C-237/98

2. Outstanding debts are owed to the appellant by the Iraqi Government by virtue of a contract for the supply of services relating to the organisation and supervision of works connected with the construction of Iraqi Expressway No 1, concluded on 30 January 1975 with the Ministry of Works and Housing of the Republic of Iraq for a period of six years 1. By appeal lodged on 6 July 1998, and subsequently renewed several times Dorsch Consult Ingenieurgesellschaft mbH (hereinafter 'the contract'). DCI maintains (hereinafter 'DCI'), a company incorpo- that recovery of the said debt has become rated under German law, applied to the Court of Justice for the setting aside of the judgment delivered by the Court of First 2 — OJ 1990 L 213, p. 1 (amended by OJ 1990 L 216, p. 28). Instance in Case T-184/95 (hereinafter 'the The regulation was adopted by the Council, on a proposal from the Commission, having regard to the serious situation contested judgment') 1 andfor the relief resulting from the invasion of Kuwait by Iraq and following sought by it at first instance, or, alterna- Resolution No 661 of 6 August 1990, whereby the Security Council of the United Nations (hereinafter 'the Security tively, for an order referring the case back Council'), declaring that it was 'mindful of its responsibil- ities under the Charter of the United Nations for the to the Court of First Instance. By the maintenance of international peace and security' and noting that Iraq had not proceeded, in compliance with Resolution contested judgment, the Court of First No 660 of 2 August 1990, immediately and unconditionally Instance rejected the claim for compensa- to withdraw its armed forces from the territory of Kuwait, had decided to impose an embargo on trade with Iraq and tion for the damage allegedly suffered by Kuwait. Article 1 of the regulation prohibited, as from 7 August 1990, the introduction into the territory of the DCI as a result of the adoption of Council Community of any product originating in, or coming from, Regulation (EEC) No 2340/90 of 8 August the said States, and also the export to Iraq and Kuwait of all products originating in, or coming from, the Community. 1990 preventing trade by the Community Moreover, under Article 2 of the regulation, as from that date, the following were prohibited: (a) all activities or commercial transactions, including all operations connected with transactions which had already been concluded or partially carried out, the object or effect of which was to * Original language: Italian. promote the export of any product originating in, or coming from, the said States; (b) the sale or supply of any product, 1 — Case T-184/95 Dorsch Consult v Council and Commission wherever it originated or came from, to any natural or legal [1998] ECR II-667. See also the order of 16 September 1998 person established in the said countries for the purposes of (not published in the European Court Reports) whereby the any commercial activity carried out in or from the territory Court of First Instance proceeded under Article 84(1) of the of Iraq or Kuwait; and (c) any activity the object or effect of Rules of Procedure to rectify paragraphs 80, 81 and 83 of which was to promote such sales or supplies. the contested judgment.

impossible following the adoption of Law person seeking to assert the non-contrac- No 57 on protection of Iraqi property, tual liability of the Community is required interests and rights in Iraq and elsewhere 3 to prove the existence both of the damage by the Higher Revolutionary Council of the allegedly suffered and of a causal link Republic of Iraq. DCI therefore argued between that damage and the act attribu- before the Court of First Instance that, table to the Community (see paragraph 59). since Law No 57 represented the response Therefore, according to the Court of First of the Iraqi authorities to the Community Instance, in the circumstances of the pre- embargo measure adopted against them, sent case it fell to the appellant to show, and therefore had its origin in the adoption inter alia, that the adoption of Law No 57 of the regulation, the Community was constituted, as a retaliatory measure, an under an obligation to pay compensation objectively foreseeable consequence, to it in respect of the damage suffered as a according to the normal course of events, result of the refusal of the Iraqi Govern- of the adoption of the regulation.

According to the Court of First Instance, the evidence adduced by DCI was not such as to show, in a sufficiently clear way, that the Iraqi authorities had made a definitive refusal to pay their debts, prompted by the adoption of the regulation. In consequence, the possibility could not be ruled out that the failure to pay the outstanding debts due to the appellant was the result of a mere II — The contested judgment delay of an administrative nature, a tem- porary refusal to pay or temporary or permanent insolvency on the part of Iraq. In particular, the Court of First Instance observed that, even if Iraq's refusal to pay

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5. The Court of First Instance went on to virtue of Article 113 of the EC Treaty (now, point out that the appellant had not even after amendment, Article 133 EC), within discharged the burden of proving that the the exclusive competence of the Commu- adoption of Law No 57 constituted a nity. retaliatory measure, of an objectively fore- seeable nature, against the adoption of the regulation. In particular, Law No 57 con- tained no reference either to the Commu- nity or to the regulation; its preamble merely indicates that that legislation was 6. The Court of First Instance then ruled, enacted in response to the adoption by without forming a view on the question 'certain governments' of 'arbitrary deci- whether or not the principle of Community sions' against Iraq.

Council. The alleged damage, flowing from cial' damage), and (iii) exceeds the eco- the counter-measures adopted by the Iraqi nomic risks ordinarily inherent in doing Government, therefore resulted from the business in the sector concerned ('unusual' adoption not of the regulation but of the damage; see paragraphs 59 and 76 to 80). aforementioned resolution. As for the reg- ulation, the Court of First Instance observed that it was adopted specifically in order to ensure uniform implementation, throughout the Community, of the mea- In applying those criteria, the Court of First sures concerning trade with Iraq and Instance rejected the possibility that the Kuwait decided upon by the Security damage suffered by a Community under-

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DCI adds that the Court of First Instance is said to have statement contained in paragraph 66 of perpetrated. the contested judgment — to the effect that it could legitimately have instructed Iraqi lawyers, remunerating them for the services rendered, to take the appropriate protective measures provided for by the contract in issue, and could thereby have prompted the Iraqi authorities to adopt a definitive position regarding the non-payment of The existence of actual and certain damage their debts — is founded on an incorrect (the first to third pleas) interpretation by the Court of First Instance

requisite legal standard the actual and 7 — 0J 1990 L 304, p. 1 (amended by OJ 1990 L 317, p. 63). certain nature of the damage suffered. According to Article x of the contract, in the event of differences arising between the parties as to the interpreta- According to the appellant, on the basis tion or performance of the contract, they were to endeavour of the facts found by the Court of First to find an acceptable solution by conciliation, failing which they were to refer the matter to the Planning Board, without Instance, the opposite answer was called prejudice to their right to bring the same dispute before the

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that the appellant has not proven that it moreover, is there any obstacle to the actually contacted, or at least attempted to possible settlement of the debt in the future contact, the appropriate Iraqi authorities or including payment of the accrued interest Rafidian Bank in order to clarify the from the date of expiry of the contractual reasons for which the orders for payment deadline for payment. of its claims given by the competent Ministry to that bank in February 1990 had remained unexecuted (see paragraph 61 of the contested judgment).

9 — As is apparent from paragraphs 61 to 66 of the contested Finally, I consider that the complaint direc- judgment, DCI omitted to avail itself of the protection ted against paragraph 61 of the contested measures provided for under the contract, so as to prompt the Iraqi authorities to adopt a definitive position concern- judgment and the third plea advanced in ing the non-payment of the debts owed by them. Moreover, the appeal are inadmissible pursuant to none of the documents relied on by the appellant shows that it actually contacted the Iraqi authorities or Rafidian Bank in order to clarify the reasons for which the latter had failed Article 168a of the EC Treaty (now Arti- to act on the payment orders received (see point 9 above). cle 225 EC) and the first paragraph of On the contrary, the appellant expressly declared that it considered it inopportune to seek to accelerate the internal Article 51 of the EC Statute of the Court of administrative execution of the orders in question, even following the repeal of Law No 57. In those circumstances, Justice. According to the settled case-law of it seems arbitrary, in my opinion, to maintain that late performance of the payment obligation on the part of Iraq has become impossible, even temporarily. Nothing, there- fore, seems to point to the debts being irrecoverable. 10 — See Article 1 of Regulation No 3155/90 (emphasis added).

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11 — See, most recently, Case C-143/95 P Commission v Socurta and Others [1997] ECR I-1, paragraph 36, and Lucaccioni (cited in footnote 6 above), paragraph 31. The Court of First Instance has exclusive jurisdiction to determine the facts of the case, save where a substantive inaccuracy in its findings is attributable to the documents submitted to it, and to appraise those facts found, since that appraisal does The existence of a direct and foreseeable not, save where the clear sense of the evidence adduced before the Court of First Instance has been distorted, causal link (fourth to sixth pleas) constitute a point of law which is subject to review by the Court of Justice in the context of an appeal (see, inter alia, Case 390/95 P Antillean Rice Mills and Others [1999] ECR I-769, paragraph 29, and Case 119/97 P Ufex and Others v Commission [1999] ECR I-1341, paragraph 66). Therefore, provided that the evidence admitted by the 13. By its fourth and fifth pleas, DCI is Court of First Instance in support of the facts found by it has been properly obtained and the general principles of challenging, in essence, that part of the law and the procedural rules relating to the burden of contested judgment (paragraphs 70 to 74) proof and the taking of evidence have been observed, it is for the Court of First Instance alone to assess the value in which the Court of First Instance held which should be attached to the evidence adduced before it (see, inter alia, the order of 17 September 1996 in Case that the existence of a causal link between C-19/95 P San Marco v Commission [1996] ECR I-4435, the damage alleged and the adoption of the paragraph 40, and the judgment in Case C-362/95 P Blackspur and Others [1997] ECR I-4775, paragraphs 26 regulation had not been proven. According to 30). A plea advanced in an appeal which is based on an alleged infringement of the right to a fair hearing, in to the appellant, if the Court had correctly particular failure by the Court of First Instance to take into characterised the facts found, it should consideration certain parts of the appellant's arguments, must therefore be declared inadmissible, inasmuch as it is aimed at obtaining a new assessment by the Court of have concluded that the refusal by the Iraqi Justice of the findings made by the Court of First Instance authorities to fulfil their obligations was and to the extent that that plea does not concern any point of law but merely records disagreement on the facts found linked in a direct and foreseeable manner to by the Court of First Instance and it is not shown that the alleged failure affected the outcome of the proceedings and so adversely affected the interests of the appellant (see Case C-221/97 P Schröder and Others v Commission [1998] ECR I-8255, paragraphs 25 and 26). 12 — See, inter alia, Lucaccioni (cited in footnote 6 above), paragraphs 13 and 14.

By its sixth plea, advanced in the alterna- 15. As the Council and the Commission tive, the appellant complains of a further have observed, the seventh plea, whereby breach of the fundamental rules of evidence DCI complains of the erroneous 'inversion' and the insufficiency of the reasoning in the in the contested judgment of the notions of contested judgment concerning the exis- 'special' and 'unusual' damage, must now tence of the causal link. The Court of First be regarded as redundant, following the Instance, it is argued, failed without any making by the Court of First Instance of the justification to draw the proper conclusions abovementioned rectification order (see from a series of pieces of evidence adduced footnote 1 above). 13 by DCI (testimony of the Presidents of the Council and of the Commission at the material time, expert's report on Iraqi law and historical report). 16. By the eighth to sixteenth pleas, the appellant, in summary, challenges the find- ing of the Court of First Instance (see paragraphs 81 to 88 of the contested 14. As for the complaints concerning the judgment) that the damage alleged by it, assessment by the Court of First Instance of even if it were held to constitute actual the relevance and significance of the evi- dence adduced by the appellant, I am bound to conclude that these are inadmis- 13 — The order in question provides that, in paragraph 80 of the contested judgment, the words 'special damage' should be sible, on the basis of the observations made read in place of 'unusual damage' and vice versa, and that, in paragraphs 81 and 83, 'special nature' should be read in previously in this regard (see point 11 place of 'unusual nature' and vice versa.

damage and to have been caused in a direct of its involvement in a war with Iran. That and foreseeable manner by the adoption of observation, according to the appellant, the regulation, lacks the characteristics of was not relevant, inasmuch as the contract specialness and unusualness which consti- in issue was concluded in 1975, that is to tute, according to the case-law of the Court say, four years prior to the advent of the of Justice, a condition precedent to any present regime in Iraq and five years before liability on the part of the Community to the beginning of the war against Iran. pay compensation for damage caused by a lawful act, such liability being, moreover, admitted only hypothetically. 14 In particu- lar, according to DCI, the Court of First Instance misinterpreted the facts of the case Further, the Bosphorus judgment — refer- in that part of the contested judgment red to by the Court of First Instance (see where it found that the appellant did not paragraph 87 of the contested judgment) form part of a category of economic for the purpose of excluding the possibility operators whose property interests were that the damage complained of by DCI, affected in a manner which set them apart even if it were held to be considerable, from all other economic operators whose could involve liability on the part of the claims became irrecoverable as a result of Community (see above, point 6) — con- the imposition of the Community embargo firms, according to the appellant, that the (see point 6 above). The appellant main- limits fixed by the property regime under tains that, contrary to the finding made by Community law must be respected even the Court of First Instance, its inability to within the framework of a legal policy of obtain, upon the conclusion of the contract embargo. Finally, the appellant argues that, in issue, a State guarantee against the risks even the reference to the judgment of the assumed under the contract was not due to Court of Justice in Grands Moulins de Paris a general refusal by Germany to cover the (see point 6 above) is erroneous, in the risks inherent in commercial activities in circumstances of the present case, in that: Iraq but to the purpose (consultancy) and (i) liability for unusual and special damage duration (more than five years) of the caused by a lawful act is provided for contract in question. precisely in cases where the act in question pursues an objective of general interest, and (ii) in Grands Moulins de Paris, by contrast with what happened in the present dispute, the Community had spontaneously agreed to pay subsidies to the applicants by way of As to the unusual nature of the damage compensation, although the latter did not alleged, DCI challenges the statement of the accept them, considering their amount to Court of First Instance (see paragraph 83 of be inadequate. the contested judgment) that, long before the invasion of Kuwait, Iraq was already regarded as a 'high-risk country' by reason

unlawfully declined to recognise the exis- that undertakings such as the appellant, tence of a right on the part of the appellant which were unable to obtain guarantees to be compensated by the defendants for from public bodies or insurance companies the damage caused to it by the adoption of to cover risks associated with commercial the regulation (a lawful act). operations with countries regarded as 'high-risk countries', merely accepted, in full knowledge, the increased risks involved, including that of a suspension of payments by the debtor State. As the 17. In my view, the pleas referred to above Commission has observed, the fact that cannot be accepted either. As the Council Iraq might not have been a 'high-risk' has observed, the appellant's arguments do country in 1975 appears, regardless of its not show that the conclusions which the correctness, not to be relevant, since the Court of First Instance reached, finding contract in issue was subsequently renewed that the damage of which it complained several times. was not of a special and unusual nature, were vitiated by errors of law. First, the appellant has not succeeded in proving that it has made any particular or dispropor- tionate sacrifice in comparison with the other operators which has benefited the general interest. As the Court of First Instance established, DCI is not, in fact, the only economic operator whose claims 19. As for the criticism that the Court of against the Iraqi authorities, not yet satis- First Instance misapplied the decisions of fied at the time of the adoption of Law the Court of Justice in Bosphorus and No 57, were affected by the measure in Grands Moulins de Paris, referred to in question. Nor, moreover, has the appellant the contested judgment, with regard to the shown that it was the only undertaking or criterion of the general interest which must that it belonged to a small group of justify the legislative measure from which operators for which the benefit of State the damage alleged derives, I would point guarantees against commercial risks was out that, if anything, it is the appellant itself available, so that its position was such as to which has supplied an incorrect interpreta- distinguish it from the generality of under- tion of these two judgments. In the takings whose claims were covered by that Bosphorus case, the Court of Justice in fact type of insurance. In the light of that applied to the case before it a body of finding, the true reason underlying the settled case-law according to which even unavailability in Germany of that system fundamental rights (in this case, the right to of guarantees against risks arising from a respect for property rights and the freedom contract such as that in issue, at the time to pursue commercial activities) do not. when it was concluded and subsequently constitute absolute prerogatives, so that renewed, appears, all things considered, to their exercise may be subject to restrictions be irrelevant. justified by objectives of general interest. 15 Moreover, in Grands Moulins de Paris, the Court of Justice unequivocally confirmed that, if the legislative measure at the root of

21. In my view, the Court of First Instance The alternative claim for compensation for did not infringe any Community laws when the damage suffered as a result of an it dismissed the appellant's alternative unlawful act (eighteenth plea) claim for compensation, in particular because the latter had not succeeded in proving, on the basis of the pleas advanced in support of its main claim, that it had suffered actual and certain damage. The dismissal of the first to third pleas in law, relating to the existence of actual and 20. Finally, by its eighteenth and final plea, certain damage, which I have proposed to DCI challenges the ground of the contested the Court of Justice above (see point 11) obliges me here to suggest a similar solu- tion with regard to the final plea put 16 — See Compagnie d'Approvisionnement and Grands Moulins de Paris (cited in footnote 5 above), paragraphs 46 and 47. forward by the appellant.

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IV — Conclusions

22. In the light of the foregoing, I propose that the Court of Justice should:

— dismiss the appeal lodged by Dorsch Consult Ingenieurgesellschaft mbH against the judgment delivered on 28 April 1998 by the Court of First Instance in Case T-184/95, and