JUDGMENT OF 13. 7. 1965 — CASE 111/63 LEMMERZ-WERKE v HIGH AUTHORITY

In Case 111/63

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

gives the following

JUDGMENT

Issues of fact and of law

I — Summary of the facts

(1). The applicant manufactures wheels and rims for vehicles and in this capacity is not subject to the ECSC Treaty. In order to supply its own requirements it set up a steel works and rolling mill where it commenced production in 1956, as it has stated, initially on a trial basis. It began to buy ferrous scrap in April 1956.

(2). On 2 May 1957 the Imported Ferrous Scrap Equalization Fund (hereafter referred to after its French initials as ‘CPFI’) sent the marketing division of the High Authority a letter stating in particular: This list includes the applicant and states that its production of crude steel does not include castings but consists exclusively of ingots.

‘Object: Production and sale of steel ingots by independent foundries.

… At the 28th meeting of the CPFI … it was decided to obtain a list of … steel foundries producing as ancillary products steel ingots, in order to make them, if necessary, liable to pay equalization contributions in respect of that part of the ingots corresponding to bought scrap.

We beg to set out for you below, for your information, the information in our possession … on this question.

Federal Republic of Germany

The German regional office has forwarded to us a list of the factories subject to the levy but which have not so far been called upon to pay it. For your information we enclose with this letter a copy of this list …’

(3). According to the minutes of its 32nd meeting, on 8 May 1957, the Board of the CPFI took the following decision:

‘Item 8 of the agenda: Determination of the date from which the independent castings foundries which produce and sell steel ingots are to be subject to the levy in respect of that part of their bought scrap corresponding to the production of steel ingots.

The Board of the CPFI … decided that the independent castings foundries shall pay the levy on the tonnage of bought scrap corresponding to their production of steel ingots from 1 February 1957.’

(4). On 16 May 1957 Mr Lindeboom, a member of the Board of Directors of the Deutsche Schrottverbraucher-Gemeinschaft, the Association of German consumers of scrap (hereinafter referred to by its German initials ‘DSVG’), and of the regional office of the CPFI (which also took part in this meeting of the Board) sent the following letter to the CPFI :

‘I have received your minutes of the 32nd meeting of the Board … and with regard to them I refer to item 8 on the agenda …

During the meeting of the Board the draft of a letter to Mr Rollman [dated 2 May 1957] was circulated in which were named all the undertakings which have not yet had to pay the levy. I presume that this letter was dispatched after the meeting of the Board … To clarify the position I recommend therefore that item 8 of the minutes be completed by the addition of the following:

This relates to the undertakings named in the letter sent … by the CPFI to Mr Rollman.’

(5). On 17 May 1957 the CPFI wrote to the chairman of the regional offices stating; in particular the following:

‘Object: Steel ingots produced by foundries

Pursuant to the decision taken on 7 and 8 May 1957 by the Boards of the Office Commun des Consommateurs de Ferraille [the Joint Bureau of Ferrous Scrap Consumers] and of the CPFI the factories mentioned in our draft letter to Mr Rollman … will be liable to pay contributions on the corresponding proportion of bought scrap from 1 February 1957.

We shall be grateful if you will inform the factories in question (with the exception of those listed below) of this decison:

[the list does not include the name or the applicant].’

(6). On 20 May 1957 the DSVG sent various undertakings including the applicant a circular letter stating in parti cular :

‘Object: Liability to pay the equalization fund levy in order to offset the increase in the cost of importation

By letter of 17 May 1957 the CPFI … informs us that:

“Pursuant to the decisions taken by the Boards [of the Joint Bureau of Ferrous Scrap Consumers and of the CPFI] on 7 and 8 May 1957 the factories mentioned in a letter sent to the High Authority shall as from 1 February 1957 be liable to pay contributions on the corresponding proportion of their bought scrap.”

Your undertaking, too, is bound by this decision.’

(7). According to the minutes of it 33rd meeting on 12 and 13 June 1957 the Board of the CPFI took the follow ing decision:

‘Item 1 on the agenda: Approval of the minutes of the 32nd meeting of the Board …

The minutes of the 32nd meeting are unanimously approved with the amendment put forward by Mr Lindeboom in his letter of 16 May 1957.’

(8). On 12 June 1958 the Société Fiduciaire Suisse sent the High Authority a report on the checks carried out at the offices of the applicant in the same month; it states in particular: (It then reports that the applicant referred to the circular letter of 20 May 1957 of the DSVG mentioned in paragraph 6 above).

‘As we have already mentioned, the company which is required to supply a statement of productions began to produce steel in July 1956; however it began to buy ferrous scrap for this purpose in April 1956 …’

‘As a result the company has not paid any levy on the purchases of ferrous scrap made during the period from April 1956 to January 1957.

Since it commenced trading the company … has only produced steel ingots from the ferrous scrap which it bought: the High Authority will therefore have to decide whether the purchases of ferrous scrap made before 1 February 1957 are to be a posteriori subject to the levy.’

(9). On 19 November 1958 the marketing division of the High Authority wrote to the CPFI inter alia as follows: Another letter, in similar terms, was sent on 25 August 1959. By letter of 12 May 1959 the CPFI sent the High Authority's request to the DSVG. On 2 June 1961 the DSVG sent a reply to the CPFI stating that in its opinion there had been no mistake and that there was no need therefore to make the alteration which had been requested.

‘As the decision of 8 May 1957 taken by the Fund relates only to independent steel foundries, the list mentioned by the DSVG can only be based on a mistake, since it mentions all the German undertakings which have not paid any contribution and also includes undertakings which consist only of steel works and blast furnaces.

I therefore request you to draw the attention of your regional office in Düsseldorf to this mistake and to rectify the list and also to withdraw DSVG circular No 1025 of 20 May 1957 addressed to Lemmerz-Werke …’

(10). By letter of 19 July 1961 the Directorate-General for Steel of the High Authority sent the applicant a statement of the relevant tonnage of bought ferrous scrap for the period February 1957 to November 1958, stating in addition as follows: The letter went on to state that the tonnage of ferrous scrap bought by the applicant from April 1956 to the end of January 1957 must ‘now’ be included in the tonnage subject to the levy.

‘According to the circular letter … sent to you inadvertently by the DSVG, … you were only to be liable to pay the levy from 1 February 1957 … As your company has never produced steel castings, it cannot in any circumstances enjoy the advantages of the procedure applied for the period prior to 1 February 1957 for the benefit of independent steel foundries …’

(11). On 8 April 1963 the appropriate department of the High Authority sent the applicant a demand for payment based on the fact that it should have paid contributions before 1 February 1957. The judgment of the Court in Joined Cases 53 and 54/63 of 5 December 1963 dismissed the application against this measure as being inadmissible.

(12). By a decision of 6 November 1963 notified to the applicant on the 21st of the same month the High Authority ordered the applicant to pay within 30 days DM 432043.25, the amount stated in the order for payment mentioned in paragraph (11) above. The decision is based in the first place on the fact that the applicant has never been legally exempt for the period prior to 1 February 1957; alternatively it revokes any exemption which may have been granted.

II — Conclusions of the parties

The applicant claims that the contested decision should be annulled; the defendant contends that the application should be dismissed as unfounded. In addition each party submits that the other party should bear the costs.

III — Submissions and arguments of the parties

According to the applicant the contested decision is defective because it infringes essential procedural requirements (see below 1 to 5), the Treaty and the rules of law relating to its application (see below 6 to 11 and 13) and because it amounts to a misuse of powers (see below 12).

1. Inadequacy of the statement of reasons: the decision does not state the nature of the DSVG's mistake

The applicant alleges that the High Authority failed to state whether the error in question was a mistake of law or of fact or a mistaken assessment of the situation. Further the reasons are not conclusive because a mistake on the part of a person making a declaration does not affect the validity of his declaration.

According to the defendant the recitals of the decision indicate the nature of the mistake: namely the fact that a decision only affecting independent steel foundries was. notified to the applicant also.

2. Inadequacy of the statement of the reasons with regard to the permissibility of the retroactive revocation

The applicant argues that a revocation such as the one in question can at most be justified if there are substantial reasons why it is in the public interest. However the decision is limited to stating that the applicant must have been aware of the DSVG's error. In particular the decision does not say that the revocation would have been justified even if the applicant were entitled to regard its legal position as securely established (‘Vertrauensposition’).

The defendant retorts that the fact that the applicant ought to have noticed the mistake is only one of many factors to be assessed and is not even a decisive one. The decision also takes into account the economic consequences of the revocation; the request for payment by instalments made by the applicant on 17 December 1963 confirms that this was done correctly. Moreover by referring to the case-law of the Court the High Authority showed that it was aware of the conditions governing the retroactive revocation of illegal exemptions.

3. Inadequacy and inconsistency of the statement of reasons with reference to the applicant's economic situation

The applicant disputes the statement in the recitals of the decision that it did not produce precise evidence that the payment of the sum in dispute would prejudice its economic situation. The High Authority should first have obtained from the applicant information on this point. The statement ‘that when the arrangements for payment are made sufficient account can be taken of any justifiable reason’ contradicts the operative part of the decision, which states that if payment of the total amount is not made within 30 days execution will be levied.

The defendant retorts that it was for the applicant to explain any economic difficulties which it may have had. The offer made by the applicant to pay by monthly instalments of DM 50000 contradicts its own statements.

The argument relating to the alleged contradiction is incomprehensible.

4. Ambiguous nature of the reasons for the decision

The applicant refers to the following passage in the contested decision:

‘By letter of 19 July 1961 the undertaking was informed that it had to pay the contribution for the disputed period. The objections of Lemmerz-Werke put forward on this point in legal proceedings have been examined during the administrative procedure … ;’

and submits that it is an ambiguous statement of the facts.

The defendant is of the opinion that the statement of defence has removed this ambiguity.

5. Inadequacy of the statement of reasons with reference to the liability in principle of the applicant to pay equalization contributions

The applicant complains that the decision does not adequately answer the question why it is liable to pay equalization contributions for the period prior to 1 February 1957.

The defendant answers this allegation by referring to the corresponding passages of the recitals of the decision.

6. The mistaken claim that the company is liable to pay equalization contributions

The applicant disputes its liability to pay equalization contributions for the period prior to 1 February 1957. During that period it had only carried out at its new steel works preparatory operations and trials; these experiments do not amount to production within the meaning of Article 80 of the ECSC Treaty, they were only ‘preparations’ for production. Therefore there were no ‘normal operations’ within the meaning of Decision No 2/57.

The defendant replies that by virtue of Article 2 of Decision No 14/55 the liability of the applicant to pay the levy arose as soon as it began to buy ferrous scrap for the production of steel, irrespective of the purpose for which it was used. Stockpiling ferrous scrap is to be regarded as ‘steel production’. The reference to ‘normal operations’ is not relevant, because the basic decisions use this concept in a different context.

7. Mistaken assumption of the High Authority that the CPFI decision of 8 May 1971 did not apply to the applicant

The applicant refers to the fact that the letter sent on 2 May 1957 by the CPFI to the High Authority (which also mentions Lemmerz-Werke) had been made available to the persons attending the meeting of the CPFI on 8 May 1957; that is sufficient to show that the decision taken at this meeting also referred to the applicant.

The history of the decision confirms this conclusion. It is no doubt correct that the discussions were mainly concerned at that time with the question whether and to what extent independent foundries producing not only castings but steel ingots were to be made liable to pay the levy on that part of their bought scrap used in the production of steel ingots. But the discussion also dealt with the question of determining as a general principle from what date undertakings which for whatever reason had not yet received a demand for payment would have to make payments. It is for reasons based on public law that in all these cases the CPFI did not seek to impose retroactive liability. Moreover all the persons concerned knew at that time that the applicant did not operate an independent steel works and only produced steel ingots.

The defendant, on the other hand, infers from all the surrounding circumstances that the contested decision was only intended to regulate the situation of independent foundries; the different view said to have been put forward by the DSVG is of no importance. The fact mat the decision was also notified to the applicant is explained as follows. Like the independent foundries the applicant was neither a participant in the voluntary equalization scheme which existed at that time, nor a member of the DSVG but had to participate later in the compulsory scheme. The DSVG sent the CPFI a list of all the undertakings in this situation; that is how the applicant's name was also inadvertently put on the completed list sent to the High Authority. There has never been any doubt that the applicant was liable to pay the levy on its entire purchases of ferrous scrap.

8. The mistaken assumption that the applicant must have known that the decision of 8 May 1957 did not affect it

The applicant submits that, even if it was not affected by the decision, it could not have known this. The circular letter of the DSVG neither quotes the wording of the decision nor of the letter of 2 May 1957.

The facts of the case show that the applicant had no reason to believe that it was not affected by the decision for the simple reason that it was not producing castings. It necessarily regarded the decision as the reaction of the CPFI to the previous letters in which it disputed its liability to pay equalization contributions.

The defendant on the other hand is of the opinion that the applicant must have known that the decision only applied to foundries. It is clear that the DSVG's circular was designed for the latter. The applicant's previous letters referred to quite different questions.

9. Illegality of the revocation

The applicant submits that the revocation is illegal because the CPFI's decision of 8 May 1957 was lawful; the CPFI failed to impose upon it liability for payment at the correct time and in the proper form and that is why it was forced to forgo the imposition of any retroactive liability. But even if this argument is disregarded the revocation is illegal for various reasons.

The High Authority allowed the normal time-limit to expire. It was informed of the exemption in 1958 at the latest but did not annul it until 1963.

The applicant had by then become entitled to regard its legal position as securely established.

The revocation discriminates between it and undertakings which before 1 February 1957 had been officially notified of the amount of their equalization contribution and were therefore able to allow for this item when fixing their prices or building up their reserves. It is also discriminatory because the High Authority continues to apply the contested decision to other undertakings.

The applicant's case cannot be compared with the Hoogovens company's case where the Court upheld the revocation (Case 16/61). The applicant compares the two cases on this point and stresses in particular that the Hoogovens judgment is based on the absence of any wrongful act or omission on the part of the High Authority whereas the dilatory conduct of the High Authority in the present case amounts to such an act or omission.

The defendant replies that according to the case-law of the Court any exemption would have been illegal.

The revocation was effected within a reasonable period of time and it is impossible to agree that the applicant had become entitled to regard its legal position as securely established. Any hope hat the decision in question would continue to apply disappeared at the latest in 1958 when the Société Fiduciaire Suisse carried out its checks at the applicant's offices and when in Decision Mo 13/58 the High Authority reserved he right to revoke the decisions taken by the organs in Brussels. There can be no question of any abnormal delay, because the High Authority waited for he outcome of certain proceedings in which the Court clarified the decisive questions.

The defendant deals with the complaint of discrimination by a detailed examination of the situation of the other undertakings concerned. Moreover the Court decided that it is the exemption of a consumer of ferrous scrap which constitutes discrimination, in that it is detrimental to that consumer's competitors.

The Hoogovens case is on all forms with this case; the position of the applicant is even weaker than that of the Hoogovens company at that time. Furthermore the judgment in question is not based only on the absence of a wrongful act or omission by the High Authority.

10. Limitation of actions

It is the applicant's view that at the time of the notification of the contested decision any rights which might have been enforced against it were already time-barred. In this case the general limitation period must be sought in the revenue laws of the Member States; these laws lay down limitation periods of 5 years, whereas the High Authority allowed a period of 7 or 8 years to elapse.

The limitation of actions is to be applied also to the equalization scheme. It is the High Authority which is answerable for the amounts not levied as a result of a wrongful act or omission. The defendant fails to understand the concept of the limitation of actions when it refuses to acknowledge it by calling attention to the benefit accruing from it to the debtor.

The defendant replies that to admit that the equalization contributions are time-barred would confer on the undertaking concerned an unjustified advantage over its competitors which would continue even if the High Authority were called upon to cover the deficit.

It is impossible to make a comparison with national revenue laws, because the levying of equalization contributions is not a tax. Furthermore it is not correct to say that the laws of all the Member States lay down limitation periods of five years at most for taxes. In this case, in the absence of express provisions, at most only a general limitation period could be considered; under German law, for example, this is a period of 30 years.

Even if it was thought that a limitation period began to run from the end of 1958 (that is to say, from the earliest date when an individual decision affecting the applicant could have been adopted), it would have been interrupted by the letter of 16 July 1961.

11. Forfeiture

The applicant submits that there was no reason for it to anticipate another a posteriori demand to pay contributions. It is true that the High Authority ‘from time to time’ made known ‘its questionable view in theoretical arguments’, but it only acted when it issued the contested decision. As it was issued too late, it contains a ‘venire contra factum proprium’ which infringes the principle of good faith.

The defendant replies that it informed the applicant many times of its view on the disputed question of liability. Further all the undertakings concerned were aware of the reasons for the delay over a period of years in the preparation of the statements of account, so that none of them could assume that it would not receive any more.

Both parties in addition refer to their arguments relating to the other complaints (see in particular points 9 and 10 above).

12. Misuse of powers

The applicant submits that the High Authority considered the question, which fell within its discretionary powers, whether the CPFI's decision of 8 May 1957 was to be revoked, on the basis of a mistaken and inadequate assessment of the facts; in addition it took an inordinately long time to revoke it.

The defendant refers to its arguments relating to the other complaints (see in particular point 9 above).

13. Mistakes in the calculations

The applicant begins its argument by slating that ‘for internal reasons’ it limited its application in Case 53/63 to part of the contested amount (DM 374844.79). But in this case its application covers the entire amount and it submits that the defendant's calculations disclose fundamental mistakes:

1) The statements of account were prepared using European Monetary Agreement units of account whereas the corresponding amounts charged to the undertakings were calculated in their respective national currencies. On this occasion the High Authority discriminated against the German undertakings by not taking proper account of either the double devaluation of the French franc or the revaluation of the German mark. In Decisions Nos 18 to 20/60 (Official Journal, p. 1145 et seq.) the High Authority continued to base its calculations on the applicable cost prices, equalization prices and amounts all expressed in European Payments Union or EMA units of account; it is not until Decision 21/60 (Official Journal, p. 1177) that there is an exception to this principle for the benefit of French undertakings. ‘The EMA unit of account in fact laid down definitively the content and extent of the credits and debits of consumers of ferrous scrap; the national currencies on the other hand were only the medium for payment and their revaluation or devaluation could not have any effect on the amount of the debtor's liability.’ It is incomprehensible why account should not be taken of variations in currency parities after the equalization period: there is no doubt that in fact the equalization scheme owed and was owed substantial sums at the date of the revaluation in question.

2) The illegal procedure followed at that time by the High Authority in connexion with group scrap led to delayed collection of the levy and also to a substantial loss of interest simply because the defendant did not compel the undertakings concerned to pay interest on overdue payments. Now Decision No 7/61 (Official Journal, p. 653) provides, unlike previous decisions, that undertakings should be retroactively exempted from interest for delay and that interest already paid should be deducted from the actual contributions, whilst interest at the rate of 5 % should be credited to undertakings which have paid their contributions, not just in advance, but on the due date. The recitals of Decision No 7/61 describe the decisions of the Court as an uncertain ‘variable factor’. Further they do not state the real reason which is the negligence of the High Authority referred to above. According to the principles of public law public bodies must bear the consequences of any wrongful act or omission on their part. The defendant on the contrary makes the debtors who paid punctually pay for the default of other debtors by charging them with the additional expenses arising out of the new regulations. The defendant regards the complaint as inadmissible. In the first place in its application in Case 53/63 the applicant has ‘in a formal written declaration already accepted so far as the High Authority and the Court are concerned’ the accuracy of the calculations: however the decision which is now disputed in fact refers to the same sum which was the subject of the order to pay of 8 April 1963 which was contested at that time. In the second place the applicant's declarations are too vague; the defendant gives particulars in support of this allegation. In the third place the applicant should have criticized in the courts of those proceedings Decisions Nos 21/60 and 7/61, which governed the questions at issue, by making appropriate submissions.

On the substance of the complaint the defendant's submissions are as follows:

Point 1

It is true that Decision No 21/60 was taken before the German and Dutch revaluations; but according to the recitals only those changes in currency parities should be taken into account which occurred during the equalization period, that is to say, up to 30 April 1959. As the revaluations in question took place after this date it was not necessary to amend Article 2 of the Decision.

Having regard to the object of the equalization scheme it is necessary to adjust the unit of account to the national currency by reference to the date ‘when the equalization was actually effected’ and not at the date of settlement.

The unit of account has only been used as a ‘standard unit for calculation’, not as a currency and not with the object of determining the amount of the contributions payable; payment has only ever been demanded in national currency and the simultaneous statement of the amount due in units of account is only intended to substantiate the calculations.

The High Authority must administer the equalization scheme in accordance with legal and not commercial criteria and in particular with due regard to the principle of equality of treatment.

Point 2

It was in the first place the system of imposing interest for delay in payment which made it necessary to fix the date bearing in mind the principle of equality of treatment. However experience showed that this system could only achieve its Object if it was possible to obtain declarations from the undertakings immediately, to fix the rate of the levy and to give notice of the amount of the contributions payable. But these ideal requirements are frustrated not only by culpable delays but also by the large number of questions which give rise to doubts.

The result of the system adopted by Decision No 7/61 (which is only fair) is that the sooner undertakings pay their contributions the better treatment they receive.

A statement produced by the defendant shows that both the old and the new systems led to the same results in normal cases; but whilst under the old system additional charges were imposed even on punctual payers (in particular because of the interest to be credited by the CPFI), the new system only imposes them on defaulters.

The assumptions made with regard to the reasons for Decision No 7/61 are misleading. To offset a loss of interest it would not have been necessary for the defendant to amend the rules concerning interest since the increased requirements would automatically have entailed higher contributions. In the Hoogovens judgment (Case 14/61) the Court held that the conduct of the High Authority with regard to group scrap did not amount to a wrongful act or omission. The recitals of the decision only treat the Court's judgments as one factor among many others.

The defendant infers from a table which it produced that under the new system no additional charges were imposed on the applicant in so far as it paid its contributions punctually.

The applicant puts forward the following argument to support the admissibility of its submission:

An acknowledgment of the substantive legality of the calculations can at most render the complaint unfounded. But there was no such acknowledgment. The statements in question made in Case 53/63 are procedural declarations of limited effect and intended for the Court. At that time the applicant itself considered that its application was inadmissible and it had therefore to minimize its risk on the question of costs; during the said proceedings the expression ‘not disputed’ which it used applied to a fixed sum and not to the method used to calculate it. The defendant itself in the previous case allowed the possibility of ‘admitting that certain objections (that is to say, to its calculations) were justified’, so that it cannot possibly be assumed that the applicant had at that time accepted the calculations as being definitive.

The applicant gives detailed reasons to prove that its submissions are set out with sufficient precision.

It criticized general Decisions Nos 21/60 and 7/61 by implication, this being sufficient according to the case-law of the Court. The contested decision is based expressly on Decision No 7/63 and on the decisions recited in its preamble which include the decisions referred to above.

IV — Procedure

The procedure followed the normal course.

On 4 August 1964 the Klöckner-werke A.G., Duisberg, lodged an application for leave to intervene in support of the applicant. The Court dismissed this application by an order of 25 November 1964.

The oral procedure took place on 11 March 1965.

On 6 May 1965 the Advocate-General delivered his reasoned opinion.

On 30 June 1965, pursuant to Article 45 (2) of its Rules of Procedure the Court heard the parties on technical details in order to obtain further clarification.

Grounds of judgment

The contested decision calls upon the applicant to pay by way of contributions under the imported ferrous scrap equalization scheme the sum of DM 432043.25, of which DM 374844.79 relate to the period prior to 1 February 1957 and the balance to the period thereafter.

I — The submissions relating to the period prior to 1 February 1957

1. Mistake relating to the principle of liability to contribute to the equalization scheme

The applicant submits that, independently of any question of exemption, the ferrous scrap which it bought prior to 1 February 1957 was not subject to the equalization levy, as the operations carried out at its steel works at that time were limited to preparatory work and trials.

According to the wording of the basic decisions relating to the financial scheme in question ‘the undertakings referred to in Article 80 of the Treaty which consume ferrous scrap’ are liable to pay the contributions prescribed by the said decisions. Under the said Article of the ECSC Treaty ‘For the purposes of this Treaty “undertaking” means any undertaking engaged in production in the coal or the steel industry’. The systematic buying of raw materials marks the commencement of such production if it enabled the buyer to start actual production even if such production was on a trial basis.

Under Article 53 of the Treaty the High Authority may make any financial arrangements ‘which it recognizes to be necessary for the performance of the tasks set out in Article 3’ including that of ‘ensuring an orderly supply to the Common Market’ laid down in subparagraph (a) of the said Article 31. The Treaty does not therefore only look on ‘undertakings’ from the point of view of production but also from that of the procurement of materials which of necessity precede production, at any rate in the case of the procurement of materials such as ferrous scrap which fall within the jurisdiction of the High Authority.

It is not disputed that the applicant bought ferrous scrap from April 1956 and that it commenced actual production of steel on 1 February 1957 at the latest. It is therefore liable to pay contributions from April 1956. Finally the applicant is wrong to quote Article 6 of Decision No 2/57, published in the Official Journal of 28 January 1957, to prove that the period prior to 1 February 1957 was not a ‘period of normal operation’. This provision in fact only refers to the ‘supplementary rates’ to be charged on ‘the excess consumption’ of ferrous scrap, a question which does not arise in the present case.

This submission must therefore be rejected without there being any need to ascertain whether and to what extent the operations carried out by the applicant during the period in question went beyond the preparatory stage.

2. The exemption of the applicant for the period prior to 1 February 1957 and its eventual withdrawal

The contested decision, after stating in its preamble that the decision of the Board of the CPFI of 8 May 1957 did not exempt the applicant and that, even if the fact that this decision was inadvertently sent to the applicant is treated as an exemption, it should in fact be regarded as illegal, revokes, so far as necessary, any exemption which it may have granted.

The applicant contests the said decision with a number of complaints, based on the one hand on the actual existence of a decision granting it an exemption and on the other hand on the illegality of any revocation of the latter decision.

It is desirable to examine first the submissions which seek to show that such a revocation is illegal, because it would be unnecessary to consider the question whether there was any exemption or not, once it was shown that the defendant was entitled to revoke it.

a) The legality of the retroactive revocation of a decision granting a benefit to the person to whom it is addressed depends, in the first instance, on the question whether the revoked decision was illegal. This is the position in the present case. In fact no legal provision conferred upon the bodies responsible for the management of the financial machinery of the equalization scheme the authority to grant exemptions. The High Authority can revoke illegal decisions, even retroactively, provided that in certain exceptional cases proper consideration is given to the principle of legal certainty. Although such consideration is in the first instance a matter for the High Authority, it is, however, subject to review by the Court.

b) In the opinion of the applicant the contested decision is incorrect when it states, ‘that … Lemmerz-Werke could not assume that [the decision of the Board of the CPFI] also applied to it, but, on the contrary, had to acknowledge that the decision had been sent to it in error or that it had obtained the benefit of it by mistake, without the specific facts of its case having been examined at all by the Board.’ Further the applicant submits that the disputed revocation took place after the reasonable period of time for such revocation had already elapsed. Both these complaints must be examined together, because they both raise the same general question whether the defendant paid sufficient regard to the extent to which the applicant was able to rely on the legality and the continuance of the exemption in question.

1) Even if the reason quoted above was factually incorrect, it would only bring about the annulment of the contested decision if it disclosed a substantial error of judgment in considering any position acquired by the applicant for which it could claim protection (Vertrauensschutz). For this purpose it is necessary to consider the fact that the applicant could not at any time be certain of the legality of the disputed exemption, for it could not have escaped the applicant's notice that the basic decisions which set up the equalization scheme did not provide for exemptions and that in the matter of public contributions exemptions cannot be presumed. Moreover it is clear that the applicant could only rely on the continuance of the said exemption for a short period because: The defendant did not disregard to any substantial degree the said claim by the applicant for the protection of its legal rights, if any.

from June 1958 the Société Fiduciaire Suisse carried out checks at the applicant's offices; it is apparent from the report which it sent to the defendant that on the one hand it had directed the defendant's attention to the ferrous scrap in dispute, and on the other hand that when questioned about the scrap the applicant had produced the circular of 20 May 1957; therefore, from that time, the applicant had to consider the possibility that the decision of the CPFI would be reviewed by the defendant;

the defendant published in the Official Journal of 30 July 1958 Article 1 (b) of Decision No 13/58 under which it reserved the right to ‘revoke if necessary any decision’ of the organs in Brussels and to ‘take such measures as are entailed by the revocation’; this provision was likely to call in question all the measures adopted by the said organs; on the other hand, having regard to the amount of work involved in reviewing all these measures, the persons who might benefit from exemptions could not expect a definite decision on their revocation to be made within a short time;

in the Official Journal of 19 December 1959 the Court published the submissions in an application brought by SNUPAT for the annulment of the refusal to revoke retroactively certain exemptions; although the subject matter of this application was only ‘group scrap’, it was nevertheless the first time in the history of the equalization scheme that the Court and the High Authority were faced with the general question of the legality of the retroactive revocation of an exemption;

In its judgment in this case of 22 March 1961 the Court confirmed that the High Authority had an inherent right to revoke decisions and also confirmed the importance in this connexion of the interdependence of the equalization charges;

according to the wording of a letter of 2 June 1961, the regional office in Germany, having been invited by the defendant and the CPFI in April and May 1959 to rectify the position with regard to the undertakings in the same situation as the applicant, refused to do so, ‘in particular because the undertakings concerned have already threatened to take proceedings if we alter our arrangements’; it must be inferred from this that the said office had at least informed the undertakings orally of the attitude of the administration;

by letter of 19 July 1961 the defendant notified the applicant that it considered that it was liable to pay the disputed contributions, a view which it did not change until the adoption of the contested decision.

2) The conduct of the defendant in the situation described above must however be examined because the fact that the applicant could not count oh the continuance of the exemption does not of itself exclude the possibility that the defendant or its representatives committed a breach of their duty to act with care and accuracy which would preclude the defendant from revoking the exemption in dispute. The examination of this question is connected with the submission that the right to revoke the exemption had been forfeited. It was not until July 1961, more than five years after the notification of the exemption in question to the applicant, that the defendant informed the latter directly that it did not intend to allow it the benefit of the said exemption. Between November 1958 and May 1959 the defendant through the CPFI invited the regional office in Germany to rectify the situation of undertakings in the same position as the applicant. However, by a letter of 2 June 1961 sent to the CPFI, the said office refused to comply with this invitation, but intimated, as has been stated above, that it had informed the parties concerned unofficially of the defendant's attitude. It is clearly as a result of this refusal that the defendant wrote directly to the applicant on 19 July 1961. Although the attitude of the regional office in Germany is not entirely blameless, it is understandable that the defendant might have believed that its instructions had been communicated correctly and without delay. Therefore it cannot be accepted that, having regard to the conduct of the defendant, its right to demand payment of the disputed amount was forfeited. Moreover it must be borne in mind that by continuing to exempt one undertaking the defendant would not only have to increase the charges on the other undertakings, some of which at least are normally in competition with the exempted undertaking, but would in particular be placing the latter in a privileged position. Finally the defendant stated that it was willing to take into account possible difficulties in making arrangements for payment. This submission must therefore be rejected. Therefore it is unnecessary to examine the allegation that a decision to grant an exemption had in fact been taken.

c) The applicant complains of discrimination in that the defendant did not revoke the exemption granted to other undertakings by the same decision of the CPFI. This complaint cannot be upheld. In fact, so far as the independent foundries are concerned, their legal position under Decision No 2/57 cannot be compared with that of the applicant, as the decision mentioned above was not based on a mistake affecting the said foundries. So far as the undertakings which have benefited from the same mistake are concerned, the applicant has not proved the incorrectness of the defendant's allegation that in their cases revocation was unnecessary having regard to the facts.

3. Limitation of action:

The applicant submits that the right to demand payment of the amounts in question was time-barred before the adoption of the contested decision.

[n any event it is of the nature of the equalization schemes that the limitation period can only run from the date when the accounts are finally closed.

This submission must therefore be rejected.

4. Misuse of powers

By this submission the applicant complains that the defendant, in using its discretionary power to revoke or not to revoke the disputed exemption, proceeded on the basis of an inaccurate or incomplete version of the facts.

It relies in addition on the time taken by the defendant to make the revocation which it considers was excessive.

This submission is similar to those which have just been examined and must therefore be rejected for the same reasons.

5. Inadequate statement of the reasons upon which the decision was based

a) The applicant submits that, although the contested decision states that the notification to the applicant of the circular of 20 May 1957 was based on a mistake, it does not state the nature of the mistake. The statement of the reasons upon which this decision is based shows that, in the opinion of the defendant, the decision which was the subject of the said circular only referred to independent steel foundries, producing steel ingots as well as castings, whereas the applicant never manufactured castings. As this statement of reasons reproduces the main considerations taken into account by the defendant, this complaint is unfounded.

b) The applicant complains that the contested decision is irrelevant, as a mistake on the part of a person making a declaration does not normally affect the validity of his declaration. This complaint refers to the main argument put forward in the said decision, that is to say, that there was no exemption. Since the examination of this argument is unnecessary, as has already been stated, this complaint has become purposeless.

c) The applicant complains that the only reason put forward by the defendant in justification of the contested revocation was that the applicant should have recognized that in fact the revocation did not apply to it. The defendant should therefore have indicated the reasons why the revocation was justified even if the applicant had become entided to regard its legal position as securely established. Since the defendant was of the opinion that the applicant must have known from the very beginning that a mistake had been made, it was able logically to exclude straight away any arguments relating to the confidence which the applicant could have had in the continuance of the exemption. Moreover the statement of reasons refers also to certain events occurring after the circular mentioned above by stating that they must have convinced the applicant that a definitive decision had not yet been taken. This complaint is therefore unfounded.

d) The applicant argues that a contradiction existed between the operative part of the decision demanding payment within thirty days and the statement of reasons, according to which ‘adequate account could be taken of any justifiable reasons when the method of payment is fixed’. The passage quoted above must be interpreted to mean that the applicant had to pay the entire sum which is disputed within the prescribed time, unless the defendant for valid reasons granted it less onerous conditions of payment. As the alleged contradiction therefore does not exist, this submission must be rejected.

e) The applicant complains that the defendant decided, without having obtained any information on the matter, that the amount to be paid by the applicant was not likely to prejudice its economic situation. As the applicant has not substantiated that it was faced with such difficulties, this complaint is unfounded.

f) The applicant claims that the statement of reasons distorts the facts by referring to objections which the applicant raised, ‘by way of proceedings’, against the defendant's letter of 19 July 1961. It is true that the said expression does not correspond to the facts, because the applicant did not commence proceedings after receiving the said letter. However it is difficult to understand how such a trivial mistake in drafting could have the slightest effect on the operative part of and the principal reasons for the contested decision. As this complaint is irrelevant it cannot be upheld.

g) The applicant complains that the defendant did not consider whether the applicant was liable under the equalization scheme for the period prior to 1 February 1957. This complaint is not factually accurate, as the statement of the reasons for the contested decision states that the applicant qualified as an undertaking within the meaning of the Treaty from April 1956, ‘the date when it began to purchase ferrous scrap for the production of steel which it intended to undertake’. The result of all the foregoing considerations is that this application is not well-founded to the extent to which it refers to the contributions charged to the applicant for the period prior to 1 February 1957.

II — The submissions relating to the period after 1 February 1957

A — Admissibility of these submissions

a) The defendant raises an objection of inadmissibility based on the fact that the applicant, in its originating application in Case 53/63, acknowledged the correctness of the calculation of the disputed amount, to the extent to which it refers to the period after 1 February 1957. In the said application the applicant stated that it doubted itself whether its action in Case 53/63 was admissible and that it had only instituted it as a precautionary measure. In these circumstances it is necessary to proceed on the basis that the applicant, far from acknowledging once and for all that the calculation of the disputed amount complied with the Treaty and with the rules of law relating to its application, simply intended to limit the subject-matter of the said application to the period prior to 1 February 1957 in order to minimize the risk on the question of costs. The objection must therefore be dismissed.

b) The defendant raises another objection of inadmissibility on the ground that the applicant's submissions are not sufficiently detailed. Under Article 22 of the Protocol on the Statute of the Court of Justice of the ECSC and Article 38 (1) (c) of the Rules of Procedure the applicant only has to give a brief statement of the grounds on which the application is based. In this case the applicant has complied with this condition, as its application makes it possible to identify the complaints which it intends to raise and the essence of the arguments invoked in support of them. Therefore this objection must be dismissed.

c) The applicant has produced an opinion of a university professor annexed to its reply but has stated that this opinion ‘does not represent in every respect the view of the applicant.’ In view of this statement the Court cannot regard this opinion as forming part of the submissions and arguments put forward by the applicant.

B — The substance of the submissions

1. The rate of exchange to be applied to the calculation of the debts of undertakings

The applicant complains that the defendant did not take proper account, when it calculated the amounts charged to undertakings, either of the double devaluation of the French franc or the revaluation of the German mark. In its opinion the unit of account in fact determined finally the amount and extent of the credits and debits of ferrous scrap consumers, whereas national currencies were only the medium for payment and their revaluation or devaluation could not have any effect on the amount of the debtor's obligation. It submits also that if, on the other hand, such an effect had existed the defendant should also have taken into account any change in currency parities after the equalization period, in this case the revaluation of the German mark. Therefore by only taking into account the devaluation of the French franc it discriminated against German undertakings.

Within the framework of the equalization scheme the unit of account is not a currency different from national currencies but is only an accounting device intended to facilitate the fixing of a general equalization price and the uniform and expeditious calculation of equalization payments and contributions. With regard to the various undertakings the use of the unit of account merely indicates the method of calculating in their national currencies the amounts which they owe or are owed. These amounts, calculated in units of account, are immediately converted into national currencies. Thus the undertakings' contributions, even if they were calculated in units of account, are in fact only determined in national currencies.

The question then arises at what time the calculation of both the amounts of the equalization contributions and payments and the resulting conversion into national currencies of the amounts in units of accounts must be effected.

In order to achieve an equal distribution of the charges arising out of the importation of ferrous scrap from third countries the equalization scheme operated on the basis of accounting periods, usually of one month, so that one equalization price was adopted for each period, and the equalization payments made during this period were calculated on the basis of this equalization price. When this had been done the charge resulting from the said payments, which varied considerably from one accounting period to another, was levied on all undertakings subject to the levy in proportion to the volume of their purchases of ferrous scrap whether imported from outside or originating within the Common Market. In this way in each accounting period it was arranged that the cost price of imported ferrous scrap for all undertakings was the same as the average purchase price of ferrous scrap bought on the internal market. As the contribution per metric ton of ferrous scrap varies from one accounting period to another it is necessary to fix the contributions to be paid on the basis of the parity of the unity of account in force during the said periods.

As the equalization scheme consists basically on the one hand of a charge on the difference between the price of imported ferrous scrap and the price inside the Common Market and on the other hand of the equal distribution of this charge among undertakings consuming scrap in proportion to their consumption it would be wrong to adopt a rate of exchange for the calculations necessary for the first stage of the operation different from the one adopted for the calculations required for the second stage.

The method adopted does not infringe the prohibition on discrimination. An equal apportionment of charges presupposes the avoidance of variations in currency parities by the adoption for all undertakings of the same period of reference during which their debits and credits calculated in units of account are converted at the same time into national currencies. The adoption of a system based on the date of payment or on the date on which the enforceable nature of the claim was established would lead to the danger that the parity applicable could vary according to the conduct of the undertakings concerned or of the High Authority and that there would be discrimination against undertakings of the same country which had paid their contribution either earlier or later.

It follows from this in particular that only those changes in parities which occurred before the end of the equalization scheme can be taken into consideration when converting into national currencies the amounts calculated in units of account. Therefore the method adopted by the defendant appears to be not only objective but to conform to the equalization scheme and the fact that it did not take into account the revaluation of the mark does not amount to discrimination against German undertakings.

In view of the foregoing this submission must be rejected as unfounded.

2. The system relating to interest

a) The applicant states that the general decisions contested in this application are illegal, because they introduced a system with regard to interest which is not covered by the decisions made earlier with the assent of the Council, in accordance with Article 53 (b) of the Treaty. The first question to be answered is whether the obligation to obtain the assent of the Council in this case arises under the Treaty. Under Article 53 (b) of the Treaty the High Authority may ‘with the unanimous assent of the Council, itself make any financial arrangements serving the same purposes’. As this is a provision which lays down the essential procedural requirements for the validity of certain decisions it must be strictly construed. The effect of Article 53 (b) of the Treaty is that the unanimous assent of the Council was only necessary if the introduction of a system of crediting interest affected or modified the very basis of the imported ferrous scrap equalization scheme. A system for crediting interest, established in order to compensate undertakings subject to the scheme for the periods during which they had to lock up capital required to meet their obligations, appears to be necessary in order to ensure that these undertakings are not unjustifiably prejudiced by delays in payments made by other undertakings. This system, which does not modify the essential structure of the financial arrangements for equalization, was adopted to enable it to function properly and to attain the objectives approved by the Council. The second question to be answered is whether the fact that Article 13 of Decision 16/58, adopted with the unanimous assent of the Council, provided for the application of a system for the payment of interest for delay meant that the High Authority had to obtain once more the unanimous assent of the Council to any amending decision. There is no justification for the conclusion that the decisions of the High Authority taken with the unanimous assent of the Council could only be amended, even in the case of amendments not affecting the basis of such decisions, by a new decision also taken with the unanimous assent of the Council. Therefore the complaint based on the absence of the unanimous assent of the Council is unfounded.

b) The applicant states that the statement of the reasons upon which Decision No 7/61 is based is inconclusive, on the ground that it does not give the reasons why it would have been impossible for the High Authority to remove the disadvantages of the former system for charging interest for delay in payment and to adopt a system other than the one which is contested. Recitals 5 to 8 of this decision underline clearly the disadvantages caused by charging interest for delay in payment on provisional contributions, and that it is necessary to calculate the amount of the contributions of all the undertakings liable to pay them by reference to the same date, as these contributions are often spread over varying periods for different undertakings, which are thereby either benefited or prejudiced. Recital 8 describes the situation which in the opinion of the High Authority results from the application of the contested system and which is the reason why it adopted this system. This statement of reasons thus discloses the considerations which led the High Authority to adopt the disputed Decision No 7/61 and the reasons upon which that decision is based. Since the statement of the reasons upon which the said decision is based is adequate in law this submission must be rejected as unfounded.

c) The applicant maintains that the new system for charging interest adopted by Decision No 7/61 discriminates against undertakings which are not responsible for the delay in their payments. In fact the system introduced by Decision No 7/61 dispensed with the imposition of pecuniary sanctions in the form of interest payable for delayed payment. However, experience showed that for various reasons, for which the undertakings could often not be made responsible, the exact amounts of the contributions could only be determined after delays which are at times considerable. There was therefore the danger that the former system might lead to both an intricate and complicated investigation into all the circumstances relating to the responsibility for delay and to the unsatisfactory situation that the charge under the equalization scheme was in fact imposed unequally on the various undertakings. Thus the undertakings, whose exact contributions could only be determined after some delay, retained the use for a certain time of sums which should have been available to the Fund. The result was that the other undertakings had to bear additional charges without any set-off. These undertakings were therefore in a doubly unfavourable position compared with the undertakings whose payments were delayed. These disparities which arose out of the former system were of a kind likely to have direct effects in the field of competition. Such a result would clearly be contrary to the requirements and objectives of the equalization scheme, in particular to the principle that the contributions to be paid by the chargeable undertakings should be apportioned as equally as possible. For this reason the High Authority could not continue the former system but had to replace it with another which did not have the disadvantages mentioned above. Whilst it is true that for this purpose it treated on a footing of equality all undertakings which were for any reason in arrear with their payments, without considering the question of blame or liability, this is explained by the injustices and uncertainties which a more conventional system would have introduced into the working of the equalization scheme. It is moreover clear that the system adopted by Decision No 7/61 eliminates as far as possible the objective inequalities caused by the delay in the liquidation of the equalization scheme. Therefore this complaint is unfounded.

d) Finally the applicant submits that Decision No 7/61 is defective because it has retroactive effect and therefore infringes a fundamental legal principle. In such a financial scheme as the one in question, based on a close interdependence between the contributions of each of the participants, it is above all necessary to ensure equality of treatment between those subject thereto, by eliminating all possibility of discriminating between them. In these circumstances the continuance of rules which would have the effect of conferring unjustified benefits on certain undertakings compared with others, on the pretext that they established legal situations or vested rights, would jeopardize the objectives of the said scheme. It is therefore necessary within the framework of such a scheme to acknowledge that the responsible bodies have the power to make the necessary amendments to such rules in order to eliminate any possible discrimination. Further, as this financial scheme is being liquidated and the contributions of each participant are therefore being dealt with on a provisional basis, it is impossible to eliminate any such discrimination without altering situations created by the previous rules, which had to be amended. It is therefore necessary to conclude that this submission is unfounded and must be rejected. The result of all these considerations is that this application is unfounded.

III — Costs

The applicant has failed in all its claims. However the conduct of the bodies responsible for the administration of the financial scheme could be said to have encouraged it to contest justification for the charge relating to the period prior to 1 February 1957 which covered the largest part of the disputed sum. In these circumstances it is appropriate to apply Article 69 (3) of the Rules of Procedure and to order that the costs be borne as set out in the operative part of the judgment;

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 3, 4 (b), 53 and 80; Having regard to the Protocol on the Statute of the Court of Justice of the European Coal and Steel Community, especially Article 22; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, especially Articles 38 and 69; THE COURT hereby:

1 Dismisses the application as unfounded;

2 Orders the applicant to pay its own costs and one half of the defendant's costs, the other half of the defendant's costs to be borne by the defendant.