1988. decisions on the requests made under Article 14 as from the third quarter of 1985 until the Court had given judgment.

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Commission had so far responded to the 15 November 1989, which is binding on the applicant's claims only with political and Court of First Instance in that respect, financial arguments but not with legal referred the case to the Court of First reasoning and, thirdly, that if no amicable Instance. solution were arrived at in the form of substantial redress, the company could not in any circumstances waive its right to fair compensation. Finally, the applicant 4. The forms of order sought considered that the period laid down in Article 34 of the ECSC Treaty for the necessary steps to be taken to comply with judgments of the Court would expire after (a) The applicant claims that the Court Easter, the implication being that after that date an action for compensation would be should: brought.

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third quarter of 1986, and all the general decisions and to the individual subsequent quarters until the second decisions. quarter of 1988 inclusive;

(d) the Commission's decision of 11 June 1985 refusing to adjust the — For the year 1985, the Court of Justice applicant's quotas for products in held, in its judgment of 14 July 1988 in category HI for the first quarter of Case 103/85, that the individual decision 1985, pursuant to Article 14 of refusing to adjust pursuant to Article 14 of general Decision No 234/84/ECSC; General Decision No 234/84 the ipplicant's quotas for Category III products For the first quarter of 1985 was based on in unlawful misapplication of the said (e) the subsequent decisions of the Article 14 and should therefore be annulled Commission refusing to adjust the [that annulment corresponds to the applicant's quotas for category III ipplicant's claims under 1(d)). products for the second, third and fourth quarters of 1985 pursuant to Article 14 of general Decision No 234/84/ECSC;

— By contrast, for the second, third and Fourth quarters of 1985, the applicant, 2. order the Commission to pay the having regard to the abovementioned applicant DM 73 065 405 together with exchange of letters with the Commission, accumulated interest until the expiry of did not bring an action. The Commission the quota system (on 30 June 1988), does not deny that its three individual amounting to DM 8 079 885 and interest decisions refusing to adjust the quotas for at 6% running from 1 July 1988; those quarters were vitiated in the same way as the annulled decision of 11 June 1985, but those decisions were not annulled (those decisions are referred to in paragraph 1(e) of the claims seeking a finding of liability). 3. order the Commission to pay the costs.

as regards the matter of liability, to the That also applies to the four quarters of applicant's claims under 1(a) and 1(b)). 1987, for which the applicant's delivery quotas were fixed on the basis of Decision No 1433/87, which applied as from 1 January 1987. And, in its judgment of 14 June 1989, cited above, the Court of Justice annulled Decision No 1433/87 in so far as it did not allow the adjustment of the — The problem is somewhat more I: P ratio required to ensure an equitable complicated in the case of the applicant's distribution of the quotas, as required by claims under 1(c) which seek a declaration Article 58(2). from this Court that several individual decisions of the Commission are vitiated by a fault of such a nature as to render the Community liable. They are, first, individual decisions addressed to the applicant, fixing its delivery quotas, again for Categories la, lb, Ic and III, for the third quarter of 1986 Finally, that also applies to the individual and, secondly, similar individual decisions decisions which fixed the applicant's concerning the subsequent quarters, up to delivery quotas for the first two quarters of the second quarter of 1988 inclusive, that is 1988, in other words until the quota system to say the fourth quarter of 1986, all four came to an end, since in its judgment of quarters of 1987 and the first two quarters 14 June 1989, cited above, the Court of of 1988. Justice annulled Articles 5 and 17 of the last Commission decision extending the quota system, namely Decision No 194/88, on the grounds, first, that Article 5 of General Decision No 194/88 merely repeated the terms of Article 5 of General Decision For those eight quarters, the applicant No 3485/85, which itself had been annulled secured no annulment decision, once again by the judgment of 14 July 1988 and, because, as it stated, it was concerned to secondly, that Article 17 of General keep proceedings to a minimum. But the Decision No 194/88 itself merely repeated Commission does not deny that, for all the provisions of Decision No 1433/87, those quarters, the individual decisions which had itself been annulled. fixing the applicant's delivery quotas for the categories of products in question are vitiated by the same illegality as that to which the Court referred in its abovemen- tioned judgment of 14 July 1988. The effect of those annulment decisions erga omnes having been established, this Court cannot disregard the new legal situation thus created by the judgment of the Court of Justice of 14 June 1989 particularly That clearly applies to the individual since, once again, the Commission has not decisions for the third and fourth quarters even contended that its individual decisions of 1986, which are based directly on Article adopted in 1987 and 1988 were not vitiated 5 of General Decision No 3485/85, which in the same way as the 1986 decisions which was itself annulled. were annulled by the Court of Justice.

Throughout the currency of the quota The applicant has based its action prin- system, situations of that kind were resolved cipally on Article 34 and, in the alternative, fairly simply by the Commission's granting on Article 40 of the ECSC Treaty. It is additional quotas to companies which had appropriate to reproduce those articles. successfully pleaded their cases before the Court of Justice. That restitution in kind, moreover, is in conformity with the concept of 'equitable redress' referred to in the first paragraph of Article 34 of the Treaty. But, The first paragraph of Article 34 provides: in the circumstances of the present case, since the Court's judgments of 14 July 1988 and 14 June 1989 were delivered after the quota system came to an end, the parties can no longer contemplate reparation in 'If the Court declares a decision or recom- kind (even though the Commission has, mendation void, it shall refer the matter rather dubiously, claimed that it could back to the High Authority. The High revert to a voluntary system of quotas, Authority shall take the necessary steps to based on Article 46 of the Treaty). comply with the judgment. If direct and special harm is suffered by an undertaking or group of undertakings by reason of a decision or recommendation held by the Court to involve a fault of such a nature as to render the Community liable, the High That is why the applicant has brought the Authority shall, using the powers conferred present action, based simultaneously — an upon it by this Treaty, take steps to ensure essential point — on Article 34 and Article 40 equitable redress for the harm resulting of the ECSC Treaty, in which it does not directly from the decision or recommen- seek any annulment but, first, claims that dation declared void and, where necessary, the Court should find that all the pay appropriate damages.' abovementioned general and individual decisions of the Commission are vitiated by a fault of such a nature as to render the Community liable and, secondly, that the Commission be ordered to pay the applicant The second paragraph reads as follows:

It is appropriate to consider successively the objections of inadmissibility raised by the Commission, under both Article 34 and Article 40 of the ECSC Treaty. The applicant, whilst recognizing that as a general rule the existence of an annulment decision is a precondition for the admissi- bility of an application based on the second A — The objections of inadmissibility paragraph of Article 34 of the ECSC concerning the applicability of Article 34 of Treaty, claims that in the present case that the Treaty to the present case condition does not need to be satisfied. In the first place, because of the exchange of letters between the parties and the formal assurances given by the Commission in response to the letters which were sent by The Commission raises three objections of the applicant in its concern to keep inadmissibility under this heading: proceedings to a minimum; secondly, by reason of the fact that the Commission frus- trated the legitimate expectations of the applicant; and finally, because, simply by — the absence of an annulling decision for reason of the subsequent annulment of 11 of the 14 quarters in question; Article 5 of General Decision No 3485/85 on which they were based, the individual decisions fixing quotas for the period from July 1986 to June 1988 did not — the impossibility of making simultaneous become final after the expiry of the period claims for annulment and compensation; of one month provided for in Article 33 of

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It is appropriate to ask four questions in that regard: in the first place, was a contract With respect to the period from the second governed by public law entered into, as the quarter to the fourth quarter of 1985, the applicant maintains? Secondly, did the letter from the applicant's lawyer to the Commission formally commit itself to Commission of 11 July 1985 merely making pecuniary reparation? Thirdly, was suggests that the applicant would not bring there any breach of the principle of the an action in respect of the second, third and protection of legitimate expectations? fourth quarters of 1985, provided that, once Finally, are the individual decisions which the Court had given judgment in Case were not annulled void merely by virtue of 103/85, the Commission adopted a fresh the annulment of Article 5 of Decision decision within a short period, in No 3485/85? conformity with the grounds and operative part of that judgment. As for Professor Wagenbaur's reply of 12 July 1985, it

20 — See in that connection the judgment in Joined Cases 42/59 (a) It seems clear to me that the exchange of and 49/59 Société Nouvelle des Usines de Pontlteue, Acieries du Temple (Snupat) c High Authority [1961] correspondence in question certainly does not ECR 53

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obvious . . . '. Court of Justice on that matter: the provisions governing time-limits for steps in proceedings are mandatory and cannot be changed by the parties or by the Court. Moreover, in relation to the ECSC, the As regards the period from the third quarter Court gave a very clear ruling on this point of 1986 to the second quarter of 1988, in its judgment of 2 July 1984, 21 stating similar considerations appear to apply. In that 'the strict application of Community the letter which he sent to the Commission rules on procedural time-limits meets the on 23 April 1986, the applicant's lawyer requirement of legal certainty and the need made the following suggestion: 'as soon as to avoid any discrimination or arbitrary the Court of Justice has given judgment in treatment in the administration of justice.

In the subsequent decisions concerning our client's present case it is clear that the applicant has delivery quotas for the first quarter of 1986 not established, or indeed alleged, the and the following quarters throughout the existence of unforeseeable circumstances or period for which General Decision force majeure, and the exchange of corre- No 3485/85 is applicable'. Thus, the spondence to which it refers does not satisfy applicant itself sought a modification of the any of the preconditions for those concepts decisions and not any assurances as to the to come into play. principle of, or the arrangements for, pecuniary reparation.

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discrimination or arbitrary treatment in the Court of Justice stated that 'under the administration of justice. provisions of the second sentence of the first paragraph of Article 34 of the ECSC Treaty, the first paragraph of Article 176 of the EEC Treaty and the first paragraph of Article 149 of the EAEC Treaty, where a (d) Finally, it is necessary to consider the last measure of an institution has been declared objection formulated by the applicant, which void by the Court that institution shall be relates to the complex problem of the effect of required to take the necessary measures to the annulments at issue: is the subsequent comply with the judgment declaring that the annulment of a general decision which measure is void. It follows that, when the constitutes the basis for individual decisions Court annuls a decision, the author of that previously adopted, which have entirely decision is under an obligation to revoke or exhausted their effects, both legal and material at least not to apply a subsequent decision (being decisions fixing quarterly quotas), of which simply confirms the first one'.

If the period the eight quarters covering the period July within which their annulment should be 1986 to June 1988 under, first, General sought has expired, they can be challenged Decision No 3485/85 of which Article 5 only under the conditions laid down in was annulled, then Decision No 1433/87, Article 177(b) or Article 184'. 25 The author which was also annulled, and General Decision No 194/88, of which the same 23 — Contentieux Communautaire, published by Bruylant, Article 5 was also annulled, does this Brussels, 1977, p. 217 24 — Joined Cases 45/70 and 49/70 Fritz-Auguste Bode Commission [1971] ECR 465 22 — Joined Cases 42 and 49/59, cuted in footnote 19, more 25 — Le droit de la Communaute economique europeenne. particularly at p. 87 editions de l'université de Bruxelles, Vol. 10 p 175

'In order to comply with the judgment [annulling a regulation] and to implement it However, by virtue of the retroactive effect fully, the institution is required to have of judgments by which measures are regard not only to the operative part of the annulled, the finding of illegality takes judgment but also to the grounds which led effect from the date on which the annulled to the judgment and constitute its essential measure entered into force. It follows that basis, in so far as they are necessary to in the present case the institution concerned determine the exact meaning of what is is also under an obligation to eliminate from stated in the operative part. It is those the regulations already adopted when the grounds which, on the one hand, identify annulling judgment was delivered and the precise provision held to be illegal and, governing marketing years after 1983/84 on the other, indicate the specific reasons any provisions with the same effect as the which underlie the finding of illegality provision held to be illegal. contained in the operative part and which the institution concerned must take into account when replacing the annulled Consequently, the finding that the coef- measure. ficients to be applied to the amount of aid . . . were illegally fixed is binding with respect not only to the 1983/84 marketing However, although a finding of illegality in year, covered by the annulled regulation, the grounds of a judgment annulling a but also to all subsequent marketing years. measure primarily requires the institution By contrast, that finding cannot apply to the which adopted the measure to eliminate that marketing years covered by the regulations illegality in the measure intended to replace adopted before the 1983/84 marketing year. the annulled measure, it may also, in so far as it relates to a provision with specific By refusing to replace, with effect from the 26 — Case 92/78 Simmenthal v Commission [1979] ECR 777. date of adoption of the annulled regulation, See also, on all these points, E. Paulis: 'Les effets des arrets d'annulation de la Cour de justice des Commu- the provision contained in the regulations nautés européennes', Cahiers de Droit Européen, 1987, p. 243; M.-C. Bergeres: 'La théorie de l'inexistence en which entered into force after that date droit communautaire', Revue Trimestrielle de Droii having the same effect as the one declared Europeen, N o 4, October-December 1989, p. 647. illegal in the [annulling] judgment, the 27 — Joined Cases 97/86, 99/86, 193/86 and 215/86 Astéris A. E. and Others and Greece v Commission [1988] ECR 2181. Commission has failed to fulfil its obli-

In any event, the second paragraph of Article 34 does not seem to me to be applicable in the present case for reasons of The objection relates to the fact that, in the a primarily procedural nature, since, for the annulling judgments of 14 July 1988, the eight quarters in question, the individual Court of Justice merely annulled several decisions were not annulled. Even though general or individual Commission decisions the general decision providing the requisite without, however, finding that they were support for them has been annulled, the vitiated by any fault of such a nature as to individual decisions became final and are render the Community liable. not subject to any nullity which could be assimilated to annulment. Moreover, cancel- lation of them would be pointless, since their legal and material effects have been The Commission contends that it is exhausted. But, as we shall see in due apparent from the very wording of the first

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paragraph of Article 34 that that finding of expressly find a fault of such a nature as to a fault of such a nature as to render the render the Community liable or, I think, the Community liable must precede the existence of direct and special harm, since lodgment of claims for compensation on the those legal classifications are certainly a basis of the second paragraph of Article 34 matter for the Court and not for the since the Community must, after such a Commission. finding, be granted an appropriate period to react to the threat of an obligation to make pecuniary reparation. This issue has been the subject of heated debate among academic legal writers. 28

In the first place, I consider it incorrect to maintain that, if an applicant brings an action for annulment, he must necessarily There are differing views on this problem think, at that stage, of possible future among legal writers and the question has reparation for any damage which he may never been settled by any decision of the suffer and in all cases ask the Court to rule, Court of Justice. forthwith, on the very principle of the Community's liability, with a view to pre- serving his rights. That argument is based on a confusion between an action for annulment and an action to establish It seems to me that this objection of inadmissi- liability, which totally disregards the bility, in so far as it relates to Article 34, is principle whereby the action to establish well founded. The second sentence of that liability is an autonomous form of action (to article reads: 'If direct and special harm is which I shall revert: see below, suffered by an undertaking or group of II B 2(a)(1)). undertakings by reason of a decision or recommendation held by the Court to 28 — See in particular Balentine, The Court of Justice of the European Coal and Steel Community, The Hague, 1955, involve a fault of such a nature as to render p. 88; the report of Cesare Grassetti in Les Actes Officiels the Community liable, the High Authority du Congrès International d'Etudes sur la CECA, Milan, 31 May to 9 June 1957, Milan, 1958, p. 55; J. Blancher, 'La shall. .. take steps . . . .' The problem thus concurrence du recours en annulation avec l'action en arises in all cases where, for whatever réparation des dommages', Dix Ans de la Jurisprudence de la CJCE, Cologne, 1965, p. 343 et seq. reason, the annulling judgment does not 29 — Case 6/60 Humblet vBelgian State [1960] ECR 559.

Secondly, it likewise seems to me to be 'pre-litigation' procedure before any action incorrect to contend that it is for the Court for compensation is brought under the to ascertain of its own motion the existence second paragraph of Article 34. It enables of a fault of such a nature as to render the the parties to enter into any appropriate Community liable and the existence of discussions as to the nature and extent of direct and special harm, even if it has not the harm and allows the Commission to been asked to make a finding in that regard. take the appropriate steps to ensure As Cesare Grassetti rightly emphasizes, equitable redress for the harm, either by 'from the legal point of view, to do so reparation in kind, where that is possible, or would be ultra petita; from the political by granting, to the extent necessary, appro- point of view, to do so would be an open priate damages. In order to do so, the

entitled to bring an independent action before the competent Community Court solely to secure a finding of a fault of such a nature as to render the Community liable and also, I think, the existence of direct and special harm. Fourthly, it seems clear to me that claims It is only on delivery of that judgment that for a finding of liability on the part of the the 'reasonable time' mentioned in the Community and the existence of direct and second paragraph of Article 34 begins to special harm certainly cannot be submitted run. The Commission's argument, which simultaneously with claims for compen- seems to deny the existence of an inde- sation under the second paragraph of pendent remedy to establish liability, seems

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The Court of Justice has recognized the decision and the harm suffered. In the admissibility of an action to establish the case of the decisions which have not Community's obligation to compensate for been annulled, and even though their damage, without it being necessary, at that illegality is clear and, moreover, not stage of the procedure, to ask the Court disputed by the Commission, compliance actually to order reparation of the damage with the letter of Article 34 seems to me and draw the specific consequences thereof, to require that restrictive interpretation since that result can be obtained and prohibit the importation, into the subsequently by means of an action for machinery thus provided for, of an compensation. 30 The Court of Justice has 'inverted' theory of the objection of also held that an action is admissible even illegality; where it merely raises the issue of the legal basis of the liability and that all matters relating to causality and to the nature and extent of the damage may be reserved for — accordingly, the claims that the Court another action. 31 should declare the Commission decisions to be vitiated by a fault of such a nature as to render the Community liable are admissible as regards all the individual 4. Provisional conclusions as to admissibility decisions covered by the annulling in relation to Article 34 judgment of the Court of Justice, that is to say those mentioned in the applicant's claims under 1(b) and (d);

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It is merely 'relative' as regards the three constitutes a lex specialis that cannot be individual decisions which were the departed from by reason, inter alia, of the subject of an annulling judgment, since structure of that article and of the fact that the reasonable time referred to in the Article 40 opens with the phrase 'Without second paragraph of Article 34 has not prejudice to the first paragraph of Article yet started to run. In this last case, the 34...'. claims for compensation based on Article 34 are inadmissible solely because they are premature. Thus, the Commission adds, the principle of subsidiarity applies not only to circum- stances where an application based on Article 34 has been upheld but also in cases B — It is appropriate at this point to examine where the undertaking does not satisfy the the objection of inadmissibility raised by the particularly strict conditions laid down by Commission in relation to Article 40 of the that article. Any different view of the scope ECSC Treaty. of Article 34 whereby, before an action is brought for compensation, a successful action for annulment must be brought within a period of one month, would lead to unacceptable consequences, in particular if, in the absence of the conditions laid The applicant based its application, in the down for the application of Article 34, it alternative, on the first paragraph of Article was permissible to bring an action for 40 of the ECSC Treaty, maintaining that compensation directly on the basis of Article the unlawful decisions annulled by the 40. Thus, in its view, Article 34 governs Court of Justice and those which are exhaustively and restrictively any liability vitiated in the same way but were not for wrongful acts or omissions with regard annulled derive from an instance of malad- to steel undertakings, provided that the ministration on the part of the Commission, cause of the alleged harm is to be found in a which could perfectly well have acted Commission decision. The Commission thus lawfully and was indeed under an obligation assimilates the concepts of annulment and to do so, as confirmed by its own communi- annullability. cation to the Council of 25 September 1985, mentioned earlier.

claim for reparation is based on an allegation However, it was justified by the finding that of maladministration deriving from the numerous powers, previously exercised by illegality of a decision which has not been the administrations of the Member States, annulled? had been transferred to the Community administration and it was unacceptable for that transfer to have the effect of under- mining the legal protection previously available to the economic agents concerned. This is one of the most delicate legal issues to be adjudicated on in these proceedings and one which, most authors insist, derives from one of the most 'obscure' chapters of the ECSC Treaty. Thus, it is apparent from the travaux préparatoires for the ECSC Treaty, 32 that initially there was no provision for any action in liability. Thus, in a memorandum I propose considering successively the back- drawn up concerning the first draft of the ground to the problem, the considerations Treaty, we read, under the heading 'Articles which prompt me to recognize that the 26 to 28', which were the early antecedents Community may incur liability under Article of Article 34 : 40 of the ECSC Treaty by reason of an unlawful decision which was not the subject of a prior annulling judgment and, finally, the practical consequences to be drawn as regards the admissibility of the action. 'The provisions concerning the jurisdiction of the Court are inspired by the need to reconcile the concern to keep action on the part of the Community organs within the 1. The background to the problem legal limits and the no less imperious need not to limit the action of the High Authority in an area where economic, political and social considerations require constant assessment of circumstances of fact The main features here, it seems to me, are or expediency which normally fall outside the existence of somewhat ambiguous legis- the jurisdiction of a court. As a result of the lation, unsettled and uncertain case-law, latter consideration: divided views in legal literature and, finally, indecisive travaux préparatoires.

(2) actions by undertakings were limited to 'Its essential function is to guarantee the individual decisions of concern to them; proper functioning of those institutions for everyone. Two conditions must be met for that purpose; it must be recognized that, for the purpose of applying the law, the powers (3) in principle, the possibility of damages in of the Court must be defined fairly broadly the event of annulment was excluded. so as to enable it, through its case-law, to contribute to the development and progress of the organization as a whole; on the other By treating as grounds of annulment, in hand, it must be ensured that its judgments addition to lack of powers and infringement are not a means whereby the powers of the of essential procedural requirements, misuse High Authority are actually transferred to of law and misuse of powers, the Court is the Court of Justice. This danger will be nevertheless provided with the means avoided by a rigorous separation of powers, necessary to ensure, to the full extent of the which will prevent the Court from substi- law, the observance of the essential rights of tuting itself for any of the organs provided the parties concerned.' for by the Treaty. It will be able to annul decisions or recommendations, deliver declaratory judgments and, in the event of infringement of the Treaty, award damages, And under the heading 'Article 29', an even but it must in all cases refer to the organs more remote ancestor of the present Article created by the Treaty with respect to the 40: decisions to be drawn up.' 33

Articles 34 and 40 respectively. All commen- (b) The case-law of the Court of Justice is tators, and that includes all Advocates unsettled and uncertain General who have been called on to give an opinion on the matter, concur in the view that the first paragraph of Article 40 constitutes the ordinary law governing the The Court of Justice examined the question non-contractual liability of the Community of the relationship between Article 34 and under the ECSC Treaty. That article enables Article 40 in two judgments delivered on 13 any aggrieved party to seek pecuniary and 14 July 1961 which, although so close reparation in the event of damage caused in together in time, arrive at largely contra- the implementation of the Treaty by malad- dictory and irreconcilable conclusions: the ministration on the part of the Community. judgment in Meroni and the judgment in But that article opens with a phrase of Vloeberghs. 34 which the least that can be said is that it is not crystal clear: 'Without prejudice to the first paragraph of Article 34 . . ..' As a result, there are many who perceive in that (b) 1. The Meroni case calls for a number of Article 34 a veritable lex specialis regarding comments. In that case, the regulatory liability, limited to cases where the decisions which had allegedly caused Community's liability derives from the damage had not been annulled but declared illegality of a decision which was previously unlawful following an objection to that annulled, in so far as such illegality involves effect in a first Meroni judgment. 35 a fault of such a nature as to render the Community liable or has given rise to direct and special harm. In his opinion, Mr Advocate General Lagrange first considered whether the conditions laid down by Article 34 were satisfied. His answer was that, as a matter of principle, they were: 'It is true that the general decisions of the High Authority have not been declared void: they have only been held to be unlawful following an objection to that effect, but the High Authority cancelled them, which it was In reality, the position is not so simple. In entitled and undoubtedly under a duty to the first place, the reservation in Article 40 do, inasmuch as the Court had found that applies only to the first paragraph of Article they were illegal and there appears to me to 34, so that the action for compensation be no doubt that the rules of Article 34 also available under the second paragraph of apply in such a case.' Article 34 is not covered by that reservation and therefore may perfectly well be assimilated to proceedings under Article 40. In the second place, no express provision is made regarding the possibility of the That constituted a particularly extensive Community's incurring liability by reason of interpretation of Article 34 which, if applied an unlawful decision which has not been annulled but is nevertheless vitiated by a 34 — Meroni et Cie and Others v High Authority (above, note 10), with an Opinion by Mr Lagrange; Joined Cases fault of such a nature as to render the 9 and 12/60 Vloeberghs, SA v High Authority [1961] ECR 197, with an Opinion by Mr Roemer. Community liable and has given rise to 35 — Judgment of 13 June 1958 ¡n Case 10/56 Meroni v High direct and special harm. Authority [195S] ECR 157.

to the present case, would possibly bring necessarily have retroactive effect, is not most of the claims made by Peine-Salzgitter sufficient to secure satisfactory compen- within the scope of Article 34. By virtue of sation.' the Astéris case, cited earlier, the annulment of Article 5 of General Decision No 3485/85 placed the Commission under an obligation to draw all the consequences of the annulling judgment: in other words, And ultimately it was only because he in the first place, to regard all the individual reached the conclusion that no wrongful act decisions adopted during the eight quarters or omission had been established that the in question as necessarily vitiated in the Advocate General proposed that the same way as the general decision and the application be dismissed. two individual decisions which were annulled; in the second place, since the quota system had come to an end and reparation in kind was thus excluded, it was required to take all steps necessary to ensure equitable redress for the harm resulting The line of reasoning of the Court of directly from all those decisions and, where Justice was entirely different.

In the first place, Article 40, unlike Article 34, is silent on this point, the words used being wholly general. . . The contrast between this wording and that of Article 34 is Then, the Court of Justice took the view striking . . . Article 40 sets out the ordinary that only special harm, or at least specific law on non-contractual liability under the harm, which had not been established in Treaty; Article 34 is a lex specialis dealing that case could give rise to entitlement to with the specific case of harm resulting from reparation under Article 40.

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applicants had not specifically demonstrated which is deemed to arise when the 'that there have been inexcusable mistakes'. Commission remains silent for a period of two months. The problem therefore amounted to deciding very precisely a case of the kind with which we are concerned today, namely the question whether, in The Court of Justice thus manifested its proceedings concerning legality and without intention, in that judgment, to ensure at all any annulling judgment having been costs that the legality of a measure which delivered, an action to establish liability had not been annulled could be considered could, nevertheless, be based directly on in the context of proceedings under Article Article 40. 40 of the Treaty.

1) The first inference which the High My views come close to the arguments put Authority draws from Article 34 is forward in that case by the Commission. It certainly correct: after a successful must not be forgotten that, under the ECSC application for annulment undertakings Treaty, actions for failure to act, under within the meaning of the Treaty cannot Article 35, are closer than under the EEC assert rights to damages except on the Treaty to the action for annulment, because basis of Article 34 if they have suffered they are brought against an implied refusal harm resulting from the decision.

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On the other hand, the basic rule giving a After developing a number of arguments to right to damages is worded in quite general which I shall refer in due course (see II B 2, terms: . . . T h e difference which has been below), the Advocate General reverted to outlined between actions for annulment and matters of principle, giving a consistent actions for compensation, taken together answer to the various questions which he with the general wording of Article 40, in had thus raised. Those questions of principle my opinion thus runs counter to the are closely related to the travaux prépara- argument of the High Authority which toires which I referred to earlier. claims that all the limits on the actions for

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conduct. On the other hand in the present case there The establishment of this right to compen- was no decision of the High Authority sation requires a corresponding right of creating rights or having legal effects. In action which is set out in Article 40 by way these circumstances the infringement of the of a general rule. . . . Treaty of which the High Authority is accused, on the ground that this is inherent It follows from all these provisions that the in its inaction, may unquestionably be Treaty gives to every injured party . . . the pleaded in support of an action based on opportunity of having the Court examine Article 40 and there is no need, in whether the Treaty has been correctly considering the present case, to rule upon

"without conduct which gave rise or which should prejudice to the first paragraph of Article have given rise to a decision.' 34". That phrase excludes any possibility of a reference to Article 34 and refers on the Accordingly, having decided that an action contrary to situations where Article 34 is for compensation based on Article 40 of the not applicable, as in the present case.' Treaty was admissible and after examining the conditions concerning the existence of maladministration and the characteristics of The Court of Justice did not follow its the harm necessary for entitlement to Advocate General, in so far as it considered compensation, the Advocate General that the conditions concerning the existence reached the conclusion that the of harm of such a nature as to give rise to Community's liability had been incurred in entitlement to reparation were not met in that case. that case.

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The contradictory and irreconcilable aspects consequently themselves declared inad- of the above two judgments have been missible in any event. 'This was in fact clearly highlighted. 36 merely an application o f the system estab- lished by Article 34 of the ECSC Treaty, whereby the implementation of the second paragraph of that article presupposes the existence of an annulling judgment, followed by completion of the procedure (b) 3. The third judgment delivered by the provided for in the first paragraph. The Court of Justice is more recent and much less Usinor judgment, extensively referred to by pertinent. It is the judgment of 10 June the Commission in the present case, does 1986 in Usinor, 17 upon which the not therefore in my opinion have the Commission expressly relies. Admittedly, it importance which the Commission attributes is stated in the fourth paragraph of the to it and does not appear in any way to rule summary of that judgment that 'it follows out recourse to Article 40. from Article 34 of the ECSC Treaty that an action for compensation for the damage arising from an individual decision may be brought by an undertaking only after the (c) Legal writers are extremely divided as to decision which allegedly caused the damage the answer to the following question: is an has been declared void and after it has been undertaking which has not brought established that the Commission does not proceedings for annulment under Article 33, intend to take the steps needed to redress and then followed the procedure under Article the illegality found to exist'. 34, entitled to bring an action for compen- sation under Article 40 of the ECSC Treaty, seeking reparation for maladministration deriving from the illegality of a decision which has not been annulled?

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On autonomy of the action for reparation under the basis of those restrictions, it has been Article 40. The admissibility of that action is contended that if the alleged damage orig- subject only to conditions specifically appro- inated from the supposed illegality of the priate to it.' 39 measure giving rise to the damage, the action for reparation would be admissible only if such illegality had previously been ascertained by the Court. In other words, the action for reparation was necessarily subordinate to the action for annulment or, It was for analogous reasons that Joachim where appropriate, the action for failure to Friedrich Meinhold 40 subscribed to that act, the result of which would have been to thesis, adding to it a number of arguments subject the admissibility of the former to the to which I shall refer (see II B 2, below). same restrictions as those affecting the Similarly, Messrs Cartou and Blanchet 41 admissibility of the latter. Acceptance of expressed their approval of that thesis, that view would have had serious conse- relying on the one hand on the terms of the

available. 38 — See in that regard Goffin, JT 1963-2, p. 115. See also Much, Die Amtshaltung im Recht der Europäischen Gemeinschaft fur Kohle und Stahl, p. 56 et seq., p. 93 et seq., and p. 161, who essentially bases his analysis on the proviso concerning the first paragraph of Article 34 contained in the opening sentence of Article 40. See also

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solution (in that judgment) that, where an 40. The question thus may be asked whether aggrieving measure is unlawful, compen- the phrase "Without prejudice to the first sation must be sought under Article 34, if paragraph of Article 34" at the beginning of two conditions are met: Article 40 refers to annulment as such or to annullability. In other words, is the application of Article 40 excluded solely (a) the time for bringing an action has not where the harm has been caused by an expired; annulled measure or also where the damage derives from an annullable measure'? The author does not give a precise reply to that question, since his study precedes the (b) the aggrieved undertaking may avail Meroni and Vloeberghs judgments. But, itself of a remedy under Article 33, relying on an analysis of the judgment of the Court of Justice of 19 July 1955, 45 he is of the opinion that 'there is a fault of such a and where those two conditions are not met nature as to render the Community liable an action for damages is not excluded but wherever an unlawful act has been must simply be brought on the basis of committed . . . The breach of a legal obli- Article 40'. 42 gation thus constitutes a wrongful act or omission within the meaning of Article 40 of the Treaty'. (c) 3. Finally, several authors have displayed great caution in analysing this question.

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reparation, to the procedure provided for in There could be no clearer statement of the the first paragraph of Article 34 of the position and such an interpretation may be ECSC Treaty. even more important in view of the fact that, as concluded by all the Advocates General of the Court of Justice, in particular Messrs Roemer and Lagrange in their abovementioned Opinions, the judicial system instituted by the ECSC Treaty was particularly influenced by the legal concepts of French administrative law. (d) Inconclusive travaux préparatoires

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and the proviso in Article 40 referred to the at a constructive and teleological interpre- first paragraph of Article 34. This fact tation of the provisions, in order to ensure appears to detract from the thesis of the lex attainment of their purpose and consistency specialis which the present Article 34 of the of the procedures and remedies available Treaty is said to constitute. under the Community legal system as a whole.

(a) Arguments concerning the limited scope of the objections to that thesis made, in In any event, although the Court of Justice particular, by legal writers has on several occasions referred to the travaux préparatoires to interpret legis- lation, 49 it seems preferable, having regard to all the considerations just put forward and to the uncertainty which they reflect, to (a) 1. In the first place, the analyses made by rely on the traditional methods of inter- some authors have disregarded the real scope preting the Treaty, with a view to arriving of the principle of the autonomy of the action in liability. According to some authors, 49 — See, in that connection. Case 6/54 Government of the Kingdom of the Netherlands v High Authority of the ECSC Article 34 implies that if the supposed [1954 to 1956] ECR 103; Case 15/60 Simon v Court of damage derives from the alleged illegality of Justice[1961] ECR 115; Case 39/72 Commissionn v Italian Republic [1973] ECR 101; Case 18/76 Government of the a decision, an action for reparation can be Federal Republic of Germany v Commission [1979] admissible only if that illegality has ECR 343 and Case 130/87 Catsse de Pensions des Employes Prives v François Retter[1989] ECR 865 previously been ascertained by the Court.

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. . a certain change in the The action for reparation referred to in case-law' brought about by the Lütticke Article 40 differs from an application for judgment. In the Schöppenstedt case, annulment both in its subject-matter and in adopting an approach somewhat similar to the nature of the grounds which may be that of the Commission today, the Council pleaded. As regards its subject-matter, an contested the admissibility of the action for action for reparation is directed not to the damages, contending that what was sought abolition of a particular measure but only to was not reparation for harm attributable to reparation of damage caused by an act or it but the abolition of the legal effects of the failure to act amounting to a wrongful act contested measure. It also stated that to

Thus, it was stated in the performance of its duties. The Council judgment of 15 July 1963, 5 0 that 'an further contends that the principal administrative measure which has not been conclusions are inadmissible in that they annulled cannot of itself constitute a involve the substitution of new rules, in

Subsequently, that case-law has always been confirmed and even taken further. 53 In particular, the judgment in Krohn v This enabled certain authors to place in Commission 54 seems to me to be of essential hermetically sealed compartments on the importance since the Court of Justice held one hand Article 34, which was regarded as that 'the action provided for by Article 178 a procedure for reparation for harm and the second paragraph of Article 215 of resulting from the illegality of an annulled the Treaty was introduced as an decision and, on the other, Article 40, autonomous form of action with a particular which was regarded as constituting a purpose to fulfil. It differs from an action procedure facilitating the reparation of for annulment in particular in that its damage caused by ordinary conduct on the purpose is not to set aside a specific measure part of the administration, such as practical but to repair the damage caused by an measures, incorrect information, negligence institution. It follows that the existence of an and so forth. individual decision which has become definitive cannot act as a bar to the admissi- bility of such an action. The decision cited by the Commission relates solely to the excep- tional case where an application for Subsequently, that distinction was found to compensation is brought for the payment of be without any basis, as pointed out in an amount precisely equal to the duty which particular by Guy Isaac 55 who emphasized the applicant was required to pay under an that 'except in civil service matters, the individual decision, so that the applicant essentially economic purpose of the activity seeks in fact the withdrawal of that indi- of the EEC endows both the damage and vidual decision . . . '. That judgment appears the damaging events with their own to me to be particularly relevant to the particular features; since the Community, by present case where, in the first place, certain contrast with a national administration, individual decisions became final and, in the undertakes hardly any concrete activities, in second place, the action for compensation, essence it is necessary to develop a system by virtue of its very subject-matter, is of liability for damage caused by juridical, and more particularly legislative, activity'. 53 — See to that effect, the judgments in Case 43/72 Merkur v Commission [1973] ECR 1055; Case 238/78 Irekt-Arkady v Council and Commission [1979] ECR 2965 — the 'Quellmehl' case, with a very explicit Opinion from Mr C a p o t o r t ion that point at p. 2981, Joined Cases 261/78 and 262/78 Interquell v Council and Commission [1979] ECR 3045; Case 76/79 Karl Konecke v That had already been pointed out by Commission [1980] ECR 665, Case 543/79 Anion Birke v Mr Advocate General Roemer in his Coimei/ [1981] ECR 2169, and Case 281/82 Société Unifrex v Commission and Council [1984] ECR 1969 54 — C a s e 175/84 Krohn v Commission [1986] ECR 753 55 — Above, p 252

Opinion in Vloeberghs when he stated that it Willemsen . . . ), the Court made clear that followed from all the provisions of the under the second paragraph of Article 215 ECSC Treaty to which he had referred that and the general principles to which that 'the Treaty gives to every injured party, and provision refers, Community liability even to undertakings outside the depends on the coincidence of a set of Community, the opportunity of having the conditions as regards the unlawfulness of the Court examine whether the Treaty has been acts alleged against the institutions, the fact correctly applied. In this respect it was quite of damage and the existence of a direct link proper for the applicant to rely upon the in the chain of causality between the case-law of the Court in which Article 40 wrongful act and the damage complained of. was also applied when it had to be considered The measures which, according to the whether the conduct of a Community applicants, gave rise to the alleged damage institution was in conformity with the Treaty are legislative measures. With regard to such and when the legality of a decision had to be measures, according to a similarly consistent examined. Article 40 is not therefore limited series of decisions of the Court, the to cases where the injury has been caused by Community does not incur liability unless a "concrete acts of the Community" or by sufficiently serious breach of a superior rule "defectiveness" or "negligence in the actual of law for the protection of the individual working of its departments", as the High has occurred (judgment of 2 December Authority stated during the oral proceedings'. 1971 in Case 5/71 Zückerfabrick Schop- Mr Advocate General Roemer repeated penstedt [1971] ECR 975). Regard must be that view in his opinion in Schöppenstedt: had to these requirements when the actions 'When the question is raised whether the are examined. Accordingly, it is appropriate Council . . . was guilty of a wrongful act or to examine separately, on the one hand, the omission . . . it must first be considered question whether the fixing, by measures whether the implementing regulation must adopted by the Council and the be considered illegal. Illegality is, in general, Commission, of the threshold price for the first prerequisite for a claim based on durum wheat for the period in question is the liability of the administration.' vitiated by illegality in the light of the criteria indicated above, and on the other hand whether the applicants are able to prove damage causally related to the contested measures.'

That is clearly applicable to the case before (a) 3. Thirdly, some legal writers have us, since all the individual decisions, which contended that a finding of illegality in became final, in that they were not proceedings to establish liability instituted on contested, also exhausted their legal and the basis of Article 40 places the High material effects immediately after the end of Authority under an obligation to annul the each quarter for which they fixed decisions at issue, contrary to the letter and the production and delivery quotas. spirit of the ECSC Treaty, as indicated, in particular, by the travaux préparatoires for that Treaty. (a) 4. Finally, it has often been stated, in support of the view that Article 34 constitutes a lex specialis, and derogates entirely from the action under Article 40, that the preconditions Once again, it was Mr Advocate General for the Community's liability to be incurred Roemer who disposed of that objection in were different under each of those articles, as his Opinion in Vloeberghs, when he stated regards both the nature of the fault and the that 'a finding in an action for damages that nature of the alleged harm. an administrative measure is illegal neces- sarily includes, according to the High Authority's argument, a requirement that This thesis has been undermined by the the administrative measure be annulled, and Court of Justice itself. Bearing in mind that, this means that the purpose of the action for even though those two articles are drafted annulment is achieved. It is true that this in somewhat different terms, it would be consequence may follow in some cases. But inconceivable for two distinct systems of it must not do so if, for example, the High liability to be established under the ECSC Authority, in the interest of the Community Treaty, the Court required, for the application of Article 40, both a serious 57 — See, on this point, H. W Fuss. 'La Responsabilité des fault and sufficiently serious harm, in other Communautés Européennes pour le Comportement Illégal de leurs Organes', Revue Trimestrielle de Drost Europeen, words conditions virtually similar to those 1981, p. 1 ; j . - F Couzinet:'La Faute dans le Régime de la under which liability could be incurred on Responsabilité non contractuelle des Communautés Euro- peennes', Revue Trimestrielle de Droit Europeen, 1986, the basis of Article 34. 58 Accordingly, as p 367; F Schockweiler, with G Wivenes and J. M Godart 'Le Regime dc la Responsabilité Extracon- tractuelle du fait d'Actes Juridiques de la Communauté 58 — See, in that connection, the case-law of the Court of Européenne', Revue Trimestrielle de Droit Europeen, 1990, Justice referred to at III A 2 regarding the seriousness of p 27 the fault and at IV 1(b) regarding the nature of the harm

regards the principles at issue and the very short period of one month, laid down by general coherence of the system of the Article 33, for an action to be brought for the Treaty, there is nothing to prevent an action annulment of an individual or general in liability, based on the illegality of a decision. As Mr Advocate General Roemer decision constituting a fault of such a nature emphasized in his Opinion in Vloeberghs, as to cause such liability to be incurred and 'the preliminary action, as a condition sine having given rise to direct and special qua non of the application for damages damage, from being brought on the basis of based on defective decisions, is not in every Article 40 and not solely under Article 34. case judicious. It is possible to imagine a case in which damage only became apparent after the expiry of the limitation period'. It would therefore be inconceivable, in such circumstances, to require steel undertakings to submit, as a protective measure, claims for annulment, possibly accompanied by (b) Arguments as to the need for appropriate claims for a finding as to the liability of the judicial protection of the individual Community, solely for the purpose of providing the possibility of a guarantee for their rights. In numerous cases, it is a very delicate question for an undertaking to decide whether a general decision, on the one hand, is vitiated by a misuse of powers and, on the other, is liable to cause it direct Both in its judgment in Case 6/60 Humblet and special harm. There is no apparent v Belgian State,59 and in its judgment in reason why, once the period of one month Case 25/62 Plaumann, 60 the Court of has expired and after the harm has actually Justice stated that the principle should be become evident, an undertaking should not applied whereby 'in case of doubt, a provision be entitled to seek to establish the establishing guarantees for the protection of Community's liability under Article 40. All rights cannot be interpreted in a restrictive things being equal, as we shall see below, it manner to the detriment of the individual is appropriate here to draw a parallel with concerned'. However, that would indeed be the mechanism of the objection of illegality the result of an excessively restrictive view against general decisions, which has been of Articles 34 and 40 of the ECSC Treaty to allowed both under the ECSC Treaty and the effect that, in the absence of prior under the EEC Treaty. annulment of a decision by the Court, it is impossible to seek to establish the Community's liability under Article 40 (no less impossible than on the basis of Article 34).

administration cannot after their annulment to undertakings that are not undertakings take "appropriate measures" instead of within the meaning of Article 80 of the pecuniary reparation. In such cases even Treaty, in other words often undertakings applicants entitled to institute annulment in non-member countries, that boils down proceedings must be able to submit directly to saying that, on the basis of Vloeberghs, claims for damages.' This comes close to the the latter would be entitled, where a circumstances of the present case where, on decision was illegal and involved fault, to the one hand, the quarterly decisions fixing act directly on the basis of Article 40. quotas immediately exhausted their legal Conversely, Community undertakings and material effects and, on the other, within the meaning of Article 80 would, in owing to the abolition of the quota system, the same circumstances, be required to it was no longer possible for the obtain prior annulment of the decision in Commission to think of taking appropriate question by the Court within the very brief steps in the form of compensation in kind. period laid down in Article 33 and then to observe the 'pre-litigation' procedure laid down in the first paragraph of Article 34. Such a solution would be truly unreasonable and would reflect an excessively restrictive

Article 40. The Court of Justice specifically took that point in relation to actions for failure to act which, in fact, are fully assimilated under the ECSC Treaty to (c) 1. Article 40 lays down the ordinary law actions for annulment. In the absence of a governing the non-contractual liability of the flexible interpretation of that kind in Community under the ECSC Treaty. That Vloeberghs, the applicant, which did not was the view expressed by Mr Advocate have the status of an undertaking within the General Lagrange in his Opinion in Meroni, meaning of Article 80 of the Treaty, would above; the same conclusion was reached by have been denied any legal remedy. Mr Advocate General Roemer in his Opinion in Vloeberghs, where, after reviewing all the applicable provisions, he stated that 'it follows from all these provisions that the Treaty gives to every

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conformity with the Treaty and when the specialis in matters of liability, in other legality of a decision had to be examined'. 61 words, as maintained by many authors, an autonomous form of action to establish liability under the ECSC Treaty. It is, in my opinion, merely a rule of procedure which requires that, where an undertaking has previously secured the annulment of an Moreover, that finding follows from the individual or general decision on the basis very terms of Article 40 of the ECSC Treaty of Article 33 and intends subsequently which grant every 'injured party' the right obtaining reparation for the harm which it to seek 'pecuniary reparation' in the event considers itself to have suffered as a result of 'any injury caused in carrying out this of that annulled decision, it must, first, Treaty by a wrongful act or omission on the observe the 'pre-litigation' phase provided part of the Community'. Those terms are for in the third sentence of the first extremely broad and, as emphasized by Paul paragraph of Article 34 and, secondly, be in Reuter, 62 'to infer that, outside proceedings a position to take advantage of a decision for annulment, an administrative decision from the Community court finding that the cannot give rise to liability would be to add fault by which the decision was vitiated is of to the text something that was not there'. such a nature as to render the Community liable and that the harm suffered is indeed direct and special.

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procedure under ordinary law provided for additional procedural obligation under in Article 40, seem to have failed to make Article 40. this elementary finding. It seems to me that if that proviso had been intended to relate to an autonomous and special form of action available only where there was a That, it seems to me, means that where prior annulment it would have referred to proceedings to establish liability are brought the whole of Article 34 and not only to its under Article 40 and the alleged harm is first paragraph, since it is the second attributable to maladministration deriving paragraph of Article 34 which provides for from the illegality of a decision not previously entitlement to bring proceedings for annulled by the Court, the first paragraph of damages. Article 34 is nevertheless applicable.

64 — Sec the second subparagraph of Article 65(4) and Article 66(1). Translator's note· In fact, in the English version of the Treaty, the expression used in these cases is 'subject On the other hand, it is similarly clear, I to ', not 'without prejudice to - 65 — See, in this connection, the second paragraph of Article think, that the authors of the Treaty 47, Article 68(1), and Article 69(1) Translator's note: The intended to ensure that, even in the context English version uses the expression 'subiect to ', not 'without prejudice to of actions in liability, the Community court

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would not meddle overmuch in the action, equality as between economic agents, decision-making of the High Authority; in depending on whether or not they are under- other words, it seems to me that they takings within the meaning of Article 80, and intended, in cases where the illegality of a compliance with the wishes of the authors of Commission decision constituted the basis the Treaty. of an action in liability and where that institution was under an obligation, by virtue of the first two sentences of Article 34, to draw all the consequences of the finding of illegality, to leave the widest (c) 3. This entire thesis appears to me to be margin of appreciation to the Commission supported by the Court's very liberal interpre- and in some way to avoid what then tation of the provisions at issue of the ECSC appeared to be a risk of 'government by the Treaty courts'.

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. Any other decision of damage and a possible misuse of powers would render it difficult, if not impossible, which might affect all general decisions, for the undertakings and associations leading to an accumulation of proceedings mentioned in Article 48 to exercise their of a purely protective or 'precautionary' right to bring actions, because it would nature; the solution which I propose to the oblige them to scrutinize every general Court — although this is not a decisive decision upon publication thereof for argument — is the one adopted in the provisions which might later adversely affect context of the EEC Treaty; to recognize the them or be considered as involving a misuse existence of liability on the basis of Article of powers affecting them. It would 40, by reason of the harm caused by an encourage them to let themselves be ordered unlawful decision, would affect only the to pay the pecuniary sanctions or periodic effects of that decision and only to the penalty payments for which the Treaty extent to which the Court considered that certain of its provisions gave rise to direct makes provision so as to be able, by virtue and special harm and constituted a fault of of Article 36, to plead the illegality of the some seriousness, a matter to which I shall general decisions and recommendations revert in due course (see below), III B 3. which they were alleged not to have

decision . . . In those circumstances, there is until very recently, the Commission still no reason why an applicant who is appeared not to agree with those decisions contesting an individual decision should not of the Court of Justice. It is not surprising be entitled to put forward the four grounds therefore that it should attempt to transpose of annulment set out in the first paragraph those arguments to the problem of the of Article 33 so as to question the legality of admissibility of actions in liability, the two the general decisions and recommendations lines of reasoning ultimately being very on which the individual decision is based.' 66 close to each other.

— Secondly, the judgment of 13 July 1961 In view of the alleged illegality, namely a in Meroni, above, despite a certain failure to act, the Court of Justice recognized cautiousness of approach, nevertheless that an action for compensation based on the accepted the possibility of liability first paragraph of Article 40 was admissible, proceedings under Article 40, on the basis although, it is true, it stated 'in the present of certain findings in a judgment given on case the Court is not asked to rule on the an objection of illegality. question whether it may be pleaded that the alleged illegality of a measure which has not been annulled constitutes in itself a wrong capable of giving rise to a right of reparation under Article 40', which shows Mr Advocate General Lagrange went much that the Court regarded this problem as further, when he emphasized that 'It is true more difficult to resolve than did some that the general decisions of the High authors. Authority have not been declared void : they have only been held to be unlawful following an objection to that effect. But the High Authority cancelled them, which it It is also true that, in that judgment, the was entitled and no doubt under a duty to Court of Justice held that the expression do, inasmuch as the Court had found that 'Without prejudice to the first paragraph of they were illegal and there appears to me to Article 34' 'excludes any possibility of a be no doubt that the rules of Article 34 also reference to Article 34 and refers on the apply in such a case.' contrary to situations where Article 34 is not applicable, as in the present case'. But the first grounds of the judgment showed that the principle of the autonomy of the action for compensation had not yet been I wholly support that view, having regard to fully accepted and it seems to me that that the development of the case-law of the incidental issue would today no longer have Court of Justice regarding objections of the same importance, in view of the illegality, definition of the concept of abovementioned developments in the maladministration and the now full and case-law of the Court of Justice on the wholehearted recognition of the principle possibility of invoking, in support of an that the action in liability is independent action in liability, the harm deriving from from the action for annulment, as well as unlawful measures which have not been the concrete consequences which are to be annulled and have become final. drawn from this.

(b) Where an undertaking has obtained the annulment by the Court of a general or individual decision on the basis of Article However, in such circumstances, and 33, it is required to observe the entire provided that the alleged harm derives from procedure provided for in Article 34. Thus, maladministration resulting from the if it has not obtained from the Court a illegality of a decision and not from a declaration finding, first, that the illegality course of conduct, the entire 'pre-litigation' by which the decision is vitiated constitutes procedure under the first paragraph of a fault of such a nature as to render the Article 34 is applicable. Community liable and, secondly, that the alleged damage is indeed of a direct and special nature, its claims for compensation are inadmissible since they are premature. I consider that this construction which I propose that the Court adopt is in conformity with a constructive interpre- tation of the provisions, that it is conducive In the present case, that applies to the relief to appropriate judicial protection for the sought by the applicant in paragraph 2 of its persons concerned and that it is not liable to claims. give rise to 'serious disturbances in the system of the Treaty'.

compensation (set out in paragraph 2) are proceedings for compensation under Article inadmissible on the ground that they are 40. But, as I said earlier, since those forms premature. of action do not seem to me to be in any way separate, it would appear really incon- sistent to provide for two distinct systems of liability under the same Treaty even though, It remains to be considered, on the one quite clearly, the concept of maladminis- hand, whether the illegality vitiating the tration includes, according to now settled decisions, whether annulled by the Court or case-law, the illegality by which a decision not covered by any annulling judgment, is vitiated. constitute a fault of such a nature as to render the Communities liable and, on the other, whether the alleged harm is indeed direct and special in character. Since It should be pointed out at this stage that, reparation of the damage must be made in by way of precaution, the applicant main- accordance with the procedure under the tained that, in the case of the decisions first paragraph of Article 34, it is not which had been the subject of an annulling necessary, in any case, to consider the judgment delivered by the Court, the problems relating to the assessment thereof. illegalities found and criticized therein had constituted a fault of such a nature as to render the Community liable within the meaning of the first paragraph of Article 34 III — The problems concerning the of the Treaty; as regards the other existence in this case of a fault such as to decisions, against which no proceedings render the Community liable were instituted in a concern to keep proceedings to a minimum, the applicant maintained, in the alternative, that, in any event, the Community must have incurred It seems to me that in order to resolve this liability under Article 40 of the ECSC problem it is necessary to give answers, Treaty, because the very illegality by which successively, to the following three those other decisions were vitiated questions : (A) In the first place, what system constituted maladministration on the part of of liability is to be applied in the context of the Commission in the implementation of the ECSC Treaty? (B) In the second place, the Treaty, such as to give rise to a right to what are the specific conditions which must reparation on the basis of the latter article. be met for liability to be incurred? (C) Thirdly, are those conditions satisfied in the present case with regard to the degree of seriousness of the fault? In general terms, the applicant states that the decisions annulled by the Court of Justice, and also the other decisions which were the same but were not annulled, are vitiated by A — What system of liability is to be applied a fault of such a nature as to render the under the ECSC Treaty? Community liable. It relies on the findings of the Court of Justice in the two judgments of 14 July 1988, cited above. Conceding that any decision annulled as vitiated by This is a new and delicate issue, at least as illegality does not necessarily render the far as Article 34 is concerned, since the Community liable, the applicant contests Court has been called upon to expound its that the conditions for the application of case-law further only in the context of Article 34 of the ECSC Treaty could be the

Whilst fully aware of the difference between the spirit and the letter of the Treaties, I rely, in reaching that conclusion, on the The Commission, for its part, considered, relevant provisions of the ECSC Treaty, on during the written procedure, that, as there the case-law of the Court of Justice relating is no judicial precedent concerning the to Article 40 and on considerations of application of Article 34 of the ECSC straightforward common sense. Treaty in the case of an illegal legislative measure, it is appropriate to refer to the judgments of the Court concerning the application of the second paragraph of Article 215 of the EEC Treaty. It is for that reason that the Commission asserts that the 1. The textual arguments Community's liability in respect of a legis- lative measure or of any measure implying choices of economic policy and a wide margin of discretion can be incurred only where a sufficiently serious breach of a superior rule of law for the protection of (a) Article 33 of the ECSC Treaty, individuals has occurred, and where the concerning annulment proceedings, shows institution concerned has, manifestly and clearly that the authors of the Treaty already seriously, disregarded the limits imposed on 69 — Case 143/77 Scholten-Honig v Council and Commission the exercise of its powers; the Commission [1979] ECR 3583

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(c) The very text of Article 40 confines itself to referring to 'any injury caused in carrying out this Treaty by a wrongful act or omission on the part of the Community'. In his (b) Article 34, the second paragraph of which Opinion in Meroni, cited above (judgment provides for proceedings for damages, which, of 13 July 1961), Mr Advocate General in my opinion, are identical or at least similar Lagrange considered that 'contrary to the to those under Article 40, lays down two view asserted by the High Authority in the preconditions in its first paragraph for entitle- written procedure, it is incorrect to say that ment to bring such an action: first direct and under French law there must usually be a special harm and secondly, a fault of such a serious wrong to render the public authority nature as to render the Community liable: on the contrary, more often than not liable — in other words, quite clearly, not just an ordinary wrong suffices. On the other any type of fault. It is for the Court to classify hand it is true that the required degree of the fault. seriousness varies according to the nature of the service, the extent of the difficulty encountered in guaranteeing it, and, on the other hand, to the extent of the protection which the interests which have suffered damage deserve. In each case a balance must be struck between the public interest and private interests. In the case of the When it is known, moreover, having regard system of equalization of ferrous scrap I do to the travaux préparatoires, that the not think that there are grounds for expression 'fault of such a nature as to requiring that the wrong must be "serious" render the Community liable' was or "unusually serious" . . . On the other substituted at the last moment for the hand the extremely complex nature of the expression 'serious fault', it is clear that the system and the inevitable delays inherent in authors of the Treaty intended to establish its proper functioning appear to me to be the principle of proceedings for reparation such as to require evidence of a wrong but, by means of very strict arrangements, which is sufficiently serious without being to place a particular limit on the conse- "inexcusable " '. quences thereof, particularly for the financial situation of the Communities. 70 — See 2, below.

We must now consider whether the Court such as to make it responsible for them'. of Justice followed that reasoning. Finally, in its judgment of 14 December 1961, 73 the Court stated that the High Authority 'whatever the reasons for this 2. The arguments based on the case-law of the failure . . . gravely neglected the duties of Court of Justice in the context of Article 40 supervision required by a normal standard of care, and it is this shortcoming which gives rise to its liability', before dismissing the In its judgment of 13 July 1961, Meroni, application to establish liability on the cited above, the Court of Justice said 'as a ground that no damage had been suffered. general observation, it must be said that, to the extent to which previous errors or defects . . . may have called for certain corrections, those errors and defects do not As is apparent, in all the foregoing cases, amount ipso facto to a wrongful act or even though Article 40 confines itself to omission. They may just as well be for mentioning a wrongful act or omission as a example the result of difficulty of solution condition for rendering the Community of intricate legal problems or the care- liable, without giving further details of acts lessness of the undertakings them- of that kind, the Court of Justice has

. . [and that] the What is important is that in both cases the promises to grant transport parities . . . are Community administration operates in a attributable to wrongful acts or omissions on delicate economic context, endeavours to the part of the High Authority of a nature reconcile several objectives which are often difficult to pursue simultaneously, and 71 — Case 23/59 FERAM vHigh Authority [1959] ECR 245. works against a background which is 72 — Joined Cases 29/63, 31/63, 36/63, 39/73 io 47/63. 50/63 and 51/63 Société des Laminom, Hauti Fourneaux, Forget, Fondenes et Usines de la Providence and Others v High 73 — Joined Cases 19/60, 21/60, 2/61 and 3/61 Société Fives Authority [1965] ECR 911. Lille Caii and Others v High Authority [1961] ECR 281

The same concern for consistency has led I shall set them out here, as they appear in me not to take the view that there are two the summary of the judgment, which different systems governing liability within faithfully reflects its substance: the same Treaty (one based on Article 34 and the other relating to Article 40 of the ECSC Treaty) and I thus think it appro- priate to propose that the Court should not establish two distinct systems of Community liability, depending on whether the Treaty 'The Commission does not incur involved is the ECSC Treaty or the EEC non-contractual liability for damage caused Treaty. The case-law which has developed to individuals through the effects of a legis- concerning the non-contractual liability of lative measure which involves choices of the European Communities under the economic policy unless a sufficiently serious second paragraph of Article 215 of the EEC breach of a rule of law for the protection of Treaty seems to me to be perfectly in the individual has occurred. Therefore the conformity with the concerns of the authors finding that a legislative measure is null and of the ECSC Treaty. Moreover, numerous void is insufficient by itself for the authors, as well as several Advocates Community to incur liability.' General, have pointed out a number of 'comings and goings' between the ECSC 75 — Case 74/74 Comptoir National Technique Agricole v Commission [1975] ECR 533. case-law and the EEC case-law in the 76 — Joined Cases 83/76 and 94/76, 4/77, 15/77 and 40/77 Bayenscbe HNL and Others v Council and Commission 74 — At p. 237. [1978] ECR 1209.

It seems to me to be well established, therefore, as has been pointed out, that all the decisions adopted each quarter to fix The foregoing decisions were confirmed by production and delivery quotas for the the judgments of the Court of Justice of applicant undertaking on the basis of the 4 October 1979 in Case 238/78 and Joined said Article 5 are merely decisions for the Cases 261/78 and 262/78, 77 by the application of that general decision, being judgment of the Court of 6 December necessarily affected by the same illegality as 1984, 78 and by the judgment of that which vitiated the general decision. 19 September 1985 79 and have never been undermined since then. It is appropriate to consider successively whether each of those prescribed conditions has been satisfied in the present case, as far as matters of Once again, even if it can be said that the principle are concerned. The condition actual and direct harm suffered each quarter concerning the existence of a sufficiently by the applicant was caused by the indi- serious breach, that is to say a manifest and viduai unlawful decision addressed to it for grave disregard of the obligations incumbent that quarter, which precludes reliance on upon the Commission, will be considered Article 34 in respect of the decisions of when the relevant principles are applied to which the annulment was not sought, the the present case, in section C below. initial harm certainly derives from the general decision which was at the origin of 77 — Case 238/78 Ireks-Arkady v Council and Commission all the illegal acts committed in the estab- [19791 ECR 2955 and Joined Cases 261/78 and 262/78 Interquell v Council and Commission [1979] ECR 3045 lishment of delivery quotas, on a basis (known as the 'Quellmchl' cases). which the Commission itself regarded as 78 — Case 59/83 Biovilac v European Economic Community [1984] ECR 4057 fair, for undertakings whose ratio between 79 — Joined Cases 194/83 to 210/83 Asiens [1985] ECR 2815. production quotas and delivery quotas was

considerably lower than the Community According to the applicant, a finding of misuse average. of powers or a finding that decisions were applied in a manner contrary to the principle of equality would he sufficient, in principle, to establish a fault, to the extent to which the institution does not succeed in exonerating itself from liability, as in the As regards the individual quarters of 1985, present case, by invoking exceptional it is the decisions by which the Commission circumstances. The Commission's fault refused to adjust the applicant's delivery derives solely from the fact that it delib- quotas (for category III products) under erately placed the applicant at a disad- Article 14 of General Decision N o 234/84 vantage for reasons of political expediency. extending the quota system for 1984 and Although it recognized the need for the 1985 which are under attack. Here again, measure to be taken, it in fact tried to have General Decision No 234/84 is certainly a the responsibility for it borne by the legislative measure involving choices of Council, so as to escape its own political economic policy. Thus, where the responsibility. Commission commits errors of law in the relatively complex application of that general decision, by means of individual decisions, and even in the absence of any The Commission is of the opinion that the illegality vitiating the general decision, it Court of Justice did not hold that any general seems to me that the conditions to be principle of law had been infringed and applied are those laid down in the merely criticized an infringement of material abovementioned case-law and not the more rules which, although important, are of a flexible conditions for administrative liability procedural nature, namely misinterpretation to arise which are found, in particular, in of the need to obtain the assent of the Community staff cases. What seems to me Council. to be important is not merely the rank of the legislation allegedly infringed but also — and essentially — the margin of appreciation available to the Commission when it adopts its decision and the more or It seems to me that the superior rule of law less complex economic context in which the at issue in the present case is without doubt decision is adopted. the principle of non-discrimination or of equality as between economic agents. That principle is, in the first place, very clearly upheld by Articles 3, 4 and 5 of the ECSC Treaty, and then in Article 58(2) of the same Treaty, which states that 'the High It thus seems to me that the first condition Authority s h a l l . . . determine the quotas on is met. an equitable basis', and, finally, by Articles 60, 65 and 66 of the Treaty.

1961 in Meroni, above, in which the Court found an infringement of the principle of of Justice held that 'the High Authority was equality. entitled and under a duty, which was precisely in the interests of the undertakings subject to the equalization scheme, to ensure that this scheme functioned at all times on a basis of fairness, legality and In the first case, concerning the annulment accuracy as to the facts' and 'that the of Article 5 of General Decision undertakings subject to the financial No 3485/85, the Court of Justice held arrangements are in competition so that the (paragraph 27) that 'by failing to alter the High Authority must take particular care to I: P ratio which it considered necessary ensure that the principle of equality in the in order to determine the quotas on an field of public charges is always most scru- equitable basis pursuant to Article 58(2), the pulously observed; . . . in such circumstances Commission pursued a purpose different the High Authority cannot be blamed for from that laid down by that provision and having given precedence . . . to the principle thus committed a misuse of power.

objective differences. In order to determine whilst noting the two errors of law whether the difference of treatment of committed by the Commission, was which the applicant accuses the Commission concerned to point out (paragraph 19 of the may constitute a misuse of powers in its judgment) that 'it is apparent from the case, it is therefore necessary in the first documents produced at the Court's request place to consider whether the treatment is that in several cases the Commission has based on the existence of objective and granted additional quotas pursuant to substantial differences having regard to the Article 14 although the undertakings aims which the Community may lawfully concerned were profitable', that is to say on pursue as part of its industrial policy in the a basis that was formally contrary to the European steel industry'. thesis developed by the Commission.

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superior rule of law intended for the and those of 26 June 1958, 82 in which the protection of individuals. Court of Justice held that 'pursuant to a principle generally accepted in the legal systems of the Member States, equality of 3. The exact significance of the condition treatment in the matter of economic rules concerning the existence of a 'sufficiently does not prevent different prices being fixed serious breach', that is to say, to use the terms in accordance with the particular situation used in Bayerische HNL, above, the of consumers or of categories of consumers requirement that the institution concerned has provided that the differences in treatment manifestly and gravely disregarded the limits correspond to a difference in the situations on the exercise of its powers. of such persons. If there is no objectively established basis distinctions in treatment are arbitrary, discriminatory and illegal. It cannot be alleged that economic rules are All that is necessary here is to define the unfair, on the pretext that they involve exact meaning of that condition since the direct consequences or disparate advantages question whether it is satisfied in the present for the persons concerned when this is case will be considered in due course, in clearly the result of the different operating section C. conditions' (see also the judgment of 10 May 1960 83).

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defendant institutions in this respect was judgment referred more to the superior rule verging on the arbitrary and was thus of of law which had been infringed in that case such a kind as to involve the Community in than to the actual! nature of the non-contractual liability'. infringement committed.'For it is true that 'arbitrariness' thus defined coincides, by its very nature, with every breach of the general principle of non-discrimination. It seems to me that that incidental issue in that judgment cannot be regarded as decisive here since, on the one hand, it is the only judgment referring to such conduct as a precondition for the European It is for that reason that, all things Communities to incur liability and, on the considered, I suggest that we adhere to the other, it is necessary to refer to the Opinion traditional conditions, as laid down in the of Mr Advocate General Reischl in order to considerable majority of the cases of the grasp its meaning. Essentially, Mr Reischl Court of Justice on the subject, namely defined arbitrary conduct, in the form of manifest and serious breach of the duties disregard of the principle of equality, by incumbent upon the institution concerned. reference to 'arbitrary disadvantage'. He added, however, that 'it must be shown, if there is to be any question of liability, that there has been a misuse of discretion verging on the arbitrary, in other words a C — Has the condition concerning manifest decision which is totally unsupported by and serious disregard of the duties incumbent, objective considerations or in which such in this case, upon the Commission been considerations have had no influence'. satisfied?

OPINION OF MR BIANCARELLI — CASE T-120/89

annulment of the individual decisions fixing Council's assent would have been necessary the applicant's delivery quotas for the first under Article 95 of the ECSC Treaty. two quarters of 1986. Finally, it states that the Court's views on the division of powers between the Council and the Commission were clarified for the first time by that judgment of 14 July 1988 and that the Court did not find any infringement of important material rules but only that of a procedural rule, namely misinterpretation of the necessity to obtain The applicant maintains that the decisions the assent of the Council. annulled by that judgment of the Court of Justice are vitiated by a fault of such a nature as to render the Community liable, since the Commission acted in breach of its own communication to the Council of 25 September 1985, in which it considered adjustments to delivery quotas necessary I find it difficult to subscribe to the and because it thus infringed the first Commission's assessment of the gravity of subparagraph of Article 58(2) of the ECSC the fault, which, although certainly a Treaty. Observing, in addition, that the delicate matter, must in my view be based Court held that the annulled decisions on the following matters of fact as a whole. constituted a manifest misuse of powers in its regard, the applicant claims that it is clear that those decisions are vitiated by a fault of such a nature as to render the Community liable.

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(c) In the third place, the Commission was very well aware both of the cause ofthat less favourable position, which derived from a collapse of steel prices on the markets of That fact is apparent not only from a certain non-member countries, and the conse- reasonably attentive reading of Article 58(1) quences thereof for the Community steel and (2) of the ECSC Treaty but also from undertakings concerned, which had delivery the case-law of the Court prior to the date quotas for the internal market which were on which the Commission adopted the clearly inadequate and were, as a result, decision and, in particular, the judgment of required to dispose of their production on the Court of Justice of 11 May 1983. 8 6 The the markets of non-member countries, Court stated very clearly in that judgment thereby suffering losses or, at least, that 'under the first subparagraph of Article considerable decreases of profits. 58(1), it is for the Commission to establish the existence of a manifest crisis.

In cerned, when consulting the Consultative laying down that form of consultation Committee, or in its communication to the between the Commission and the Council, Council of 25 September 1985 concerning Article 58 did not determine its detailed the introduction of a system of production arrangements. In those circumstances, it is a quotas after 31 December 1985. 85 86 — Case 244/81 Khckner v Commission [1983] ECR 1451, 85 — Above. paragraphs 10 and 11.

matter for the two institutions to provide, Werke GmbH v High Authority [1965] by common consent and in accordance with ECR 677, at page 699, and its judgment of their respective powers, for the form which 13 July 1965 in Case 37/64 Mannesmann their cooperation shall take. The AG v High Authority [1965] ECR 725, at requirements of Article 58 are thus satisfied page 741, made a distinction between "the if such cooperation culminates in the very basis" or "essential structure" of the Council's assenting to the "quota system" financial arrangements provided for in which the Commission proposes to set up, Article 53(b) of the ECSC Treaty and the without its being necessary to require the other elements of those arrangements. It two institutions to examine a detailed draft held that "there is no justification for the decision'. conclusion that the decisions of the High Authority taken with the unanimous assent of the Council could only be amended, even in the case of amendments not affecting the basis of such decisions, by a new decision also taken with the unanimous assent of the And indeed, the Commission itself stated, in Council". the course of the proceedings leading to the judgment of the Court of Justice of 7 July 1982, 87 precisely what the Court held in its judgment of 14 July 1988. In its defence to As regards the respective roles of the High a plea in law concerning the lack of any Authority and the Council in the application assent from the Council, the Commission of the first two paragraphs of Article 58, had contended that 'it is to the Council that Mr Advocate General VerLoren van the Treaty grants the power to take the Themaat made a detailed examination of appropriate measures in cases of manifest the different ways in which those provisions crisis. The requirement of the assent may be interpreted and of the opinions of envisaged in Article 58 is therefore satisfied academic writers on this matter (Opinion of provided that the Council has consented to 26 May 1982 in Case 119/81 [1982] the principle of establishing a quota system, ECR 2658, at pp. 2672-2677).' 88 being apprised of the material content of the system envisaged. On the other hand, it is not necessary for the Council to give a decision on the detailed arrangements for (g) The Commission cannot therefore that system. The consultation which took seriously claim to have been surprised or to place in this case satisfies those requirements have been confronted with an as yet unre- and the existence of the Council's assent is solved legal problem and it is therefore strange duly attested in the preamble to Decision that it should have considered it necessary to No 2794/80'. seek the assent of the Council which, for reasons which have not been disclosed to the Court, the latter refused to grant it (on the specific point of the adjustment of delivery quotas).

intention to adjust the applicant's I: P ratio, Finally, it is surprising that the Commission it came up against fierce resistance from the should congratulate itself on not aban- vast majority of undertakings and associ- doning its intent but to have 'taken the ations, which considered that a correction difficult option of negotiating with the was inappropriate. Having regard to the Council in order to give effect to its arguments put to it, the defendant could intention'. The fact is that the Commission have changed its mind about the need to not only flagrantly disregarded the limits on amend the I: P ratio. However, instead of its own powers but also, by approaching the abandoning the idea, it took the difficult Council in order to settle that modification option of negotiating with the Council in of details of the delivery quota system for a order to give effect to its intention. The very limited number of undertakings, set out defendant's intention thus sought precisely along a path which, ex hypothesis could lead the opposite of an arbitrary disadvantage.' practically nowhere other than the point actually arrived at.

It is similarly astonishing that the The Court of Justice thus inferred that it Commission should contend that, in the was 'foreseeable, once the system had been face of such resistance, it could have introduced, that a particularly unfavourable changed its mind about the need to amend development on the export market might the I: P ratios of the nine undertakings require an adjustment of that ratio in order concerned. Although the Commission is to enable the Commission to comply with its required to consult undertakings, under obligation to determine the quotas on an Article 58(2), it is certainly under no obli- equitable basis. Such an adjustment must gation to adopt their suggestions. On the therefore be considered as forming part of contrary, it is under a binding obligation to the details of the system for which the determine the quotas on an equitable basis, Council's assent is not necessary... By in accordance with the principles laid down failing to alter the I: P ratio which it in Articles 2, 3, 4 and 58 of the ECSC considered necessary in order to determine Treaty. the quotas on an equitable basis pursuant to

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In the author's opinion, under the ECSC Treaty, there has been a progression from a subjective view towards an objective view of misuse of powers and, as a result, that impropriety 'is tending to merge with the concept of error of law, at least in so far as It is true that the concept of misuse of the latter relates to the scope of powers and powers has developed to some extent in the aims attributed to action on the part of Community law, as has been pointed out by the Commission'. Fernand Schockweiler. 89 He highlighted clearly the distinction between the French and German concepts of misuse of powers. According to the French concept, which is essentially subjective: 'The concept of In any event, I consider, on the one hand, misuse of powers is understood as relating that the view of misuse of powers adopted to the defect by which an administrative in the judgment of 14 July 1988 remains measure is vitiated where an administrative essentially subjective in character (see authority has wilfully used its powers for a paragraph 27) and, on the other, that the purpose other than that for which they were case-law of the Court of Justice concerning conferred upon it.' misuse of powers has always treated that impropriety as being of extreme gravity. 89 — See F. A. Schockweiler: 'La Notion de Détournement de Thus, on at least three occasions in Pouvoir en Droit Communautaire', Actualité Juridique de Droit Administratil, 20 June 1990, p. 435. connection with the ECSC Treaty, the

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It must be observed, on the one hand, that that fact, which, moreover, appears remote It is clear, as has moreover been emphasized from the dispute, was referred to only by the Commission, that that draft decision incidentally in the communication submitted did not cause any upset in the circles by the Commission to the Council on concerned since nearly all the steel under- 25 September 1985 to which I referred takings benefited from that system. As a earlier 91 and, on the other, that that result, it was not capable of reducing the argument was not referred to at any stage in inequalities previously established and the the written or oral procedure before the decision was annulled. Court of Justice prior to the judgment of 14 July 1988. In other words, that

90 — See in thai connection the judgments in Case 8/55 federation Charbonnière de Belgique v High Authority [1956] ECR 245; Case 2/57 Compagnie des Haut, But what is important is the fact that, in fourneaux de Chane v High Authority [1957 and 1958] ECR 199; and Joined Cases 3/64 and 4/64 Chambre order to establish a system of that kind, Syndicale de la Sidérurgie Française and Others v High which had a much greater impact and wider /1u(Aori/y[l965] ECR 441 91 — See, under the heading 'Supplementary Remarks', Section repercussions than would have resulted from XIII, last paragraph a readjustment of delivery quotas on the

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For the second, third and fourth quarters of 2. Do the illegalities found by the Court of 1984, the Commission, aware of the diffi- Justice in its abovementioned judgment of culties experienced by the applicant owing 14 July 1988 in Case 103/85 constitute a to its particularly unfavourable I: P ratio, fault of such a nature as to render the adjusted the part of the quota available for Community liable? delivery in the common market. On the other hand, for the first quarter of 1985, the Commission, by an implied decision which was confirmed by an express decision of 11 June 1985, refused to make a further In that case, which covers, as far as the adjustment of that kind, relying on two applicant's claims are concerned, all four arguments which have both been held by the quarters of 1985, the Court of Justice was Court of Justice to be vitiated by an error of called on to examine the conditions for the law, namely, first, the absence of excep- application of Article 15 of General tional difficulties and, on the other, the allo- Decision No 234/84, which provides that cation of aid intended to cover operating 'If, by virtue of the scale of the abatement losses.

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It was thus clear that Article 14 was intended solely to compensate for the That interpretation was vitiated by a rigours of the quota system and that excep- manifest error of law in the light of the very tional difficulties originating otherwise than wording of Article 14 of General Decision from the introduction and application of the No 234/84, from which it was clearly quota system could not be taken into apparent, as the Court of Justice held in consideration under that article. As was paragraph 17 of the judgment, 'only the clearly shown by the Advocate General, that difficulties which are the direct consequence is precisely what would have happened if of the establishment and application of the the Commission's reasoning had been quota system may be considered by the followed. It was therefore incumbent on the Commission in applying Article 14'. Commission to carry out a case-by-case review of the situation of each undertaking and of the nature and extent of the excep- tional difficulties suffered by each as a result of the quota system alone, without asking What is more, once again, that finding was not new as far as the Commission was 92 — Case 14/81 Alpha Steel Commission [1982] ECR 749

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whether on the whole it was making a loss or used for steel production, within the a profit. meaning of the ECSC Treaty, namely for the closure of such plant or, in exceptional cases, in respect of an enduring reduction of capacity used.

' . . . it follows that the effect which aid may have on the profit and loss account of an (b) The classification of the aid received by undertaking cannot be regarded as a valid Peine-Salzgitter criterion for determining what constitutes aid intended to cover operating losses within the meaning of Article 14. Since the result of any aid may be to compensate wholly or in part for any operating losses, At the material time, the applicant had the Commission's argument with regard to received aid under the directive of the the application of Article 14 would exclude Federal Minister for the Economy almost all aid which is not aid for closure. concerning the grant of aid for structural improvement of steel undertakings, of 28 December 1983. The only aid at issue in this case was that intended to bring about structural improvements, facilitating special It is therefore the conditions of grant and amortization arrangements for plant to be the aim of aid which must be taken into

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'It is thus undeniable that the Community legislature intended to widen appreciably the class of beneficiaries of this equity clause. Whereas under Decision No 2177/83 all traders who had received As the Court of Justice pointed out in any aid, apart from aid for closure pursuant paragraph 25 of the judgment of 14 July to Article 4 of the Aids Code, were barred 1988, 'The Court held in its judgment of from the benefit of Article 14, under 15 January 1985 in Case 250/83 Fin sider v Decision No 2748/83 all traders, even Commission [1985] ECR 131 that the aim those who had received aid, were allowed to of the general decision extending the quota benefit from Article 14 with the sole system was to promote the restructuring exception of those who had received aid needed to adapt production and capacity to with a view to covering operating losses.' foreseeable demand and to re-establish the competitivity of the European steel industry. The Court observed that it was consistent with that aim that undertakings which had received a form of aid likely to delay the desired restructuring, namely aid intended As far as the definition of aids intended to to cover operating losses, should be cover operating losses was concerned, the excluded from the benefit of the additional Court of Justice had delivered on quotas, the grant of which might likewise 15 January 1985, that is to say several reduce their willingness to restructure. It weeks before the Commission's contested follows from that judgment that aid which decision, an important judgment which in practice is likely to promote the desired shows that the fault committed by the restructuring and improvement in competi- Commission in the present case is truly tivity cannot be regarded as aid intended to inexcusable.93 In paragraph 7 of that cover operating losses within the meaning of Article 14 of the general decision now in 93 — Case 25C/83 Finiiderv Commission [1985] ECR 131 force.'

In the present case, as pointed out by the excessively vague and that there were good Court of Justice, it was clear that the grounds for believing the applicant's diffi- contested aid had been granted with specific culties were attributable not to the quota reference to a programme of restructuring system but to 'structural failings'; and, on of particular expedience from the point of the other, that it was not at all clear that the view of economic policy and that in German structural aid should not be addition the aid might have to be refunded regarded as aid intended to cover operating if the undertaking decided to abandon the losses. closure or reduction in capacity previously decided upon by it. It was thus clear that the aid in question could not be regarded as aid liable to delay the desired restructuring, within the meaning of the Finsider In the first place, it is my view that a judgment, that is to say aid intended purely superior rule of law for the protection of and simply to cover operating losses within individuals has indeed been infringed, in this the meaning of Article 14 of General case, by the Commission. The principle of Decision No 234/84. equality of treatment has been infringed in two ways: on the one hand, by a manifestly incorrect interpretation of Article 14 of General Decision No 234/84 which, as a general equity clause, was specifically The various errors of law committed by the intended to ensure compliance with the Commission, accompanied by inconsistent fundamental principle of equitable distri- practice vis-à-vis the applicant and also bution of production and delivery quotas; practice which discriminated against the and, on the other hand, because it has been applicant and benefited competing under- clearly shown, as expressly stated by the takings in connection with the application Court, that, in several cases, contrary to its of legislative provisions which were easy to own contention, the Commission granted interpret and for which the conditions of additional quotas under Article 14 even applicability had already been clarified by though the undertakings concerned were the Court of Justice on two occasions seems profitable, that is to say in total contra- to me without any doubt to constitute a diction with its own thesis. fault of such a nature as to render the Community liable vis-à-vis the applicant, within the meaning of Article 34, and an instance of maladministration in carrying out the Treaty, of the kind referred to in Secondly, I consider that, having regard to Article 40. the foregoing, the successive errors of law committed by the Commission in this case are indicative of a manifest and grave disregard of the limits on the exercise of its powers within the meaning of Bayerische The Commission's defence will certainly not HNL. affect my views on this point, since it merely seeks to avoid the authority of res judicata of the abovementioned judgment of the Court of Justice of 14 July 1988 by contending that the term 'exceptional diffi- In those circumstances, I propose that the culties', within the meaning of Article 14, as Court hold that, on the one hand, not only previously clarified by the Court, remained Commission General Decision No 3485/85

(Article 5) of 27 November 1985 but also (b) Article 40, for its part, makes clear that all the individual decisions determining the pecuniary reparation by the Community is applicant's delivery quotas for products in to be made in the event of any injury caused Categories Ia, Ib, Ic and III, from the first in carrying out the Treaty by a wrongful act quarter of 1986 to the second quarter of or omission on the part of the Community, 1988, and also the individual decisions but no details are given to describe the determining the applicant's delivery quotas injury. for Category III products, for the four quarters of 1985, are vitiated by a fault of such a nature as to render the Community However, in the judgment of 13 July 1961 liable, whether on the basis of Article 34 or in Meroni, the Court of Justice expressed its that of Article 40 of the Treaty. In other views on the necessary characteristics of words, I specifically propose that the Court such injury. Differing in that respect from accept that all the claims made by the the views of its Advocate General, applicant in paragraph 1(a), (b), (c), (d) and Mr Lagrange, who considered that there (e) are not only admissible but are also well was no need to require special harm for the founded. purposes of Article 40, the Court held that it could not 'accept that the normal disad- vantages which are bound to be inherent in the system of equalization amount to an injury giving rise to a claim for reparation IV — Finally, the problems concerning the and is reinforced in its view because these harm alleged by the applicant remain to be disadvantages affect every Community considered undertaking and because equalization on the other hand gives substantial advantages to all consumers of ferrous scrap, especially by maintaining the price of Community scrap at a reasonable level and by preventing much larger fluctuations of this I suggest that we consider successively: (1) price. In the present cases it has not been the background to the problem, (2) the shown that the disadvantage suffered by condition as to the direct nature of the undertakings owing to the fact that they harm, (3) the condition as to the special were for a time uncertain as to the final nature of the harm and, finally (4) the amount of their equalization contributions is extent of the right to reparation. greater than the disadvantage normally inherent in the system which was chosen'.

may be required... to accept within same result would have been arrived at in reasonable limits certain harmful effects on the absence of the unlawful conduct. Such their economic interests as a result of a an examination clearly shows that in the legislative measure without being able to present case it was the unlawful obtain compensation from public funds even Commission decisions which directly caused if that measure has been declared null and the harm suffered by the applicant. void' and, on the other, that the harm must affect limited and easily identifiable categories of economic agents (see the judgments in Bayerische HNL and Biovilac v Commission, above). The Commission, for its part, denied both that there was any harm at all and that there was any causal link between the alleged harm and its decisions. The Commission put forward four arguments, which will be It may thus be inferred that, in addition to considered successively. In the first place, it the requirement of the direct nature of the was as a result of the quota system that the harm, which is to be found in all the legal applicant was able to survive the crisis in the systems of the Member States, the condition steel industry; secondly, the harm was not as to the special nature of the harm, within caused by the annulled general decision but the Community legal order, actually by the individual decisions based on it, embraces two ideas: the harm must be which have not been contested and special, firstly by being of a certain gravity, therefore have become final; thirdly, the a certain intensity; and it must be special, harm in this case, that is to say the failure to secondly, by affecting only a limited and obtain the profit which would otherwise easily identifiable category of economic have been earned, was not caused by the agents. It is necessary to consider whether contested general decision alone, since there those various conditions are satisfied in the were other causes, which were not attribu- present case. table to the Commission; finally, the absence of a loss of any substantial duration and the emergence of new market shares in the future, on expiry of the quota system, negate the applicant's arguments. 2. The direct nature of the harm

It seems to me that, as the Court of Justice markets came to an end favourable held in respect of the equalization economic conditions came into being in the mechanism for the users of scrap in Meroni, steel industry, enabling steel undertakings to and as it has also held on numerous become profitable again. All the foregoing occasions regarding the monitoring system decisions of the Court of Justice, which and implementation of steel production require an equitable sharing of sacrifices quotas, an undertaking cannot, in relation and constant and scrupulous observance of to the ECSC Treaty and when particular the principle of equality — these being prin- difficulties are being experienced, complain ciples given effect by the adoption of an of the normal disadvantages which are equitable production and delivery quota bound to be inherent in the system put into system — clearly run counter to such a effect by the Commission, since that system contention.

In the present the jobs which depend on it to be preserved case, the loss of profit referred to by the as far as possible. However, contrary to the applicant was caused only by the disadvant- applicant's intention, Article 58 does not in ageous determinations of quotas in the indi- any way require the Commission to vidual decisions which were not contested, not guarantee each individual undertaking a by the general decision which was contested. minimum level of production determined in accordance with the undertaking's own criteria of profitability and development. The aim of Article 58 is to spread in the most equitable manner possible amongst all undertakings the reductions required by the I shall not dwell on the obvious fact that economic situation and not to guarantee such an argument is without foundation in undertakings a minimum level of view of everything that I have just said employment proportionate to their concerning the relationship between Articles capacity.' 34 and 40 of the ECSC Treaty and the principle whereby actions to establish

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suffered the same fate if brought before the beginning of 1985, the steel price on certain Court. non-member-country markets had de- teriorated considerably further that the Commission itself considered it necessary to adjust the I: P ratio of a limited number of steel undertakings which, as a result, But, once again, as I have endeavoured to suffered considerable harm. demonstrate, the problem lies simply in determining whether the illegal acts in question, by which all those decisions are vitiated, constitute maladministration or a fault of such a nature as to render the Community liable, depending on whether Accordingly, the unlawful imposition of the reference is made to Article 40 or to Article requirement that an undertaking dispose of a 34 of the ECSC Treaty. That argument is, substantial and excessive portion of its therefore, entirely irrelevant and, ultimately, production on markets which at that time merely reiterates reasoning which I rejected were structurally unprofitable, at prices when considering the problems of admissi- significantly lower than those prevailing on bility. other markets where it would otherwise have been entitled to dispose of its products, amounts, in my view, to causing direct harm to that undertaking. Moreover, that is precisely what the Court of Justice said in (c) Thirdly, the Commission states that there its judgment of 14 July 1967. 94 is no entitlement to compensation since the harm derived from other causes which are not attributable to it.

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Those losses are therefore developed legal systems, that the Court relatively slight and cannot be regarded as grants compensation not only for lucrum liable to give rise to serious damage for the cessans but also for damnum emergens, undertakings in question. That conclusion is provided that, as in the present case, direct all the more inescapable inasmuch as it must causality is sufficiently established.95 be borne in mind that, as the Court has consistently held, measures adopted under

force. The existence of temporary damage But the Commission's argument on that cannot therefore be decisive if, all in all, the point falls down upon examination of the undertaking is ultimately able to make real scope of the action, in which what is profits on a restored market. sought is not any restoration of a relative market share but merely reparation for the harm suffered as a result of a series of illegal decisions involving faults of such a It is true that the case-law of the Court of nature as to render the Community liable. Justice has accorded a degree of importance to adverse effects on the relative position of steel undertakings in the market, or again to the concept of 'enduring losses in terms of relative position', but only to the extent to which the negative effect was regarded as Moreover, at the hearing, Counsel for the serious. 96 The order made in response to applicant took care to emphasize that the the application for interim relief in the financial compensation sought related only to the direct harm and not the indirect harm 95 — O n this point, sec the O p i n i o n of M r Advocate General resulting from all the unlawful decisions, C a p o t o r t i in Ireki-Arkjdy, above, at p 2998

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It seems to me that, by using this argument, The applicant is therefore right, in my the Commission is persisting in the same opinion, to claim that the issue is not view, namely that, since Peine-Salzgitter whether it was able to achieve profits after achieved profits, it must not only tolerate all the quota system came to an end but simply the unlawful acts of the Commission but whether it suffered discrimination when the also is to be deprived of any reparation in system was in force. respect of those unlawful acts which amount to a fault of such a nature as to render the 97 — See the Opinion of Mr Advocate General M. Capotorti of Community liable. 12 September 1979 (at p. 3001).

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— As regards the intensity of the harm by (b) The special nature of the harm in relation reason of its extent, it is sufficient to refer, to the unlawful acts condemned by the Court on the one hand, to the Commission's of Justice in its judgment of 14 July 1988 in communication to the Council of Case 103/85, in other words the unlawful 25 September 1985 and, above all, to the refusal to adjust the applicant's deliveiy quotas actual judgment of the Court of Justice, for category III products for the four quarters paragraph 7 of which states that 'it is an of 1985. established and undisputed fact that these unfavourable I: P ratios entail exceptional economic difficulties for the applicants'. That exceptional nature is also apparent from the arguments relied on by the applicant in — The extent of the hann in question is calculating the damage suffered by it. recognized by the Commission itself in the Although, by all appearances, they require letter sent on 28 December 1988 by to be clarified and possibly rectified, they Mr Kutscher on its behalf to Peine-Salz- nevertheless show that the harm suffered as gitter, conceding that 'as regards the Article a result of the illegality by which the 14 supplements, they amounted to about Commission decisions were vitiated by far 7 000 tonnes per quarter for 1985'. That exceeds the harmful effects on their economic figure is perfectly consistent with the claims interests which private individuals may made in the application, since the applicant properly be expected to accept within assesses as 28 289 tonnes for the whole year reasonable limits as a result of a legislative the additional quantity which it would have

— Conversely, the Commission contends that Article 34 of the ECSC Treaty does not allow 4. The extent of the entitlement to reparation full reparation for the harm suffered but merely allows appropriate damages to be claimed, a term which necessarily means a predetermined sum. In its view, the second paragraph of Article 34, which uses the word 'Schadensersatz' in the German I think it is appropriate to make some version of the Treaty, that is to say observations on this point, since, if the 'damages', merely establishes the jurisdiction Court has followed me to this point in my of the Court of Justice and contains no reasoning, it will refer the matter back to substantive provision. There was also a the Commission, either under the terms of drafting error in the German translation, the first paragraph of Article 34 or under since in the French version, which is the the conditions of the ordinary law on only authentic version, both paragraphs of liability, as is the frequent practice of the Article 34 refer only to the possibility of Court of Justice when the documents before granting 'indemnité' and not to that of it do not enable a precise decision to be paying damages. Thus, in the Commission's given as to the amount of the alleged view, a provision of that kind, being damage. That is clearly the case here, particularly flexible, leaves the Court a wide particularly since the oral procedure did not margin of discretion in order to strike a fair

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compensate for all the various components of not limited to the field of private law but the harm suffered. In that respect, I shall also apply to the liability of public auth- quote from the Opinion of Mr Advocate orities, and more especially to the General Capotorti in Ireks-Arkady of non-contractual liability of the 4 October 1979, cited earlier: Community.' 98

V — Final conclusions

For all the foregoing reasons, I propose:

(1) that it be declared that the following decisions of the Commission involve a fault of such a nature as to render the Community liable : 98 — At pp. 2998 and 2999. 99 — In that respect, see the judgment in Joined Cases 27/59 and 39/59 Campolongo vHigh Authority [1960] ECR 391.

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(a) Article 5 of Commission Decision No 3485/85/ECSC of 27 November 1985 (recognized as admissible under Article 34);

(4) That the matter be referred to the Commission so that it may take the steps required by the first paragraph of Article 34 of the ECSC Treaty;

(5) That the Commission be ordered to pay the costs.

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