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URL: http://www.bailii.org/eu/cases/EUECJ/1983/C26382.html
Cite as: [1983] EUECJ C-263/82

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61982J0263
Judgment of the Court (Fourth Chamber) of 14 December 1983.
Klöckner-Werke AG v Commission of the European Communities.
Steel market - Production quotas.
Case 263/82.
European Court reports 1983 Page 04143
Spanish special edition 1983 Page 01103

ECSC - PRODUCTION - SYSTEM OF PRODUCTION QUOTAS - BASIS AND PURPOSE - QUOTA EXCEEDED BY AN UNDERTAKING - NECESSITY - NECESSITY BASED ON THE SERIOUS FINANCIAL DIFFICULTIES OF THE UNDERTAKING - INAPPLICABILITY OF THE PRINCIPLE
( ECSC TREATY , ART . 58 )

IT IS IMPOSSIBLE TO ENTERTAIN THE CONCEPT OF NECESSITY IN RELATION TO THE QUOTA SYSTEM PROVIDED FOR BY ARTICLE 58 OF THE ECSC TREATY , WHICH IS BASED ON SOLIDARITY BETWEEN ALL COMMUNITY STEEL UNDERTAKINGS IN THE FACE OF A MANIFEST CRISIS AND SEEKS AN EQUITABLE DISTRIBUTION OF THE SACRIFICES ARISING FROM UNAVOIDABLE ECONOMIC CIRCUMSTANCES . NO NECESSITY CONSISTING IN THE CONTINUED EXISTENCE AND PROFITABILITY OF A PARTICULAR UNDERTAKING CAN BE INVOKED AGAINST THE APPLICATION OF THE SYSTEM , WHICH WOULD BE DESTROYED IF EVERY UNDERTAKING COULD , BY INVOKING NECESSITY BECAUSE OF SERIOUS FINANCIAL DIFFICULTIES , EXEMPT ITSELF FROM THE RESTRICTIONS AND EXCEED AT WILL THE PRODUCTION QUOTAS ALLOCATED TO IT . A CHAIN REACTION WOULD SET IN WHICH WOULD LEAD TO THE COLLAPSE OF THE SYSTEM AND THUS COMPROMISE THE PURPOSE OF ARTICLE 58 OF THE ECSC TREATY .

IN CASE 263/82
KLOCKNER-WERKE AG , A STEEL UNDERTAKING HAVING ITS REGISTERED OFFICE IN DUISBURG , REPRESENTED BY PROFESSOR BODO BORNER OF THE UNIVERSITY OF COLOGNE , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF ERNEST ARENDT , 34 B RUE PHILIPPE-II ,
APPLICANT ,
V
COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ITS LEGAL ADVISER , NORBERT KOCH , ACTING AS AGENT , ASSISTED BY PROFESSOR EBERHARD GRABITZ OF THE FREE UNIVERSITY OF BERLIN , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ORESTE MONTALTO , A MEMBER OF THE COMMISSION ' S LEGAL DEPARTMENT , JEAN MONNET BUILDING , KIRCHBERG ,
DEFENDANT ,

APPLICATION FOR A DECLARATION THAT THE COMMISSION ' S INDIVIDUAL DECISION OF 13 AUGUST 1982 IMPOSING A FINE ON THE APPLICANT FOR EXCEEDING ITS PRODUCTION QUOTA FOR ROLLED PRODUCTS OF GROUP I FOR THE SECOND QUARTER OF 1981 IS VOID ,

1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 24 SEPTEMBER 1982 KLOCKNER-WERKE AG , A STEEL UNDERTAKING OF DUISBURG , BROUGHT AN ACTION UNDER ARTICLE 36 OF THE ECSC TREATY IN WHICH IT SOUGHT TO HAVE DECLARED VOID THE COMMISSION ' S INDIVIDUAL DECISION OF 13 AUGUST 1982 IMPOSING A FINE ON IT , PURSUANT TO ARTICLE 58 ( 4 ) OF THE ECSC TREATY AND ARTICLE 9 OF DECISION NO 2794/80 OF 31 OCTOBER 1980 ( OFFICIAL JOURNAL 1980 , L 291 , P . 1 ), FOR EXCEEDING ITS PRODUCTION QUOTAS .

2 BY AN INDIVIDUAL DECISION OF 6 APRIL 1981 , ADOPTED PURSUANT TO ARTICLE 58 OF THE TREATY AND DECISION NO 2794/80 , THE COMMISSION HAD NOTIFIED KLOCKNER OF ITS REFERENCE PRODUCTION AND PRODUCTION QUOTAS FOR THE SECOND QUARTER OF 1981 . TAKING THE VIEW THAT THOSE QUOTAS WERE TOO LOW IN RELATION TO THE PRODUCTION CAPACITY OF ITS PLANT , KLOCKNER MADE AN APPLICATION TO THE COURT FOR A DECLARATION THAT THE INDIVIDUAL DECISION WAS VOID . BY JUDGMENT OF 7 JULY 1982 ( CASE 119/81 , KLOCKNER V COMMISSION , ( 1982 ) ECR 2627 ) THE COURT DISMISSED THE APPLICATION , SO THE QUOTAS IN QUESTION BECAME DEFINITIVE .

3 IN THE MEANTIME KLOCKNER HAD EXCEEDED THOSE QUOTAS BY 122 781 TONNES IN RESPECT OF ROLLED PRODUCTS IN GROUP I . AFTER A COMPLAINT HAD BEEN ADDRESSED TO IT , BY A LETTER DATED 1 FEBRUARY 1982 , FOR EXCEEDING ITS QUOTAS AND THE PROCEDURE PROVIDED FOR IN ARTICLE 36 OF THE TREATY HAD BEEN EXHAUSTED , THE COMMISSION ADOPTED AN INDIVIDUAL DECISION OF 13 AUGUST 1982 , WHICH IS THE SUBJECT-MATTER OF THE PRESENT APPLICATION , IMPOSING A FINE ON KLOCKNER OF 10 129 432 ECU , EQUIVALENT TO DM 23 909 916 .
4 THE APPLICANT DOES NOT DENY THAT IT EXCEEDED THE QUOTA AS ALLEGED BY THE COMMISSION . IT CLAIMS , HOWEVER , THAT IT WAS JUSTIFIED IN SO DOING BY THE NECESSITY IN WHICH IT FOUND ITSELF AS A RESULT OF THE PRODUCTION QUOTAS ALLOCATED TO IT .

ADMISSIBILITY OF THE SINGLE SUBMISSION BASED ON NECESSITY
5 THE COMMISSION OBJECTS , IN THE FIRST PLACE , TO THE ADMISSIBILITY OF THE PLEA OF NECESSITY , WHICH IS THE SOLE SUBMISSION MADE IN THE APPLICATION . IT OBSERVES THAT THE ALLEGED NECESSITY PLEADED BY THE APPLICANT IS SAID TO ARISE FROM THE FACT THAT THE PRODUCTION QUOTAS ALLOCATED TO IT WERE TOO LOW , UNJUST AND UNLAWFUL , IN SO FAR AS THEY DID NOT TAKE ACCOUNT OF ITS REAL PRODUCTION CAPACITY . THE COMMISSION SUBMITS THAT THE ALLEGED UNLAWFULNESS OF A QUOTA WHICH WAS SO LOW AS TO THREATEN THE UNDERTAKING ' S SURVIVAL OUGHT TO HAVE BEEN PLEADED IN THE CASE RELATING TO THE FIXING OF THE QUOTA , IN ACCORDANCE WITH ARTICLE 42 ( 2 ) OF THE RULES OF PROCEDURE ; FURTHERMORE , THE LAWFULNESS OF THE QUOTA , HAVING BEEN RECOGNIZED BY THE AFORESAID JUDGMENT OF THE COURT OF 7 JULY 1982 , HAS THE FORCE OF RES JUDICATA AND CANNOT BE CALLED IN QUESTION AGAIN .

6 THE APPLICANT OBJECTS THAT , ALTHOUGH THE BINDING FORCE OF THE AFORESAID JUDGMENT PREVENTS IT FROM REOPENING THE QUESTION OF THE LAWFULNESS OF THE DECISION FIXING THE QUOTA IN ISSUE , IT DOES NOT AFFECT THE QUESTION WHETHER THE COMMISSION MAY IMPOSE A FINE FOR AN INFRINGEMENT OF THE QUOTA WHICH OCCURRED IN CIRCUMSTANCES AMOUNTING TO NECESSITY . THE APPLICANT SUBMITS THAT ARTICLE 42 OF THE RULES OF PROCEDURE IS NOT RELEVANT IN THE PRESENT CASE , SINCE THE QUESTION OF AN INFRINGEMENT AND OF THE POSSIBLE JUSTIFICATION FOR IT DID NOT ARISE IN CASE 119/81 .
7 IN THAT RESPECT , IT MUST BE RECOGNIZED THAT CERTAIN ARGUMENTS PUT FORWARD BY THE APPLICANT - SUCH AS THE INADEQUACY OF THE QUOTAS ALLOCATED TO IT , WHICH ARE BELOW THE AVERAGE OF THE QUOTAS GRANTED TO OTHER UNDERTAKINGS IN THE COMMUNITY AND THUS DO NOT ENSURE THE PROFITABILITY OF THE APPLICANT ' S BUSINESS - AMOUNT IN SUBSTANCE TO REOPENING THE QUESTION OF THE LAWFULNESS OF THE QUOTA SYSTEM AND IN PARTICULAR THE LAWFULNESS OF THE DECISION ALLOCATING TO THE APPLICANT THE QUOTA WHICH IT EXCEEDED . THOSE ARGUMENTS CANNOT BE ACCEPTED BECAUSE THE COMMISSION ' S DECISION HAS BECOME DEFINITIVE AND THE MATTER IS RES JUDICATA AS A RESULT OF THE COURT ' S JUDGMENT OF 7 JULY 1982 .
8 HOWEVER , DURING THE PROCEEDINGS THE APPLICANT CLARIFIED ITS POSITION BY STATING THAT IT WAS NOT CHALLENGING THE LAWFULNESS OF THE DECISION ALLOCATING THE QUOTA TO IT BUT WAS CONFINING ITSELF TO A CLAIM THAT THE DECISION IMPOSING A FINE ON IT WAS VOID ON THE GROUND THAT IT WAS JUSTIFIED IN EXCEEDING THE QUOTA BY THE NECESSITY IN WHICH IT FOUND ITSELF . IN THOSE CIRCUMSTANCES AND WITHIN THOSE LIMITS THE COMMISSION ' S OBJECTION THAT THE MATTER IS RES JUDICATA MUST BE DISMISSED .

THE VALIDITY OF THE SINGLE SUBMISSION OF NECESSITY
9 THE APPLICANT MAINTAINS THAT SINCE 1974 IT HAS SUFFERED VERY HEAVY LOSSES WHICH IT WAS ONLY ABLE TO WITHSTAND BY DRAWING ON ITS ENTIRE RESERVES , SO THAT IT IS NO LONGER ABLE TO BEAR FURTHER SERIOUS LOSSES WITHOUT BECOMING INSOLVENT . THE CUT IN PRODUCTION ENTAILED BY THE QUOTA SYSTEM WOULD , HOWEVER , HAVE INFLICTED FURTHER ENORMOUS LOSSES ON IT . IN THOSE CIRCUMSTANCES IT MAINTAINS THAT IT WAS CONSTRAINED TO EXCEED THE QUOTAS ALLOCATED TO IT IN ORDER TO PROTECT THE ESSENTIAL LEGAL INTEREST CONSTITUTED BY ITS OWN EXISTENCE . IT THUS ACTED OUT OF NECESSITY .

10 THE APPLICANT BASES ITS ARGUMENT ON A LEGAL OPINION GIVEN BY PROFESSOR ESER , DIRECTOR OF THE MAX PLANCK INSTITUTE FOR FOREIGN AND INTERNATIONAL CRIMINAL LAW , WHO MAINTAINS THAT NECESSITY IS A LEGAL CONCEPT OF UNIVERSAL SCOPE ENSHRINED IN EXPRESS LEGISLATIVE PROVISIONS OR RECOGNIZED BY THE COURTS . ACCORDINGLY , IT IS ' ' NOT THE VALIDITY BUT THE EXCLUSION OF NECESSITY WHICH MUST BE SPECIFICALLY PROVED ' ' . IT FOLLOWS , ACCORDING TO THE APPLICANT , THAT NECESSITY MUST ALSO BE RECOGNIZED AS A FUNDAMENTAL PRINCIPLE OF COMMUNITY LAW .

11 THE APPLICANT CONSIDERS THAT IN THE PRESENT CASE THE CONDITIONS FOR RECOGNIZING NECESSITY ARE SATISFIED . IT SAYS THAT THE SERIOUS JEOPARDY WHICH WOULD HAVE ARISEN IF THE QUOTAS HAD BEEN OBSERVED IS PROVED BY TWO AUDITORS ' REPORTS WHICH IT PUT IN EVIDENCE . THE LEGAL INTEREST WHICH THE UNDERTAKING SEEKS TO PRESERVE BY ITS CONDUCT , NAMELY ITS SURVIVAL , IS SUPERIOR TO THE REQUIREMENT NOT TO OBSTRUCT THE APPLICATION OF THE SYSTEM . THE INFRINGEMENT IN ISSUE HAD IN NO WAY DISTURBED THE QUOTA SYSTEM , SINCE THE OTHER COMMUNITY UNDERTAKINGS HAD BEEN ABLE TO DISPOSE OF THEIR PRODUCTION AT THE PRESCRIBED PRICES . THE DANGEROUS SITUATION IS NOT DUE TO ERRORS COMMITTED BY THE UNDERTAKING ; ON THE CONTRARY , IT HAD FAITHFULLY FOLLOWED THE SUGGESTIONS AND EXHORTATIONS OF THE COMMISSION IN REORGANIZING ITS PLANT . FINALLY , THE DANGER COULD NOT HAVE BEEN AVERTED EXCEPT BY EXCEEDING THE QUOTAS .

12 IN REPLY TO THAT ARGUMENT THE COMMISSION CITES THE DECISIONS IN WHICH THE COURT HAS CONSISTENTLY HELD THAT IN MANAGING THE QUOTA SYSTEM THE COMMISSION IS NOT REQUIRED TO GUARANTEE EACH INDIVIDUAL UNDERTAKING A MINIMUM LEVEL OF PRODUCTION DETERMINED IN ACCORDANCE WITH THE UNDERTAKING ' S OWN CRITERIA OF PROFITABILITY AND DEVELOPMENT . IT SUBMITS THAT THAT PRINCIPLE WOULD ALSO APPLY IN THE EVENT OF THE UNDERTAKING ' S VERY EXISTENCE BEING THREATENED .

13 IN THE COMMISSION ' S VIEW , TO ACCEPT NECESSITY AS AN ARGUMENT TO JUSTIFY EXCEEDING THE QUOTA WOULD BE INCOMPATIBLE WITH THE NATURE AND STRUCTURE OF THE QUOTA SYSTEM . AS THE COURT HAS ALREADY RECOGNIZED IN ITS JUDGMENT OF 11 MAY 1983 ( JOINED CASES 303 AND 312/81 , KLOCKNER V COMMISSION , ( 1983 ) ECR 1507 ), THE APPLICATION OF THE PRINCIPLE OF NECESSITY TO THE QUOTA SYSTEM WOULD ULTIMATELY LEAD TO THE COLLAPSE OF THE SYSTEM .

14 IN THE ALTERNATIVE , THE COMMISSION CONTENDS THAT THE CONDITIONS FOR RECOGNIZING NECESSITY ARE NOT SATISFIED IN THE PRESENT CASE . THE DANGER TO THE UNDERTAKING AT THE TIME THE QUOTA WAS EXCEEDED IS NOT SUFFICIENTLY PROVED ; IN ANY EVENT , THE FINANCIAL CRISIS WHICH IS AT THE ROOT OF THE ALLEGED NECESSITY IS NOT THE CONSEQUENCE OF ADOPTING THE QUOTA SYSTEM BUT OF CERTAIN CHOICES MADE BY THE UNDERTAKING ITSELF AS PART OF ITS INVESTMENT POLICY . FINALLY , THE ALLEGED DANGER COULD HAVE BEEN AVERTED BY LAWFUL MEANS AND TO EXCEED THE QUOTA WAS IN NO WAY NECESSARY FOR THAT PURPOSE .

15 IT MUST BE REMEMBERED THAT IN ITS AFORESAID JUDGMENT OF 11 MAY 1983 THE COURT HAS ALREADY CONSIDERED AND REJECTED KLOCKNER ' S ARGUMENT THAT THE INFRINGEMENT OF ITS QUOTA FOR THE FIRST QUARTER OF 1981 WAS JUSTIFIED BY THE INADEQUACY OF THE QUOTA WHICH HAD BEEN ALLOCATED TO IT BY THE COMMISSION AND BY NECESSITY . IN PARTICULAR , THE COURT REFUTED KLOCKNER ' S CLAIM THAT THE QUOTA WAS UNLAWFUL AND INEQUITABLE INASMUCH AS IT WAS TOO LOW IN RELATION TO ITS PRODUCTION CAPACITY AND STATED THAT THE UNDERTAKING ' S DIFFICULTIES WERE DUE TO ITS MANAGEMENT AND THEREFORE NECESSITY COULD NOT BE PLEADED . FINALLY , THE COURT EMPHASIZED THAT APPLICATION OF THE PRINCIPLE OF NECESSITY TO THE QUOTA SYSTEM WOULD LEAD TO THE COLLAPSE OF THE SYSTEM AND DEPRIVE ARTICLE 58 OF THE TREATY OF ANY PURPOSE .

16 EVEN THOUGH , IN THE PRESENT CASE , WHICH ALSO CONCERNS THE INFRINGEMENT OF PRODUCTION QUOTAS , BUT FOR THE SECOND QUARTER OF 1981 , KLOCKNER HAS PUT FORWARD MORE PRECISE AND DETAILED ARGUMENTS TO JUSTIFY A PLEA OF NECESSITY , THE COURT CANNOT BUT COME TO THE SAME CONCLUSION AS IN THE PREVIOUS CASE .

17 IT IS IN FACT IMPOSSIBLE TO ENTERTAIN THE CONCEPT OF NECESSITY IN RELATION TO THE QUOTA SYSTEM PROVIDED FOR BY ARTICLE 58 OF THE ECSC TREATY , WHICH IS BASED ON SOLIDARITY BETWEEN ALL COMMUNITY STEEL UNDERTAKINGS IN THE FACE OF THE CRISIS AND SEEKS AN EQUITABLE DISTRIBUTION OF THE SACRIFICES ARISING FROM UNAVOIDABLE ECONOMIC CIRCUMSTANCES .

18 IN THAT RESPECT IT MUST BE EMPHASIZED THAT ARTICLE 58 OF THE ECSC TREATY PROVIDES FOR THE ADOPTION OF A SYSTEM OF PRODUCTION QUOTAS ONLY IF THERE IS FOUND TO BE A MANIFEST CRISIS WHICH IS SO SERIOUS THAT IT CANNOT BE DEALT WITH BY THE MEANS PROVIDED FOR IN ARTICLE 57 . IN OTHER WORDS , A QUOTA SYSTEM MAY BE ADOPTED ONLY IF A WHOLE ECONOMIC SECTOR IS AFFECTED BY A CRISIS SO SERIOUS AS TO JEOPARDIZE THE EXISTENCE OF ALL THE UNDERTAKINGS IN THE COMMUNITY . IN THE PRESENT CASE IT IS COMMON GROUND THAT A VERY SERIOUS CRISIS , DUE TO THE SUDDEN SLUMP IN DEMAND AND THE COLLAPSE OF PRICES , AFFECTED ALL STEEL UNDERTAKINGS IN THE COMMUNITY .

19 THE QUOTA SYSTEM SEEKS TO COUNTER THAT SITUATION BY A GENERAL REDUCTION IN SUPPLY WHICH IS INTENDED TO BRING SUPPLY AND DEMAND BACK INTO BALANCE AND TO CHECK THE FALL IN PRICES . THAT REDUCTION INVOLVES HEAVY SACRIFICES WHICH MUST BE DISTRIBUTED EQUITABLY BETWEEN ALL STEEL UNDERTAKINGS ; THOSE UNDERTAKINGS MUST STRIVE TOGETHER IN A DISPLAY OF COMMUNITY SOLIDARITY SO AS TO ENABLE THE INDUSTRY AS A WHOLE TO OVERCOME THE CRISIS AND TO SURVIVE . THAT BEING THE AIM OF THE SYSTEM IN QUESTION , NO NECESSITY CONSISTING IN THE CONTINUED EXISTENCE AND PROFITABILITY OF A PARTICULAR UNDERTAKING CAN BE INVOKED AGAINST THE APPLICATION OF THE SYSTEM .

20 IN ADDITION IT MUST BE EMPHASIZED THAT IF EVERY UNDERTAKING COULD , BY PLEADING NECESSITY ON ACCOUNT OF SERIOUS FINANCIAL DIFFICULTIES , EXEMPT ITSELF FROM THE RESTRICTIONS AND EXCEED AT WILL THE PRODUCTION QUOTAS ALLOCATED TO IT THE QUOTA SYSTEM WOULD BE DESTROYED . IF THE QUOTAS OF UNDERTAKINGS PLEADING NECESSITY WERE INCREASED - OR SIMPLY EXCEEDED BY THE UNDERTAKINGS WITHOUT ANY PENALTY , ON GROUNDS OF NECESSITY - IT WOULD NECESSARILY ENTAIL A REDUCTION IN THE QUOTAS OF OTHER UNDERTAKINGS , SO THAT SOME OF THEM WOULD IN TURN FIND THEMSELVES IN A STATE OF NECESSITY AND WOULD BE ENTITLED TO CLAIM INCREASED QUOTAS OR TO EXCEED THEIR QUOTAS WITHOUT ANY PENALTY . A CHAIN REACTION WOULD SET IN WHICH WOULD LEAD TO THE COLLAPSE OF THE SYSTEM AND THUS COMPROMISE THE PURPOSE OF ARTICLE 58 OF THE ECSC TREATY .

21 THE LEGAL OPINION PROVIDED BY PROFESSOR ESER STATES THAT THE CONCEPT OF NECESSITY WAS DEVELOPED IN THE FIELD OF CRIMINAL LAW AND HAS ALSO PERMEATED ECONOMIC LAW IN A LIMITED NUMBER OF MEMBER STATES . WITHOUT DENYING THE TRUTH OF THAT OBSERVATION , WHICH HOWEVER DOES NOT IN ITSELF WARRANT THE CONCLUSION THAT COMMUNITY LAW CONTAINS A GENERAL PRINCIPLE RELATING TO NECESSITY , THE COURT WISHES TO EMPHASIZE ONCE AGAIN THAT THE CONCEPT OF NECESSITY CANNOT BE ACCEPTED IN THE CONTEXT OF THE QUOTA SYSTEM PROVIDED FOR BY ARTICLE 58 OF THE ECSC TREATY .

22 NECESSITY CANNOT THEREFORE BE PLEADED BY AN UNDERTAKING IN ORDER TO EXEMPT ITSELF FROM THE RESTRICTIONS ON PRODUCTION PROVIDED FOR BY THE QUOTA SYSTEM OR FROM THE PAYMENT OF FINES IMPOSED ON IT FOR EXCEEDING THE QUOTAS . THE SYSTEMATIC EXCEEDING OF ITS QUOTAS BY THE APPLICANT CONSIDERABLY IMPAIRED THE FUNCTIONING OF THE SYSTEM .

23 FROM THE FOREGOING CONSIDERATIONS IT FOLLOWS THAT THE SOLE SUBMISSION , BASED ON A PLEA OF NECESSITY , MUST BE DISMISSED .

24 THE ACTION MUST THEREFORE BE DISMISSED .

COSTS
25 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE , THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS IF THEY HAVE BEEN ASKED FOR IN THE SUCCESSFUL PARTY ' S PLEADING .

26 AS THE APPLICANT HAS FAILED IN ITS SUBMISSIONS , IT MUST BE ORDERED TO PAY THE COSTS .

ON THOSE GROUNDS ,
THE COURT ( FOURTH CHAMBER )
HEREBY :
1 . DISMISSES THE APPLICATION ; AND
2.ORDERS THE APPLICANT TO PAY THE COSTS , INCLUDING THE COSTS OF THE APPLICATION FOR INTERIM MEASURES .