Opinion of Mr Advocate General La Pergola delivered on 11 November 1999. - European Fertilizer Manufacturers Association (EFMA) v Council of the European Union and Commission of the European Communities. - Appeal - Anti-dumping - Ineffective pleas - Right to a fair hearing. - Case C-46/98 P.
European Court reports 2000 Page I-07079
1. The Court is being asked in the present case to rule on the appeal brought by European Fertilizer Manufacturers Association (hereinafter EFMA) against the judgment delivered by the Court of First Instance on 17 December 1997 in the case of EFMA v Council. That judgment dismissed the action brought by EFMA seeking annulment of Article 1 of Council Regulation (EC) No 477/95 of 16 January 1995 amending the definitive anti-dumping measures applying to imports into the Community of urea originating in the former USSR and terminating the anti-dumping measures applying to imports into the Community of urea originating in the former Czechoslovakia (hereinafter the contested regulation).
Factual and legal context of the action for annulment brought by the present appellant before the Court of First Instance
2. The facts underlying the action are as set out in the judgment under appeal. EFMA is a trade association of fertiliser producers. In July 1986 CMC-Engrais, which is a member of EFMA, requested the Commission to institute anti-dumping proceedings in respect of imports into the Community of urea originating in non-member countries pursuant to Council Regulation (EEC) No 2176/84 of 23 July 1984 on protection against dumped or subsidised imports from countries not members of the European Economic Community.
The proceedings instituted by the Commission resulted in the adoption of Council Regulation (EEC) No 3339/87 of 4 November 1987 imposing a definitive anti-dumping duty on imports of urea originating in Libya and Saudi Arabia and accepting undertakings given in connection with imports of urea originating in Czechoslovakia, the German Democratic Republic, Kuwait, the USSR, Trinidad and Tobago and Yugoslavia and terminating these investigations. The undertakings accepted by that regulation were confirmed by Commission Decision 89/143/EEC of 21 February 1989.
3. Following a request made by EFMA on 29 October 1992, the Commission opened a fresh investigation, taking the view that there was evidence of changed circumstances such as to justify initiating a review of the undertakings given.
On 10 May 1994 the Commission sent to all parties concerned a disclosure letter setting out its conclusions from the investigation together with the considerations on the basis of which it intended to recommend the introduction of definitive measures. In that letter the Commission explained in particular why it had chosen Slovakia rather than Australia or Canada as the reference country, its calculation of the normal value (in Slovakia), its comparison between normal value and export prices, and finally its estimate of injury. The Commission also explained why it found it appropriate to set a profit margin of 5% for Community producers and to make an adjustment of 10% of the price of urea of Russian origin in calculating the level of the duty. The latter adjustment was justified on the grounds that Russian urea tended to deteriorate during transport and that it could not be supplied on a regular basis to the market. This resulted in the reduction in its price.
There then followed an exchange of correspondence and a number of meetings between EFMA representatives and the Commission at which the 10% adjustment and the setting of the 5% profit margin were discussed.
4. On 16 January 1995 the Council adopted the contested regulation, which amended the definitive anti-dumping measures applying to imports into the Community of urea originating in the former USSR and terminated the anti-dumping measures applying to imports into the Community of urea originating in the former Czechoslovakia.
The injury elimination threshold was lower than the dumping margin established for Russia. Consequently, in accordance with Article 13(3) of Regulation (EEC) No 2423/88 (hereinafter the basic regulation), the definitive anti-dumping duty was set at the level of the injury elimination threshold.
Article 1 of the contested regulation provides as follows:
1. A definitive anti-dumping duty is hereby imposed on imports of urea falling within CN codes 3102 10 10 and 3102 10 90 originating in the Russian Federation.
2. The amount of the duty shall be the difference between ECU 115 per tonne and the net, free-at-Community-frontier price, before customs clearance, if this price is lower.
3. Unless otherwise specified, the provisions in force concerning customs duties shall apply.
The judgment of the Court of First Instance
5. On 17 April 1995 EFMA brought an action before the Court of First Instance in which it sought annulment of Article 1 of the contested regulation. EFMA requested the Court of First Instance to order that the anti-dumping duty imposed by that regulation be maintained until the competent institutions adopt the more stringent measures needed to comply with the judgment requested.
EFMA put forward three pleas in law in support of its action. First, it challenged the choice of Slovakia as reference country; that choice, it argued, infringed the basic regulation. Second, it alleged a further infringement of that regulation inasmuch as the normal value and the export prices had been compared at two different stages. In the alternative, it submitted that the comparison was also vitiated by a manifest error of assessment and that the contested regulation was inadequately reasoned. Finally, the third plea in law related to the determination of injury. In this regard, EFMA put forward two arguments: first, that the Council had made a manifest error of assessment and had failed to respect the right to a fair hearing by making an adjustment to the price of urea produced in Russia in order to compensate for alleged differences in the quality of that product; second, those infringements were then alleged in regard to the determination of the profit margin for Community producers, which EFMA considered to be too low.
6. By judgment of 17 December 1997, which is the subject of the present appeal, the Court of First Instance dismissed the application. The judgment first examined the third plea, relating to the determination of injury. The Court found in this regard that the institutions had not exceeded their margin of discretion in setting an adjustment equal to 10% by reason of differences in quality between Russian urea and urea produced in the Community. Concerning the allegation that EFMA's right to a fair hearing had been infringed during the administrative proceedings, the Court of First Instance held that EFMA had been informed, during those proceedings, of the principal facts and considerations on which the institutions based their conclusions. Consequently, no infringement of the right to a fair hearing was recognised. Still in regard to the third plea in law, the Court of First Instance went on to reject EFMA's argument that the 5% profit margin for Community producers was inadequate for assessment of loss of profit. The Court held in this regard that EFMA had not adduced any evidence to show that [in establishing that profit margin] the Commission made a manifest error of assessment. The Court of First Instance did not take into account the Z/Yen report submitted by EFMA in support of its contentions, on the ground that this report had been presented only in the judicial proceedings and after the contested regulation had been adopted. The Court also rejected the argument that EFMA's right to a fair hearing had been infringed inasmuch as it had been in a position to make known its views on the appropriateness of the 5% figure and to show why a pre-tax profit of 10% was necessary. However, the judgment continued, EFMA did no more than assert in general terms that a profit of the order of 10% would be more appropriate, and did not even seek further details regarding any particular method for calculating the profit margin.
7. Having rejected the third plea in law, the Court of First Instance did not dwell at length on the other two pleas put forward by EFMA. It declared them to be ineffective on the ground that, even if it were accepted that they were well founded, they would still not have resulted in the annulment of the contested regulation and in the setting of a higher duty than that established by the institutions in this case.
8. EFMA appealed against that judgment, setting out, in substance, six grounds of appeal.
The first ground
9. In its first ground, the appellant submits that the judgment is inadequately reasoned: the Court of First Instance, it argues, failed to explain why it did not examine the first two pleas in law put forward in the proceedings at first instance, ruling that they were ineffective.
That criticism is manifestly unfounded. As the judgment states, Article 13(3) of the basic regulation provides that, where the injury elimination threshold is lower than the dumping margin, the definitive anti-dumping duty cannot be established at a level higher than that threshold. Consequently, once it was established that the institutions had correctly determined the injury, there could in any event be no question - specifically by virtue of the rule in Article 13(3) - of the duty being set at a level higher than that threshold, as EFMA had sought. This reasoning is comprehensively set out in paragraphs 115 to 122 of the judgment, and I am, quite frankly, unable to see how a failure to state reasons can be pleaded in this regard.
The second ground
10. In its second ground, the appellant argues that the Court of First Instance was wrong to hold that it did not have an interest in obtaining a decision on the first two pleas put forward in its application. This, it submits, amounts to a violation of Article 173 of the EC Treaty (now, after amendment, Article 230 EC).
This criticism is also manifestly unfounded. The case-law cited by EFMA in support of its contention raises a problem which is entirely irrelevant in the present context, namely that relating to the interest which an applicant has in obtaining the annulment of a measure. In the present case, the Court of First Instance did not in any way deny the appellant's right of action, nor did it rule on the appellant's interest in having the regulation annulled. The judgment confined itself, quite simply, to applying Article 13(3) of the basic regulation: once it had been established that the anti-dumping duty had to be set at the injury elimination threshold and that the institutions had proceeded correctly in setting it, the possibility of securing a higher anti-dumping duty, as the appellant had sought, was precluded by the aforementioned substantive rule in the basic regulation. Consequently, once the third plea in law - concerning determination of injury - had been rejected, EFMA's argument that a higher anti-dumping duty ought to have been imposed was precluded by the provisions of the basic regulation. That is why it was unnecessary to examine the first and second pleas in law: in no case could a duty higher than the injury elimination threshold have been imposed. It is for that reason that the Court of First Instance was correct in holding that the first and second pleas in law were ineffective. This represents a consistent application of the principle of procedural economy, examples of which abound in the Court's case-law: a plea in law may justifiably be declared ineffective in the case where, even if it were held to be well founded, it would not result in the application being upheld. In that case, the Court of First Instance or the Court of Justice is not required to examine such a plea, which would in any event have no bearing on the operative part of the judgment.
The third ground
11. In its third ground of appeal, EFMA claims that there was substantive inaccuracy and distortion of evidence by the Court of First Instance. It points out in this regard that, in appeal proceedings, the Court of Justice has jurisdiction to rule only on points of law, not on issues of fact. EFMA adds, however, that the Court has made an exception to this in cases where it is obvious that the Court of First Instance has distorted the evidence put before it. The judgment under appeal, it argues, erred precisely in that regard when it stated, in paragraph 77, that the Community producers had agreed, during the administrative proceedings, that an adjustment of the order of 5% might be acceptable in respect of the difference in quality between Russian urea and urea produced in the Community. In fact, it submits, the Community producers had never given any such agreement.
This ground of appeal lacks all foundation. First, distortion of the evidence, which is challengeable before the Court of Justice, remains a very exceptional possibility, given that the Court would, in such a case, be required to review the ruling of the Court of First Instance on the facts of the case, the only special feature being that the error was obvious and easily ascertainable. Indeed, it is not fortuitous that the Court, while acknowledging such a possibility, has none the less never applied it in a specific case. That said, it is easy to establish that there is in the judgment under appeal no error such as that claimed by the appellant. In fact, the Court of First Instance never stated that the Community producers had accepted an adjustment in the order of 5%. The passage in the judgment which the appellant cites confines itself simply to recording an assertion made by the Council to that effect. That assertion, therefore, is included in the judgment as a statement by a party, not as an assessment by the Court of First Instance itself. So far as the substantive accuracy of this assertion by the Council is concerned, that is clearly a question of fact, assessment of which falls outside the jurisdiction of the Court of Justice.
The fourth ground
12. EFMA concludes that the Court of First Instance distorted the evidence before it in finding that the applicant's arguments are immaterial in so far as they concern the physical and chemical composition of the urea when it leaves the Russian factory. The Court of First Instance, it argues, thus ignored the analyses carried out by the Community producers.
This ground is inadmissible. The appellant is not challenging any alleged error of law in the judgment, but is merely disputing the findings made by the Court of First Instance on an issue of fact. That is not a matter which the Court of Justice can overrule on appeal.
The fifth ground
13. The appellant argues that certain information of fundamental relevance to the price adjustment was not communicated to it during the administrative proceedings, while other information was disclosed to it only during the proceedings before the Court of First Instance. That Court, consequently, erred in finding that the appellant's right to a fair hearing had not been infringed.
This argument likewise cannot be upheld. The judgment states that the applicant was informed during the anti-dumping proceedings of the principal facts and considerations on which the institutions based their conclusions. The only additional factor provided in this respect by the Council ... is merely confirmatory and did not form part of the statement of reasons in the contested regulation, [and] its non-disclosure cannot have deprived the applicant of its right to a fair hearing. Basing myself on this premiss - which the Court of Justice cannot review - I fail to see how the argument can be sustained that the Court of First Instance erred in law in ruling that the applicant's right to a fair hearing was not infringed. In this, the judgment correctly applied the principle that it is settled case-law that the right to a fair hearing is respected if the undertaking concerned has been afforded the opportunity during the administrative procedure to make known its views on the correctness and relevance of the facts and circumstances alleged.
The sixth ground
14. The appellant argues that the Court of First Instance erred in declaring that it could not take account of the Z/Yen report, produced by the appellant during the proceedings at first instance for the purpose of establishing that the contested regulation was vitiated by a manifest error of assessment in its determination of the profit margin of Community producers. The Court of First Instance held that no account ought to be taken of that report because it had not been cited by EFMA during the administrative proceedings but was submitted after the regulation had been adopted. This assessment, in the appellant's view, amounts to a violation of Article 173 (now, after amendment, Article 230 EC) and in particular of the right to judicial protection: the right of one party to adduce arguments in support of its views cannot be restricted simply because those arguments were not submitted during the administrative proceedings. In support of this contention, EFMA cites two judgments involving State aid, in which this possibility was acknowledged.
15. This ground also cannot be upheld. The relevant passage in the judgment is paragraph 108, which states that the Court must ascertain whether the institutions based their decisions on correct material facts and whether the assessment of those facts was not manifestly erroneous, in the situation as it appeared at the time of adoption of the contested measure. In the present case, it has been shown that the applicant did not during the administrative procedure produce any evidence in support of its assertion that a higher profit margin was required. The institutions were therefore unable to take that factor into account when they adopted the contested regulation. For that reason the Court considers that the Z/Yen report should not be taken into account in the present proceedings. Essentially, the judgment is based on the premiss - which in my opinion is correct - that, in this case, the Court of First Instance did not have jurisdiction to review the substance of the contested measure by taking into account for that purpose any information which it considered to be useful. Rather, the Court of First Instance had to confine itself to ascertaining whether, in adopting the measure, the institutions had committed a manifest error in their assessment of the material in their possession at the time when the measure was adopted. The Z/Yen report could not therefore be taken into account for the simple reason that it was submitted after the contested regulation had been adopted.
Nor do I consider that the case-law on State aid cited by the appellant can be relevant to the present case. In the matter here at issue - that of dumping - the requirement that the institutions base themselves exclusively on the facts which emerged during the administrative proceedings is imposed by the basic regulation itself. Suffice it in this regard to cite Article 12(1), which provides that Where the facts as finally established show that there is dumping or subsidisation during the period under investigation and injury caused thereby ... a definitive anti-dumping or countervailing duty shall be imposed by the Council. According to that provision, therefore, the Council, in introducing a duty, may base itself only on the situation resulting from the facts as finally established. Consequently, in its judicial review of the measure adopted by the Council, the Court of First Instance, called on to determine whether there has been a manifest error of assessment, can refer only to the results obtained during the investigation and available at the time when the measure was adopted.
16. Further, I would add that the investigation procedure in dumping cases, as governed by Article 7 of the basic regulation, is characterised by the fact that it recognises interested parties as being entitled to take cognisance of and present observations on all information relevant to the protection of their interests and used by the Commission during the investigation, with the single exception of the information excluded under Article 8. This fundamental right would clearly be jeopardised if it were held to be possible, as the present appellant argues, to call in question the results of the investigation by relying on material which had not been submitted during the administrative proceedings and to which the other interested parties had not had access.
I accordingly conclude that the Court of First Instance did not err in law in refusing to take account of the Z/Yen report, which the appellant submitted during the judicial proceedings but not during the administrative proceedings. Indeed, the judgment correctly interpreted the principles imposed by the basic regulation, under which the possibility that the institutions committed a manifest error in their appraisal of the facts must be assessed by reference to the information available when the measure was adopted, as resulting from the anti-dumping investigation.
17. In the light of the foregoing considerations, I propose that the Court should:
- dismiss the appeal;
- order the appellant to pay the costs incurred by the Council.