CFI, 4th chamber, March 17, 2005, No T-192/98

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fourth Chamber, Extended Composition)

Background to the case

1 On 26 May 1997 the Comité des industries du coton et des fibres connexes de l'Union européenne (Eurocoton), acting on behalf of the Community producers of unbleached cotton, lodged a complaint with the Commission concerning the dumping of that product. That complaint was supported by inter alia 33 national producers from six Member States.

2 On 11 July 1997 the Commission published a Notice of initiation of an anti-dumping proceeding concerning imports into the Community of unbleached cotton fabrics originating in the People's Republic of China, Egypt, India, Indonesia, Pakistan and Turkey (OJ 1997 C 210, p. 12).

3 On 7 April 1998 the Commission adopted Commission Regulation (EC) No 773-98 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).

4 On 21 September 1998 the Commission submitted a proposal for a Council Regulation (EC) imposing definitive anti-dumping duties on imports of certain unbleached cotton fabrics originating in the People's Republic of China, Egypt, India, Indonesia and Pakistan, definitively collecting the provisional duty imposed by Commission Regulation (EC) No 773-98 of 7 April 1998 (OJ 1998 L 111, p. 19) and terminating the anti-dumping proceeding in respect of imports of these fabrics originating in Turkey (document COM (98) 540 final).

5 Under Article 6(9) of 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), anti-dumping investigations 'shall in all cases be concluded within 15 months of initiation'. In the present case, that period ended on 11 October 1998.

6 On 5 October 1998 the Council of the European Union issued a press release (Press Release on 2120th Council meeting - General Affairs, 11602-98, Press 322 G) which, under the title 'Anti-dumping - imports of unbleached cotton fabrics', stated:

'Confirming the absence of a simple majority in favour of the Commission's proposal, the Council rejected the proposed regulation imposing a definitive anti-dumping duty on imports of certain unbleached cotton fabrics from China, Egypt, India, Indonesia and Pakistan, (and terminating the anti-dumping proceeding in respect of Turkey).

As a consequence, the provisional duties collected pursuant to Regulation (EC) No 773-98 shall be released.'

Procedure and forms of order sought

7 By application lodged at the Registry of the Court of First Instance on 7 December 1998, Eurcoton brought the present action.

8 On 25 August 1999 the United Kingdom of Great Britain and Northern Ireland sought leave to intervene in support of the Council.

9 By judgment of 29 November 2000 in Case T-213-97 Eurocoton and Others v Council [2000] ECR II-3727, the Court of First Instance, dealing with a case concerning an earlier refusal by the Council to adopt a Commission proposal for a regulation imposing definitive anti-dumping duties on imports similar to those at issue in the present case in which the Council had raised a plea of inadmissibility, dismissed the action for annulment as inadmissible, finding that, because the Council had not adopted a decision, there was no reviewable act. It also dismissed the action for damages because there was no fault on the part of the Council.

10 The applicants at first instance brought an appeal against that judgment before the Court of Justice.

11 By order of 10 May 2001, the proceedings in the present case were suspended pending judgment of the Court of Justice in the appeal against the judgment of the Court of First Instance in Case T-213-97, owing to the similarity of the issues of admissibility and substance in the two cases.

12 By judgment of 30 September 2003 in Case C-76-01 P Eurocoton and Others v Council [2003] ECR I-10091, the Court of Justice set aside the judgment of the Court of First Instance, held the action to be admissible and annulled the Council's decision on grounds of failure to state reasons.

13 The Court of Justice held, first, with respect to admissibility, that the failure by the Council to adopt the Commission's proposal for a regulation imposing definitive anti-dumping duties constituted an adoption of position with respect to that proposal and that it also constituted an implied rejection of that proposal, which became definitive upon the expiry of the 15-month period provided for in Article 6(9) of Regulation (EC) No 384-96, referred to in paragraph 5 above, within which the institutions are to conclude the investigation and, where necessary, to impose definitive anti-dumping duties (paragraphs 57 to 65). The Court held that such a position affected the interests of the applicants who had instigated the anti-dumping investigation and thus constituted a reviewable act which had produced binding legal effects capable of affecting the appellants' interests (paragraphs 66 and 67).

14 Second, on the substance, the Court of Justice noted that the appellants were only arguing, in support of their action for annulment, that the Council had disregarded the obligation to state reasons by not indicating why it had rejected the Commission's proposal for a regulation imposing a definitive anti-dumping duty and set aside the Council's decision for failure to state reasons.

15 The Court of Justice held, first, that when the Council decides not to adopt a proposal for a regulation imposing definitive anti-dumping duties, it should provide an adequate statement of reasons which shows clearly and unambiguously why, in the light of the provisions of Regulation No 384-96, there is no need to adopt the proposal, and, second, that compliance with the obligation to state reasons therefore required the act in question to indicate the absence of dumping or corresponding injury or that the Community interest did not call for intervention on its part (paragraphs 87, 89 and 91).

16 Finding that, in that case, the only reason put forward for the failure to adopt the proposal for a regulation imposing a definitive anti-dumping duty submitted by the Commission was the lack of a majority in favour of that proposal, the Court of Justice found that such information concerning the result of the voting in the Council could not satisfy the obligation to state reasons laid down by Article [253] EC and, consequently, annulled the contested decision (paragraphs 93 to 95).

17 However, the Court of Justice dismissed the appellants' claim for damages, noting that an inadequacy in the statement of reasons for a legislative measure is not sufficient to cause the Community to incur liability (paragraph 98).

18 The proceedings in the present case were recommenced following the judgment of the Court of Justice. The Court of First Instance asked Eurocoton and the Council to submit their observations on the inferences to be drawn from that judgment. The parties submitted their observations on 21 and 20 November 2003.

19 By order of 9 March 2004, the United Kingdom of Great Britain and Northern Ireland was granted leave to intervene in this case.

20 The defendant submitted its statement in defence on 9 March 2004, and the intervener stated on 27 May 2004 that it would not submit a statement in intervention.

21 In addition, by letter of 5 November 2004, further to the notification of the hearing, Eurocoton restricted the arguments in its action to the plea relating to failure to state reasons in the contested decision and referred to the arguments put forward in Case C-76-01 P.

22 At the hearing on 1 December 2004, the Court of First Instance noted the absence of the parties and closed the oral procedure.

23 Eurocoton claims that the Court of First Instance should:

-

annul the Council's decision of 5 October 1998 to reject the Commission's proposal for a Council Regulation (EC) imposing definitive anti-dumping duties on imports of certain unbleached cotton fabrics originating in the People's Republic of China, Egypt, India, Indonesia and Pakistan, definitively collecting the provisional duty imposed by Commission Regulation (EC) No 773-98 of 7 April 1998 (OJ 1998 L 111, p. 19) and terminating the anti-dumping proceeding in respect of imports of these fabrics originating in Turkey, submitted by the Commission on 21 September 1998 (document COM (98) 540 final) in so far as it concerns the applicant;

-

order the Council to pay the costs.

24 TheCouncil contends that the Court of First Instance should:

-

rule on the action for annulment in the light of the judgment of the Court of Justice in Case C-76-01 P.

Pleas in law and arguments of the parties

25 With respect to admissibility, Eurocoton submits that it follows from the judgment of the Court of Justice in Case C-76-01 P that its action is admissible.

26 On the substance, as its form of order sought originally stood, Eurocoton submitted, as its principal plea, that the Council had no power to reject the Commission's proposal. In the alternative, assuming that the Council had the power to reject the Commission's proposal, Eurocoton stated that the decision was unlawful for three reasons. It was vitiated by a manifest error of assessment of the facts found by the Commission, a disregard of the procedural rights of the claimants and a failure to state adequate reasons as follows from the judgment of the Court of Justice in Case C-76-01 P.

27 In its letter of 5 November 2004, Eurocoton restricted its arguments in the action, referring to the arguments put forward in the appeal in Case C-76-01 P, and informed the Court that its action for annulment was based solely on the plea alleging failure to state adequate reasons in the contested decision.

28 The Council, which recognised in its statement of defence that, pursuant to the judgment of the Court of Justice in Case C-76-01 P, the present action was admissible, acknowledged that it also followed from that judgment that the contested decision did not contain an adequate statement of reasons and, for that reason, should be annulled.

Findings of the Court

Admissibility

29 According to the case-file, on 5 October 1998 the Council published the press release referred to in paragraph 6 above, stating that the written procedure relating to the imposition of a definitive anti-dumping duty had ended negatively. At the end of the voting procedure, the Council thus adopted a position on the Commission's proposal, as the Court held in Eurocoton and Others v Council in respect of circumstances analogous to those of the present case.

30 The maximum period of 15 months allowed to the institutions within which to conclude the investigation and, where necessary, to impose definitive anti-dumping duties in accordance with Article 6(9) of Regulation No 384-96 expired several days later on 11 October 1998. It follows that the Council's position on the proposal for a regulation, which constituted an implied rejection of that proposal, became definitive on that date.

31 As held by the Court of Justice in Eurocoton and Others v Council, the failure to adopt that proposal, which determined definitively the Council's position in the final phase of the anti-dumping proceedings, affected the interests of the applicants, whose complaint had instigated the anti-dumping investigation (see paragraph 1 above).

32 The rejection of the proposal for a regulation submitted by the Commission has all the characteristics of a reviewable act within the meaning of Article 230 EC, in that it produced binding legal effects capable of affecting the applicant's interest. The legislative nature of the procedure in the context of which the Council adopted its definitive position is not such as to alter that conclusion (see Eurocoton and Others v Council, cited above, paragraphs 68 to 73).

33 It follows from the foregoing that this action is admissible.

The sole plea: failure to state reasons in the contested decision

34 Article 253 EC provides: '[r]egulations, directives and decisions adopted jointly by the European Parliament and the Council, and such acts adopted by the Council or the Commission, shall state the reasons on which they are based and shall refer to any proposals or opinions which were required to be obtained pursuant to this Treaty'.

35 As the Court of Justice held in Eurocoton and Others v Council, cited above, when the Council decides not to adopt a proposal for a regulation imposing definitive anti-dumping duties, it should provide an adequate statement of reasons which shows clearly and unambiguously why, in the light of the provisions of Regulation No 384-96, there is no need to adopt the proposal (paragraph 89). Compliance with the obligation to state reasons therefore requires the act in question to indicate the absence of dumping or corresponding injury or that the Community interest does not call for intervention on its part (paragraph 91).

36 The Court finds that, in the present case, as in the case before the Court of Justice, the Council's position on the proposal, submitted by the Commission, for a regulation imposing a definitive anti-dumping duty on the imports in question here is apparent from the press release from the Council referred to in paragraph 6 above, which gives, as the sole ground for rejecting that proposal, the lack of a simple majority in favour of it.

37 In accordance with the findings of the Court of Justice in Eurocoton and Others v Council, cited above, such a statement does not satisfy the obligation to state reasons under Article 253 EC.

38 Consequently, the contested decision should be annulled on the same ground of the Council's failure to state reasons in the decision rejecting the proposal for a regulation submitted to it by the Commission.

Costs

39 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Council has been unsuccessful and the applicant has applied for costs, the Council must be ordered to pay the costs.

40 In addition, under Article 87(4) of the Rules of Procedure, Member States which have intervened in the proceedings are to bear their own costs. Pursuant to that provision, the United Kingdom is to bear its own costs.

On those grounds,

THE COURT OF FIRST INSTANCE (Fourth Chamber, Extended Composition)

hereby:

1.

Annuls the Council's decision of 5 October 1998 to reject the Commission's proposal for a Council Regulation (EC) imposing definitive anti-dumping duties on imports of certain unbleached cotton fabrics originating in the People's Republic of China, Egypt, India, Indonesia and Pakistan, definitively collecting the provisional duty imposed by Regulation (EC) No 773-98 (OJ 1998 L 111, p. 19) and terminating the anti-dumping proceeding in respect of imports of these fabrics originating in Turkey, submitted by the Commission of the European Communities on 21 September 1998 (document COM (98) 540 final);

2.

Orders the Council of the European Union to pay the costs;

3.

Orders the United Kingdom of Great Britain and Northern Ireland to bear its own costs.