CJEC, October 4, 1983, No 191-82

THE COURT

1 By application lodged at the court registry on 29 july 1982 the eec seed crushers ' and oil processors ' federation (FEDIOL) (hereinafter referred to as ' ' the federation ' ') brought an action under the second paragraph of article 173 of the eec treaty for a declaration that a communication dated 25 may 1982 by which the commission informed the applicant pursuant to article 5 (5) of council regulation n°3017-79 of 20 december 1979 on protection against dumped or subsidized imports from countries not members of the european economic community (official journal 1979, l 339, p. 1) that an anti-subsidy proceeding would not be initiated in respect of imports of soya-bean oil-cake from brazil, was void.

2 By a document lodged on 11 october 1982 the commission, pursuant to article 91 of the rules of procedure, requested the court to give a preliminary decision on the admissibility of the action.

3 It appears from the file that on 2 april 1980 the federation lodged a complaint with the commission in which it referred to the subsidization of exports of soya-bean oil-cake by the federative republic of brazil and invited the commission to initiate an anti-subsidy proceeding under regulation n°3017-79, to ask the brazilian government for explanations and to impose a provisional countervailing duty.

4 In that complaint, later supplemented by further information, the federation states that brazil subsidizes its exports of soya-bean oil-cake by a combination of various measures: on the one hand it exerts pressure by means of export restrictions on the domestic price of soya beans so that they are preferentially reserved at a reasonable price for national industry; on the other hand it gives preferential treatment to exports of soya-bean oil-cake by domestic fiscal measures, by levying different duties on exports of soya beans and of soya-bean oil-cake and by the grant of credit facilities for exports of soya-bean oil-cake. As a whole the measures are intended, it is alleged, to encourage the development of the brazilian soya seed-crushing industry and they create serious difficulties for the european industry thereby jeopardizing its profitability.

5 It is not disputed that the commission investigated the practices of which the federation complained, that it entered into negotiations with the brazilian government and achieved some results and that, finally, it kept the applicant informed of those discussions.

6 On 30 september 1981 the federation served notice on the commission under the second paragraph of article 175 of the eec treaty calling upon it to initiate an anti-subsidy proceeding against brazil without delay. In the same letter it informed the commission that it would bring the matter before the court of justice and that it reserved the right to hold the community responsible for the damage caused to it by the refusal to impose a countervailing duty.

7 By a telex message of 4 december 1981 the commission informed the applicant of the progress of the discussions held with the brazilian mission in accordance with the terms of the gatt anti-subsidy code and, at the same time, gave notice that it did not for the time being intend to initiate an anti-subsidy proceeding.

8 On 5 february 1982 the commission sent to the applicant a working document dated 4 february 1982 in which it considers, on the one hand, the various brazilian measures impugned by the federation and, on the other hand, the question of the damage suffered by the european industry. In that memorandum the commission states that the majority of the measures of which the applicant complained had in the meantime been withdrawn by brazil and that the effect of the remaining measures was to leave a rate of subsidization which was economically negligible. It states that in those circumstances it seems to it ' ' inappropriate ' ' to initate an anti-subsidy proceeding and recalls that a complete assessment of the case requires the consideration not only of the interests of the european industry but also those of consumers.

9 On 5 march 1982 a meeting took place between officers of the commission and the federation ' s representatives. As a result of that meeting the commission on 25 may 1982 sent the applicant a letter signed by the responsible director in the directorate general for external relations, in which it referred to the aforementioned correspondence and stated as follows:

' ' For that reason, and in accordance with article 5 (5) of council regulation (eec) n°3017-79, i am writing to let you know that an anti-subsidy proceeding in respect of imports of soya-bean oil-cake from brazil is not being initiated by the commission.

I should like to add, however, that the commission will keep a close watch on developments in the situation in that sector, particularly as the trend of brazilian policy relating to credit is such as to give rise to a certain concern, with regard both to time-limits and to rates. ' '

10 The federation brought an action under the second paragraph of article 173 of the treaty for a declaration that that communication was void.

11 In its objection of inadmissibility the commission contends that its communication of 25 may 1982 constitutes a mere transmission of information in pursuance of article 5 of regulation n°3017-79 and that it does not involve any decision having any other scope. In the commission ' s view the regulation, whilst recognizing the right on the part of undertakings and federations to lodge a complaint, does not confer on them the right to compel the initiation of an anti-subsidy proceeding. The commission emphasizes the wide discretion reserved to it in the regulation and states that the exercise of that discretion touches upon the economic and political interests of the community and of the non-member countries affected. The purpose of the regulation, it states, is not only to protect european industry, but also to safeguard the general interests of the community in all their complexity.

12 On those grounds the commission takes the view that its letter of 25 may 1982 cannot constitute a measure open to challenge under the second paragraph of article 173 and that the action is therefore inadmissible.

13 The applicant, for its part, considers that regulation n°3017-79 imposes on the commission a duty to initiate an official investigation under article 7 as soon as sufficient evidence to show the existence of a subsidy and injury suffered by the european industry has been submitted to it during the preliminary stage of the procedure. Once those facts have been established the commission, it is alleged, no longer has any discretion with regard to the inferences to be drawn from them.

14 Consequently the applicant considers that where there is a subsidy and resultant injury community producers have the right to require the competent community institutions to adopt the necessary protective measures once they have established the facts. The applicant considers that it is entitled at the present stage, regard being had to the evidence it has adduced, to require the commission to commence the formal investigation stage provided for by article 7 of the regulation.

15 That claim must be assessed in the light of the whole scheme of investigation and protection created by regulation n°301-79. The applicant ' s rights must be defined in the context of that scheme.

16 According to the wording of article 5 (1) and (3) any undertaking or association of undertakings in the community which considers itself injured or threatened by subsidized imports has the right to lodge a complaint with the commission, or a member state, which is under a duty to forward it to the commission. After the complaint has been submitted the governments of the member states must be consulted in the manner provided for in article 6 of the regulation.

17 The scope of the consultations to be carried out by the commission at that stage is defined in article 6 (4) which sets out the matters to be included in the preliminary consultations in respect of every decision, namely: the existence of a subsidy and the amount thereof, the existence and extent of injury, the causal link between the subsidized imports and injury and, finally, the type of measures which are appropriate to prevent or remedy the injury caused by the subsidy.

18 If, after having carried out consultations on those various matters, the commission considers that the complaint does not contain sufficient evidence to justify the initiation of an investigation it must so inform the complainant.

19 However, if the commission considers that there is sufficient evidence to justify initiating a formal investigation, it must, according to article 7, take a number of measures to publicize the fact, including an announcement in the official journal and it must carry out research, either directly or indirectly or in conjunction with the member states. According to the wording of article 7 (4), (5) and (6) the information obtained by the commission must, subject to certain exceptions, be made available to the complainants. On their request the complainants must be heard by the commission and they may also request the commission for an opportunity to meet other parties directly concerned with the investigation. At that stage, according to the wording of article 7 (7), the community authorities may reach preliminary determinations or apply provisional measures, which must take effect ' ' expeditiously ' '.

20 In order to allow the elimination or neutralization of any effects produced by the subsidy the regulation provides a series of measures consisting of the acceptance of undertakings on the part of the country of origin or of the country exporting the products in question, of the imposition of a provisional countervailing duty and a definitive countervailing duty.

21 Article 10 of the regulation contains detailed provisions concerning the undertakings offered and also provides for measures to be taken in the event of the undertakings not being fulfilled. The undertakings are to be accepted by the commission after the consulations provided for in article 6 have taken place.

22 The commission, acting at the request of a member state or on its own initiative may, according to article 11, impose a provisional countervailing duty where a preliminary investigation shows that a subsidy exists and where there is sufficient evidence of injury caused thereby and the interests of the community call for intervention to prevent injury being caused during the proceeding. The imposition of such duties is subject to the requirement of consultation provided for in article 6 except in cases of extreme urgency. Article 11 (4) provides that the commission shall be required to inform the council and the member states forthwith of any decision concerning provisional duties.

23 According to article 12, where the facts as finally established by the commission show that there is subsidization and injury caused thereby and the interests of the community call for community intervetion, a definitive countervailing duty is to be imposed by the council, acting by a qualified majority on a proposal submitted by the commission after consultation.

24 It must be noted that, according to article 13 (1), countervailing duties, whether provisional or definitive, are to be imposed by regulation.

25 It appears from a comparison of the provisions governing the successive procedural stages described above that the regulation recognizes the existence of a legitimate interest on the part of community producers in the adoption of anti-subsidy measures and that it defines certain specific rights in their favour, namely the right to submit to the commission all evidence which they consider appropriate, the right to see all information obtained by the commission subject to certain exceptions, the right to be heard at their request and to have the opportunity of meeting the other parties concerned in the same proceeding, and finally the right to be informed if the commission decides not to pursue a complaint. In the case of the proceedings being terminated on the completion of the stage of preliminary investigation provided for in article 5 that information must comprise at least a statement of the commission ' s basic conclusions and a summary of the reasons therefor as is required by article 9 in the event of the termination of formal investigations.

26 Whilst it is true that the commission, when exercising the powers assigned to it in regulation n°3017-79, is under a duty to establish objectively the facts concerning the existence of subsidization practices and of injury caused thereby to community undertakings, it is no less true that it has a very wide discretion to decide, in terms of the interests of the community, any measures needed to deal with the situation which it has established.

27 It is in the light of those considerations, originating in the scheme of regulation n°3017-79 that it is necessary to decide whether complainants have the right to bring an action.

28 It seems clear, first, in that respect - and the point is not disputed by the commission - that complainants must be acknowledged to have a right to bring an action where it is alleged that the community authorities have disregarded rights which have been recognized specifically in the regulation, namely the right to lodge a complaint, the right, which is inherent in the aforementioned right, to have that complaint considered by the commission with proper care and according to the procedure provided for, the right to receive information within the limits set by the regulation and finally, if the commission decides not to proceed with the complaint, the right to receive information comprising at the least the explanations guaranteed by article 9 (2) of the regulation.

29 Furthermore it must be acknowledged that, in the spirit of the principles which lie behind articles 164 and 173 of the treaty, complainants have the right to avail themselves, with regard both to the assessment of the facts and to the adoption of the protective measures provided for by the regulation, of a review by the court appropriate to the nature of the powers reserved to the community institutions on the subject.

30 If follows that complainants may not be refused the right to put before the court any matters which would facilitate a review as to whether the commission has observed the procedural guarantees granted to complainants by regulation n°3017-79 and whether or not it has committed manifest errors in its assessment of the facts, has omitted to take into consideration any essential matters of such a nature as to give rise to a belief in the existence of subsidization or has based the reasons for its decision on considerations amounting to a misuse of powers. In that respect, the court is required to exercise its normal powers of review over a discretion granted to a public authority, even though it has no jurisdiction to intervene in the exercise of the discretion reserved to the community authorities by the aforementioned regulation.

31 It follows from the foregoing that the attitude adopted by the commission is excessive inasmuch as it considers that any action brought by the complainants described in article 5 of the regulation is, in principle, inadmissible. As has been shown above, the regulation acknowledges that undertakings and associations of undertakings injured by subsidization practices on the part of non-member countries have a legitimate interest in the initiation of protective action by the community; it must therefore be acknowledged that they have a right of action within the framework of the legal status which the regulation confers upon them.

32 It is therefore for the applicant to put forward its submissions in the course of the subsequent proceedings and to show that they fall within the limits of the legal protection given to it by regulation n°3017-79 and by the general principles of the treaty.

33 For all those reasons the application must be declared admissible and the proceedings must be allowed to continue.

Costs

34 The costs should be reserved.

On those grounds,

The court,

Be way of interlocutory decision, hereby:

1. Declares the action to be admissible;

2. Reserves the costs.