JUDGMENT OF 15. 12. 1965 — CASE 4/65 S.A. MÉTALLURGIQUE HAINAUT-SAMBRE v HIGH AUTHORITY

In Case 4/65

THE COURT composed of Ch. L. Hammes, President, L. Delvaux and W. Strauß, Presidents of Chambers, A. M. Dormer, A. Trabucchi (Rapporteur),, R. Lecourt and R. Monaco, Judges, Advocate-General: K. Roemer 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

Admissibility

The substance of the case

A — The application for annulment

1. The argument with regard to the clause retaining ownership in the scrap

2. The argument relating to the applicant's general conditions of sale

3. The argument relating to infringement of the principle of non-discrimination

B — The application for damages for a wrongful act or omission

IV — Procedure

Grounds of judgment

I — The application for annulment

II — The application for damages

III — Costs

I —. Facts

II —. Conclusions of the parties

III —. Submissions and arguments of the parties

A —. The application for annulment

1. The argument with regard to the clause retaining ownership in the scrap

(a). The reference made to the law on accession does not go far enough. Accession really concerns the natural or civil fruits of a thing. The waste scrap to which the retention in question applies, on the other hand, is neither the natural nor the artificial product of the sheet bars; rather, it is the result of a transformation of the bars themselves. By its reference to the theory of accession, the applicant's argument questions the exclusive nature of the right of ownership, a feature which is inconsistent with the right to enjoy and dispose of a thing being invested in several persons simultaneously. In the present case, the waste scrap is apparently the result of the exercise of the jus abutendi, which resides solely in the owner of the sheet bars, that is. in Phenix-Works.

(b). The reference to the national tax provisions misses the point because the tax authorities, in the exercise of their discretionary powers, act on considerations of expediency rather than on precise legal principles.

(c). This case, the defendant claims, is indistinguishable from others where the Court has excluded the possibility of having a retention of ownership. The quantity of waste scrap which the disputed clause is intended to cover is not even determined as being that which will be present at the moment of completion of the transformation, but the amount of scrap which might arise from the processing of the sheet bars sold, estimated in advance: this retention of ownership clause thus corresponds to an obligation on Phenix-Works to deliver an amount of scrap fixed at a flat rate, without regard to whether this scrap does in fact arise from the sheet bars sold. The applicant's claim that the waste scrap in question does not constitute an integral part of the bars because it has never been sold is merely begging the question, since the problem is precisely that of seeing whether the retention of ownership clause is valid bearing in mind the fact that the subject matter of it is not distinguishable from the sheet bars supplied.

(a). According to the first opinion (that of Mr Dabin), the disputed scrap is to be considered as a product of rolling the bars into rough sheets. It is in fact as a result of its processing and by the exercise of the jus abutendi that the product is, in the legal sense, created: as, for example, in the cutting down of trees in timber forests, the extraction of stone from a quarry and other operations which transform the basic element. The applicant sold Phenix-Works a single entity not composed of constituent elements. The waste scrap is in no sense an indeterminate inseparable constituent part of the sheet bars but, on the contrary, a new and separated thing. Since this scrap does not come into existence until the moment of separation, it cannot be considered as a constituent element of the bars.

(b). According to a second opinion (that of Mr Renard), the agreement in question concerns something to be determined only after rolling and cutting, in accordance with Article 1585 of the Belgian Civil Code; it is that part of the sheet bar which will become the finished sheet. According to this view, the applicant remained the owner of the sheet bars delivered, and thus there did not at any moment exist any new ownership in the separate parts of the bar, prior to their identification and separation. When this occurred, Phenix-Works acquired tide to the part of the bars which had been turned into sheet. As for the waste scrap, it remained distinct from the thing sold and Phenix-Works was obliged to restore it to the applicant in accordance with the terms of the disputed clause.

(c). A third opinion (that of Mr Limpens) emphasizes the priority that the parties' real intention must take over their declared intention, considering that in accordance with this the applicant disposed of only a part of the bar and made Phenix-Works temporarily co-owner of the thing delivered, but neither contracting party could claim exclusive ownership of a part of the bar, the pants being as yet undetermined. By analogy with the second paragraph of Article 573 of the Belgian Civil Code, it is considered that for as long as the division (here, the cutting of the rough sheets) has not been made, the owner of the future sheets and the owner of the future waste scrap are co-owners of the sheet bar in which the two future things are for the time being united. The exclusiveness of the right of ownership does not mean that the right to enjoy and dispose of an object cannot be vested in several persons at once. According to the will of the parties, the union of the two elements comes to an end when the sheet bar is divided, which operation has merely a declaratory effect. Each party must be considered to have been the owner of its particular parcel since the time of the union of the two parcels first existed. The applicant cannot therefore be said to have purchased the waste scrap of which it was always the owner.

(a). As to the first opinion: the argument developed on the theory of accession is not applicable to the present situation. Any product of an object belongs to the owner of that object, not by virtue of the principle of accession but by the effective exercise of the jus fruendi which is an attribute of ownership. In the present case the cutting brought about the splitting into two of the thing which belonged to a single owner. There is therefore no question of accession, which assumes the unification of two things belonging to different owners. This has been confirmed, moreover, by Professor Renard, who supplied the second opinion.

(b). As to the second opinion the defendant, while recognizing that in civil law the autonomy of the intention preserves a certain freedom of action which allows ownership to be disposed as the parties may agree, contends that this view in practice imputes to the applicant an intention which could not have been there. The processing by Phenix-Works of the thing sold, far from having been performed as part of an agreement for work under contract, represents the right of usus and abusus exercised by it in its acquired capacity as owner. It appears moreover from the applicant's statement in its application that it never claimed that its sheet bars were not sold on leaving its factory.

(c). As to the third opinion, the defendant states first that its underlying concept (co-ownership in sheet bars and in arithmetical fractions of their constituent elements in the context of the product of processing them into sheets and sheet-waste) is formally repudiated by the applicant, which has denied that there could at any time have existed co-ownership of the bars. Article 573 of the Belgian Civil Code, on which this theory relies, is not applicable to our case, for here, contrary to what was envisaged by this provision, there has been no mixture of several substances but the sale of a single substance: a sheet bar, which is a single entity not composed of different parts, as is indeed confirmed by the writers of the first and second expert opinions produced by the applicant.

2. The argument relating to the applicant's general conditions of sale

3. The argument relating to infringement of the principle of non-discrimination

B —. The application for damages for a wrongful act or omission

IV —. Procedure

I —. The application for annulment

II —. The application for damages

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 the Treaty establishing the European Coal and Steel Community, especially Articles 5, 33, 40 and 53; 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; THE COURT hereby:

I Dismisses the application as unfounded;

2 Orders the applicant to bear the costs.

1 The figures omitted from this passage have since been altered.