Opinion of Mr advocate-general Roemer

Mr President,

Members of the Court,

Because of their similarity, the two cases (67/69 and 70/69), which occupy us today, have been joined for the purposes of the oral procedure, under an order of the Court of 8 July 1970. They concern once more the scheme which was created under the ECSC Treaty to make imported ferrous scrap and scrap treated as such cheaper and with which we are familiar from numerous previous cases; it concerns the equalization scheme which operated from 1954 to 1958 and the accounts of which are not yet closed. As concerns the two applicant undertakings (I will describe them hereinafter as the first applicant and the second applicant), let me recall that they operate or have operated steel works in Naples and in Rome and that in consequence they were, as consumers of scrap, liable to contribute to the equalization scheme. Moreover, also thanks to a series of previous cases (Nos 23/59, 16 and 20/60, 9/64, 25 and 26/65), we know the essentials of their relationships with that organization as well as with the High Authority of the ECSC so that it is not necessary to set them out in detail now.

Concerning the situation of the first applicant, I will content myself with showing that after making the normal checks the High Authority had doubts as to the correctness of the declarations concerning scrap made by that undertaking (for the period from January 1957 to November 1958, they showed 15469 metric tons in all). These doubts prompted it to calculate the consumption of scrap of the applicant on the basis of its consumption of electric current, which, for the period between 1 June 1956 and 30 November 1958, showed a total of 37668 tons of scrap subject to equalization. A corresponding notice of assessment was sent to the applicant by letter by the High Authority's markets management on 18 August 1964. As the undertaking took no notice, on 11 February 1965 the High Authority adopted two formal decisions. The first specified that during the period between 1 June 1956 and 30 November 1958 the applicant had consumed the quantity of bought scrap indicated in the letter of 18 August 1954 and the second put at Lit. 252974228 the amount of contributions due from the applicant.

On the same day the High Authority also adopted a formal decision in respect of the second applicant. In respect of the tonnage of bought scrap declared (32805 metric tons), it fixed the contribution due up to 31 May 1963 at Lit. 105899634 (taking account of payments made and corresponding interest).

As you know these decisions were contested in Joined Cases 25 and 26/65 [1967] ECR 33. The application of the second applicant was dismissed on the ground that it was made out of time. Under the decision taken in respect of the undertaking the Commission, as the successor of the High Authority, therefore subsequently took enforcement proceedings and consequently had rolling plant belonging to the applicant sold by auction. On the other hand the application of the first applicant succeeded. The decisions which had been notified to it were annulled by a judgment of 2 March 1967, because the calculation of the consumption of scrap had been irregular, since it did not appear that at the time of the checking of its undertaking, the applicant had refused to produce the documents asked for.

While the legal proceedings were still taking place, the Commission on 15 December 1965 adopted General Decision No 19/65 relating to the fixing of final rates of contribution and drawing up of final statements of account (OJ No 224 of 30. 12. 1965). It provides in respect of each undertaking for the drawing up of the complete statement of account as at 31 December 1965 and specifies that the balances established as at 31 December 1965 shall carry interest at 5 % per annum from 1 January 1966 until the date of payment. Further, interest falling due during one year must, to the extent to which it is unpaid, be capitalized on 31 December of the same year. Accounts of this type were sent to the undertakings by letters from the markets management on 23 December 1965. As regards the first applicant the account was based on the tonnages of scrap set out in the decision of 11 February 1965, and showed on 31 December 1965, a debit balance of lit. 274845521. Following the judgment of 2 March 1967, however, it was impossible to maintain that figure. The case of the first applicant was therefore re-examined and this led to the inclusion in the account, in addition to the consumption of scrap declared for 1957 and 1958, a tonnage of 2268 metric tons which was ascertained at the time of the checks made in 1960 on the basis of purchase invoices produced and referring to the year 1956. On this basis (17737 tons), the Commission on 9 October 1969 adopted an individual decision fixing the amount of the contribution due on 31 December 1968. That decision specifies in detail the manner in which this debt is calculated, taking account of payments made, of the distribution of equalization bonuses wrongly paid and recovered, as well as outstanding interest on debits and credit balances, the total amounting to lit. 140594449. As the decision also specifies, interest is due on that sum at the rate of 5 % per annum, as from 1 January 1969 until the date of payment. On the same day the Commission adopted in respect of the second applicant an individual decision fixing the amount of its contribution. Taking account of payments made, of corresponding interest due, of the distribution of equalization bonuses recovered, including interest on the debt, the total of the contribution amounted to lit. 130089513 on 31 December 1968 and finally, after the deduction of the sum fixed in the decision of 11 February 1965, to lit. 24189879. This debit balance also carries interest at 5 % per annum from 1 January 1969 until the date of payment.

The decisions mentioned were notified to the undertakings concerned on 18 and 27 October 1969. It is because of these decisions that on 14 and 29 November 1969 the matter was referred to the Court and that the two applications upon which you are now asked to decide were made. The claims formulated in these applications have above all the common purpose of procuring the annulment of the individual decisions of 9 October 1969. Further, the two undertakings ask that the Commission should be ordered to pay damages because of the wrongful act on the part of the administration constituted by the late notification of the sums owing by way of contributions and by the fact that by virtue of its inadequate management and supervision of the equalization scheme, the High Authority did not prevent fraudulent practices, and more especially the unwarranted payments of equalization bonuses.

Legal discussion

In considering these cases I shall in the first place deal with the requests for annulment and the submissions put forward to that end: I shall then consider the claims which put in issue the liability of the administration. In doing this I can in the main deal with the two cases together because the arguments are mostly identical. It is only within the framework of the action for annulment that the first applicant has put forward certain particular complaints, which I will consider first of all.

I — The requests for annulment

1. Case 67/69

(a) Arguments relating directly to the contested individual decision

Referring to a series of arguments as to form and substance, the applicant first of all raises the objection that the amount of its contribution was fixed on the basis of tonnages of scrap which it did not declare, that is to say, by including 2268 metric tons for the year 1956.

I must therefore state that, considered in its different aspects, the first submission relied upon by the first applicant does not justify a partial annulment of the contested decision.

(b) Arguments directed against the general decisions on which the contested decision is based

A second complaint which also is put forward only in Case 67/69 concerns the calculation of interest in the contested decision. The applicant considers that interest may be charged not only for delayed payment but only after communication of the exact amount of the debt and after a formal demand, that is to say in its case, at the earliest as from 18 October 1969 (the date on which the contested decision was notified). Further the annual capitalization of interest, that is to say, the charging of interest on interest, must be regarded as irregular.

In respect of the specific arguments put forward on this subject, the applicant cannot refute the Commission's objection that its deductions, based only on Italian law, are clearly inadequate. Further—as the Commission has also shown—it emerges from the national legal systems that not only can interest be required in case of wrongful failure to pay (and therefore after a formal demand) but there even exists statutory interest and which runs automatically as from a particular day. In the same way the national legal systems (as the Commission has shown by referring to German, French and Italian law) do not absolutely exclude capitalization of interest and consequently the charging of interest on interest.

The decisive question is therefore whether the system of interest chosen by the Commission can be justified by the particular requirements of the scrap equalization scheme. Let me say at once that this certainly appears to be the case. An essential principle in this scheme is in fact to place all undertakings consuming scrap in the same situation on a particular date whether or not they consumed internal scrap (and consequently were required to make a contribution by way of equalization), or purchased imported scrap (and consequently had the right to an equalization bonus. The rules on interest, too, must serve this equalizing function. This means that it must have an objective structure, to be limited as to time only and not to be linked to subjective factors such as knowledge of the equalization debt and culpable delay in payment. The Court of Justice has expressly affirmed this in Case 111/63 ([1965] ECR 677) concerning the regulation of the legal interest on credit balances referred to in Decision No 7/61 which was then being considered (OJ of 25. 4. 1961, p. 653): in fact it emphasized that the system relating to interest on overdue payments in force previously might have resulted in unjustified disadvantages in view of the varying behaviour of the undertakings. In my opinion it must be the same for the objective system of interest on overdue payments introduced as from 1 January 1966, at the same time as the final fixing of rates of contribution by Decision No 19/65, because, in the first place, the system in question applies uniformly both to debit balances and to credit balances, that is to say, it ensures equality of treatment. It follows that interest could properly be taken into account without individual notifications being sent to the undertakings (notifications which were, furthermore, addressed several times to the applicant), merely on the basis of general decisions which not only fixed rates of contribution but made provision also for demands for payment on specified dates, as well as warnings concerning the possibility that interest miphr become payable.

Further it seems to me impossible to raise objections against the annual capitalization of interest, that is to say, the charging of interest on interest (which, too, applies equally to creditors and debtors); that is so not only because this capitalization (by analogy with current bank interest) culminates in a hardly noticeable increase in the burden of interest. It is necessary also to take account of the fact that Decision No 19/65 made provision for final statements of account and that in order to ensure their rapid closing off, in which all the participants necessarily had an interest, it might appear perfectly proper to adopt special measures.

The arguments of the applicant (based on the concept that balances produce interest) therefore provides no ground justifying a declaration of the illegality of the general decisions and consequently the annulment of the individual decision for which they serve as a basis.

2. Arguments put forward jointly in the two cases

Like the argument which I have just discussed, the essentially concurring arguments which were put forward in the two cases in order to support the applications for annulment all refer to General Decisions Nos 7/63 (OJ No 54 of 6. 4. 1963) and 19/65 (OJ No 224 of 30. 12. 1965); they thus amount to objections of illegality.

As regards the requests for annulment I can therefore conclude that none of the numerous complaints directed against individual and general decisions can contribute to the success of the applications.

II — The claims for damages

As I have already said it is now necessary to study the claims for damages based on the alleged liability of the administration which the applicants put forward from two points of view: on the one hand on the ground that the Commission delayed in communicating the equalization debt and on the other hand on the ground it did not prevent the well-known cases of fraud which caused an increase in rates of contribution.

III — Summary

My conclusion, after all the foregoing considerations, may be summarized as follows:

I consider that the applications made by the Simet and Feram undertakings must be dismissed in their entirety as unfounded and that the applicants should be ordered to bear the costs.

1 Translated from the French version.