61988J0049

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Community law - Principles - Right to a fair hearing - Observance of that right in administrative proceedings - Anti-dumping - Obligation on the institutions to ensure that undertakings concerned are given information with due diligence - Scope - Details concerning communication - Information to be communicated - Method of calculating the definitive anti-dumping duty - Not included

(Council Regulation No 2176/84, Art. 7(4)(a), (b) and (c)(ii) )

The right to a fair hearing, as a principle of fundamental character, must be observed not only in administrative proceedings which may result in the imposition of penalties, but also in investigative proceedings such as those prior to the adoption of anti-dumping regulations which, despite their general scope, may directly and individually affect the undertakings concerned and entail adverse consequences for them.

So far as the defence against dumping practices is concerned, any action taken by the Community institutions must be all the more scrupulous in view of the fact that, as they stand at present, the rules in question do not provide all the procedural guarantees for the protection of the individual which may exist in certain national legal systems.

In performing their duty to provide information under Article 7(4)(b) of Regulation No 2176/84, the Community institutions must act with all due diligence by seeking to provide the undertakings concerned, as far as is compatible with the obligation not to disclose business secrets, with information relevant to the defence of their interests, choosing, if necessary on their own initiative, the appropriate means of providing such information. In any event, the undertakings concerned should have been placed in a position during the administrative procedure in which they could effectively make known their views on the correctness and relevance of the facts and circumstances alleged and on the evidence presented by the Commission in support of its allegation concerning the existence of dumping and the resultant injury.

Although the information requested may, under Article 7(4)(c)(ii) of

Regulation No 2176/84, be supplied in a purely oral manner, that possibility cannot release the Community authorities from their obligation to ensure that they have evidence enabling them, if necessary, to prove that such information was actually communicated.

While it is true that the amount of the definitive duty constitutes essential information, such is not the case with regard to the type of duty adopted and its method of calculation, if only because the choice between the various types of anti-dumping duties has in principle no effect on the final amount of that duty. The absence of such information cannot therefore be treated as infringing the right to a fair hearing.

In Case C-49/88,

Al-Jubail Fertilizer Company (SAMAD), Al-Jubail, PO Box 10046, Kingdom of Saudi Arabia,

and

Saudi Arabian Fertilizer Company (SAFCO), PO Box 533, Damman 31421, Kingdom of Saudi Arabia,

represented by Ivo Van Bael and Jean-François Bellis, both of the Brussels Bar, with an address for service in Luxembourg at the Chambers of A.F. Brausch, 8 Rue Zithe,

applicants,

v

Council of the European Communities, represented by Hans-Juergen Lambers, Director in its Legal Department, and Erik H. Stein, Legal Adviser, acting as Agents, assisted by Michael Schuette, Rechtsanwalt, Hamburg, with an address for service in Luxembourg at the office of Joerg Kaeser, Manager of the Legal Directorate of the European Investment Bank, 100 Boulevard Konrad Adenauer,

defendant,

supported by

Commission of the European Communities, represented by John Temple Lang, Legal Adviser, acting as Agent, with an address for service in Luxembourg at the office of Guido Berardis, a member of the Commission' s Legal Service, Wagner Centre, Kirchberg,

intervener,

APPLICATION for a declaration that Article 1 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 (Official Journal 1987 L 317, p.1) is void in so far as it applies to the applicants,

THE COURT (Sixth Chamber),

composed of: G.F. Mancini, President of the Chamber, T.F. O' Higgins, M. Díez de Velasco, C.N. Kakouris and F. Schockweiler, Judges,

Advocate General: M. Darmon,

Registrar: V. Di Bucci, Administrator,

having regard to the Report for the Hearing,

after hearing the oral argument presented by the parties at the hearing on 12 December 1990, at which the Council was represented by Dr Hans-Juergen Rabe, Rechtsanwalt, Hamburg, and the Commission by Eric White, Legal Adviser, acting as Agent,

after hearing the Opinion of the Advocate General at the sitting on 7 February 1991,

gives the following

Judgment

1 By an application lodged at the Court Registry on 16 February 1988, the Al-Jubail Fertilizer Company (hereinafter referred to as "SAMAD") and the Saudi Arabian Fertilizer Company (hereinafter referred to as "SAFCO"), companies incorporated under Saudi law and having their registered offices in Al-Jubail and Damman respectively, brought an action under the second paragraph of Article 173 of the EEC Treaty for a declaration that Article 1 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 (Official Journal 1987 L 317, p. 1) was void in so far as it applied to the applicants.

2 The applicant companies manufacture urea in Saudi Arabia. In addition to its own production activities, SAFCO acts as agent for SAMAD with regard to the sale of the latter company' s products in Saudi Arabia and a number of other countries, including those of the EEC. The two companies are "joint ventures" with a common shareholder in the Saudi Basic Industries Corporation (hereinafter referred to as "SABIC"), a company established by the Saudi Government in 1976 for the purpose of setting up basic industries to utilize and upgrade the natural resources of the Kingdom.

3 Following a complaint made to it by the CMC-Engrais (Common Market Committee of the Nitrogen and Phosphate Fertilizer Industry) on behalf of producers accounting substantially for all Community production of urea, the Commission initiated an anti-dumping proceeding on 11 October 1986 concerning imports into the Community of urea originating in Czechoslovakia, the German Democratic Republic, Kuwait, Libya, Saudi Arabia, the USSR, Trinidad and Tobago, and Yugoslavia (Official Journal 1986 C 254, p. 3).

4 This anti-dumping proceeding, which the Commission initiated on the basis of Council Regulation (EEC) No 2176/84 of 23 July 1984 on protection against dumped or subsidized imports from countries not members of the European Economic Community (Official Journal 1984 L 201, p. 1, hereinafter referred to as "the basic regulation") led first of all to the imposition, by Commission Regulation (EEC) No 1289/87 of 8 May 1987 (Official Journal 1987 L 121, p. 11), of a provisional anti-dumping duty on imports of urea originating in particular in Saudi Arabia, equal to the amount by which the price per tonne net, free-at-Community-frontier, before duty, was less than 133 ECU. By the contested regulation the Council subsequently fixed the definitive anti-dumping duty at 40% ad valorem.

5 By order of 8 June 1988 the Court granted to the Commission leave to intervene in the present case in support of the conclusions of the Council.

6 Reference is made to the Report for the Hearing for a fuller account of the legal framework and the facts of the case, the course of the procedure and the submissions and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

7 In support of their application, the applicants rely on four submissions based respectively on an inadequate statement of reasons, manifest errors of appraisal, errors of law resulting in distortion of the facts and denial of the applicants' right to a fair hearing. This final submission may be dealt with first.

8 In support of this submission, the applicants claim that they were not informed in advance of the reasons why the Council formed the view that their request for an allowance to take account of differences in levels of trade and in quantities sold in Saudi Arabia and the Community could not be accepted. They also claim that they were not warned in advance of the change in the type of anti-dumping duty imposed, that they received no answer to the questions which they had raised regarding the determination of the injury threshold and that the allowance granted by the Commission in respect of warehousing was insufficient.

9 With regard to the complaint concerning the rejection of their request that an allowance be made for differences in levels of trade, the applicants claim that the Commission officials took the view during the entire procedure that such an allowance ought to be refused for various reasons, without, however, casting doubt at any point on the existence of differences in the levels of trade, whereas, according to the contested regulation, the allowance was rejected on the ground that in both Saudi Arabia and Europe most sales of urea were made to end-users, with the result that there was no difference in levels of trade.

10 Turning to the rejection of their request for an allowance to take account of differences in quantities sold in Saudi Arabia and Europe, the applicants contend that, whereas Commission officials indicated on several occasions that there was no need for any additional allowance because account had been taken of differences in quantities at the time quantity discounts had been granted, the Council, in adopting the contested regulation, found that there was inadequate evidence to justify such an allowance.

11 The applicants also contend that the Commission had adopted a floor price of ECU 133 in the regulation imposing the provisional duty, whereas the Council, in the regulation imposing the definitive duty, had adopted an ad valorem duty imposing a much heavier charge, without informing the parties concerned in advance or giving them the opportunity to submit observations, in contravention of the duty to provide information laid down in Article 7(4)(a) of the basic regulation.

12 The applicants also criticize the Commission for its failure to reply to the questions which they had raised concerning the determination of the injury threshold and in particular regarding the choice of the representative Community producer and the level of its production costs, on the ground that such information was confidential.

13 Finally, the applicants claim that the Commission officials, in granting an allowance for warehousing, used a figure which was lower than that which the applicants had supplied and that, despite explicit requests, no explanation was ever given in this regard.

14 It should be recalled at the outset that under Article 7(4)(a) and (b) of the basic regulation

"(a) The complainant and the importers and exporters known to be concerned ... may inspect all information made available to the Commission ..., provided that it is relevant to the defence of their interests and not confidential within the meaning of Article 8 and that it is used by the Commission in the investigation ...

(b) Exporters and importers of the product subject to investigation ... may request to be informed of the essential facts and considerations on the basis of which it is intended to recommend the imposition of definitive duties ...".

15 Secondly, according to the well-established case-law of the Court (see most recently the judgment of 18 June 1991 in Case C-260/89 ERT [1991] ECR I-2925), fundamental rights form an integral part of the general principles of law, whose observance is ensured by the Court. Consequently, it is necessary when interpreting Article 7(4) of the basic regulation to take account in particular of the requirements stemming from the right to a fair hearing, a principle whose fundamental character has been stressed on numerous occasions in the case-law of the Court (see in particular the judgment of 17 October 1989 in Case 85/87 Dow Benelux v Commission [1989] ECR 3137). Those requirements must be observed not only in the course of proceedings which may result in the imposition of penalties, but also in investigative proceedings prior to the adoption of anti-dumping regulations which, despite their general scope, may directly and individually affect the undertakings concerned and entail adverse consequences for them.

16 It should be added that, with regard to the right to a fair hearing, any action taken by the Community institutions must be all the more scrupulous in view of the fact that, as they stand at present, the rules in question do not provide all the procedural guarantees for the protection of the individual which may exist in certain national legal systems.

17 Consequently, in performing their duty to provide information, the Community institutions must act with all due diligence by seeking, as the Court stated in its judgment of 20 March 1985 in Case 264/82 Timex v Council and Commission [1985] ECR 849, to provide the undertakings concerned, as far as is compatible with the obligation not to disclose business secrets, with information relevant to the defence of their interests, choosing, if necessary on their own initiative, the appropriate means of providing such information. In any event, the undertakings concerned should have been placed in a position during the administrative procedure in which they could effectively make known their views on the correctness and relevance of the facts and circumstances alleged and on the evidence presented by the Commission in support of its allegation concerning the existence of dumping and the resultant injury.

18 There is nothing in the documents before the Court to show that the Community institutions discharged their duty to place at the applicants' disposal all the information which would have enabled them effectively to defend their interests.

19 With regard to the allowances requested in order to take account of the differences in quantities and levels of trade, the defendant, in support of its contentions, relies solely on an internal mission report drawn up by Commission officials following checks carried out in Saudi Arabia, and on the minutes of two meetings held in Brussels on 22 May and 5 October 1987 with the representatives of the parties in question. Given that the documents before the Court show that the information contained in such internal documents was not brought by other means to the attention of the applicants, there is all the less reason for such documents to be accorded probative value.

20 Although the information requested may, under Article 7(4)(c)(ii) of the basic regulation, be supplied in a purely oral manner, that possibility cannot release the Community authorities from their obligation to ensure that they have evidence enabling them, if necessary, to prove that such information was actually communicated. Since the Council has failed to adduce any evidence in support of its contentions, it must be concluded that the applicants' first two arguments are well founded.

21 The same holds true with regard to the arguments based on the irregularities committed by the Commission in determining the injury threshold and calculating the allowance for warehousing.

22 The defendant constantly referred in this regard to a letter of 8 September 1988 which the applicants claim never to have received. For the reasons already outlined, that letter, which was not sent by registered post and the reception of which by the addressee could consequently not be established with absolute certainty, cannot be regarded as a diligent method of discharging the obligation to provide information laid down in the basic regulation. For that reason, these two complaints must also be upheld.

23 With regard finally to the failure to provide information relating to the change in the method of calculating the definitive duty, it is necessary first of all to point out that, while it is true that the amount of the definitive duty constitutes essential information, such is not the case with regard to the type of duty ultimately adopted by the Council and the method of calculating that duty.

24 In view of the fact that the choice between the various types of anti-dumping duties has in principle no effect on the final amount of that duty and that the ad valorem duty is by far the most common type of duty in cases of dumping, the information concerning the method of calculating the anti-dumping duty cannot be regarded as essential, nor consequently can the absence of such information be treated as infringing the right to a fair hearing. That argument must therefore be rejected.

25 It follows from the foregoing, however, that the submission based on the infringement of the right to a fair hearing must be accepted. As a result, Article 1 of Regulation No 3339/87 must be declared void in so far as it imposes an anti-dumping duty on the applicants, without its being necessary to examine the applicants' remaining submissions on which they have relied.

Costs

26 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the Council has failed in the essential part of its submissions, it must be ordered to pay the costs. The intervener shall bear its own costs.

On those grounds,

THE COURT (Sixth Chamber)

hereby:

1. Declares Article 1 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 void in so far as it imposes an anti-dumping duty on the applicants;

2. Orders the defendant to pay the costs.