JUDGMENT OF 14.12.1962 — JOINED CASES 46 AND 47/59 MERONI v HIGH AUTHORITY

In Joined Cases 46 and 47/59

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

gives the following

JUDGMENT

Issues of fact and of law

I — Facts

II — Conclusions of the parties

III — Submissions and arguments of the parties set out in the written procedure

1. Submissions and arguments of the applicants

2. Submissions and arguments of the defendant

IV — Subsequent procedure

Grounds of judgment

I — On the scope of the conclusions of the applicants

II — On the substance of the case

1. Liability of the High Authority on the basis of a guarantee given by it

2. Liability for a wrongful act or omission

III — Costs

I —. Facts

1. By a series of general decisions, the High Authority instituted, extended and modified, pursuant to Article 53 (b) of the ECSC Treaty, obligatory financial arrangements for all undertakings consuming ferrous scrap. These arrangements were in particular intended to equalize within the Community the cost price of this raw material, whether of Community or of foreign origin. The scheme was supported by contributions based on the consumption of bought scrap by each undertaking. These contributions were principally intended to allow for equalization payments in order to assist those undertakings which purchased ferrous scrap imported from third countries or emanating from ship-breakers' yards, as the cost price of these two categories of ferrous scrap was generally dearer than that of ferrous scrap within the Community.

2. Up to 1957 approximately 22000 metric tons of ferrous scrap of Community origin were equalized, in respect of which there were presented, by way of supporting documents, certificates issued by Mr Van der Grift, the head of the Iron and Steel Department of the Dutch Ministry for Economic Affairs. These certificates fraudulently certified that the material was from ship-breakers yards'. These irregularities gave rise to an action by the Société FERAM against the High Authority pursuant to Article 40 of the ECSC Treaty, which was dismissed by the Court on 17 December 1959 (Rec. 1958/1959, pp. 506 et seq.), as it did not consider that the above-mentioned facts indicated a wrongful act or omission on the part of the Community.

II —. Conclusions of the parties

1. Declare that the present action is admissible;

2. Declare that the defendant is liable for having failed to avoid the situation whereby, through the medium of the OCCF during the period from 1954 to 1957, considerable quantities of ferrous scrap were sold, supported by fraudulent certificates issued by the head of the Iron and Steel Department of the Dutch Ministry for Economic Affairs, to the effect that those quantities originated from ship-breakers yards (in which affair Hansa-Rohstoff of Düsseldorf appears to have been involved), and on any other ground which may emerge in the course of the proceedings;

3. Order the defendant, in accordance with the provisions of Article 23 of the Protocol on the Statute of the Court of Justice, to produce all minutes and documents relating to the present dispute together with all appropriate information;

4. If necessary, appoint an expert, to be selected by the Court, to ascertain

5. Order the High Authority to pay the costs and expenses of the proceedings.'

III —. Submissions and arguments of the parties set out in the written procedure

1. Submissions and arguments of the applicants

1. By its Decisions establishing the financial arrangements for the equalization of ferrous scrap, the High Authority had explicitly guaranteed to the undertakings concerned that it would ensure that these arrangements functioned faultlessly, and thereby, that it would ensure that acts of fraud such as those in the present case were prevented. In this respect the applicants refer in particular to the eighth recital of the preamble to Decision 14/55. The High Authority has failed seriously in its duty to exercise due care. It cannot plead in its defence that the acts of fraud in question were unforeseeable, as the opposite is indicated by past experience. Furthermore, the undertakings are entitled to require that the High Authority should exhibit a higher degree of care than an ordinary administration.

2. Moreover, the High Authority and the agencies in Brussels had admitted on several occasions that a wrongful act or omission had occurred.

2. Submissions and arguments of the defendant

(a). The applicants nave failed to prove any actual injury. The High Authority has taken measures to recover the equalization sums paid in error, so that it will still be possible subsequently to correct the amounts of the levy. It is unnecessary to consult an expert, since the exact amount of ferrous scrap for which equalization payments have been illegally granted is known.

(b). The arguments of the applicants do not establish a wrongful act or omission on the part of the High Authority or on the part of the agencies in Brussels — which, in the opinion of the High Authority, amounts to the same thing. The wrongful act or omission of the Dutch official cannot be imputed to the High Authority. The events which led to the irregularities in question were not foreseeable, even judged by the most severe criteria as to the requisite standard of care.

(c). The fact that the responsible departments of the Community recognized the certificates issued by the Dutch Ministry as supporting documents does not constitute a delegation of its powers, but merely the recognition of documents which a national agency issued in the exercise of its constitutional powers.

IV —. Subsequent procedure

1. By an Order of 26 February 1960, the Court joined the present cases to Case 33/59 for the purposes of the oral procedure.

2. By an Order of 2 June 1960, the Court authorized the three applicants to add to the file a certain number of documents, amongst which was a Report of the High Authority of 21 December 1959, the first official document in which it stated that acts of fraud other than those relating to the Van der Grift case had been committed with regard to equalization (this Report is not identical with the Report mentioned under I, 2 above).

3. At the first hearing on 31 January 1962, the three applicants made pleas in respect of all the acts of fraud so far discovered, and referred in particular to the Report of the High Authority and the Poher Report.

4. By an Order of 21 March 1962, the Court decided to reopen the oral procedure in the three cases, and in particular required the applicants to answer the following question:

I —. On the scope of the conclusions of the applicants

II —. On the substance of the case

1. Liability of the High Authority on the basis of a guarantee given by it

2. Liability for a wrongful act or omission

(a). The official of the Dutch Ministry for Economic Affairs, who fraudulently issued the certificates in question, was not subject to the control of the High Authority and did not receive orders from it, but acted in his capacity as a national official.

(b). It is also necessary however to consider whether there was a wrongful act or omission on the part of the defendant within the meaning of Article 40 of the ECSC Treaty, because of its failure to provide a better organized system for issuing the certificates of origin for ferrous scrap qualifying for equalization payments, and in particular because of its failure to provide for the investigation of the authenticity of the said certificates.

III —. Costs

On those grounds, 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 Article 40 of the Treaty establishing the European Coal and Steel Community; Having regard to the Protocol on the Statute of the Court of Justice of the European Coal and Steel Community, in particular Articles 22 and 40; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, in particular Articles 38 (1) and 69 (2) and (3); THE COURT hereby

1 Joins the cases entered under numbers 46/59 and 47/59 for the purposes of the present judgment by reason of their interconnexion;

2 Dismisses the applications as unfounded;

3 Orders that the costs be shared, each party bearing its own costs.