C-93/02

IV — The appeal I - 10504

A — Incorrect interpretation of Article 300(7) EC I - 10504

1. Effetiveness of Article 300(7) EC I - 10504

2. Recognition of direct effect of WTO agreements I - 10506

B — Incorrect interpretation of Article 48 of the Rules of Procedure of the Court of

First Instance I - 10507

(a) Incorrect interpretation of Article 300(7) EC I-10512

(b) Exceptions I-10514 (c) The direct applicability of WTO law resulting from DSB recommen- dations I - 10517

(i) The Understanding on Rules and Procedures Governing the Settle- ment of Disputes I - 10518

1 — Original language: German.

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I — Introduction expressly claims that the judgment should be set aside. As to fact, it alleges that it has suffered damage as a result of a Commu- nity prohibition on the importation of beef, which the DSB has found to be inconsistent with the W T O agreements. 1. The appeal — against the judgment dis- missing an action for damages — turns essentially on the question whether the case-law of the Court, pursuant to which individuals cannot rely on W T O rules to challenge the legality of acts of Community I I — Law and facts law, also applies where those rules are embodied in a specific ruling handed down by the W T O Dispute Settlement Body (hereinafter 'DSB'). 2 The appellant 2. Reference is made to paragraphs 1 to 17 of the contested judgment 3 for an account 2 — Name given in the Agreement establishing the World Trade Organisation (WTO) (hereinafter 'the WTO Agreement'), see Article IV(3) of the WTO Agreement, (OJ 1994 L 336, 3 — Judgment in Case T-174/00 Biret International v Council p. 3). [2002] ECR II-17.

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7. In February 1998, the DSB found these Community measures to be inconsistent with the SPS Agreement. The Community 5. On 15 April 1994, the Community had until 13 May 1999 to comply with the signed the Final Act concluding the Uru- DSB's recommendations. guay Round, the Agreement establishing the World Trade Organisation (hereinafter 6 — Council Decision 9-1/800/EC of 22 December 1994 concern- 'the WTO') and all the agreements and ING the conclusion on behalf of the European Community, understandings in Annexes 1 to 4 to the as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations Agreement establishing the World Trade (1986-1994 (OJ 1994 L 336, p. 1). 7 — OJ 199-1 L 336, p. 40. 8 — OJ 199-1 L 336, p. 234. 9 — Name given in the WTO Agreement (cited in footnote 2), 4 — OJ1981 L 222, p. 32. see Article 111(3) of the Agreement. 5 — OJ 1988 I. 70, p. 16. 10 — OJ 1996 1 125, p. 3.

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9. In respect of the period before 28 June 1995, the Court of First Instance dismissed the action as inadmissible on the ground that it was time-barred. 1 1In respect of the 62 The purpose of the WTO agreements is subsequent period, it should be noted that to govern relations between States or by judgment of 7 December 1995 the regional organisations for economic Tribunal de commerce (Commercial integration and not to protect individ- Court), Paris, opened judicial liquidation uals. As the Court of Justice stated in proceedings in respect of Biret and pro- Portugal v Council [Case C-149/96 visionally set the date for cessation of Portugal v Council [1999] ECR payments at 28 February 1995. However, I-8395], the agreements are still according to the Court of First Instance, founded on the principle of negoti- that did not necessarily imply that Biret ations with a view to entering into was no longer able to engage in any reciprocal and mutually advantageous commercial activities during the period arrangements and thus differ from the from 28 June 1995 to 7 December 1995. agreements concluded between the Community and non-member coun- tries whereby the obligations are not 11 — Paragraphs 37 to 43 of the contested judgment. necessarily reciprocal. To have the task

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of ensuring that Community law is in 65 In the circumstances, therefore, the conformity with those rules fall directly applicant cannot rely on an infringe- to the Community judicature would be ment of the SPS Agreement. to deprive the legislative or executive bodies of the Community of the dis- cretion enjoyed by similar bodies of the Community's trading partners.

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70 In its reply, however, the applicant EC a n d i n c o r r e c t i n t e r p r e t a t i o n of requests the Court of First Instance, in Article 48 of the Rules of Procedure of the alternative, to "develop its case- the Court of First Instance. law" in the direction of a system of no-fault liability for the Community in respect of its normative acts. In support of that request, it relies in particular on the "defence of the rule of law", the autonomous nature of an action for damages, the general principles com- mon to the laws of the Member States and considerations of natural justice A — Incorrect interpretation of linked to application of the "pre- Article 300(7) EC cautionary principle".

71 That submission, which changes the 1. Effetiveness of Article 300(7) EC 12 very basis on which the Community could be held liable, must be regarded as constituting a new plea in law which cannot be introduced in the course of proceedings, as Article 48 of the Rules 12. The appellant considers that the con- of Procedure of the Court of First tested judgment is mistaken about the Instance provides... effect of Article 300(7) EC. In its view, it is inconsistent to maintain that the W T O agreements are an integral part of Com- munity law but not to admit them as a criterion for determining the legality of acts of Community secondary legislation. 72 It is clear from all the foregoing that in so far as the action is not inadmissible it is in any event unfounded.'

13. In the judgment in NV Nederlandse Spoorwegen, the Court held that since, so far as fulfilment of the commitments pro- vided for by GATT is concerned, the IV — The appeal Community has replaced the Member States, the mandatory effect, in law, of

17. Biret claims that Article 300(7) EC 15. Biret also cites Advocate General Sag- should be interpreted as meaning that the gio's Opinion in Portugal v Council, in obligation of the Community institutions to which he objected that it would reduce the comply with an international rule depends scope of Article 300(7) EC. The application only on whether that rule forms an integral of rules of an international agreement part of the Community legal order. That is cannot, he said, depend on prior incor- undoubtedly so in the case of the W T O poration of the agreement in the Commu- agreements. nity legal order by means of a transposing or enabling act. In any case, internal review of the rules of agreements by the Commu- nity institutions and the Member States cannot fail to offer a stronger guarantee of the fulfilment of the obligations undertaken at international level and is therefore in 18. It also claims that the contested judg- keeping with the objectives of the W T O ment docs not address the argument that, in Agreement. 15 acceding to the WTO dispute settlement- system, the Community undertook to recognise the DSB's decisions. In so doing, 13 — Judgment in Case 38/75 NV Nederlandse Spoorwegen the Community intended to implement a [1975] ECR 1439, paragraph 16. particular obligation assumed in the con- 14 — In the case of GATT, the appellant refers to the judgments text of the W T O . in Case 38/75 NV Nederlandse Spoorwegen, cited in footnote 13, and Case 112/80 Dürbeck [1981] ECR 1095. 15 — Biret refers to the statements contained in points 18 and 24 [properly 23] of Advocate General Saggio's Opinion in Case C-149/96 Portugal v Council [1999] ECR I-8395, 16 — Judgment in Case C-104/97 P Atlanta and Others v I-8397. Commission and Council [1999] ECR I-6983.

23. The fact remains, according to the appellant, that a legal rule that forms an integral part of Community law has been infringed. The Community Courts are therefore required to punish that infringe- ment. Even if damages and other compen- sation might be payable under the WTO 20. Moreover, automatic reliance on the system in the event of an infringement of discretion accorded to the legislative and the agreements, the fact that under Com- executive bodies would suggest that the munity law Article 228 EC provides for WTO dispute settlement mechanism was more tolerant of persistent infringements than other systems. But that is not the case. 17 — Judgments in Case 104/81 Kupferberg [1982] ECR 3641, On the contrary, the WTO agreements are paragraph 20, and Case C-162/96 Racke [1998] ECR much more developed than other com- I-3655, paragraph 36. 18 — Biret refers to paragraph 21 of the judgment in Case parable international agreements. C-104/97 P Atlanta, cited in footnote 16.

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payment of a lump sum or penalty payment B — Incorrect interpretation of Article 48 does not alter the fact that the infringement of the Rides of Procedure of the Court of may persist. First Instance 19

27. Biret considers that the contested judg- ment was wrong to reject its submission 24. An argument for admitting the direct regarding a system of no-fault liability on applicability of the WTO agreements is the ground that it was out of time. In the that more and more provisions of the first place, the reference to the judgment in agreements affect the relations between Atlanta was inappropriate because that citizens and the States parties to those case concerned responsibility for a lawful agreements. Biret cites, in particular, the act. But the present case concerns liability provisions on public contracts, protection for illegal acts of Community law on the of intellectual property and food safety ground that the Directives at issue infringe regulations. WTO law, which is an integral part of Community law.

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international agreements, 21 and lastly in effects of an international agreement in the connection with the description of the Community legal order must be determined damage suffered by Biret as being specific by reference to the nature and objectives of and unusual. 22 According to the case-law, the agreement in question. 24 It adds that in a submission may not be rejected on the the judgment in Demirel the Court imposed ground that it is a new plea in law and the further condition that the provision in therefore out of time if it merely develops question must contain a clear and precise submissions made in the application by obligation which is not subject, in its invoking a number of arguments some of implementation or effects, to the adoption which were adduced for the first time in the of any subsequent measure. 25 reply. 23 Also, it had simply been replying to the objections raised by the Council in its defence.

31. It contends that the purpose of the WTO agreements is not to establish rights for individuals but merely to govern V — The Council's position relations between States and regional econ- omic organisations on the basis of negoti- ations based on the principle of reciprocity. Consequently, it claims that the Court of 29. The Council observes that, in its view, First Instance described the SPS Agreement the Court of First Instance had not ruled on and applied Article 300(7) correctly in the the admissibility of the application with contested judgment. respect to the period between 28 June and 7 December 1995. Should the Court of Justice uphold the appeal, it would there- fore have to refer the case back to the Court of First Instance for further examination.

VI — Forms of order sought

36. Biret claims that the Court should: 34. The Council rejects the suggestion that the case-law on the direct applicability of the WTO agreements should be developed and refers to the previous case-law, con- firmed by the judgment in Omega Ah- among others. 26 The Council also rejects — set aside the judgment delivered by the the objection regarding the discretion Court of First Instance on 11 January enjoyed by the legislative and executive 2002 in Case T-174/00, bodies. In its view, the objection is mis- taken about the ways in which the SPS Agreement can be implemented. The States parties to that agreement may be guided either by international standards or by — uphold the form of order sought by it some other scientific assessment of the risks at first instance, and or by the precautionary principle. The Court of First Instance was therefore quite right to take account of the discretion accorded to the legislative and executive bodies. — order the Council to pay the costs.

37. The Council claims that the Court 35. As regards the plea concerning the should: incorrect interpretation of Article 48 of the Rules of Procedure, the Council con-

26 — Judgment in Joined Cases C-27/00 and C-122/00 Omega Air [2002] ECR I-2569. — dismiss the appeal, and

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OPINION OF MR ALBER — CASE C-93/02 P

39. The present appeal turns primarily on the question whether a rule of law that is intended to confer rights on individuals has been infringed. Is the infringement of the 40. Liability of the Council under the SPS Agreement committed by the Commu- second paragraph of Article 288 EC pre- nity legislature in adopting Directives supposes illegal conduct. The conduct in 81/602, 88/146 and 96/22 prohibiting this case consists of adopting Directives 81/602, 88/146 and 96/22 prohibiting the importation of meat treated with hormones 27 — See judgments in Case C-104/97 P Atlanta, cited in footnote 16, paragraph 65, and Case C-352/98 P Berga- derm and Goupil v Commission [2000] ECR I-5291, paragraph 42. 29 — Judgment in Case C-149/96 Portugal v Council [1999] 28 — Judgments in Joined Cases 51, 7/ and 13/ to 24/66 ECR I-8395. Kampffmeyer and Others v Commission [1967] ECR 245, 262, Case 5/71 Schoppenstedt v Council ECR [1971] 30 — Cited in footnote 16. ECR 975, paragraph 11, and Case C-282/90 Vreugdenhil v 31 — Judgment in Case C-104/97 P Atlanta, cited in footnote Commission [1992] ECR I-1937, paragraph 19. 16, paragraph 22 et seq.

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OPINION OF MR ALBER — CASE C-93/02 P

Community measure in question in the the WTO agreements form part of Com- light of the WTO rules. 35 munity law and the contention that indi- viduals cannot rely on them to challenge the legality in Community law of acts of secondary legislation that are contrary to WTO law. 45. The appellant contends that the case- law cited is mistaken about the effect of Article 300(7) EC. It also considers that the DSB's decision establishes the conditions for the first exception recognised by the Court to the principle that WTO rules are not directly applicable. In the alternative, it 48. It must first be pointed out that the suggests that the case-law should be devel- Court holds that international agreements oped. concluded by the Community form 'part of Community law'. 36 Contrary to Biret's view, it is unnecessary to decide whether the relationship between Community law and international law is to be understood in 46. Biret's claim for damages presupposes a monist sense. On the contrary, the mere that it can rely on provisions of WTO law. fact that international treaty law is classi- In that case, the provisions would have to fied as Community law is sufficient to be directly applicable and be intended to establish the Court's jurisdiction to inter- protect individuals. pret and apply the provisions of inter- national agreements. 3 7

possibility of bringing an action for as to material scope: the provision on infringement depends on two conditions. which an individual relies must be directly As to formal scope, the action must be applicable. The Court has recognised that admissible and as to material scope, the some provisions of the EC Treaty are provision at issue must be directly appli- directly a p p l i c a b l e . For e x a m p l e cable. Articles 25, 38 49, 39 90 40 and 141 EC 41. But many others are not, for example Article 293 EC 42. All these provisions indubitably form part of Community pri- mary law. Nevertheless, natural or legal persons may bring an action for infringe- ment of those provisions only in the context 50. In the case of many Treaty provisions, of questions raised in an incidental manner individuals or institutions may not chal- under Article 241 EC. lenge possible infringements by the Com- munity legislature. Under the fourth para- graph of Article 230 EC, a natural or legal person may institute proceedings only if the contested act is of direct and individual concern to it. An individual cannot, for example, bring an action in the abstract for infringement of the limits set in a provision defining powers such as Article 95 EC, even though that provision is part of Commu- nity law. Until the Treaty of Nice entered 52. It is clear from these rulings that the into force, even an action for annulment question whether or not WTO law forms brought by the European Parliament was part of Community law has no bearing on admissible only if the purpose of the action the question whether individuals may chal- was to protect its prerogatives and not lenge an infringement of that law. It 'merely' to challenge an infringement of a follows that the case-law on WTO law Treaty provision; see the third paragraph of and the fact that individuals may not rely Article 230 EC in the version contained in on it to challenge acts of Community the Treaty of Amsterdam. The Parliament secondary legislation is based not on a could not, for example, bring an action for mistake as to the effects of Article 300(7) annulment on the ground that an act of the EC but on the system of rules on the Commission or of the Council was in admissibility and validity of actions against breach of the prohibition on discrimination acts of secondary legislation of the Com- contained in Article 12 EC, although that munity institutions. The appellant's first provision undoubtedly forms part of Com- plea must accordingly be rejected. munity law.

54. The Court has admitted two exceptions to the rule that WTO agreements are not 57. The Commission maintained that the directly applicable. The Court may review application was inadmissible on the ground the legality of Community measures in the that the GATT rules are not sufficiently light of the WTO rules where the Commu- precise to give rise to such rights on the part nity intended to implement a particular of individuals. The Court did not agree obligation assumed in the context of the with that view. The Court has certainly WTO or where the Community measure held, on several occasions, that various refers expressly to the precise provisions of GATT provisions were not capable of the WTO agreements. 43 conferring on citizens of the Community rights which they can invoke before the courts. Nevertheless, it cannot be inferred from those judgments that citizens may not, in proceedings before the Court, rely on the provisions of GATT in order to obtain a 55. As far as I know, the Court has so far ruling on whether conduct criticised in a allowed an individual to rely on provisions complaint lodged under Article 3 of Regu- of GATT or WTO law to challenge the lation No 2641/84 constitutes an illicit legality of Community acts in only three commercial practice within the meaning cases. of that regulation. The GATT provisions form part of the rules of international law to which Article 2(1) of that regulation refers, as is borne out by the second and fourth recitals in its preamble, read together. 45 It follows, according to the 56. In Fediol, the issue was the legality of a decision rejecting Fediol's application 44 — Council Regulation (EEC) No 2641/84 of 17 September 1984 on the strengthening of the common commercial policy with regard in particular to protection against illicit commercial practices, OJ 1984 L 252, p. 1. 43 —Judgment in Case C-149/96 Portugal v Council, cited in 45 — Judgment in Case 70/87 Fediol v Commission [1989] ECR footnote 29, paragraph 49. 1781, paragraph 19.

Court, that, since Regulation No 2641/84 obligation assumed in the context of the entitles the economic agents concerned to WTO) is afforded by the judgment in rely on the GATT provisions in the com- Nakajima. 4 7In that case, the issue was plaint which they lodge with the Commis- the legality of a regulation imposing an sion in order to establish the illicit nature of anti-dumping duty. The proceeding was the commercial practices which they con- initiated at the request of the Committee of sider to have harmed them, those same European Printer Manufacturers (Euro- economic agents are entitled to request the print) on the basis of Regulation (EEC) Court to exercise its powers of review over No 2176/84. 48 Nakajima claimed inter alia the legality of the Commission's decision that Regulation (EEC) No 2423/88, 49 applying those provisions. 46 which replaced the contested regulation, was at variance with a number of the provisions in the GATT Anti-Dumping Code. The Council considered that claim to be inadmissible because, as is the case with the General Agreement, the Anti- Dumping Code does not confer on individ- uals rights which may be relied on before 58. The Court's ruling was based on the the Court, its provisions being not directly authorisation contained in Article 3(1) of applicable. 50 Regulation N o 2641/84, according to which 'any natural or legal person, or any association not having legal personality, acting on behalf of a Community industry which considers that it has suffered injury as a result of illicit commercial practices, may lodge a written complaint'. Illicit commercial practices for the purposes of that provision are defined in Article 2(1) of the regulation as 'any international trade practices... which are incompatible with 60. The Court rejected that view. It pointed international law or with the generally out, first, that Nakajima was not relying on accepted rules' (my emphasis). That judg- the direct effect of the provisions of the ment is consequently an example of the GATT Anti-Dumping Code. It was in fact second type of exception (express reference questioning, in an incidental manner under to the precise provisions of the W T O Article 241 EC, the applicability of Regu- agreements). lation No 2423/88. Citing the judgment in Kupferberg, 51 the Court added that Rcgu-

63. The Court of First Instance considered that the present case did not constitute an exception. It held that, since Directives 81/602 and 88/146 were adopted several years before the entry into force of the SPS Agreement on 1 January 1995, it is not logically possible for them either to give rise to a specific obligation entered into 61. Again in connection with an action for under that agreement or to refer expressly the annulment of a regulation imposing to some of its provisions. 54 definitive anti-dumping duties, the Court held in Case C-76/00 P Petrotub and Republica v Council that the purpose of Regulation No 384/96 as amended by Regulation No 2331/96 is to transpose into Community law as far as possible the new and detailed rules contained in the WTO 64. The Court of First Instance also found Anti-Dumping Code. It followed that the in the contested judgment, with reference Community adopted those regulations and to the judgment in Atlanta, 55 that the in particular Article 2(11) in order to decision of the DSB of 13 February 1998 satisfy its obligations arising from the Anti- did not mean that Biret could rely on an Dumping Code and in particular from infringement of the SPS Agreement. It held Article 2.4.2 of that code. It was therefore that there is an inescapable and direct link for the Court to review the legality of the between the decision and the plea alleging contested regulation imposing anti-dump- infringement of the SPS Agreement, and the ing duties in the light of Article 2.4.2 of the decision could therefore only be taken into Anti-Dumping Code. 5 3 This too is an consideration if the Court had found that example of the first type of exception agreement to have direct effect in the (intention to implement a particular obli- context of a plea alleging the invalidity of gation assumed in the context of the the directives in question. 56 WTO).

69. Moreover, it is not clear that this statement to the WTO by the Community's executive body was intended to have any legal consequences within the Community. 66. However, the question arises whether The DSB recommendations of 13 February the legal assessment of the DSB decision 1998 are to be transposed into Community will stand re-examination. The Court of law by the adoption of the Commission First Instance pointed out in paragraph 14 proposal of 24 May 2000 for a directive of the contested judgment that the Com- amending Directive 96/22. This is con- munity had informed the WTO that it firmed in the second recital in the preamble intended to comply with its WTO obli- to the proposal. 57 It cannot therefore be gations but that it needed a reasonable time accepted that the statement by the Com- to do so. It was then granted a period of 15 munity to the WTO was intended to trans- months, expiring on 13 May 1999, to pose a WTO obligation into Community comply with its obligations under the SPS law. Consequently, neither of the excep- Agreement. tions recognised in the case-law applies in the present case.

67. It remains to be seen how far that statement by the Community, in this instance the Commission, can be regarded as a Community measure intended to (c) The direct applicability of WTO law implement a particular obligation assumed resulting from DSB recommendations in the context of the WTO (the first type of exception).

70. Biret argues that, in acceding to the WTO dispute settlement system, the Com-

57 — Proposal for a directive of the European Parliament and 68. The first objection to such an inter- the Council amending Council Directive 96/22/EC con- cerning the prohibition on the use in stockfarming of pretation is that the statement in question certain substances having a hormonal or thyrostatic action was made in the context of international and of ß-agonists, COM(2000)320 final of 24 May 2000, in particular the second paragraph on p. 2 and the last law. It was made to the WTO. A statement paragraph on p. 3 .

(i) The Understanding on Rules and Pro- cedures Governing the Settlement of Dis- putes

72. For the sake of clarity, it must be observed once again that the Court has not so far ruled on this point of law. In Portugal v Commission there was no DSB recommendation or decision to be taken 74. As the Court has already noted in the into account. In Atlanta, the appellant judgment in Portugal v Council, the new referred for the first time in its reply to a WTO dispute settlement mechanism differs

58 — Paragraph 66 et seq. of the contested judgment, cited in 59 — Judgment in Case C-104/76 P Atlanta, cited in footnote footnote 3. 16, paragraph 21.

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75. It is true that, under the new mech- anism, a solution that is mutually accept- able to the parties to a dispute is clearly to be preferred (see the third sentence of Article 3(7) of the DSU), as the Court has already pointed out in Portugal v Coun- cil. 62 However, that applies only while the 76. According to the DSU, 'prompt' com- 60—Judgment in Case C-149/96 Portugal v Council, cited in pliance with recommendations or rulings of footnote 29, paragraph .36. the DSB is 'essential' to ensure effective 61 — Ernst-Ulrich Petersmann, The GATT/WTO Dispute Settle- ment System. International Law. International Organi- resolution of disputes (Article 21(1) of the sations and Dispute Settlement, London — The Hague — Boston 1997, p. 188. 62 —Judgment in Case C-149/96 Portugal v Council, cited in footnote 29, paragraph 36. 63 — WT/DS72/7 of 18 November 1 9 9 9 .

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7 9 . C o m p e n s a t i o n is v o l u n t a r y (Article 22(1) of the DSU). Suspension of concessions is subject to prior authorisation 78. As already mentioned, DSB recommen- from the DSB (Articles 2(1) and 22(2) of dations and rulings must be 'uncondition- the DSU). It may not therefore be imposed ally' accepted by the parties (Article 17(14) unilaterally, as it could be under GATT of the DSU). Should they fail to do so 1947. 66 Furthermore, concessions may within the 'reasonable period of time', only be suspended until such time as the compensation and the suspension of con- DSB recommendations or rulings are imple- cessions are available. These are described mented or the Member provides a solution to the nullification or impairment of bene- fits or a mutually satisfactory solution is 64 — The German version of OJ 1994 L 336 contains a reached (Article 22(8) of the DSU). translation error. The term 'impracticable' in the English version should have been rendered as 'nicht möglich', not 'möglich'. 65 — See report of arbitration judge Julio Lacarte-Muró of 29 May 1998, WT/DS26/15 and WT/DS48/13, point 2. 66 — Petersmann, cited in footnote 61, p. 182.

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82. One argument against recognising the 6 7 — J u d g m e n t in Case C-149/96 Portugal v Council, cited in direct applicability of WTO provisions is footnote 29, paragraphs 39 to 41.

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84. Contrary to the assertions made by the approved in the dispute settlement pro- Council representative at the hearing, even cedure at issue in the present case. How- a waiver is ruled out. In the DSU dispute ever, according to the judgment in Kupfer- settlement procedure, the parties to a dis- berg, 68 the mere fact that a waiver may be pute may no longer agree a waiver, that is granted does not exclude the direct appli- to say exemption from the obligations cation of W T O rules. 69 incurred under the W T O agreements. In the first place, the temporary suspension of concessions ('penalty') requires prior auth- orisation from the DSB (Article 22(2) of the DSU) and can no longer be agreed by the parties to a dispute. In the second place, all agreements between the parties to a dis- pute, including 'a mutually satisfactory solution', must be consistent with the W T O agreements (Article 3(5) to (7) of 86. Non-compliance with a DSB recom- the DSU). A waiver agreed between the mendation or ruling may be a commercial parties to a dispute would not meet these policy option. However, it is clear from the requirements inasmuch as it would grant above account of the DSU that it is not a exemption from the obligations incurred lawful option. Consequently, under W T O under the W T O agreements. law and in particular the Understanding on Rules and Procedures Governing the Settle- ment of Disputes (DSU), the legislative and executive bodies no longer have any dis- cretion that could be reduced by recognis- ing W T O law to be directly applicable.

binding and that an individual may rely on executive bodies when it comes to imple- them in an action for damages must be that menting DSB recommendations. It is appar- it should support the principle of legality ent from paragraphs 12 and 13 of the after the expiry of the reasonable period of contested judgment that the report adopted time allowed to comply with the DSB by the DSB on 13 February 1998 required recommendation or ruling. the European Communities 'to bring the SPS measures found... to be inconsistent with the SPS Agreement into conformity with the obligations of the European Com- munities under that Agreement'. The word- ing of that injunction means that a further legal act is required to implement the 88. Non-compliance with a DSB recom- recommendations. This interpretation is mendation or ruling is a commercial policy confirmed by the fourth sentence of option only because there is no means of Article 3(7) of the DSU according to which, enforcing such recommendations or rul- in the absence of a mutually agreed sol- ings. They can only be supported by the ution, the first objective of the dispute traditional retaliation measures (suspension settlement mechanism is usually to secure of concessions). This is bound up with their the withdrawal of the measures concerned nature as instruments of international law. if these are found to be inconsistent with There is in principle no way of enforcing the provisions of any of the agreements international law. This was also true of covered by the DSU. According to the DSB Community law before the Maastricht ruling, Directive 96/22 should therefore Treaty entered into force. Only with the have been repealed. Directives 81/602 and introduction of Article 228(2) EC did it 88/146 had already been repealed by become possible for the first time to require Directive 96/22. This is in line with Com- Member States to make lump sum or mission proposal COM(2000)320 of May penalty payments for failure to comply 2000 for a directive amending Directive with decisions. The fact that DSB recom- 96/22. mendations and rulings are unenforceable is consequently no reason for the Court to disregard them.

91. More than four years have now passed since May 1999 without any change in the law, be it WTO law or Community law. The question therefore arises whether Biret must accept this state of affairs without compensation or whether in these circum- stances it may rely on a binding DSB ruling establishing the illegality of the Community legislation, with the result that WTO law 93. Recognising the direct applicability of will be deemed to be directly applicable and WTO law as a basis for a claim for the way will be opened for Biret to bring an damages does not reduce the discretion of action for damages. the legislative and executive bodies in deciding how to implement a DSB recom- mendation. How the Community estab- lishes the conformity of its measures with its obligations under the SPS Agreement is and remains a matter for the competent Community bodies. Thus, on the basis of new scientific information or in the form of temporary protective measures, the Com- 92. The Court has recognised freedom of munity could well impose an import ban trade 70 as a fundamental right or, as it is again, this time in conformity with the SPS expressed in more recent judgments, free- Agreement. The way opened by proposal dom to pursue an economic activity 71 as a COM(2000)320 remains open even if the general principle of Community law. It SPS Agreement is held to be directly seems unfair to deny a citizen a right to applicable on the basis of the DSB recom- claim damages where the Community legis- mendation of 13 February 1998. Recogni- lature, by failing to act, maintains a state of tion of the direct applicability of WTO law embodied in a DSB ruling does not mean that an individual has a right to require the 70 — Judgment in Case 240/83 ADBHU [1985] ECR 531, Community bodies to take a particular paragraph 9. course of action. Biret is merely entitled to 71 — Judgment in Case C-104/97 P Atlanta, cited in footnote seek monetary compensation from the 16, paragraph 47, and Order of the President of the Court in Case C-317/00 P (R) 'Invest' Import und Export and Community provided that the other con- Invest Commerce v Commission [2000] ECR I-9541, paragraph 57. ditions are met.

95. It must consequently be concluded that 98. Proponents of this argument are think- the Court will not reduce the discretion ing primarily of the United States of enjoyed by the legislative and executive America. The US legislation on the imple- bodies of the Community in implementing mentation of the WTO agreements pre- DSB recommendations if, in the case at cludes any claim by a private person issue, it holds that WTO law should apply against the American authorities. 74Simi- after the expiry of the period of time allowed to comply with the DSB recom- mendations of 13 February 1998. 7,1 —Judgment in Case C-149/96 Portugal v Council, cited in footnote 29, paragraphs 43 and 45. 74 — See paper by Ernst-Ulrich Petersmann, 'The Dispute Settlement System of the World Trade Organization antl 7 2 — J u d g m e n t in Case 5/71 Schöppenstedt v Council [1971] the Evolution of the GATT Dispute Settlement System LCR 975, paragraph 3. s i n c e1948', in CMLR 1994, pp. 1157, 1243.

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larly, the Community legislature too sought agreements are binding on the Court, as on to limit the legal effects of implementing all the other institutions of the Community, WTO law within the Community. The under Article 300(7) EC. The scope of these 11th recital in the preamble to Decision rules of primary legislation cannot be 94/800 states that '... by its nature, the reduced by an act of secondary legislation Agreement establishing the World Trade in the form of a Council decision. Organisation, including the Annexes thereto, is not susceptible to being directly invoked in Community or Member State courts.'

102. It should also be pointed out that reciprocity is really a commercial policy issue, decked out in the legal trappings of a 'principle of reciprocity'. There appears to be considerable doubt as to whether the Community's trading position might be 100. The reservation contained in Decision weakened at all by recognising the direct 94/800 is open to objection even under applicability of WTO law as a basis for a Community law. The Court is required claim for damages. If the Community has under Article 220 EC to ensure that the law is observed in the interpretation and appli- cation of the Treaty. Moreover, the WTO 76 — See, for example, the judgment in Case C-149/96 Portugal v Council, cited in footnote 29, paragraphs 42 to 46. 77 — Judgment in Kupferberg, cited in footnote 17, paragraph 18. 75 — See also Advocate General Saggio's remarks in his Opinion 78 — Opinion in Case C-280/93 Germany v Council, cited in in Case C-149/96, cited in footnote 15, point 20 et seq. footnote 24, point 142.

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infringed WTO rules, it is — as already to damages arising from non-contractual explained — required to comply with any liability is consistent with the Court's case- DSB recommendations or rulings. If law on comparable situations within the another Member has infringed WTO rules, Community. This applies both to the case- the Community may initiate a dispute law on the significance of actions for settlement procedure and demand that it infringement of the Treaty and to Member comply with the DSB ruling. The possibility States' liability for failure to implement of negotiation arises only where it is directives within the prescribed period. assumed that the parties to the dispute agree as to the continued existence of rules that are contrary to WTO law. How- ever — as already explained — that is not the case.

ment of the Treaty in order to establish the 107. In the judgment in Francovich, the basis of liability which a Member State may Court stated that the full effectiveness of incur as a result of its default towards other Community rules would be impaired and Member States, the Community or private the protection of the rights which they parties. 80 grant would be weakened if individuals were unable to obtain redress when their rights are infringed by a breach of Com- munity law for which a Member State can be held responsible. 83 The possibility of obtaining redress from the Member State is particularly indispensable where the full effectiveness of Community rules is subject to prior action on the part of the State and where, consequently, in the absence of such action, individuals cannot enforce before — Liability arising from failure to imple- the national courts the rights conferred ment directives upon them by Community law. 84

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the provisions of directives do not in a binding ruling or recommendation of the principle establish rights on which individ- DSB but also an act of a Community body uals may rely. Directives are only binding, expressly referring to that ruling or recom- as to the result to be achieved, upon the mendation. Member States to which they are addressed and do not as a rule establish rights for individuals. Similarly, in the circumstances described in this case, WTO law should be recognised exceptionally as being directly applicable and thereby opening the way to 112. It is true that the assurance in question a claim for damages. was given in the context of international law and, as already explained, produces no direct effects in the Community legal order. It must nevertheless be borne in mind that the Commission makes such statements to the WTO after first informing the compet- ent Council committee of the outcome of the dispute settlement procedure. Both Community bodies therefore acknowledge (v) The fundamental right of freedom to that Community law is contrary to WTO pursue an economic activity law and must accordingly be amended to comply with the DSB recommendations. If it is not amended within the prescribed period, that means that the Commission and the Council are going back on their 110. Lastly, from the point of view of own position. This is another argument for Community law, another argument for recognising the possibility of claiming recognising the direct effect of DSB recom- damages. mendations and rulings after the expiry of the period of time allowed to comply with them is the fundamental right of freedom to pursue an economic activity. As already explained, that fundamental right is unfairly reduced if a citizen is obliged to accept without compensation the Commu- nity bodies' failure to implement the DSB (vi) Sufficiently precise rules ruling or recommendation for a period of four years.

(vii) Interim conclusion 116. The WTO agreements are primarily concerned with customs duties and inter- national trade. However, it is clear from the judgment in Van Gend en Loos that basic provisions on customs duties may be 114. It must consequently be concluded directly applicable. In that judgment, the that WTO law is directly applicable where Court recognised that Article 12 of the EEC DSB recommendations or rulings have Treaty (now, after amendment, Article 25 found a Community measure to be incon- EC) was directly applicable. 87 That provi- sistent with WTO law and the Community sion imposes a general prohibition on has failed to implement the recommen- customs duties on imports and exports dations or rulings within the prescribed and customs duties of a fiscal nature and period. it is addressed only to States, not to citizens. In that respect it is entirely com- parable with the rules of WTO law and in particular the rules of GATT 1947 and GATT 1994.

2. Infringement of a protective measure

117. Moreover, the WTO agreements also guarantee freedom and prohibit discrimi- 115. As explained at the outset, it is not nation. Regulations concerning trade affect sufficient that the infringed measure be the citizen's freedom to pursue an econ-

85 — Judgments in Case 45/75 REWE v Hauptzollamt Landau [1976] ECR 181, paragraph 24, and Case C-76/91 Caves 86 — See paragraph 62 of the contested judgment. Neto Costa [1993] ECR I-117, paragraphs 7 and 9. 87 — Judgment in Van Gend & Loos, cited in footnote 38, p. 16.

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118. Moreover, the fact that a rule is intended to protect interests of a general nature — in this case the liberalisation of 3. Conclusion as to the illegality of the international trade through the WTO Council's conduct agreements — does not preclude the possi- bility that it is also intended to protect individual interests. In Kampffmeyer, the Court held, with regard to Regulation No 19 of the Council on the progressive establishment of a common organisation of the markets in grain, 88 that the regulation 120. In the light of the foregoing consider- was directed to ensuring appropriate sup- ations, it must be concluded that Articles 3 port for the agricultural markets of the and 5 of the SPS Agreement embodied in Member States during the transitional the DSB recommendations of 13 February period on the one hand and to allowing 1998 are directly applicable since those the progressive establishment of a single recommendations were not implemented market by making possible the develop- within the prescribed period which expired ment of the free movement of goods within on 13 May 1999. It follows that Biret may

89 — Judgment in Kampffmeyer, cited in footnote 28, p. 262 et 88 — JO 1962 30, p. 933, not available in English. seq.

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rely on a rule that is intended to protect it. sion proposal of 24 May 2000. The pro- Thus, contrary to the findings of the hibition on one of the hormones in question contested judgment, there is a serious is based on new scientific information. As infringement of the law. regards the five other hormones, the pro- visional prohibition applies until more scientific information is made available. 91

91 — See preamble to the Commission proposal, cited in foot- 90 — See paragraph 69 of the contested judgment. note 57, p. 2 in fine.

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necessary scientific information became procedure. In view of the statement in the available. It seems unfair for the citizen to contested judgment that in its reply Biret be obliged to accept without compensation requested the Court of First Instance to a restriction of his fundamental right to develop its case-law in the direction of a freedom to pursue an economic activity system of no-fault liability, 92 it is advisable when the Community legislature proposed to refer to the judgment in Atlanta. In that a new legal ground for its own conduct. judgment the Court held that a submission which changes the very basis on which the Community could be held liable, that is from liability for an unlawful act to liability for a lawful act, must be regarded as constituting a new plea in law which is inadmissible. 93 Pursuant to Article 42(2) of 125. It must consequently be concluded the Rules of Procedure of the Court and that the contested judgment should be set Article 48(2) of the Rules of Procedure of aside and the case referred back to the the Court of First Instance no new plea in Court of First Instance for further examin- law may be introduced in the course of the ation. proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure.

D — Incorrect interpretation of Article 48 of the Rules of Procedure of the Court of First Instance

129. In the light of the foregoing considerations it is proposed that the Court:

(1) Set aside the judgment delivered by the Court of First Instance on 11 January 2002 in Case T-174/00 Biret International v Council and refer the dispute back to the Court of First of Instance.

(2) Order the Council to bear the costs.

(3) Order the Commission to bear its own costs.

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