CJEU, 7th chamber, February 27, 2014, No C-601/12

THE COURT (Seventh Chamber),

1 By its appeal, Ningbo Yonghong Fasteners Co. Ltd seeks the setting aside of the judgment of 10 October 2012 in Case T-150-09 Ningbo Yonghong Fasteners v Council ('the judgment under appeal') by which the General Court of the European Union dismissed its action for annulment of Council Regulation (EC) No 91-2009 of 26 January 2009 imposing a definitive anti-dumping duty on imports of certain iron or steel fasteners originating in the People's Republic of China (OJ 2009 L 29, p. 1; 'the contested regulation') in so far as that regulation imposes a definitive anti-dumping duty on that company.

Legal context

2 At the material time, the application of anti-dumping measures by the European Union was governed by 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), as last amended by Council Regulation (EC) No 2117-2005 of 21 December 2005 (OJ 2005 L 340, p. 17) ('the basic regulation').

3 Article 2(7)(a) of the basic regulation laid down a special rule on the method to be used for determining the 'normal value' for imports from non-market economy countries.

4 However, Article 2(7)(b) of the basic regulation provided that the general rules laid down in Article 2(1) to (6) were to apply to certain countries, including the People's Republic of China, if it was shown on the basis of claims by one or more producers subject to an investigation that market economy conditions prevailed for that producer or those producers.

5 The criteria and procedures for determining whether that was the case were set out in Article 2(7)(c) of the basic regulation, under which:

'A claim under subparagraph (b) must be made in writing and contain sufficient evidence that the producer operates under market economy conditions, that is if:

- decisions of firms regarding prices, costs and inputs, including for instance raw materials, cost of technology and labour, output, sales and investment, are made in response to market signals reflecting supply and demand, and without significant State interference in this regard, and costs of major inputs substantially reflect market values,

...

A determination whether the producer meets the abovementioned criteria shall be made within three months of the initiation of the investigation, after specific consultation of the Advisory Committee and after the Community industry has been given an opportunity to comment. This determination shall remain in force throughout the investigation.'

Background to the dispute and the contested regulation

6 The appellant - Ningbo Yonghong Fasteners Co. Ltd - is a company governed by Chinese law which produces and exports iron and steel fasteners to the European Union.

7 On 9 November 2007, following a complaint lodged on 26 September 2007 by the European Industrial Fasteners Institute AISBL (EIFI), the European Commission published a Notice of initiation of an anti-dumping proceeding concerning imports of certain iron or steel fasteners originating in the People's Republic of China (OJ 2007 C 267, p. 31).

8 On 3 December 2007, Ningbo Yonghong Fasteners submitted a claim for market economy treatment ('MET').

9 Between early December 2007 and August 2008, the Commission sent Ningbo Yonghong Fasteners various requests for information and for additional clarification - to which that company submitted replies - in connection with its MET claim. The Commission also undertook a verification visit at Ningbo Yonghong Fasteners' premises and carried out inspections at the premises of producers in an analogue country - namely, India - pursuant to Article 2(7)(a) of the basic regulation.

10 On 30 April 2008, the Commission sent Ningbo Yonghong Fasteners an information document on the MET, setting out the essential facts and considerations on the basis of which the Commission had concluded that Ningbo Yonghong Fasteners did not meet the criteria allowing it to receive MET.

11 In the final information document sent on 3 November 2008, the Commission told Ningbo Yonghong Fasteners that it intended to propose to the Council of the European Union that a definitive anti-dumping duty be imposed on imports of certain iron or steel fasteners originating in China.

12 On 26 January 2009, the Council adopted the contested regulation.

13 With regard to Ningbo Yonghong Fasteners' MET claim, recital 63 and recitals 66 to 68 of that regulation are worded as follows:

'(63) [Ningbo Yonghong Fasteners was] denied MET on the grounds that the costs of the major input, steel wire rod, did not substantially reflect market values, as required by Article 2(7)(c) of the basic regulation. It was found that the prices of steel wire rod, or in some cases, drawn steel wire, charged on the Chinese market were significantly lower than those charged on other markets, such as Europe, India, North America and Japan ...

...

(66) ... Based on data obtained and verified during the investigation as well as from independent market sources, such as the [Steel Business Briefing], it is undisputable that prices of steel wire rod on the Chinese domestic market are significantly below prices on other markets. Given that [China] does not benefit from any natural comparative advantage with regard to iron ore, which it imports at international market prices, it is considered that there is no justification for the abnormally low prices of steel wire rod, which do not substantially reflect market values. This conclusion applies equally to the sector as a whole as well as individually to all of the investigated sampled companies. Therefore criterion 1 of Article 2(7)(c) is not considered to be met.

(67) ... It should also be borne in mind that it is up to the exporting producers to demonstrate that they operate under market economy conditions and that the costs of their major inputs substantially reflect market values. This has not been demonstrated in this case.

(68) Some exporting producers have also argued that even if there was a price difference between raw material prices on the Chinese domestic market and other international markets, this difference could be explained by quality differences. It is clear however, that even if some quality differences existed, they could not explain the huge price gap found for steel of similar grades used by the Chinese exporting producers and the Community and Indian producers. Moreover, the difference between Chinese prices of steel wire rod and prices on other markets, as apparent from published sources, and referring to the same type of wire rod is very significant; according to data published by the [Steel Business Briefing], Chinese domestic prices of steel wire rod were in the range of 300-350 [euros]-tonne in the [investigation period] whereas prices in North America, Europe and Japan ranged between 400-500 [euros]-tonne for the same quality. Data obtained and verified during the investigation at the sampled exporting producers and Community producers is in line with the above published data. Therefore it is maintained that, even if there were any quality differences, these could not explain the huge price difference between raw material prices found on the Chinese domestic market and those charged on other international markets.'

14 On the other hand, recitals 80 to 83 of the contested regulation show that the Council considered that Ningbo Yonghong Fasteners met the conditions for individual treatment, listed in Article 9(5) of the basic regulation.

15 Recitals 91 and 92 of the contested regulation state that, pursuant to Article 2(7)(a) of the basic regulation, normal value for that company was established on the basis of verified information received from a producer established in India.

16 Article 1(1) and (2) of the contested regulation imposed a definitive anti-dumping duty of 78.3% on imports by Ningbo Yonghong Fasteners of certain iron or steel fasteners, other than of stainless steel.

Procedure before the General Court and the judgment under appeal

17 In support of its action for annulment of the contested regulation, Ningbo Yonghong Fasteners raised three pleas in law before the General Court, all of which concerned the rejection of its MET claim by the EU institutions.

18 By the first plea, Ningbo Yonghong Fasteners submitted that the contested regulation had rejected its MET claim after the three-month period laid down in the second subparagraph of Article 2(7)(c) of the basic regulation had expired - circumstances which, in its view, should have entailed the annulment of the contested regulation.

19 The second and third pleas alleged, respectively: (i) manifest error of assessment on the part of the Council and the Commission in the application of Article 2(7)(c) of the basic regulation and (ii) misinterpretation by those institutions of Article 2(7)(b) and (c) of that regulation.

20 By the judgment under appeal, the General Court rejected all the pleas in law raised by Ningbo Yonghong Fasteners, dismissed the action, and ordered that company to pay the costs.

Forms of order sought on appeal

21 Ningbo Yonghong Fasteners claims that the Court should:

- set aside the judgment under appeal;

- annul the contested regulation in so far as it concerns Ningbo Yonghong Fasteners; and

- order the Council to pay the costs incurred both at first instance and on appeal.

22 The Council, the Commission and EIFI contend that the Court should dismiss the appeal and order Ningbo Yonghong Fasteners to pay the costs. In the alternative, the Council contends that the application for annulment of the contested regulation should be dismissed.

The appeal

23 As a preliminary point, it should be emphasised that Ningbo Yonghong Fasteners limits its appeal, in so far as it contests only the General Court's final decision and the grounds for that decision which relate to the first plea raised at first instance, alleging that the MET decision was out of time.

24 Ningbo Yonghong Fasteners relies on three grounds of appeal: (i) the General Court rendered the three-month time-limit laid down in the second subparagraph of Article 2(7)(c) of the basic regulation meaningless by introducing a new criterion of interpretation, namely, the 'only plausible hypothesis' criterion; (ii) the General Court applied an incorrect test with regard to the consequences of a procedural irregularity, leading it to impose an unreasonable burden of proof on Ningbo Yonghong Fasteners; and (iii) in arriving at its findings, the General Court distorted the evidence and the facts before it.

First ground of appeal: infringement of the second subparagraph of Article 2(7)(c) of the basic regulation, in that the General Court introduced a new criterion of interpretation

Arguments of the parties

25 According to Ningbo Yonghong Fasteners, the General Court had based its approach on the view that, as the Commission was aware from the beginning of the investigation that the prices charged by Chinese suppliers for the major 'input' (component) of the product in question were significantly below the market price, the effect that the MET decision would have on the dumping margin was known even before Ningbo Yonghong Fasteners had submitted its replies to sections E and F of the anti-dumping questionnaire. Given the information available to the Commission at that time, the application of a lower dumping margin to Ningbo Yonghong Fasteners was, according to the General Court, 'the only plausible hypothesis' if that company were to be granted MET. In the light of that finding, the General Court held that the practical effect of the three-month time-limit had not been undermined in the circumstances of the case.

26 Ningbo Yonghong Fasteners observes first in that regard that lower production costs do not necessarily result in a lower normal value, since it is possible in such circumstances that sales prices on the domestic market may be very high. Secondly, it submits that having a lower dumping margin applied to it is an equally plausible hypothesis for any company claiming MET. Accordingly, the General Court erred in law in its interpretation of the second subparagraph of Article 2(7)(c) of the basic regulation since that court is not at liberty to interpret the provisions of a regulation in such a way as to render them redundant or useless.

27 Furthermore, Ningbo Yonghong Fasteners asserts that such an interpretation is contrary to two judgments in which the Court of Justice highlighted the importance of that three-month time-limit, namely, the judgments in Case C-249-10 P Brosmann Footwear (HK) and Others v Council [2012] ECR and Case C-247-10 P Zhejiang Aokang Shoes v Council [2012] ECR.

28 The Council, the Commission and EIFI dispute those arguments.

Findings of the Court

29 In paragraphs 51 to 54 of the judgment under appeal, the General Court held that, although the MET decision was indeed adopted after the expiry of the three-month period laid down in the second subparagraph of Article 2(7)(c) of the basic regulation, it could not be inferred either from the content of the relevant provisions or from the purpose and structure of the basic regulation that non-compliance with that procedural rule would automatically entail the annulment of the contested regulation.

30 In that regard, the General Court first of all pointed out, in paragraph 55 of the judgment under appeal, that the three-month time-limit had been imposed in order to ensure that the question whether the producer meets the criteria set out in Article 2(7)(c) of the basic regulation is not decided on the basis of its effect on the calculation of the dumping margin. The General Court then found, in paragraph 61 of the judgment under appeal, that the Commission had been aware from the beginning of the investigation that the Chinese prices for steel wire rod - the major 'input' of the product in question, representing approximately 50% of production costs - were significantly below prices on other international markets. Lastly, the General Court concluded, in paragraphs 62 to 65 of the judgment under appeal, that, in the particular circumstances of the case, the practical effect of the three-month time-limit could not be undermined by the Commission having exceeded that time-limit, given that the Commission was aware from the beginning of the investigation - and thus before the expiry of the three-month period - of information enabling it to conclude that the normal value and, consequently, the dumping margin for Ningbo Yonghong Fasteners would in all likelihood be lower if that company were to be granted MET.

31 Without it being necessary to give a ruling on the purposive interpretation given by the General Court in paragraph 55 of the judgment under appeal of the three-month time-limit laid down in the second subparagraph of Article 2(7)(c) of the basic regulation, it must be found that the line of argument put forward by Ningbo Yonghong Fasteners as its first ground of appeal cannot succeed.

32 It can be seen from the above considerations that it was on the basis of an appraisal of the facts before it that the General Court decided that, in the circumstances, the interests of Ningbo Yonghong Fasteners had not been damaged as a consequence of the three-month time-limit having achieved its intended practical effect. This means that, by the first ground of appeal, Ningbo Yonghong Fasteners is in part effectively challenging the findings of fact made by the General Court and set out in paragraphs 61 to 64 of the judgment under appeal, regarding the question whether the purpose of that time-limit had been undermined in the particular circumstances of the case. However, it is settled law that, under Article 256 TFEU and the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union, an appeal lies on a point of law only, to the exclusion of any appraisal of the facts. Accordingly, that appraisal does not, save where the facts are distorted, constitute a point of law which is subject, as such, to review by the Court of Justice (see Case C-416-04 P Sunrider v OHIM [2006] ECR I-4237, paragraph 49 and the case-law cited).

33 To that extent, the first ground of appeal must be rejected as inadmissible.

34 As to the remainder, it should be noted that the argument from Ningbo Yonghong Fasteners that the approach taken by the General Court would render the three-month time-limit redundant or useless is ineffectiveab initio: the determinant line of reasoning adopted by the General Court in that regard - as set out in paragraph 68, inter alia, of the judgment under appeal - is based on the finding that Ningbo Yonghong Fasteners' arguments had failed to prove that, if the Commission had not exceeded the three-month time-limit, the Council might have adopted a different regulation more favourable to that company's interests than the contested regulation.

35 Moreover, Brosmann Footwear (HK) and Others v Council and Zhejiang Aokang Shoes v Council, cited by Ningbo Yonghong Fasteners in support of its position, are irrelevant in the present case. The Court gave no indication in those judgments as to the consequences of failure to comply with the three-month time-limit laid down in the second subparagraph of Article 2(7)(c) of the basic regulation.

36 Accordingly, the first ground of appeal must be rejected as being in part inadmissible and in part unfounded.

Second ground of appeal: application of an incorrect test with regard to the legal consequences of non-compliance with a procedural time-limit

Arguments of the parties

37 According to Ningbo Yonghong Fasteners, the General Court applied an incorrect test in the judgment under appeal when examining the legal consequences of the failure to comply with the three-month procedural time-limit, leading it to impose an unreasonable burden of proof on Ningbo Yonghong Fasteners. In that regard, Ningbo Yonghong Fasteners maintains that the appropriate test does not consist in requiring proof that, but for that procedural irregularity, a different MET decision - and, accordingly, a more favourable dumping margin - would have been adopted, but in requiring a demonstration that such a possibility cannot be totally ruled out. If, therefore, in the judgment under appeal, the General Court had applied the correct test - as set out by the Court in, inter alia, Case C-141-08 P Foshan Shunde Yongjian Housewares & Hardware v Council[2009] ECR I-9147 - it would have found that the fact that the Commission had exceeded that procedural time-limit justified annulment of the contested regulation.

38 The Council and the Commission contend that those submissions are legally irrelevant and based on a distortion of the findings made by the General Court.

Findings of the Court

39 It should be noted from the outset that the second ground of appeal is based on an incorrect reading of the judgment under appeal.

40 The finding made by the General Court in paragraphs 68 and 70 of the judgment under appeal was not that Ningbo Yonghong Fasteners had to prove that, but for the procedural irregularity at issue, a different MET decision - and, accordingly, a more favourable dumping margin - would have been adopted; rather, that finding was, in essence, that it was for Ningbo Yonghong Fasteners to establish, in accordance with the line of authority on that point (see Foshan Shunde Yongjian Housewares & Hardware v Council, paragraph 94 and the case-law cited), that, if the Commission had complied with the three-month time-limit in question, the Council 'might have' adopted a different regulation more favourable to Ningbo Yonghong Fasteners' interests than the contested regulation.

41 In those circumstances, the second ground of appeal clearly lacks any basis in fact and must therefore be declared unfounded, without there being any need to give a ruling as whether the time-limit laid down in the second subparagraph of Article 2(7)(c) of the basic regulation constitutes a procedural guarantee intended to protect Ningbo Yonghong Fasteners' rights of defence.

42 In any event, the arguments submitted by Ningbo Yonghong Fasteners in connection with that ground of appeal are ineffective ab initio since that company has not adduced any reasons to show that, if the Commission had complied with the three-month time-limit in question, the MET decision or the contested regulation might have been more favourable to Ningbo Yonghong Fasteners' interests, and especially since it has not disputed before this Court the findings made in the judgment under appeal concerning the substance of the MET decision.

43 Accordingly, the second ground of appeal must be declared unfounded in that regard also.

Third ground of appeal: distortion of the evidence and the facts

Arguments of the parties

44 Ningbo Yonghong Fasteners submits that the General Court distorted the evidence when it found, in paragraph 61 of the judgment under appeal, that it was apparent from the documents before it that, from the beginning of the investigation, the Commission had general information at its disposal indicating that the prices charged by Chinese suppliers for steel wire rod were significantly below prices on other markets. According to Ningbo Yonghong Fasteners, the single newspaper article on which that finding was based was not enough to enable the General Court to reach a conclusion of that kind.

45 Moreover, by finding in paragraph 61 of the judgment under appeal that Ningbo Yonghong Fasteners had not disputed the Council's argument that the prices charged by Chinese suppliers for steel wire rod were significantly below prices on other markets, even though that company had indeed disputed that argument, as was clear from the evidence which it had produced in the context of its MET claim, the General Court distorted the evidence which Ningbo Yonghong Fasteners had provided in the course of the proceedings.

46 The Council contends that the arguments put forward by Ningbo Yonghong Fasteners in connection with its third ground of appeal are inadmissible, incorrect, or irrelevant.

Findings of the Court

47 As a preliminary point, it should be borne in mind that, according to settled case-law, the General Court has exclusive jurisdiction to assess the evidence. Save where the clear sense of the evidence has been distorted, that appraisal does not therefore constitute a point of law which is subject as such to review by the Court of Justice. Furthermore, a distortion must be obvious from the documents before the Court, without there being any need to carry out a new assessment of the facts and the evidence (see, inter alia, Case C-551-03 P General Motors v Commission [2006] ECR I-3173, paragraph 54; Case C-535-06 P Moser Baer India v Council [2009] ECR I-7051, paragraph 33; and Case C-552-10 P Usha Martin v Council and Commission [2012] ECR, paragraph 27).

48 In the present case, it must first of all be stated that the arguments raised in support of the third ground of appeal are based on a false premiss since the newspaper article in question was not the only source of general information available to the Commission prior to the expiry of the three-month period indicating that Chinese prices of steel wire rod were significantly below prices on other international markets. It can be seen from paragraphs 81 and 82, in particular, of the judgment under appeal that the General Court based the finding of fact set out in paragraph 61 of that judgment on various items of evidence, including the fact that the institutions also had access, for that purpose, to - inter alia - the published data taken from the Steel Business Briefing publication, which confirmed that conclusion.

49 Next, it should be noted that Ningbo Yonghong Fasteners' criticisms of that newspaper article's evidential value are inadmissible at the appeal stage. Those criticisms are intended to challenge the appraisal of the facts carried out by the General Court on the basis of the evidence placed before it, which is not subject to review by the Court of Justice on appeal.

50 Lastly, as regards the complaint that the General Court was wrong to find, in paragraph 61 of the judgment under appeal, that Ningbo Yonghong Fasteners had not disputed the Council's argument that it was clear from the evidence that the company had supplied in its MET claim form that the prices it was paying for Chinese steel wire rod were significantly below prices on other international markets, it is sufficient to note that the General Court made that finding merely for the sake of completeness: the decisive finding in that regard was based on the fact that the MET claim form submitted by Ningbo Yonghong Fasteners showed that the average price paid in China by that company for steel wire rod was lower than the price on other international markets.

51 As it is, complaints directed against the grounds of a judgment of the General Court included merely for the sake of completeness must be rejected outright since such grounds cannot provide any basis for setting that judgment aside (see Case C-13-12 P CHEMK and KF v Council [2013] ECR, paragraph 82 and the case-law cited). Consequently, that complaint must be declared ineffective ab initio.

52 Thus, contrary to the assertions made by Ningbo Yonghong Fasteners in relation to its third ground of appeal, it is impossible to discern in the reasoning of the General Court any distortion of the facts or the evidence.

53 Since none of the three grounds of appeal can be upheld, the appeal must be dismissed in its entirety.

Costs

54 Under Article 138(1) of the Rules of Procedure of the Court of Justice, applicable to appeal proceedings pursuant to Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. As Ningbo Yonghong Fasteners has been unsuccessful and the Council has applied for costs, Ningbo Yonghong Fasteners must be ordered to pay the costs incurred by that institution in the present appeal.

55 Under Article 140(1) of the Rules of Procedure, also applicable to appeal proceedings under Article 184(1) thereof, the Commission is to bear its own costs. Pursuant to Article 140(3) of those Rules, it is appropriate to order EIFI to bear its own costs.

On those grounds, the Court (Seventh Chamber) hereby:

1. Dismisses the appeal;

2. Orders Ningbo Yonghong Fasteners Co. Ltd to pay the costs incurred by the Council of the European Union in the present proceedings;

3. Orders the European Commission and the European Industrial Fasteners Institute AISBL (EIFI) each to bear its own costs.