OPINION OF ADVOCATE GENERAL
JACOBS
delivered on16 January 2003(1)
Case C-76/01 P
Eurocoton and Others
v
Council of the European Union
()
1. This is an appeal against a judgment in which the Court of First Instance dismissed an action brought by representatives of the Community cotton industry–as inadmissible in so far as they sought annulment of an alleged decision by the Council to reject the Commission’s proposal for a regulation imposing a definitive anti-dumping duty on certain cotton imports and–as unfounded in so far as they sought compensation for damage thereby caused. (2)
2. The main issue is whether that Court erred in law by considering that neither –the fact that the Council did not reach a majority in favour of the Commission’s proposal nor –the expiry of the 15-month period imposed on anti-dumping investigations by Article 6(9) of Regulation No 384/96 (3) could constitute an act reviewable under Article 173 of the EC Treaty (now, after amendment, Article 230 EC). Other issues are whether it also erred in–dismissing the argument concerning Article 6(9) of the basic regulation as in any event inadmissible and –considering that the Council was under no obligation to state reasons for not adopting the proposed regulation.
Legislative framework
3. Regulation No 384/96, the present basic regulation governing the imposition of anti-dumping measures by the Community, was adopted partly to bring practice into line with new international obligations under the 1994 ‘Anti-dumping Code’ established as part of the Uruguay round of multilateral trade negotiations. (4) Both that code and the basic regulation contain provisions cited by the appellants as relevant to the protection of complainants’ rights.
The Anti-dumping Code
4. Article 6.9 of the Anti-dumping Code requires the authorities, before a final determination is made and in sufficient time for parties to defend their interests, to ‘inform all interested parties of the essential facts under consideration which form the basis for the decision whether to apply definitive measures’.
5. Article 9.1 provides, inter alia: ‘The decision whether or not to impose an anti-dumping duty in cases where all requirements for the imposition have been fulfilled ... [is] to be made by the authorities of the importing Member. It is desirable that the imposition be permissive in the territory of all Members ...’
6. Under Article 12.2, public notice must be given of any preliminary or final determination, whether affirmative or negative, providing sufficient detail of the findings and conclusions reached on all issues of fact and law considered material by the investigating authorities.
7. Article 13 concerns judicial review. It requires WTO Members to maintain judicial or equivalent procedures for the purpose inter alia of the prompt review of ‘administrative actions to final determinations’.
The basic regulation
8. Under the basic regulation the Commission, in consultation with an Advisory Committee on which the Member States are represented, carries out investigations into dumping and may impose provisional duties, whereas the Council is responsible for imposing definitive duties.
9. Article 5 concerns the initiation of proceedings. Under Article 5(1), an investigation is to be initiated upon any complaint lodged on behalf of the Community industry. Under Article 5(9), where there is sufficient evidence to justify initiating a proceeding, the Commission must do so within 45 days; where the evidence is insufficient, the complainant is to be informed within the same period.
10. Article 6 concerns the investigation. Paragraphs 5, 6 and 7 provide for interested parties to be informed and heard. Article 6(9) stipulates: ‘For proceedings initiated pursuant to Article 5(9), an investigation shall, whenever possible, be concluded within one year. In any event, such investigations shall in all cases be concluded within 15 months of initiation ...’
11. Article 9 is entitled ‘Termination without measures; imposition of definitive duties’. Under Article 9(2), where protective measures are unnecessary the proceeding is to be terminated. Article 9(4), on the other hand, states: ‘Where the facts as finally established show that there is dumping and injury caused thereby, and the Community interest calls for intervention in accordance with Article 21, a definitive anti-dumping duty shall be imposed by the Council, acting by simple majority on a proposal submitted by the Commission after consultation of the Advisory Committee. ...’
Background to the proceedings
12. On 8 January 1996 the Committee of the Cotton and Allied Textile Industries of the European Union (Eurocoton) lodged a complaint with the Commission alleging that dumped imports of unbleached cotton fabrics from certain countries were causing material injury to the Community industry.
13. On 21 February 1996, the Commission published a notice of initiation of anti-dumping proceedings. (5) On 18 November, it adopted a regulation imposing a provisional anti-dumping duty. (6) Then, on 21 April 1997, it submitted a proposal for a Council Regulation imposing a definitive duty. (7)
14. The 15-month period allowed under Article 6(9) of the basic regulation ended on 21 May 1997. On that date the Council stated in a press release: (8) ‘Following the written procedure concerning the introduction of definitive anti-dumping duties on cotton fabrics originating in certain third countries which had expired on 16 May, with a negative result, the French delegation once again insisted on the need for such measures to be taken.’
15. On 23 June 1997, Eurocoton asked for confirmation that the Council had decided to reject the Commission proposal, and for a copy of the decision or of the minutes incorporating it. The following day, it received a reply stating that by written procedure which ended on 16 May 1997 the Council had found that the simple majority necessary for the adoption of the regulation in question was not attained.
16. Consequently, on 18 July 1997, the appellants (9) brought proceedings before the Court of First Instance, asking it to–annul ‘the Council’s decision to reject the Commission’s proposal’ for a regulation imposing a definitive anti-dumping duty and–order the Council to make good the damage caused to the applicants by that unlawful rejection.
The judgment under appeal
The action for annulment
17. The Council objected to the admissibility of the action for annulment on three grounds, of which the Court of First Instance examined only one – the absence of any reviewable act – which it dealt with as follows in paragraphs 39 to 64 of the judgment.
18. It considered that, whilst a regulation imposing a definitive anti-dumping duty is clearly an act open to challenge, that is not necessarily so where a proposal is not adopted by the Council; each case must be assessed on its merits.
19. The Treaty does not require the Council to adopt a Commission proposal, nor does the basic regulation give complainants any right to such adoption. Article 1 of that regulation states that a duty ‘may’ be applied, and Article 9(4) that a definitive duty is to be imposed by the Council ‘acting by simple majority on a proposal submitted by the Commission’ – necessarily implying that the proposal will not be adopted if only a minority of Member States consider the necessary conditions fulfilled. Article 6(9) lays down a maximum duration for investigations but does not require the Council to accede to the Commission’s proposal; its sole purpose is to prevent over-long procedures and thus allow interested parties to know within a reasonable time what action is to be taken.
20. Nor does the Anti-dumping Code oblige the Council to adopt definitive duties. It merely fixes the conditions to be met before a contracting party may impose duties and thus have an impact on exports from another contracting State, and Article 9.1 states that it is ‘desirable that the imposition [of anti-dumping duties] be permissive’.
21. The Court of First Instance then noted that any measure which produces binding legal effects and affects the interests of an applicant by bringing about a distinct change in his legal position – thus all measures adopted by the institutions, whatever their nature or form, which are intended to have legal effects – may be the subject of an action for annulment.
22. In the present case, no measure was adopted, and the mere statement that a majority was not reached was not in itself a reviewable act.
23. Responding to the applicants’ argument that they would have no legal protection if their application for annulment were inadmissible, the Court observed that the review to which they are entitled must be appropriate to the nature of the powers reserved to the Community institutions. As regards consideration of a complaint and the action to be taken, the positions of the Commission and the Council are not comparable. The Council must place any proposal for a definitive anti-dumping regulation on its agenda, but is not obliged to adopt it. Even if the failure to adopt the proposal were for any reason unlawful, it would still be possible to bring an action for damages – as the applicants did in this case.
24. The action for annulment was therefore dismissed as inadmissible.
25. In addition, however, the Court considered an argument raised by the applicants in their observations on the Council’s objection to admissibility, questioning the legality of the negative act allegedly resulting from the expiry of the 15-month time-limit in Article 6(9) of the basic regulation. That claim was dismissed as inadmissible because it was not raised in the application, but the Court stated that in any event mere expiry of the period does not constitute a decision by the Council which could be the subject of an action for annulment.
The claim for damages
26. In paragraphs 86 to 92 of the judgment under appeal, the Court of First Instance again noted that the Council was under no obligation to adopt the proposal and the applicants were entitled to no such adoption. The claims that the Council had disregarded the facts found by the Commission, infringed the applicants’ legitimate expectations and procedural rights and failed to state adequate reasons, being based on the mistaken premiss that there was such an entitlement, were dismissed.
27. In particular, the only legitimate expectation that could be entertained was that the Council should examine the case carefully, and there was no indication that it had not done so; and only measures actually adopted must state the reasons on which they are based – here, no act was adopted.
The appeal
28. The appellants put forward four grounds of appeal:(i))the Court of First Instance infringed Article 230 EC and the general legal principle of coherence by considering that there was no reviewable act;(ii))it infringed Article 19 of the Statute of the Court of Justice and Article 44 of its own Rules of Procedure by finding the argument concerning the expiry of the 15-month period to be a new plea raised in the observations on the objection to admissibility;(iii))it again infringed Article 230 EC by finding that the expiry of the 15-month period did not constitute a reviewable decision of the Council; and(iv))it infringed Articles 253 and 288 EC and the general legal principle of coherence by rejecting the argument that the contested measure was unlawful and implying that the Council had complete freedom of action;and request the Court to annul the judgment under appeal, find in their favour on the substance and refer the case back to the Court of First Instance only to determine the amount of compensation.
29. In their written pleadings, they devote most of their argument to their first ground of appeal; the third and fourth grounds, they consider, must be in any event successful if the first and second are upheld. At the hearing, moreover, counsel for the appellants stated that their case was simply that the Court of First Instance erred in law in characterising the Council’s rejection of the Commission’s proposal as the ‘absence of a decision’ and then drawing the conclusion that there was no reviewable act within the meaning of Article 230 EC.
30. It may further be noted that the appellants have explicitly stated that they do not challenge the finding of the Court of First Instance to the effect that the Council was not obliged to adopt the Commission’s proposal, stressing only that it was none the less constrained by the procedural and substantive requirements of the basic regulation.
31. In outline, the arguments presented are as follows.
First ground of appeal
32. The appellants propose a general principle of Community law to the effect that, where an institution is acting in the context of a procedure governed by a Community regulation which confers procedural rights on the individual parties concerned, any step which amounts to closing the file without action is an act subject to review under Article 230 EC. (10) That was the situation in the present case as a result either of the Council’s decision not to adopt the Commission’s proposal – a statement that the requisite majority was not obtained is tantamount to saying that the Member States had voted against adopting the proposal – or of the expiry of the 15-month period.
33. The basic regulation must be interpreted in accordance with the Anti-dumping Code, Article 9.1 of which does not distinguish between decisions imposing duties and decisions leading to non-imposition. Judicial review in accordance with Article 13 of the code must be available in both cases. The Court has reviewed measures in a variety of circumstances, including cases where a complainant was dissatisfied with the definitive duty (11) or where the Council (12) or Commission (13) has adopted a decision explicitly terminating proceedings. There must also be a reviewable act where the Council does not adopt a Commission proposal to repeal or reduce duties following a review, since otherwise there would be a failure to safeguard the rights of exporters guaranteed by the Anti-dumping Code. (14) Equivalent protection must be available to complainants.
34. By stating that Article 6(9) of the basic regulation has the sole purpose of preventing over-long procedures, the Court of First Instance cannot have meant that the Council could still have acted after the 15 months, because the contrary is clear from Article 6(9), or that the complainants should have called on the Council to act pursuant to Article 232 EC, which would have led to a clash between the time-limits imposed by the two provisions. The remaining implication, that the expiry of the 15-month time-limit could not confer the status of a decision on the Council’s failure to adopt the proposal, ignores the fact that under Article 6(9) such non-adoption, by whatever means, is final.
35. Finally, the Court of First Instance was illogical in stating that the appellants were not without legal protection since they could bring an action for damages – if the Council had no obligation to act there could be no entitlement to damages and if there was no act there could be no obligation to state reasons. The Court’s reasoning was thus self-destructive or circular, infringing Article 230 EC and the general legal principle of coherence.
36. The Council denies that there is any general principle of Community law that the conclusion of an administrative procedure necessarily involves a challengeable act.
37. First, the adoption of an anti-dumping regulation involves administrative action at the Commission level but a legislative process within the Council. There can be no comparison with other decision-making processes, as for example in the field of competition, where the Commission adopts an administrative decision to close a file. Here, the Council was acting in a legislative capacity and did not take any decision as such.
38. Second, the fact that a certain standard of review applies if the Community institutions have decided to close a file without an investigation does not mean that any closure of the file without action is an act subject to review, and there was in fact no act in the present case.
39. With regard to the arguments based on the Anti-dumping Code, first, the appellants may not rely directly on that instrument. (15)
40. Second, the code is designed to define the limits within which WTO members are entitled to impose anti-dumping duties by prescribing constraints in the interests of producers and exporters whose goods may be affected; the Community industry may not rely on those constraints to its benefit.
41. Third, the Court of First Instance was right to conclude from the words ‘it is desirable that the imposition be permissive’ that no obligation is imposed on WTO members either as to the choice of the competent authority or as to the nature or structure of the decision to impose or not to impose a duty. Article 9.1 does not preclude a shared administrative/legislative competence between the Commission and the Council. In the Community system, the legislative nature of the decision-making process in the Council, in particular the need to reach the required majority on a Commission proposal, means that there can be no reviewable legal act in cases such as the present.
42. Nor do Articles 12.2 and 13 support the appellants’ argument; Article 12.2 concerns the duty to give public notice in the event of a final determination, whether affirmative or negative, and Article 13 requires judicial review of ‘administrative actions to final determinations’, but neither requires a final determination to be made in every conceivable case.
43. The Council denies that there is any self-destructive or circular reasoning in the judgment under appeal with regard to the availability of a remedy in damages despite the absence of a reviewable act. The Court of First Instance correctly held that there could be no duty to state reasons where no act was adopted by the Council, but that does not preclude the existence of other reviewable procedural errors, such as a violation of the right to a fair hearing, which might form the basis of an action for damages.
Other grounds of appeal
44. In their second ground of appeal, the appellants cite their pleadings at first instance in context in order to demonstrate that the argument on the 15-month time-limit set out in their observations on the Council’s objection to admissibility was merely an elucidation of their challenge to the decision not to adopt the Commission’s proposal, however that decision was manifested.
45. The Council denies that the Court of First Instance was wrong to dismiss that argument as inadmissible. Before their observations on the objection to admissibility at first instance, the applicants had claimed that the act challenged was the outcome of the written procedure of 16 May 1997 – a different situation and a different point in time from the expiry of the 15-month period. The object of their challenge was not redefined by the fact that they also referred to it in general terms as the Council’s decision to reject the Commission’s proposal, and it was in no way clear that they were challenging the decision however manifested. Thus the subsequent argument based on the expiry of the 15-month period was a new plea, raised out of time.
46. In their third ground of appeal, the appellants point out that, once the 15-month period was over, it was clear that the file was definitively closed and thus there must have been a reviewable decision; the case-law and arguments presented in the context of the first ground of appeal are thus relevant. Finally, in their fourth ground, they submit that if their first ground is upheld, the basis for dismissing the claim for damages falls away.
Admissibility of the appeal
47. Before examining the substance of those arguments, it is necessary to consider their admissibility, which has been challenged in part by the Council.
48. The Council submits, essentially, that–the first ground of appeal is imprecise and repeats arguments raised at first instance – contrary to Article 112(1)(c) of the Court’s Rules of Procedure and to consistent case-law; (16) –in the same ground of appeal, the argument based on the Anti-dumping Code is new and was not submitted at first instance – contrary in particular to Article 113(2) of the Rules of Procedure and to consistent case-law; (17) and–the third ground of appeal is inadmissible because immaterial to the outcome of the appeal.
49. In my view, those challenges should not be upheld.
50. As regards the first argument, it is quite true that ‘it follows from [Article 225 EC], the first paragraph of Article 51 of the EC Statute of the Court of Justice and Article 112(1)(c) of the Rules of Procedure of the Court of Justice that an appeal must indicate precisely the contested elements of the judgment which the appellant seeks to have set aside, and also the legal arguments specifically advanced in support of the appeal … That requirement is not satisfied by an appeal which, without even including an argument specifically identifying the error of law allegedly vitiating the contested judgment, confines itself to reproducing the pleas in law and arguments previously submitted to the Court of First Instance. Such an appeal amounts in reality to no more than a request for re-examination of the application submitted to the Court of First Instance, which the Court of Justice does not have jurisdiction to undertake.’ (18)
51. However, the appeal in the present case clearly indicates the finding in the judgment under appeal which is contested – that the Council did not adopt any reviewable act – and the paragraphs embodying that finding. It also puts forward identifiable legal arguments explaining why the Court of First Instance is alleged to have erred in law in that regard.
52. Those arguments do not seem to me to be a mere reproduction of the (related) arguments advanced in the reply at first instance. In any event the ban on such reproduction is intended to ensure that an appeal does not serve merely as a second examination of arguments raised in particular in the application at first instance, but not to prevent an appellant from claiming that arguments presented in response to those of the opposing party were wrongly disregarded by the Court of First Instance.
53. Nor do I agree with the Council’s objection that certain of the appellants’ arguments are vague because based on hypothetical interpretations of the judgment under appeal. It seems to me that the appellants are merely envisaging the possibility that the judgment might, in certain regards, be interpreted in different ways.
54. The Council’s second argument is that the appellants’ references to the provisions of the Anti-dumping Code are inadmissible on the ground that they change the subject-matter of the proceedings (Article 113(2) of the Rules of Procedure).
55. It is true that at first instance (19) the applicants appear to have referred to the Anti-dumping Code only in support of their main argument that the Council had foregone the right to adopt any measure other than that proposed by the Commission – an argument which has now been abandoned – but not (20) when countering the Council’s argument that the outcome of the written procedure on 16 May 1997 was not a reviewable act, which is the context in which it is invoked on appeal.
56. However, it seems to me from their appeal (21) that they are now adducing the Anti-dumping Code simply as a standard from which Community law as embodied in the basic regulation may not depart, rather than as a separate norm to be complied with independently. At the hearing, counsel for the appellants made it clear that they were relying on the existence of the Community’s obligations under the code as an element to be taken into account in interpreting the basic regulation and in deciding whether what the Council did was indeed a reviewable act. In other words, they are seeking to strengthen the force of their arguments based on the basic regulation by stressing that it may not be interpreted in a manner incompatible with provisions of the code which were under consideration at first instance.
57. In those circumstances, I do not consider it appropriate to dismiss that part of their plea as inadmissible although, as I shall explain below, I do not believe that they can in fact derive any benefit from it.
58. In its last argument on admissibility the Council submits that it is immaterial whether the Court of First Instance was wrong to reject as out of time the claim that the expiry of the 15-month time-limit amounted to a negative decision: if the first ground of appeal is accepted, there is no need to examine the third; if it is dismissed, then the third, which relies on the same arguments, must also be dismissed.
59. However, I do not see any scope for a challenge to admissibility there. If the ground of appeal is immaterial to the outcome, it need indeed not be examined and no decision on its admissibility is required; if on the other hand it is material, the alleged basis for the challenge disappears.
Substance of the appeal
The extent to which the Anti-dumping Code may be invoked
60. It may be convenient to consider first the extent to which the appellants may rely on the Anti-dumping Code in support of their main ground of appeal. I have already reached the view that their references to that instrument are not formally inadmissible under Article 113(2) of the Rules of Procedure. However, the Council further objects that in any event applicants or appellants may not rely directly on the code; nor, by its nature, can it benefit the Community industry.
61. On the first point, although litigants may not rely directly on the provisions of the Anti-dumping Code as such, it is none the less frequently appropriate – and indeed necessary – to interpret the basic regulation in their light. (22)
62. On the second point, however, I agree with the Council. The purpose of the guarantees and constraints in the Anti-dumping Code is to protect the interests of those – exporters, exporting countries and importers – whose products are liable to be affected by anti-dumping duties. The rights of domestic-industry complainants are a matter for domestic law.
63. It is true that the Anti-dumping Code provides for all interested parties (which must include domestic-industry complainants) to be informed of all decisions taken, that Article 13 on judicial review does not explicitly exclude complainants and that the basic regulation and Community anti-dumping law in general must be interpreted in the light of the code.
64. However, the purpose of a multilateral agreement regulating the imposition of anti-dumping duties in world trade – such as Article VI of GATT 1994 and the Anti-dumping Code implementing it – is to ensure that such duties are not imposed unless they are justified, not that they are imposed whenever they may be justified. (23) There is thus, contrary to the thrust of the appellants’ argument, an inherent imbalance, as regards the protection afforded by those instruments, between the positions of those who claim to be injured by dumping and those who are alleged to be practising the dumping. The fact that the basic regulation must be interpreted so as to afford the latter every guarantee enshrined in the Anti-dumping Code is consequently of no avails to the appellants, whose position is different.
65. Thus, even if Community law did not allow judicial review at the instigation of domestic-industry complainants in every case in which a complaint failed to result in the imposition of a duty, it would not in my view thereby conflict with the Anti-dumping Code. The arguments put forward in that context need therefore not detain us any further in the present appeal.
The admissibility of the argument concerning the 15-month time-limit
66. Since it has been argued that a reviewable act might have been constituted by the closure of the written procedure on 16 May 1997, by the expiry of the 15-month period on 21 May or by the two in combination, a second preliminary point to be considered is whether the Court of First Instance was wrong to reject the argument based on the expiry of the 15 months as inadmissible, as the appellants allege in their second ground of appeal.
67. The application at first instance states at paragraph 22: ‘The measure challenged … is the Council’s decision to reject the Commission’s proposal … this decision was obtained by failure to achieve a simple majority in favour … The outcome of the written procedure of 16 May 1997 amounted to a Council decision definitively rejecting the Commission’s proposal.’ At paragraph 73, the first form of order sort is the annulment of ‘the Council’s decision to reject the Commission’s proposal’. The only mention of the 15-month time-limit is in support of the now explicitly abandoned contention that the Council had no discretion not to adopt the Commission’s proposal.
68. The disputed submission appears however in paragraphs 7 to 9 of the applicants’ observations on admissibility, in response to the Council’s objection that the outcome of the written procedure which ended on 16 May 1997 did not constitute a definitive rejection of the Commission’s proposal, since the Council could (at least in theory) have adopted it at any time up to 21 May. The applicants argued that, in that case (which they strongly denied), their legal position ‘was undoubtedly affected by the expiry of the 15-month time-limit without the adoption of the measures proposed by the Commission’ and that ‘the fact that the Council allowed the time-limit to expire without adopting the proposal amounted to a negative act confirming its rejection of the Commission’s proposal’.
69. The Court of First Instance considered that to be a new claim not raised in the application, and thus inadmissible. The appellants now argue that in the application ‘it was clear that they were challenging the decision, of which there could be only one, however manifested’ and that they had ‘responded with the point about expiry of the 15 months, not as a new claim but as a demonstration that the matter could not remain open indefinitely and so a decision had definitively been taken one way or another’.
70. I find it very difficult to accept that it was clear from the application that the original challenge covered either a negative decision taken on 16 May or an implied rejection of the proposal on 21 May, as appropriate.
71. However, paragraph 9 of the observations on admissibility may easily be seen as asserting simply that the decision not to adopt the proposal, although not definitive on 16 May, became so through subsequent inaction and the expiry of the time-limit; the applicants were still seeking the annulment of that decision but pointing out that it was, contrary to the Council’s position, definitive when they lodged their application. That was, indeed, the point made by counsel for the appellants at the hearing and I find it persuasive.
72. In those circumstances, I take the view that the Court of First Instance erred at paragraph 64 of the judgment under appeal by dismissing as a new claim an argument which it wrongly interpreted at paragraph 63 as a challenge to the legality of an act other than that contested in the application. That argument may therefore be taken into consideration also at the present stage.
73. We may now turn to the principal issue in this appeal.
The validity of the finding that there was no act to be reviewed
The existence of a decision
74. First of all, it seems clear that a decision was taken in the present case – at least in the generally accepted sense of the word. If at the close of the written procedure no majority was found in favour of the proposal, then a vote must have been taken and no more than seven of the 15 Member States can have voted in favour. Article 8 of the Council’s Rules of Procedure, (24) governing the written procedure, requires a ‘written vote’.
75. The statement in paragraph 58 of the judgment under appeal (‘If a positive vote is the legal means by which the act is adopted, a negative vote merely indicates the absence of any decision’) is in my view wrong. An ‘absence of any decision’ would imply that the Council either did not address the question or, having addressed it, formed no view. Both of those hypotheses are contradicted by the existence of a ‘negative result’ described in the press release (25) and the finding that the necessary majority was not achieved.
76. It may moreover be noted that, in a new proceeding instigated by Eurocoton immediately after the failure of the one in issue in the present case, which gave rise to essentially the same result at each step, (26) the Council’s press release (27) concerning its equivalent meeting stated: ‘Confirming the absence of a simple majority in favour of the Commission’s proposal, the Council rejected the proposed Regulation …’ Such a statement seems to indicate no doubt in the Council’s mind that, in almost exactly equivalent circumstances some 18 months later, it reached a decision.
The relevance of the expiry of the 15-month time-limit
77. At first instance, the Council argued that no definitive decision could have been taken on 16 May 1997 since it remained possible to adopt the Commission’s proposal by 21 May. The applicants countered with the argument – which I have considered above to be admissible – that in that case the expiry of the time-limit provided for in Article 6(9) of the basic regulation amounted to a negative act confirming the Council’s rejection of the proposal. The Council has not since significantly developed its original contention. At the hearing, in response to a question from the Court, its representative expressed the view that the effect of the expiry of the time-limit was simply that any subsequent adoption of the proposal would be unlawful under the basic regulation, but that the proposal in theory remained (and even now remains) before the Council so that no decision can be said to have been taken.
78. In that regard, I agree essentially with the appellants. Since the 15-month time-limit had not yet expired on 16 May 1997, the negative decision taken was perhaps not definitive on that date but it must have become so on 21 May. Whilst the expiry of the time-limit may not itself have constituted or given rise to a decision, it necessarily meant that the decision already taken could no longer be changed.
The reviewability of the decision
79. The appellants postulate a general principle of Community law that, in a procedure governed by rules which confer procedural rights on the parties concerned, any step taken by an institution which amounts to closing the file without action is an act subject to review pursuant to Article 230 EC.
80. The Council objects that its activity as a legislative authority cannot be compared for purposes of judicial review with the Commission’s activity as an administrative authority, so that no general principle can be inferred from the case-law cited by the appellants, which concerns principally the Commission’s activity in the field of competition.
81. In my view, a decision such as that taken in the present case must in principle be open to review.
82. Under Article 230 EC, the Court of Justice may review the legality of acts of the institutions other than recommendations and opinions, a category held by the Court to include all acts, whatever their nature or form, which have binding force or produce legal effects. In the ERTA case, (28) it held Council proceedings laying down a particular negotiating procedure to constitute a reviewable act, and in France v Commission (29) it indicated that an action might have been brought against ‘the expression of a Commission decision refusing to amend’ a previous decision.
83. The decision not to adopt the Commission’s proposal for a regulation imposing the duty sought by the appellants undoubtedly produced (negative) legal effects for them: their domestic production was no longer given the protection which had been afforded by the provisional duty, and the only way in which they could achieve such protection again was to lodge a new complaint, as they did.
84. Even if it were to be considered that a failure by a legislature to agree on the adoption of a purely legislative act should not be open to review, it is commonly accepted that anti-dumping measures are of a hybrid nature, in that the procedures possess many features of an administrative procedure and the measures themselves moreover normally affect individual named parties who are often (as here) involved in the procedure. (30)
85. Thus, although where an anti-dumping duty is imposed the final step in the procedure takes the form of a legislative act which has both individual and general effects, that act may none the less be challenged by parties individually affected in the same way as is the case for administrative acts having comparable individual effects. That circumstance in my view militates very strongly in favour of according that same treatment also to any failure to adopt such an act. And in the field of competition, as the appellants have pointed out, ‘an institution empowered to find that there has been an infringement and to impose a sanction in respect of it and to which private persons may make complaint … necessarily adopts a measure producing legal effects when it terminates, wholly or in part, an investigation initiated upon a complaint by such a person’. (31)
86. Consequently, the statement at paragraph 59 of the judgment under appeal that ‘the position in which the Commission is placed, particularly as regards consideration of the complaint and the action to be taken on it, is not comparable to that of the Council’ does not in my view follow from the valid premiss in the same paragraph that ‘the review by the Court to which the applicants are entitled must be appropriate to the nature of the powers reserved to the Community institutions as regards anti-dumping measures’.
87. In so far as that statement implied that the non-adoption of the Commission’s proposal could not be reviewed, I therefore consider that the Court of First Instance erred in law. I do not however disagree – nor indeed do the appellants – with the final sentence in the paragraph, to the effect that the Council was under no obligation to adopt the proposal.
88. Since the application for annulment was dismissed by the Court of First Instance as inadmissible on the ground that there was no reviewable act, it follows that the judgment under appeal must be quashed on that point.
The appeal against the decision on damages
89. At first instance, the applicants’ principal submission on damages was based on the Council’s alleged lack of power to reject the Commission’s proposal outright. On appeal, the appellants do not challenge the dismissal of that submission on the ground that the Council was under no obligation to adopt the proposal.
90. In their alternative submission, they alleged (i) wilful disregard or manifest error of assessment of the facts found by the Commission, (ii) denial of their procedural rights and legitimate expectations and (iii) failure to state adequate reasons. The first and second of those arguments were dismissed again on the ground that the Council was under no obligation to adopt the proposal and, as regards the second, that there was no evidence that any procedural rights or legitimate expectations had been denied. Again, those aspects are not challenged on appeal.
91. The allegation of failure to state adequate reasons, however, was dismissed on the ground that ‘no act was adopted by the Council’. That aspect is challenged by the appellants and it follows from the conclusion I have reached above that the decision on the claim for damages must also be quashed to that extent.
Consequences of the success of the appeal
92. Under Article 54 of the EC Statute of the Court, when a decision of the Court of First Instance is quashed on appeal, the Court of Justice may itself give final judgment where the state of the proceedings permits. In the present case, that is in my view not only possible but also desirable in the interests of procedural economy.
93. It is necessary to examine first the Council’s two other objections to admissibility at first instance and then, if those objections are unfounded, the grounds of review available and whether the existence of any illegality is established.
Admissibility of the action at first instance
Interest in bringing an action for annulment
94. The Council’s second objection to admissibility at first instance was that the interest pursued by the applicants was the imposition of definitive anti-dumping duties on the imports in question; however, since annulment of the decision not to adopt the Commission’s proposal could not lead to such imposition – the 15-month time-limit had expired and the proposal could no longer validly be adopted – they had no legal interest in seeking that annulment.
95. The appellants countered that if the decision not to adopt the proposal were annulled the Council would be required under Article 176 of the EC Treaty (now Article 233 EC) to take the necessary measures to comply with the judgment of the Court. Such compliance would involve the adoption not of the proposal in question but of a subsequent proposal to be submitted by the Commission in another procedure.
96. The Council rejoined that the decision to be taken in any subsequent procedure, based necessarily on a different reference period and thus on a different factual situation, could not be constrained by the Court’s judgment in the present case.
97. In my view, the Council’s objection should not be upheld.
98. It is true that, following the expiry of the 15-month limit, the Council cannot lawfully take any further action on the proposal in issue in the present case, nor could it have done so at the time when the application was lodged. Furthermore, as the Council correctly states, any subsequent decision can only be taken in a different context.
99. However, I do not consider that the applicants had no interest in seeking annulment of the decision not to adopt the proposal.
100. It is settled law that ‘[i]n order to comply with a judgment annulling a measure and to implement it fully, the institution is required to have regard not only to the operative part of the judgment but also to the grounds which led to the judgment and constitute its essential basis, in so far as they are necessary to determine the exact meaning of what is stated in the operative part. It is those grounds which, on the one hand, identify the precise provision held to be illegal and, on the other, indicate the specific reasons which underlie the finding of illegality contained in the operative part and which the institution concerned must take into account when replacing the annulled measure’. (32)
101. The present case may be compared to AKZO v Commission, (33) in which the applicant sought annulment of the Commission’s decision to communicate certain documents to a third party in the context of a competition proceeding. The documents had already been communicated and clearly the clock could not be turned back. Yet the Court said, at paragraph 21 of its judgment:
‘AKZO’s interest in contesting the decision in question cannot be denied on the ground that in this case the decision had already been implemented at the time when the action was brought. The annulment of such a decision is of itself capable of having legal consequences, in particular by preventing a repetition by the Commission of the practice complained of …’
102. If, in the present case, it is found that the decision challenged was vitiated by some illegality, the Council will have to take that finding into account in future decisions, in particular in any decision in the context of a procedure instigated by a complaint by one or more of the applicants.
Individual concern
103. In its final objection to admissibility at first instance, the Council submitted that the decision challenged was not of individual concern to any of the applicants other than Eurocoton.
104. Here, it need merely be pointed out that, regardless of the standing of the other applicants to bring annulment proceedings, that of Eurocoton is not challenged. Consequently, its action cannot be dismissed in whole or in part on that ground, since no separation can be made between the submissions of the different applicants. Furthermore, as regards the claim for damages, the standing of the individual applicants is not determined by the criteria of direct and individual concern laid down in Article 230 EC. It is therefore unnecessary to examine this objection any further.
Substance of the action at first instance
The action for annulment
Grounds of review: in general
105. Under the second paragraph of Article 230 EC, the Court’s powers of review are to be exercised on grounds of lack of competence, infringement of an essential procedural requirement, infringement of the Treaty or of any rule of law relating to its application, or misuse of powers.
106. How can those grounds operate in the specific case of the non-adoption by the Council of a proposal submitted by the Commission? In practice, circumstances in which they can validly be asserted may be rare.
107. Lack of competence, for example, could be alleged only if the Council were required to adopt the proposal, since only then would it be incompetent not to do so. Since proposals must always be adopted by at least a majority, it seems difficult to conceive of a situation in which the Council might lack competence not to adopt; it is inherent in the nature and operation of that institution that no Member State can be constrained to vote in a particular manner.
108. It would also seem difficult for the non-adoption of a proposal itself to constitute a breach of the Treaty or of a rule of law relating to its application unless the relevant rule required the Council to adopt the proposal.
109. However, it is not inconceivable that an applicant could establish that the decision not to adopt a proposal was ‘taken with the exclusive or main purpose of achieving an end other than that stated or evading a procedure specifically prescribed by the Treaty for dealing with the circumstances of the case’ (34) and was thus vitiated by a misuse of powers.
110. It would in any event appear possible to envisage circumstances in which the non-adoption of a proposal should be annulled because an essential procedural requirement had been infringed.
111. If, for example, in a situation comparable to that in the present case, representations supporting the proposal had not been circulated, or a step required by the Council’s Rules of Procedure had not been followed, that might well provide grounds for annulment. Other such breaches might include violation of procedural rights, denial of a fair hearing, or failure to state adequate reasons.
In the present case
112. The application at first instance contained two alternative pleas in support of the claim for annulment: either the Council had no power to reject the proposal outright or the rejection was unlawful because it involved wilful disregard or manifest error of appreciation of the facts found by the Commission, denial of the applicants’ procedural rights and legitimate expectations and failure to state adequate reasons.
113. The first plea has now explicitly been relinquished. Of the second plea, it may be assumed that only the claim relating to the statement of reasons is maintained. (35)
114. When the Council adopts a positive measure on a proposal from the Commission, reasons must be stated and a statement of reasons (which may none the less be amended) is put forward in the proposal. There is on the other hand, as the Council pointed out at first instance, no proposal for a statement of reasons for not adopting the proposal – and thus no need to reach agreement on those reasons.
115. That does not mean that no reasons at all need be stated for such a non-adoption. All decisions must in my view be accompanied by a statement of reasons which is adequate to the circumstances. But it is settled law that such a statement must be ‘appropriate to the nature of the measure in question. It must show clearly and unequivocally the reasoning of the institution … so as to inform the persons concerned of the justification for the measure adopted and to enable the Court to exercise its powers of review. It is not necessary, however, for details of all relevant factual and legal aspects to be given’, since the adequacy of the reasoning ‘must be assessed with regard … to its context …’. (36)
116. The type of reasoning which may be required of a decision such as that in issue would appear to be limited, bearing in mind not only the essential aims of informing interested parties and enabling the Court to exercise review but also the context in which the decision is taken.
117. It must be borne in mind that the Community institutions enjoy a margin of discretion as regards the means of achieving the common commercial policy, and that judicial review is limited in such matters which involve an appraisal of complex economic situations. (37)
118. In the field of protection against dumping, it is essentially the Council which enjoys that discretion. The allocation of responsibilities in the basic regulation leaves the definitive decision to be taken by that body, which as representative of the Member States’ governments may be best placed to decide on policy considerations. An overriding policy consideration is the Community interest, to be assessed, under Article 21 of the basic regulation, on the basis of ‘all the various interests taken as a whole, including the interests of the domestic industry and users and consumers’.
119. When the Council decided not to adopt the Commission’s proposal in the present case, the factors taken into account may have included considerations of international policy towards the non-member countries concerned or of general policy in matters of world trade; a belief that competition from lower-priced imports was likely to stimulate the Community industry to achieve greater efficiency; or a concern that other Community industries using unbleached cotton fabric as a raw material, and Community consumers of their products, should not be deprived of the benefit of the more competitive prices. It may also have been felt that the Commission’s analysis did not clearly demonstrate a need to protect the Community industry concerned.
120. When an anti-dumping (or any other) measure is adopted, the reasons stated for its adoption must clearly not only be such as to justify its content but must do so in a manner which is not internally contradictory or incoherent.
121. When on the other hand a proposed measure is not adopted, it is enough that the reasons for not adopting it outweigh those in favour of its adoption. The potentially very wide variety – and even mutual incompatibility – of such reasons is such that their usefulness as a tool for judicial review would be extremely limited.
122. Taken together with the broad discretion enjoyed by the Council, that factor leads me to the view that, even though a detailed statement of the reasons prompting the Council not to adopt a proposal for an anti-dumping regulation, if given, could be subject to review by the Court, the fact that it was not given in the present case does not affect the validity of the decision. Such a statement would serve no purpose relevant to judicial review unless it were a coherent statement of a single position, and there can be no requirement that it should be so.
123. As regards the information to which interested parties are entitled on a purely practical level, it may be doubted whether any statement would in fact have added to their knowledge. Eurocoton’s position as the federation representing the Community industry presumably enables it, either directly or through its constituent national federations, to be aware of the reasons for Member States’ positions. Certainly in the present case such knowledge appears to have been available to outside commentators, (38) and at no stage have the appellants claimed that they were unable to defend their position through ignorance of the reasons for the non-adoption; they have consistently relied simply on the formal obligation to state reasons.
124. I thus take the view that the statement of reasons provided – that the simple majority necessary for the adoption of the regulation was not attained – was appropriate to the nature of the decision and adequate in the circumstances.
125. It may be noted that a similar approach was taken by the Court of First Instance in Bic and Others. (39)
126. In that case, the applicants challenged a Council Regulation (40) repealing anti-dumping duties, on the ground that insufficient reasons were given for the repeal. The Commission had previously submitted two proposals to extend the imposition of duties but ‘the appropriate majority in the Council was not achieved to adopt a Regulation on the basis of either proposal’. (41) The Council therefore decided to repeal the original imposition in order to avoid its remaining in force in accordance with the last sentence of Article 11(2) of the basic regulation.
127. The Court of First Instance considered at paragraph 29 of its judgment that the statement quoted above ‘clearly indicates the reason – namely, the failure to achieve a majority in the Council – for which the Commission’s proposals for maintaining the anti-dumping duties introduced by the original regulation were not followed by the Council’.
128. In view of all the above considerations, I am of the opinion that the action for annulment should be dismissed as unfounded.
The action for damages
129. Since the only remaining allegation of illegality in the context of the action for damages is that the statement of reasons was inadequate, that claim cannot be upheld either. In any event, lack of reasoning might not on its own be capable of founding a claim for damages.
Costs
130. Both at first instance and on appeal, Eurocoton requested that costs be awarded against the Council. At the hearing on appeal, counsel for the appellants requested that, even if the appeal were unsuccessful, the Court should make use of Article 69(3) of the Rules of Procedure and order the parties to bear their own costs, on the ground that the question to be resolved was an important one and that the appeal was justified in order for it to be settled.
131. In fact, I take the view that the appeal should be allowed because the Court of First Instance did indeed err in law on an important point, but that the action should be dismissed.
132. In those circumstances, I consider that the applicants should bear the costs in Case T-213/97 and that the Council should bear the costs of the appeal.
Conclusion
133. I am therefore of the opinion that the Court should(1))quash the judgment of the Court of First Instance in Case T-213/97;(2))dismiss the action as unfounded;(3))order the applicants in case T-213/97 to bear the costs in that case; and(4))order the Council to bear the costs of the appeal.
1 – Original language: English
2 – Case T-213/97 Eurocoton and Others v Council [2000] ECR II-3727 ('the judgment under appeal').
3 – Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community, OJ 1996 L 56, p. 1 ('the basic regulation'), which lays down the procedures to be followed for the imposition of anti-dumping duties by the Community.
4 – Uruguay Round of Multilateral Trade Negotiations (1986-1994) - Annex 1 - Annex 1A - Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (WTO-GATT 1994), OJ 1994 L 336, p. 103; see recitals 3 to 5 in the preamble to the basic regulation.
5 – OJ 1996 C 50, p. 3.
6 – Regulation (EC) No 2208/96 imposing a provisional anti-dumping duty on imports of unbleached (grey) cotton fabrics originating in the People's Republic of China, Egypt, India, Indonesia, Pakistan and Turkey, OJ 1996 L 295, p. 3.
7 – COM(97) 160 final.
8 – Press Release 8134/97 (Press 156) on 2007th Council meeting - Internal Market.
9 – Eurocoton and 12 textile undertakings established in Germany, France and Italy which had supported the complaint; a 13th applicant at first instance, established in Italy, is not an appellant.
10 – They cite Case 210/81 Demo-Studio Schmidt [1983] ECR 3045; Case 191/82 FEDIOL [1983] ECR 2913, paragraphs 28 to 31 of the judgment; Case 298/83 CICCE [1985] ECR 1105; Joined Cases 142/84 and 156/84 BAT and Reynolds [1987] ECR 4487; Case T-24/90 Automec v Commission [1992] ECR II-2223, paragraphs 78 and 80; and Case T-120/96 Lilly Industries [1998] ECR II-2571, paragraph 53.
11 – Case 264/82 Timex [1985] ECR 849.
12 – Case C-121/86 Epicheiriseon and Others [1989] ECR 3919.
13 – Case C-315/90 Gimelec and Others [1991] ECR I-5589.
14 – Articles 9.3, 11.1 and 11.2 of the Anti-dumping Code, and Articles 9(4) and 11(1) of the basic regulation.
15 – Joined Cases T-33/98 and T-34/98 Petrotub and Republica [1999] II-3837, at paragraph 105 of the judgment. On appeal in those cases, a judgment was delivered in case C-76/00 P on 9 January 2003; see note 22 below.
16 – For example, Case C-352/98 P Bergaderm and Goupil [2000] ECR I-5291, paragraphs 34 and 35 of the judgment.
17 – For example, Case C-51/92 P Hercules Chemicals [1999] ECR I-4235, paragraphs 57 and 58 of the judgment and the case-law cited there.
18 – Bergaderm, cited above in note 16, paragraphs 34 and 35 of the judgment, and most recently the judgment of 19 September 2002 in Case C-104/00 P DKV v OHIM, at paragraph 44.
19 – Paragraphs 37 to 39 of the application.
20 – See paragraphs 4 to 15 of the reply.
21 – Paragraphs 28 to 38.
22 – See, for a comparable example, Case C-69/89 Nakajima v Council [1991] ECR I-2069, paragraphs 26 to 32 of the judgment and, most recently, Case C-76/00 P Petrotub and Republica, cited above in note 15, at paragraph 52 et seq.
23 – See paragraphs 1, 2 and 4 to 7 of Article VI of GATT 1994, and Articles 1 and 9.1 of the Anti-dumping Code.
24 – In the version applicable at the material time, Council Decision 93/662/EC of 6 December 1993 adopting the Council's Rules of Procedure, OJ 1993 L 304, p. 1.
25 – See paragraph 14 above.
26 – See the notice opening the investigation on 11 July 1997, OJ 1997 C 210, p. 12; Commission Regulation (EC) No 773/98 of 7 April 1998 imposing a provisional anti-dumping duty on imports of certain unbleached cotton fabrics originating in the People's Republic of China, Egypt, India, Indonesia, Pakistan and Turkey, OJ 1998 L 111, p. 19; and the Commission's proposal for the imposition of definitive duties in COM(1998) 487, amended in COM(1998) 540.
27 – Press Release 11602/98 (Press 322) on the 2120th Council Meeting (General Affairs) at Luxembourg on 5 October 1998.
28 – Case 22/70 Commission v Council [1971] ECR 263, at paragraphs 42 to 55 of the judgment; see also Case C-25/94 Commission v Council [1996] ECR I-1469 at paragraphs 25 to 39 (cf. paragraphs 43 to 50 of the Opinion).
29 – Case C-514/99 [2000] ECR I-4705, at paragraph 45 of the order.
30 – See, for example, Case C-75/92 Gao Yao v Council [1994] ECR I-3141, paragraph 26 of the judgment.
31 – Case C-19/93 P Rendo and Others v Commission [1995] ECR I-3319, at paragraph 28 of the judgment, Case C-39/93 P SFEI and Others v Commission [1994] ECR I-2681, paragraph 27, and the case-law cited.
32 – See, for a recent example in the field of anti-dumping, Case C-458/98 P Industries des Poudres Sphériques v Council [2000] ECR I-8147, at paragraph 81 of the judgment.
33 – Case 53/85 [1986] ECR 1965.
34 – See, for example, Case C-110/97 Netherlands v Council [2001] ECR I-8763, at paragraph 137 of the judgment.
35 – See paragraph 90 above.
36 – See, for example, Case C-328/00 Weber [2002] ECR I-1461, at paragraph 42 of the judgment; paragraphs 58 and 59 of the judgment in Case C-340/98 Italy v Council [2002] ECR I-2663; and, for a recent instance with regard to anti-dumping measures, Case T-87/98 International Potash Company v Council [2000] ECR II-3179, paragraph 65.
37 – See, for example, Case C-150/94 United Kingdom v Council [1998] ECR I-7235, at paragraphs 53 and 54 of the judgment.
38 – See, for one example, Francesca Gee and Olivier Cadot, Confronting EU Anti-Dumping measures: The grey cotton case seen from Turkey (1998), INSEAD, Fontainebleau, France.
39 – Case T-82/00 Bic and Others v Council [2001] ECR II-1241.
40 – Council Regulation (EC) No 174/2000 of 24 January 2000 repealing Council Regulation (EEC) No 3433/91 insofar as it imposes a definitive anti-dumping duty on imports of gas-fuelled, non-refillable pocket flint lighters originating in Japan, OJ 2000 L 22, p. 16.
41 – Recital 85 of Regulation No 174/2000.
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