C-362/95

BLACKSPUR DIY A N D OTHERS v C O U N C I L A N D COMMISSION

O P I N I O N O F ADVOCATE GENERAL TESAURO delivered on 5 June 1997 *

1. In these proceedings, the English com- 3. In 1988, the EBF lodged a second com- pany, Blackspur DIY, in receivership, and its plaint, this time concerning the Chinese managing shareholders, Messrs Kellar, importer's failure to fulfil its undertaking. Glancy and Cohen (hereinafter collectively After reopening the anti-dumping pro- referred to as 'the appellants') ask the Court cedure, the Commission adopted Regulation to annul the judgment of the Court of First (EEC) N o 3052/88 of 29 September 1988 Instance of 18 September 1995 1 which imposing a provisional anti-dumping duty rejected in its entirety their claim that the on imports of certain types of paint, distem- Council and the Commission be ordered to per, varnish and similar brushes originating pay compensation for the damage allegedly in the People's Republic of China, 3 which suffered by them as a result of the imposition entered into force on 5 October 1988. The of an anti-dumping duty on imports of paint provisional anti-dumping duty was imposed brushes from the People's Republic of at the rate of 69% of the net unit price of the China. products in question (see Article 1(2)).

Facts

4. Blackspur, which was incorporated in proceedings without imposing protective 1988 with the object of selling and marketing measures. tools for amateur home improvers, placed a first order in July of that year, according to the reconstruction of events by the Court of First Instance, 6 for the purchase of brushes from China. They were cleared though cus- toms on 5 October 1988, the date of entry into force of Regulation N o 3052/88 impos- 6. On 5 August 1993, the appellants insti- ing the anti-dumping duty. The United tuted proceedings before the Court of Justice Kingdom authorities required the duty to be seeking compensation for the entirety of the paid on 5 March 1990. Blackspur was placed damage suffered by them as a result of the in receivership in August 1990 and subse- Community's conduct in connection with quently went into liquidation. the imposition of the anti-dumping duty. The case was remitted to the Court of First Instance pursuant to Article 4 of the Council Decision amending Decision 88/591/ECSC, EEC, Euratom establishing the Court of First Instance of the European Communi- ties. n

5. By judgment of 22 October 1991, 7 the Court of Justice, in proceedings under Article 177, held that Regulation N o 725/89 The judgment of the Court of First Instance was invalid. 8 The Commission therefore reopened the investigation 9 and, by decision of 18 May 1993, 1 0 closed the anti-dumping

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BLACKSPUR DIY A N D OTHERS v C O U N C I L A N D COMMISSION

8. The Court of First Instance specifically between the date on which it was set up and referred to an earlier decision of the Court of August 1990 (when it was placed in receiver- Justice according to which 'the Communi- ship), Blackspur imported only one consign- ty's non-contractual liability ... is dependent ment of brushes from China, to a total value on the coincidence of a series of conditions of £40 948.38 (in fact, net of duty and VAT as regards the unlawfulness of the acts the figure was £22 831.55). From the accoun- alleged against the Community institutions, tants' report also produced by the applicants, the fact of damage and the existence of a the Court noted that Blackspur had a turn- causal link between the conduct of the insti- over of £1 435 384 over the period extending tution concerned and the damage com- only from 1 July 1988 to 31 August 1989. plained of' 12 and the fact that it is incumbent on the applicant to prove the causal link (as well as the other conditions for liability). 13 The Court of First Instance then confined itself to the matter of the causal link and reached the conclusion that, in the case before it, the applicants had not provided any proof thereof. The application was therefore dismissed.

10. The Court of First Instance went on to observe that Blackspur's statement that the import of brushes from China accounted for half of its turnover in the period prior to imposition of the anti-dumping duty was 9. In particular, the Court of First Instance, uncorroborated by any evidence. after noting that the applicant company had not produced to the Court its balance sheets for the years 1988/89 and 1989/90, analysed the documentation drawn up by a firm of chartered accountants in order to assess the merits of the applicants' allegations concern- ing the cause of the damage (paragraph 44).

13. By a document lodged on 27 November 1995, the appellants appealed to the Court of Justice, requesting: (a) that the judgment of 11. The Court of First Instance therefore the Court of First Instance be set aside; came to the conclusion that the loss of the (b) that the case be remitted to the Court of commercial outlet represented by the sale of First Instance for judgment; and (c) that the Chinese brushes could not have prevented Council and the Commission be ordered to Blackspur from continuing its commercial pay the costs of the proceedings in their activities until August 1990, when it was entirety. placed in receivership. In particular, the Court noted that there was nothing in the chartered accountants' letter to show how the loss of the market in cheap brushes had influenced Blackspur's financial results to such an extent that it was unable to give 14. The appellants put forward numerous effect to the commercial plan approved by its grounds of appeal, under the headings of bank; and that there was no other evidence breaches of procedure and infringements of to support the applicant's explanation that its Community law. poor financial results were attributable to the discontinuance of its sales of Chinese brushes.

error in law consisting in the failure to take 18. The appellants recognize, 14 however, proper account of their arguments. that, in paragraphs 47 and 48 of its judgment, the Court of First Instance elaborated a dif- ferent basis for the decision as an alternative to what it had argued up to that point, with the result that, according to the appellants, the criticisms made earlier fall to be consid- ered only if the grounds of the judgment, as set out in paragraphs 47 and 48, are also viti- ated by an error in law. In particular, accord- 16. The appellants' second ground of appeal ing to the appellants, the Court of First is that, in paragraph 43 of its judgment, the Instance relied on the figures for brush sales Court of First Instance appears to draw sup- from 1 July 1988 to 31 August 1989 (repre- port for its decision from the fact that Black- senting about 40.44% of turnover) in order spur, on being asked to produce to the Court to reject the assertion that it was the imposi- balance sheets for the years 1988/89 and tion of the anti-dumping duty that made it 1989/90, allegedly gave the unacceptable impossible to find alternative sources of sup- answer that it was not in a position to do so. ply and, consequently, obliged Blackspur t o In actual fact, according to the appellants, withdraw from the market for sales of cheap the Court of First Instance never asked for brushes. There too, they claim, the Court of balance sheets to be produced but only First Instance erred in law my misrepresent- requested details of the company's turnover ing their case: they had merely claimed that for the years in question. the imposition of the duty had prevented them from importing Chinese brushes as planned, but certainly not brushes from else- where. The appellants' efforts to import brushes from elsewhere were unsuccessful, so that their business was inevitably dam- aged.

20. Turning to the Court's rejection of the claims for compensation made by the mem- bers and the management of Blackspur, the appellants state first that the Court of First Instance misrepresented their case by saying in paragraph 51 of the judgment that the 19. According to the appellants again, the guarantees furnished by them required them Court's inference in paragraph 48 of the to introduce capital into Blackspur. In actual judgment that the loss of brush sales did not fact, the directors were obliged to pay Black- prevent Blackspur from continuing its com- spur's debts. mercial activities and even increasing its turnover is wholly inappropriate. Its contin- ued trading and its increase in turnover were merely the results of the efforts made by the English company to survive the imposition of the duty — efforts which proved insuffi- cient. In particular, if it had examined Annex 1 Secondly, the Court of First Instance errone- to the application, the Court of First ously relied on the judgment in Dumortier Instance would have discovered that Black- Frères15 to establish a proposition of law spur's aggregate turnover from 1 September that any loss caused by the institution of 1989 to 31 July 1990 should have amounted insolvency proceedings amounted to indirect to £4 402 225, whereas it turned out to be and remote damage, for which the Commu- only £1 864 016. The appellants also chal- nity could not therefore be held hable. lenge the Court's statement that the char- tered accountants' letter does not disclose the reasons for which the turnover achieved was not sufficient to allow Blackspur to give effect to the commercial plan approved by the bank, contending that the Court used that letter for a purpose other than that for Thirdly, the lack of evidence of the causal which it was intended, namely to give details link between the conduct of the institutions of turnover. O n the other hand, the Court failed to take account of the statements of the independent financial adviser, as set o u t in Annex 26 to the reply. According to the 15 — Joined Cases 64/76, 113/76, 239/78, 28/79 and 45/79 Dumortier Frères [1979] ECR 3091, paragraph 21.

and the damage complained of by the mem- Article 51 of the Statute of the Court of Jus- bers and directors of Blackspur was estab- tice — are intrinsically capable of supporting lished by the Court of First Instance as a the conclusions reached by the Court of result of the fact that, erring in law, it refused First Instance, the criticisms made against to admit the witness evidence of Blackspur's other parts of the judgment become irrel- independent financial adviser, who wrote the evant — but in any event I reserve the right statement contained in Annex 26 to the to revert to those criticisms later. Secondly, reply. as I have already pointed out, the appellants themselves have conceded that the other alleged defects in the grounds of the judg- ment have no bearing on the reconstruction of events undertaken by the Court of First Instance in the part of the decision under 21. The defendant institutions contend that review here. the appeal is inadmissible and, in the alterna- tive, unfounded. In the event of the Court's considering the application well founded and consequently annulling the decision of the Court of First Instance, the defendants con- tend that the Court of Justice, pursuant to the first paragraph of Article 54 of its EC 24. The Court of First Instance, on the basis Statute, should give final judgment in the of information supplied by the appellants, matter, without referring the case back to the inferred that, in the period from July 1988 to Court of first Instance, rejecting the appel- August 1989, Blackspur was in a position to lants' original claims as inadmissible and, in locate other sources of supply to replace the part, unfounded. brushes on which the duty was imposed, so much so that in fact it sold substitute goods to an aggregate value of £580 503. That fact, which cannot be denied since it comes from the documentation produced by the appel- lants in response to requests from the Court, 22. I consider the pleas put forward to be righdy seemed significant to the lower court partly inadmissible and partly unfounded. since, as it had noted earlier, in paragraph 45, the only consignment of brushes imported from China was valued, including duty and VAT, at £40 948.38. That value, even if increased by the 40% profit which the appel- (a) Blackspur's appeal lants claim to make on the products in ques- tion, nevertheless amounts to barely more than one-tenth of the value of the brushes sold in the year 1988/89.

which allowed it to sell non-Chinese brushes 26. The appellants complain that the Court thus appears to be substantially correct. The of First Instance did not take account of the same can be said of the inference drawn by explanations given on that point by that court as to the existence of a contradic­ Mr Cohen, one of the appellants, and did not tion between that finding of fact and the order any measures of inquiry in that regard appellants' view that the imposition of a either. O n the first point, it need merely be duty (dating back to October 1988) com­ observed that the statements made by pelled Blackspur to abandon the market in Mr Cohen added nothing to the facts estab­ cheap brushes. The sales of brushes in the lished by the Court of First Instance from period following the imposition of the duty, documents, namely that, even after the thanks to non-Chinese sources of supply, imposition of the duty, Blackspur succeeded could only prompt the Court to conclude in locating on the market considerable quan­ that there was insufficient evidence of a tities of brushes that were not subject to the causal link between the imposition of the duty. As regards the request for preparatory duty and the decline in sales of brushes inquiries, it was, if the appellants are given which occurred subsequently between the benefit of the doubt, made in paragraph November 1989 and August 1990. 13 of the application in the form of a request that the facts be investigated by means of 'a measure of inquiry', without any further details except for the clarification that an inquiry should be undertaken if any asser­ tions of fact were disputed. The absence of any evidence of a causal link was in fact objected to by the Commission and the Council in their respective statements of defence 1 7 but their objection did not give rise to any more specific request for prepara­ tory measures from the applicants.

enee of those facts. 18 That rule, moreover, is nothing more than the consequence of what in conformity with a fundamental procedural was noted in the earlier paragraphs, in par- principle which, albeit with slight variations, ticular paragraph 47, a fact made clear by the is common to the judicial practice of the first sentence of the paragraph in question. Member States. In the present case, in In response to the finding — which was not response to the challenge by the Commis- contested — that there were substantial sales sion and the Council, the appellants failed to of brushes (albeit of non-Chinese origin) produce sufficient evidence at the outset to even after the imposition of the duty and justify the adoption of measures of inquiry that there was an increase in aggregate turn- by the Court of First Instance 19 or — as over in the financial year 1989/90, notwith- regards the witness evidence mentioned at standing the decline in sales of brushes, the the hearing by counsel for the appellants — Court of First Instance considered that n o to specify the witnesses to be called, the facts causal link had been demonstrated between to be considered and the reasons for the the sale of Chinese brushes and financial requested hearing; 20 furthermore, it cannot results which were so disastrous that the even be said that they requested preparatory banks were prompted to call in receivers. measures in sufficiently clear and specific terms to oblige the Court of First Instance expressly to state its reasons for granting them or declining to do so. It cannot there- fore be said that, on the point at issue here, the judgment was vitiated by an error in law.

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O P I N I O N O F MR TESAURO — CASE C-362/95 P

required to explain -why any specific docu- in offering it. That, moreover, appears to be ment produced is irrelevant, particularly perfectly consistent with the different role where, far from satisfying the strict require- played by the Court of Justice in appeal pro- ments that must be met in such circum- ceedings, in which the facts, and therefore stances, the document in question is nothing the means of establishing and assessing them, more than a list of hypothetical sales fore- must be accepted as they appear in the analy- casts which, moreover, was drawn up ex post sis made by the Court of First Instance, facto and on a basis which is not clarified, 23 without there being any possibility of fur- since the original commercial plan was never ther measures of inquiry, not even where it produced. 24 considers that that analysis may be vitiated by contravention of legal rules: in such cir- cumstances the proper course of action is for the judgment to be set aside and the case to be referred back to the Court of First Instance.

23 — Annex 1 to the application is nothing more than a projec- tion, of hypothetical financial results drawn up after the event by the firm of chartered accountants Stoy Hayward in October 1992 and forwarded to Blackspur's lawyers. T h e forecast covers the period September 1989 to August 1990. 24 — In general, the evidence produced by the appellants to the Court of First Instance came, wholly or in part and directly 29. The rejection as unfounded and inadmis- or indirectly, from Blackspur or its directors. There is n o need for me to dwell on the irrelevance of such evidence sible of the part of the of appeal concerning — I shall merely repeat what was said by Advocate General the grounds stated by the Court of First Darmon in his Opinion, delivered on 12 April 1989, in Joined Cases 193/87 and 194/87 M anrissen and Others v Instance in the paragraphs following para- Court of Auditors, in which the Court delivered judgment on 11 May 1989 ([1989] ECR 1045): ' N o document pur- graph 47 necessarily means, on the basis of porting to support a party's allegations which emanates from that party should be taken into account by the Court' what the appellants themselves have indi- (paragraph 65 of the Opinion). cated, that the other grounds of appeal must

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BLACKSPUR DIY AND OTHERS v COUNCIL AND COMMISSION

also be rejected since they are levelled against cants to be £586 000, following the imposi- reasoning that was given ad abundiantam tion of an anti-dumping duty on those and are therefore irrelevant. 25 However, for brushes'. Thus, the Court of First Instance the sake of completeness, I shall also examine understood the applicants' position exactly the other complaints directed against the as they has stated it: the financial loss was a judgment of the Court of First Instance. cause of the company's liquidation, not a consequence.

31. As regards the second complaint, it does not in fact appear that the Court of First Instance asked the appellants to produce balance-sheets. However, as significantly acknowledged by the appellants themselves, As regards the second wrongly attributed the fact that the Court criticized the failure statement, namely that the loss of £586 000 to produce documents not requested has was the result of Blackspur's being put into absolutely no bearing on its assessment. I n liquidation, that is in fact what was stated in fact, the Court (in paragraph 44) accorded to paragraph 41 of the judgment. However, the the documentation produced, and in particu- Court of First Instance demonstrated that it lar a letter written by a firm of chartered perfectly understood the appellants' submis- accountants relating to Blackspur's financial sions where, at the end of paragraph 48, it results, the same value as a balance-sheet. As refers to their views in these terms: 'Black- regards the appellants' statement, in para- spur's liquidation was attributable to poor graph 42 of the appeal, that that part of the financial results occasioned by the discon- judgment, although not strictly relevant to tinuance of its sales of Chinese brushes, the Court's reasoning, also needs to be com- depriving it of profits estimated by the appli- mented on because the very fact of including it implies that some importance was attached to it, it seems hardly comprehensible and at 25 — Sec the order of the Court of Justice of 25 Mich 1996 most supports the view that the Court's in Case C-137/95 SPO and Others v Commission [1996] error was irrelevant. ECR 1-1611, paragraphs 47 to 49.

32. As regards the complaint concerning the brushes from China. It was therefore justi- failure to make, in paragraph 44 of the judg- fied for that document not to be specifically ment, any reference to Annex 1 to the appli- mentioned in the reasoning of the Court. cation and Annex 26 to the reply, with the result that the Court appears to have relied exclusively on the letter from Stoy Hayward produced by the appellants in reply to ques- tions from the Court concerning turnover, it has already been stated that the evaluation of evidence is a matter for the Court of First N o r can it be said a that there was any dis- Instance and cannot be reviewed by the tortion of evidence regarding the letter from Court of Justice. Stoy Hayward, considered by the Court, simply because it was produced by the appellants in order to respond to a question from the Court concerning turnover and not to explain the causal link. O n this point, all I need say is that the documents produced avail, and must be considered, on the basis of what they contain, and not according to the intentions of their authors. The Court did consider the objective information contained Nor, in this specific case, can it be said that in that document (in particular the turnover the Court of First Instance distorted evi- figures and the percentage of sales accounted dence by inferring from it things which it for by brushes) and the fact of having relied clearly did not contain. In fact, the document on it to show the lack (or lack of any proof) considered by the Court of First Instance of a causal link does not amount to a distor- appears to be the most comprehensive and tion of evidence. 27 comprehensible source of information con- cerning Blackspur's financial situation, with particular reference to the importance of brush sales as part of the aggregate turnover of the company — a matter justly regarded as decisive in determining whether there was a causal link. Moreover, it has already been stated that the failure to consider a document (b) The appeal by the directors containing hypothetical sales forecasts drawn up ex post facto and on an unexplained basis, like Annex 1 to the application, does not appear open to criticism. As regards Annex 26 to the reply, it merely comprises a num- ber of statements by a financial adviser, who, likewise on the basis of information received from one of the appellants, 26 submits that 33. As regards the rejection of the claims the main cause of the receivership of Black- made by the appellants, Messrs Kellar, spur was the loss of the opportunity to sell

Glancy and Cohen, directors of Blackspur, Justice in Dumortier Frères. 2S In their view the latter criticize paragraph 51 of the judg- the principle cannot be educed from that ment, alleging that it misdescribed their judgment that losses deriving from insol- claims. In particular, according to the way in vency proceedings amount to indirect and which the relevant part of paragraph 51 of remote damage of such a kind that the Com- the judgment is described in paragraph 75 of munity cannot incur non-contractual liabil- the appeal, it would appear that the Court of ity. First Instance interpreted the claims of Blackspur's directors as being directed towards obtaining compensation for the loss suffered as a result of the loss of the capital which they contributed as guarantors for Blackspur. If that is the case, then the Court of First Instance misinterpreted the claim Without its being necessary to examine in since, as guarantors, the appellants did not detail the real legal scope of the Court's dicta contribute capital to Blackspur but paid its in Dumortier Frères, it need only be debts, as they in fact stated. observed that the reference to that decision appears not to be of any relevance to the rea- soning on which the judgment was based. The Court of First Instance dismissed the directors' claim for damages as such since, in the absence of proof of a causal link between However, that criticism is based on a clearly the unlawful conduct of the institutions and erroneous and partial reading of paragraph the harm complained of by the company, 51 of the judgment, in which the Court of there could certainly be no link between First Instance sets out the compensation such conduct and the harm complained of by claims of the appellants, drawing a clear dis- the company's members and guarantors, any tinction between what they claim: as direc- such further harm being connected with the tors (and members) who contributed to the impact of the allegedly unlawful conduct on capital of the company and lost their contri- the assets of the company (see paragraphs 51 butions; as members who saw the possibility and 52 of the judgment). Here too, the rea- of obtaining income from their capital hold- sons given were given ad abundiantam and ing disappear; and, finally, as guarantors no ground of appeal directed against them 'obliged to honour the personal guarantees can succeed. which they had given to their company for the unrecovered amount of its debt'. There was thus no error or omission on the part of the Court of First Instance in setting out the appellants' claims.

(2) order the appellants to pay the costs, including those of the proceedings before the Court of Justice.

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