JUDGMENT OF 30. 6. 1966 — CASE 2/65 FERRIERA ERNESTO PREO v HIGH AUTHORITY

In Case 2/65

THE COURT composed of: Ch. L. Hammes, President, A. M. Donner (Rapporteur), A. Trabucchi, R. Lecourt and R. Monaco, Judges, Advocate-General: J. Gand 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

A — Infringement of Article 3 of Decision No 22/54 of 26 March 1954, establishing a financial arrangement for the equalization of ferrous scrap imported from third countries, and of Article 5 of the Treaty

B — Abuse of powers on the ground of infringement of an essential procedural requirement (lack of a statement of reasons, misuse of power — in the form of misuse of procedure and evident illogicality) in connexion with the provisions of the first paragraph of Article 47, and the fourth paragraph of Article 86 of the Treaty together with Article 2 of Decision No 13/58

C — Abuse (misuse) of powers by reason of erroneous criteria and renunciation of the first assessment, which is all the more serious and requires relevant and convincing grounds since the assessment was accepted by the undertaking — complete failure to state reasons

IV — Procedure

Grounds of judgment

Costs

I —. Facts

II —. Conclusions of the parties

(1). Is it true that the commissioning period for Preo e Figli's furnace, which went into operation on 1 October 1956, lasted until the end of 1957?

(2). Is it true that, during the commissioning period, and even later, until recently, numerous errors were committed causing various difficulties as a result of which many castings were unsuccessful, so that the materials had to be returned to the furnace involving a considerable increase in the consumption of electricity?

(3). Is it true that the instruction and retraining of the work force was very long and difficult; that these periods lasted even longer owing to the continual turnover in workers under a group employment scheme, and that this turnover constituted and at present still constitutes the major obstacle to the training of a qualified and specialized labour force?

(4). Is it true that in October 1958 production of special steels (for motor vehicle springs and carbon steels) commenced and that this production was declared, as it progressed, to the ECSC and amounted in all, up to June 1960, to 2032 metric tons; and that to obtain that special production there were required several months of trials with unhappy results and an excessive consumption of electricity as a consequence of castings which were either too long or spoiled and in the latter instance had later to be returned to the furnace?

(5). Is it true that the excessive consumption of electricity led Preo e Figli in particular to use iron turnings, light scrap and American baled scrap, that the latter in particular constituted the major part of the supplies obtained by Preo e Figli in third countries and as they contain many impurities amongst which in particular are chrome and nickel, does the necessary deoxidization require a longer period in the furnace?

III —. Submissions and arguments of the parties

A —. Infringement of Article 3 of Decision No 22/54 of 26 March 1954, establishing a financial arrangement for the equalization of ferrous scrap imported from third countries, and of Article 5 of the Treaty

B —. Abuse of powers on the ground of infringement of an essential procedural requirement (lack of a statement of reasons, misuse of power — in the form of misuse of procedure and evident illogicality) in connexion with the provisions of the first paragraph of Article 47, and the fourth paragraph of Article 86 of the Treaty together with Article 2 of Decision No 13/58

C —. Abuse (misuse) of powers by reason of erroneous criteria and renunciation of the first assessment, which is all the more serious and requires relevant and convincing grounds since the assessment was accepted by the undertaking — complete failure to state reasons

IV —. Procedure

(a). In adopting the approved criteria, did the experts take account of normal reuse of own arisings relating to each production cycle in subsequent production cycles?

(b). Are the approved criteria applicable to the 15 months after a furnace has commenced operations, in an undertaking which has just begun its production?

As to (a):. The consumption of units of electricity, fixed for the different furnace capacities, depends on the input of ferrous scrap, and it is of little importance whether the latter is composed of own arisings or of bought scrap; because of this, it was unnecessary for the experts to consider whether the ferrous scrap with which the furnace was charged was composed only of bought material, or whether it also included own arisings originating from previous production cycles, and therefore they have not made this distinction.

As to (b):. As appears from the marginal notes to the graph drawn up by the experts during their abovementioned meeting, with regard to threshold values, it should be noted that the following statement was made:

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 the Treaty establishing the European Coal and Steel Community, especially Article 33; Having regard to Decisions Nos 2/57 and 13/58 of the High Authority of 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; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, especially Article 69 (2); THE COURT hereby:

1 Annuls the individual decisions of the High Authority of the European Coal and Steel Community of 13 November 1964 relating to the payment of contributions to the scheme for the equalization of imported ferrous scrap and scrap treated as such;

2 Orders the defendant to pay the costs of the main action;

3 Orders the applicant to pay the costs of the application for the adoption of an interim measure.