JUDGMENT OF 17.7.1959 — CASE 20/58 PHOENIX-RHEINROHR v HIGH AUTHORITY

In Case 20/58

THE COURT composed of: A. M. Donner, President, O. Riese, President of Chamber, L. Delvaux (Rapporteur), Ch. L. Hammes and N. Catalano, Judges, Advocate-General: M. Lagrange Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Conclusions of the parties

II — Statement of the facts

III — Submissions and arguments of the parties

1. Admissibility

2. The substance of the case

First submission: infringement of and manifest failure to observe the Treaty and the rules of law relating to its application

Second submission: lack of competence

Third submission: infringement of an essential procedural requirement

Fourth submission: misuse of powers

Grounds of Judgment

Admissibility

Costs

I —. Conclusions of the parties

1. Annul the decisions contained in the letter sent by the High Authority on 18 December 1957 to the OCCF, relating to the definition of the concept of own resources scrap within the meaning of Decisions Nos 22/54, 14/55 and 2/57, and published in the Journal Officiel of 1 February 1958, pages 45-58 et seq.;

2. Order the High Authority to pay the costs.

1. Take formal note that all the documents and communications relating to this case shall be sent to the High Authority, 2 place de Metz, Luxembourg;

2. Dismiss the application submitted by the applicant on 17 March 1958 as unfounded;

3. Order the applicant to pay the costs.

II —. Statement of the facts

III —. Submissions and arguments of the parties

1. Admissibility

2. The substance of the case

(1). The contested decision constitutes an administrative measure which is contradictory, incomprehensible and unacceptable as to its content and purport and which consequently offers no protection against arbitrary application and discrimination.

(2). The High Authority leaves to the Brussels agencies the power of interpreting the ill-defined concept of own resources and of applying it according to their own discretion. This delegation of powers is incompatible with the Treaty (to this effect, see the Judgment of the Court in Case 9/56).

(3). By authorizing exemptions for two particular cases of an exceptional nature, Hoogovens and Breda (see the letter of the High Authority of 17 April 1958), the High Authority is guilty of discrimination.

(4). By including in the equalization system scrap which is not bought, the defendant infringes its own Decisions Nos 22/54, 14/55 and 2/57.

(5). The High Authority creates a discriminatory state of affairs by using as the criterion for comparing the situation of scrap consumers not their real economic situation, but abstract legal fictions. It considers as scrap not on the market only such scrap as is recovered by one and the same legal person, and not also such scrap as is recovered by two or more legal persons controlled by another legal person.

(6). The act of bringing in for equalization scrap which has not been bought and of doing so with retroactive effect for Decisions Nos 22/54, 14/55 and 2/57 adopted previously cannot be accepted; such inclusion is contrary to the generally accepted principle that administrative measures involving new taxes cannot be retroactive.

(a). Decisions Nos 22/54 and 14/55 did not contain the concept of own resources, which the defendant purports to take into account retroactively;

(b). The High Authority includes in the equalization system scrap which was not bought;

(c). The High Authority allows for exceptions by virtue of which bought scrap is exempted from the obligation to pay contributions.

1. It is a generally acknowledged principle of law that an administrative authority can use its powers only to adopt clear, coherent, sensible and comprehensible decisions. By using its powers to adopt an obscure, contradictory, absurd and unintelligible decision, the High Authority failed seriously to adhere to the legal objective of its powers; it was guilty of a misuse of powers.

2. The Treaty does not recognize any arbitrary objectives. If the High Authority adopts any measures which result in arbitrary effects, it is using its powers to pursue objectives extraneous to the Treaty.

3. The High Authority completely shifted to the Brussels agencies the burden of exercising the discretionary power of assessment which belongs to the High Authority alone. It thus used its powers to upset the balance of powers which characterizes the organization of the Community.

4. In two exceptional cases the High Authority authorized the granting by the Brussels agencies of an exemption from the obligation to pay contributions. By bringing into being this discriminatory situation of exceptions, it used its powers to pursue objectives other than those authorized by the Treaty.

5. As a result of the letter complained of, the defendant is putting undertakings which seek to avoid the obligation to pay contributions under a compulsion to organize their economic grouping under a single company name. According to the Treaty, the High Authority must take account of economic realities. In fact, it has ignored the economic situation by failing to allow scope for economic concentration other than under a single company name. It has thus committed a misuse of powers by exercising its powers in breach of the aims of the Treaty.

6. According to Articles 3 (a) and 53 (b) of the Treaty, the powers of the High Authority are conferred upon it with a view to enabling it to ensure supply to the common market, and therefore solely in respect of such undertakings as take part in the ferrous scrap market. By bringing in for equalization scrap which is not on the market, it seeks to acquire funds from undertakings which do not take part in the ferrous scrap market. It is thus using its powers for a purpose other than that in view of which they were conferred upon it.

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to Articles 14, 15, 33 and 80 of the Treaty establishing the ECSC; Having regard to the Protocol on the Statute of the Court of Justice of the ECSC; Having regard to the Rules of Procedure of the Court of Justice of the ECSC, THE COURT hereby: