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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Confederation europeenne de l'industrie de la chaussure (CEC), v BA.LA. di Lanciotti Vittorio & C. Sas, [2012] EUECJ C-247/10 (15 November 2012)
URL: http://www.bailii.org/eu/cases/EUECJ/2012/C24710.html
Cite as: [2012] EUECJ C-247/10
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JUDGMENT OF THE COURT (Third Chamber)
15 November 2012 (*)
(Appeal – Dumping – Regulation (EC) No 1472/2006 – Imports of certain footwear with uppers of leather originating in China and Vietnam – Regulation (EC) No 384/96 – Article 2(7)(b) – Market economy treatment – Article 9(6) – Individual treatment – Article 17(3) – Sampling – Article 20(5) – Rights of the defence)
In Case C-247/10 P,
APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 12 May 2010,
Zhejiang Aokang Shoes Co. Ltd, established in Yongjia (China), represented by M. Sánchez Rydelski, Rechtsanwalt,
appellant,
the other parties to the proceedings being:
Council of the European Union, represented by J.-P. Hix and R. Szostak, acting as Agents, and by G. Berrisch, Rechtsanwalt, and N. Chesaites, Barrister,
defendant at first instance,
Wenzhou Taima Shoes Co. Ltd,
applicant at first instance,
European Commission, represented by H. van Vliet and T. Scharf, acting as Agents, with an address for service in Luxembourg,
Confédération européenne de l’industrie de la chaussure (CEC),
BA.LA. di Lanciotti Vittorio & C. Sas,
interveners at first instance,
THE COURT (Third Chamber),
composed of K. Lenaerts, acting as President of the Third Chamber, E. Juhász, G. Arestis (Rapporteur), T. von Danwitz and D. Šváby, Judges,
Advocate General: P. Mengozzi,
Registrar: K. Sztranc-Sławiczek, Administrator,
having regard to the written procedure and further to the hearing on 7 March 2012,
having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,
gives the following
Judgment
1 By its appeal, Zhejiang Aokang Shoes Co. Ltd requests the Court to set aside, in so far as it concerns the appellant, the judgment of the General Court of the European Union of 4 March 2010 in Joined Cases T-407/06 and T-408/06 Zhejiang Aokang Shoes and Wenzhou Taima Shoes v Council [2010] ECR II-747 (‘the judgment under appeal’), by which the General Court dismissed its action for the annulment of Council Regulation (EC) No 1472/2006 of 5 October 2006 imposing a definitive anti-dumping duty and collecting definitely the provisional duty imposed on imports of certain footwear with uppers of leather originating in the People’s Republic of China and Vietnam (OJ 2006 L 275, p. 1; ‘the contested regulation’).
Legal context
2 The provisions governing the application of anti-dumping measures by the European Union are set out in 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 amended by Council Regulation (EC) No 2117/2005 of 21 December 2005 (OJ 2005 L 340, p. 17) (‘the basic regulation’).
3 As regards the conditions for the grant of market economy treatment (‘MET’), Article 2(7) of the basic regulation provides:
‘7. (a) In the case of imports from non-market economy countries …, normal value shall be determined on the basis of the price or constructed value in a market economy third country, or the price from such a third country to other countries, including the Community, or where those are not possible, on any other reasonable basis, including the price actually paid or payable in the Community for the like product, duly adjusted if necessary to include a reasonable profit margin.
An appropriate market economy third country shall be selected in a not unreasonable manner, due account being taken of any reliable information made available at the time of selection. Account shall also be taken of time limits; where appropriate, a market economy third country which is subject to the same investigation shall be used.
The parties to the investigation shall be informed shortly after its initiation of the market economy third country envisaged and shall be given 10 days to comment.
(b) In anti-dumping investigations concerning imports from … the People’s Republic of China …, normal value will be determined in accordance with paragraphs 1 to 6, if it is shown, on the basis of properly substantiated claims by one or more producers subject to the investigation … that market economy conditions prevail for this producer or producers in respect of the manufacture and sale of the like product concerned. When this is not the case, the rules set out under subparagraph (a) shall apply.
(c) 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,
– firms have one clear set of basic accounting records which are independently audited in line with international accounting standards and are applied for all purposes,
– the production costs and financial situation of firms are not subject to significant distortions carried over from the former non-market economy system, in particular in relation to depreciation of assets, other write-offs, barter trade and payment via compensation of debts,
– the firms concerned are subject to bankruptcy and property laws which guarantee legal certainty and stability for the operation of firms, and
– exchange rate conversions are carried out at the market rate.
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.’
4 Article 9(6) of the basic regulation provides:
‘When the Commission has limited its examination in accordance with Article 17, any anti-dumping duty applied to imports from exporters or producers which have made themselves known in accordance with Article 17 but were not included in the examination shall not exceed the weighted average margin of dumping established for the parties in the sample. ... Individual duties shall be applied to imports from any exporter or producer which is granted individual treatment, as provided for in Article 17.’
5 As regards the sampling technique, Article 17(1) and (3) of the basic regulation provides:
‘1. In cases where the number of complainants, exporters or importers, types of product or transactions is large, the investigation may be limited to a reasonable number of parties, products or transactions by using samples which are statistically valid on the basis of information available at the time of the selection, or to the largest representative volume of production, sales or exports which can reasonably be investigated within the time available.
…
3. In cases where the examination has been limited in accordance with this Article, an individual margin of dumping shall, nevertheless, be calculated for any exporter or producer not initially selected who submits the necessary information within the time limits provided for in this Regulation, except where the number of exporters or producers is so large that individual examinations would be unduly burdensome and would prevent completion of the investigation in good time.’
6 Article 20(1), (2), (4) and (5) of the basic regulation is worded as follows:
‘1. The complainants, importers and exporters and their representative associations, and representatives of the exporting country, may request disclosure of the details underlying the essential facts and considerations on the basis of which provisional measures have been imposed. Requests for such disclosure shall be made in writing immediately following the imposition of provisional measures, and the disclosure shall be made in writing as soon as possible thereafter.
2. The parties mentioned in paragraph 1 may request final disclosure of the essential facts and considerations on the basis of which it is intended to recommend the imposition of definitive measures, or the termination of an investigation or proceedings without the imposition of measures, particular attention being paid to the disclosure of any facts or considerations which are different from those used for any provisional measures.
…
4. Final disclosure shall be given in writing. It shall be made, due regard being had to the protection of confidential information, as soon as possible and, normally, not later than one month prior to a definitive decision or the submission by the Commission of any proposal for final action pursuant to Article 9. Where the Commission is not in a position to disclose certain facts or considerations at that time, these shall be disclosed as soon as possible thereafter. Disclosure shall not prejudice any subsequent decision which may be taken by the Commission or the Council but where such decision is based on any different facts and considerations, these shall be disclosed as soon as possible.
5. Representations made after final disclosure is given shall be taken into consideration only if received within a period to be set by the Commission in each case, which shall be at least 10 days, due consideration being given to the urgency of the matter.’
Background to the dispute
7 The background to the dispute was set out as follows by the General Court in paragraphs 11 to 16, 22 and 24 to 36 of the judgment under appeal:
‘11 The applicants, Zhejiang Aokang Shoes Co., Ltd and Wenzhou Taima Shoes Co., Ltd, are footwear-producing and exporting companies established in China.
12 Imports of footwear from China falling within certain categories of the combined nomenclature were subject to a quantitative quota regime which lapsed on 1 January 2005.
13 Following a complaint lodged on 30 May 2005 by the Confédération européenne de l’industrie de la chaussure (“CEC”), the Commission of the European Communities initiated an anti-dumping proceeding concerning imports of certain footwear with uppers of leather originating in China and Vietnam. The notice of initiation of that proceeding was published in the Official Journal of the European Union of 7 July 2005 (OJ 2005 C 166, p. 14) (“the notice of initiation”).
14 In view of the large number of parties involved, it was envisaged, at point 5.1(a) of the notice of initiation, to apply sampling, in accordance with Article 17 of the basic regulation.
15 The applicants contacted the Commission and on 25 July 2005 provided it with the information required by point 5.1(e) of the notice of initiation in order to be granted [MET] or, failing that, to be given individual treatment (“IT”). By email of 13 January 2006, counsel for the applicants requested the Commission to state its intentions concerning the procedure to be followed in response to the MET/IT claims submitted by exporters not forming part of the sample and whose claims had not been individually examined. By email of 17 January 2006, the Commission stated that, as the investigation was in progress, it was unable to comment.
16 On 23 March 2006, the Commission adopted Regulation (EC) No 553/2006 imposing a provisional anti-dumping duty on imports of certain footwear with uppers of leather originating in the People’s Republic of China and Vietnam (OJ 2006 L 98, p. 3) (“the provisional regulation”).
…
22 According to recital 62 to the provisional regulation, exporting producers which were not finally retained in the sample were informed that any anti-dumping duty on their exports would be calculated in accordance with the provisions of Article 9(6) of the basic regulation. As regards the requests presented by those exporting producers which sought an individual dumping margin pursuant to Article 9(6) and Article 17(3) of the basic regulation, the Commission considered, at recital 64 to the provisional regulation, that individual examination of those exporting producers would be unduly burdensome and prevent it from completing the investigation in good time. In those circumstances, the dumping margin of those producers was determined on the basis of the weighted average of the dumping margins of the companies in the sample (recitals 135 and 143 to the provisional regulation).
…
24 By fax of 7 July 2006, the Commission sent the applicants, pursuant to Article 20(2) to (4) of the basic regulation, a final disclosure document setting out the essential facts and considerations on which the proposal to impose definitive anti-dumping duties was based.
25 In section H of that document, the Commission set out its considerations concerning the definitive anti-dumping measures which were proposed to the Council of the European Union. As regards the type of measures, the Commission explained, first, that undertakings given by producers not to sell at below the price level which would have eliminated the significant injury sustained by the Community industry did not constitute appropriate measures and, second, that it was appropriate to apply a delayed duty system (paragraphs 278 to 291 of the final disclosure document).
26 As regards the delayed duty system, the Commission observed that the volume of imports had had a significant injurious effect on the Community industry as from 1 January 2005, the date on which the quota regime lapsed (see paragraph 12 above). During the first quarter of 2005, which was included in the investigation period (see paragraph 17 above), the Community industry underwent, proportionally, the most significant decline during the period considered with respect to a number of economic indicators such as profitability, sales prices, market share, sales, employment and production. In those circumstances, the Commission paid special attention to the quantitative element of dumping practices in determining whether there was injury. It thus considered that only imports above a certain volume threshold were injurious and that, therefore, intervention in the form of ad valorem duties was not necessary to ensure fair competition. Therefore, anti-dumping duties should be applied only to quantities of imported products above certain annual volume thresholds. In the present case, such a delayed duty system would be adequate to remove the injury in so far as it would take the effect of the quota regime into consideration and would balance the concerns of the interested parties. The proposed anti-dumping duties should therefore apply to imports from China in excess of a threshold of 140 million pairs of shoes per annum. That volume reflected the Commission’s assessment on imports from China in 2005 and took account of the quantities imported in 2004 (paragraphs 285 to 287 and 291 of the final disclosure document).
27 Therefore, the Commission proposed the imposition of a definitive anti-dumping duty, equal to the injury elimination level, on imports above the threshold of 140 million pairs of shoes per annum originating in China. That margin was fixed at the level of the underselling margin, namely 23% (paragraph 293 of the final disclosure document).
28 The Commission invited the applicants to submit their comments on the final disclosure document by 17 July 2006.
29 By letter of 28 July 2006, the Commission sent the applicants an additional final disclosure document. According to its first two paragraphs, the purpose of that document was to provide interested parties with information about a change with regard to the envisaged form of the definitive anti-dumping duties. The Commission’s Directorate General (DG) “Trade” had considered the comments submitted by certain interested parties with regard to the originally envisaged delayed duty system (see paragraphs 25 to 27 above). By that document, the Commission gave up the idea of such a system. In its new approach, the Commission stated that the real materially injurious increase in imports took place in 2004 and until the end of the investigation period, and that 2005 had been the first year in which imports of footwear from China were no longer subject to a quota regime. Furthermore, the Commission established a volume of non-materially injurious imports on the basis of imports originating in China and Vietnam in 2003, namely 109 million pairs of shoes. Under that new approach, the economic impact of that volume needed to be taken into consideration in establishing the injury elimination level. Consequently, first, the injury elimination level was lowered to take account of the volume of non-materially injurious imports and, secondly, definitive duties were applied as from the first pair of shoes imported. According to that methodology, which provides for four stages set out in that document, the Commission concluded, for imports from China, on the basis of the “lesser duty rule”, that a definitive anti-dumping duty equal to the level required to eliminate injury should be imposed, in this case 16.5%.
30 In order to formalise that new proposal, the Commission annexed to its letter of 28 July 2006 the paragraphs which were to be included in the new section H of the final disclosure document and replace those in the corresponding section of the original final disclosure document (see paragraph 25 above). The Commission stated, in the paragraphs 278 and 279 which were to be included in the new section H of the final disclosure document, that only imports above a certain volume threshold prior to the lapsing of the quota regime could cause material injury so that the injury threshold determined on the basis of the results of the investigation period had to reflect the fact that certain import quantities had not caused such material injury. Consequently, the non-materially injurious import quantities had to be reflected in the injury elimination levels. In paragraph 280 of that document, the Commission set out the methodology which had been used.
31 The Commission invited the applicants to submit their comments on the final disclosure document by 2 August 2006. The applicants submitted their comments on that date.
32 On 5 October 2006, the Council adopted [the contested regulation]. By [that] regulation, the Council imposed a definitive anti-dumping duty on imports of footwear with uppers of leather or composition leather, excluding sports footwear, [Special Technology Athletic Footwear (“STAF”)], slippers and other indoor footwear and footwear with a protective toecap, originating in China and falling within a number of combined nomenclature codes (Article 1 of the contested regulation). The rate of the definitive anti-dumping duty applicable, before duty, to the net free-at-Community-frontier price was established, for footwear produced by the applicants, at 16.5%. Pursuant to Article 3 of the contested regulation, the contested regulation was to remain in force for a period of two years.
33 The Council dealt with the questions connected with the claims of a number of companies to be granted MET, on which the Commission had not ruled, at recitals 60 to 65 to the contested regulation.
34 According to those recitals, the fact that the Commission did not respond individually to each MET claim submitted to it does not constitute a breach of the basic regulation. It is, on the contrary, consistent with Article 17 of that regulation. The sampling methodology provided for in that article also applies where a high number of companies concerned request MET or IT. In the present case, the exceptionally high number of claims by the companies concerned left the administration with no alternative other than to examine only those from the companies which were part of the sample in order to balance necessities resulting from an as individualised as possible case assessment within the margin of mandatory deadlines. That entailed the application to all non-sampled companies of the weighted average margin resulting from the undertakings in the sample. It follows that the complaints formulated during the administrative procedure, according to which the dumping calculation is not representative, must also be rejected.
35 Those considerations also applied to claims for IT.
36 As regards the level of duties necessary to eliminate the injury caused by imports from China, the Council stated at recitals 296 to 301 to the contested regulation, reiterating paragraphs 275 to 280 of the new section H of the final disclosure document attached as an annex to the additional final disclosure document (see paragraph 30 above), that it was appropriate to take account of the particularities of the present proceeding and in particular of the fact that a quota regime had been in force until 1 January 2005. As that quota regime had prevented any material injury being caused to the Community industry, whereas the increase in imports after the lapse of that regime had had a particularly decisive injurious effect on the Community industry, the Council considered that only imports above a certain volume before the lapsing of the quota regime could cause injury. Consequently, the injury threshold determined on the basis of the results of the investigation period had to take into account the fact that certain import quantities had not caused such material injury. That operation, which was based on the value of import volumes in 2003, led, for imports from China, to an injury threshold of 16.5%, whereas a threshold of 23% would have been applied, according to recital 295 to the contested regulation, if the Council had not taken account of the particularities of the present case.’
Procedure before the General Court and the judgment under appeal
8 In support of its action before the General Court, the present appellant raised seven pleas in law, alleging, respectively:
– breach of Article 2(7)(b) and (c) of the basic regulation and of the principle of equal treatment;
– breach of Article 9(5) of the basic regulation;
– breach of the principle of protection of legitimate expectations;
– breach of the rights of the defence, breach of the obligation to state reasons and breach of the right to proper judicial protection;
– incorrect calculation of its dumping margin;
– breach of Article 20 of the basic regulation, breach of the rights of the defence and failure to state reasons concerning the injury sustained by the Community industry;
– error of law and manifest error of assessment concerning the injury caused to the Community industry.
9 The General Court dismissed the appellant’s action.
10 The first three pleas and the fifth plea raised by the appellant, by which it maintained that the Commission made a number of errors of law in so far as it refused to grant the appellant MET or IT, without examining its MET/IT claims, were examined together and rejected by the General Court. That rejection is challenged in the first ground of appeal.
11 In that connection, the General Court held, in paragraph 88 of the judgment under appeal, that where sampling is used, the basic regulation does not give traders who are not included in the sample an unconditional right to the calculation of an individual dumping margin. The acceptance of such a claim depends on the Commission’s decision as to the application of Article 17(3) of that regulation.
12 In paragraph 89 of the judgment under appeal, the General Court also held that, since the grant of MET or IT serves, pursuant to Article 2(7)(b) of the basic regulation, only to establish the method for calculating normal value with a view to the calculation of individual dumping margins, the Commission was not required to examine MET/IT claims from traders not included in the sample where it has concluded, in applying Article 17(3) of that regulation, that the calculation of such margins would be unduly burdensome and would prevent it from completing the investigation in good time.
13 The second ground of appeal challenges the rejection of the sixth plea in law, which alleged, inter alia, infringement of Article 20(5) of the basic regulation. In that connection, it must be observed that the General Court held, in paragraphs 145 to 147 of the judgment under appeal, that, even though the appellant had been granted a period shorter than the prescribed period of 10 days to submit full comments on the Commission’s new approach, it had been in a position in which it could effectively make known its views and, therefore, that period had not actually been capable of affecting the rights of defence in the context of the procedure in question.
Forms of order sought by the parties
14 By its appeal, the appellant claims that the Court should:
– set aside the judgment under appeal;
– annul the contested regulation in so far as it applies to the appellant; and
– order the Council to pay the costs of this appeal and those of the proceedings before the General Court in Case T-407/06.
15 The Council contends that the Court should:
– primarily, dismiss the appeal;
– in the alternative, refer the case back to the General Court;
– in the further alternative, dismiss the action, and
– in any event, order the appellant to pay the costs of the appeal.
16 The Commission contends that the Court should dismiss the appeal and order the appellant to pay the costs.
The appeal
17 In support of its appeal, the appellant relies on two grounds, alleging that the General Court erred in law in relation to, first, the MET/IT claims which the appellant had made and, second, the observance of the rights of the defence in the light of Article 20(5) of the basic regulation.
The first ground of appeal
Arguments of the parties
18 The appellant submits that the General Court erred in law with regard to the legal effects of the application of Article 17 of the basic regulation vis-à-vis the requirements in Article 2(7)(b) and (c) of that regulation with regard to the appellant’s MET/IT claims. It submits that the General Court erroneously confused an ‘individual dumping margin’, requested pursuant to Articles 9(6) and 17(3) of the basic regulation, with a dumping margin that is attributed to an MET/IT company outside the sample and calculated on the basis of data of one or more companies within the sample group with that status. The appellant argues that a non-sampled company can still benefit from the grant of MET/IT status, without having to go through the process for the calculation of an individual margin for that company.
19 The appellant submits that applications for calculation of individual dumping margins pursuant to Articles 9(6) and 17(3) are very different from those for establishing MET/IT status. The sampling technique clearly shows those differences. The appellant states that a non-sampled company which applies for an individual dumping margin pursuant to Articles 9(6) and 17(3) of the basic regulation must, in addition to its MET claim form, submit a detailed reply to the producer/exporter questionnaire that is also completed by companies in the sample group. Those replies to that questionnaire constitute the ‘necessary information’ required by Article 17(3) in order to be able to calculate an individual dumping margin based on that company’s own normal value and export price data. In the present case, since it was outside the sample group and decided to file only for MET, the appellant, had its MET claim succeeded, would – on the basis of Commission practice up to this case – benefit, not from an individual margin within the meaning of Articles 9(6) and 17(3) of the basic regulation, but rather from a margin calculated specifically with regard to another company or companies in the sample group which similarly obtain MET.
20 The Council takes the view that a decision to apply to all non-sampled exporters the weighted average dumping margin of all exporters included in the sample would not exceed the institutions’ wide margin of discretion. The Council contends that the General Court did not state that the appellant was seeking MET/IT in order to obtain an individual dumping margin. It is also apparent from the judgment under appeal that the General Court did not rely on Article 17(3) of the basic regulation to limit any obligation laid down in Article 2(7) of that regulation. Instead, the General Court held that, since the MET determination serves merely to calculate an individual dumping margin, the institutions are obliged to make an MET determination only if they decide to establish an individual dumping margin. At the hearing, when discussing the judgment of 2 February 2012 in Case C-249/10 P Brosmann Footwear (HK) and Others v Council, the Council restated that there was no need to adjudicate upon a claim for MET, which serves to establish the method for calculating normal value, when the exporter is not included in the sample and no individual dumping margin has to be established.
21 The Commission concurs with the observations submitted to the Court of Justice by the Council and points out that the General Court found, inter alia, in paragraphs 94 and 95 of the judgment under appeal, that the Commission had not erred in concluding that even a mere ‘desk analysis’ of 141 MET/IT claims would prevent the institutions from completing the investigation in good time. Therefore, even if the appellant’s argument might in theory be accepted, it cannot lead to the judgment under appeal being set aside, in view of that finding of the General Court, which is not contested by the appellant. At the hearing, in referring to the judgment in Brosmann Footwear (HK) and Others v Council, the Commission requested the Court to limit the temporal effects of the judgment to be delivered in the present case.
Findings of the Court
22 It should be noted, first of all, that Article 2(7)(a) of the basic regulation provides that, in the case of imports from non-market economy countries, in derogation from the rules set out in paragraphs 1 to 6 of that Article 2, normal value must, as a rule, be determined on the basis of the price or constructed value in a market economy third country.
23 However, under Article 2(7)(b) of the basic regulation, in anti-dumping investigations concerning imports from, inter alia, China, normal value is to be determined in accordance with paragraphs 1 to 6 of Article 2 of that regulation if it is shown, on the basis of properly substantiated claims by one or more producers subject to the investigation and in accordance with the criteria and procedures set out in Article 2(7)(c), that market economy conditions prevail for that producer or producers in respect of the manufacture and sale of the like product concerned.
24 In that connection, it should be stressed that the burden of proof lies with the producer wishing to claim MET under Article 2(7)(b) of the basic regulation. To that end, the first subparagraph of Article 2(7)(c) provides that the claim submitted by such a producer must contain sufficient evidence, as laid down in that provision, that the producer operates under market economy conditions. Accordingly, there is no obligation on the EU institutions to prove that the producer does not satisfy the conditions laid down for the recognition of such status. By contrast, it is for the EU institutions to assess whether the evidence supplied by the producer concerned is sufficient to show that the criteria laid down in the first subparagraph of Article 2(7)(c) of the basic regulation are fulfilled in order to grant it MET and it is for the EU judicature to examine whether that assessment is vitiated by a manifest error (see Brosmann Footwear (HK) and Others v Council, paragraph 32).
25 In the present case, paragraph 15 of the judgment under appeal states that the appellant contacted the Commission and on 25 July 2005 provided it with the information required by point 5.1(e) of the notice of initiation in order to be granted MET or, failing that, to be given IT.
26 It is, however, apparent from paragraph 34 of the judgment under appeal that the Commission did not respond individually to each MET claim submitted to it. According to recitals 60 to 65 in the preamble to the contested regulation, the sampling method laid down by Article 17 of the basic regulation applied to MET/IT claims from companies.
27 In the present case, in the anti-dumping investigation, the institutions took the view that the exceptionally high number of claims by the companies concerned left the administration with no alternative other than to examine only those from the companies which were part of the sample. It is not disputed in that regard that such a course of action entailed the application of the weighted average margin resulting from the undertakings in the sample to all the non-sampled companies, without those companies’ claims being examined individually.
28 The General Court held, in paragraph 88 of the judgment under appeal, that, where sampling is used, the basic regulation does not give traders who are not included in the sample an unconditional right to the calculation of an individual dumping margin. The General Court took the view that the acceptance of such a claim depends on the Commission’s decision as to the application of Article 17(3) of that regulation. In that connection, the General Court held, in paragraph 89 of the judgment under appeal, that, as the grant of MET or IT serves, pursuant to Article 2(7)(b) of the basic regulation, only to establish the method for calculating normal value with a view to the calculation of individual dumping margins, the Commission was not required to examine MET/IT claims from traders not included in the sample, where it has concluded, in applying Article 17(3) of the basic regulation, that the calculation of such margins would be unduly burdensome and would prevent it from completing the investigation in good time.
29 In the judgment in Brosmann Footwear (HK) and Others v Council, which annulled the contested regulation in so far as it concerned four other companies, it being held that there was an infringement of Article 2(7) of the basic regulation, the Court found, in paragraph 38 of that judgment, that the obligation on the Commission to adjudicate upon a claim from a trader wishing to claim MET is clear from the very wording of Article 2(7)(b) of that regulation.
30 That provision lays down the obligation to determine the normal value in accordance with Article 2(1) to (6) of the basic regulation if it is shown, on the basis of properly substantiated claims by one or more producers, that market economy conditions prevail for those producers. Such an obligation concerning the recognition of the economic conditions under which each producer operates, in respect of the manufacture and sale of the like product concerned, is not affected by the manner in which the dumping margin is to be calculated (see Brosmann Footwear (HK) and Others v Council, paragraph 38).
31 Under the second subparagraph of Article 2(7)(c) of the basic regulation, such an obligation must be fulfilled within three months of the initiation of the investigation.
32 It follows that the General Court was wrong to reject, in paragraph 91 of the judgment under appeal, the appellant’s argument that Article 2(7)(b) and (c) of the basic regulation obliged the Commission to examine MET/IT claims from non-sampled traders.
33 In that connection, it must be noted that Article 2(7) of the basic regulation is one of the provisions of that regulation concerned solely with the determination of normal value, whereas Article 17 of that regulation – concerning sampling – is one of the provisions relating to, inter alia, the methods available for determining the dumping margin. Thus, the provisions differ in content and purpose (see Brosmann Footwear (HK) and Others v Council, paragraph 37).
34 Consequently, the first ground of appeal relied on by the appellant in support of its appeal must be upheld, inasmuch as it is based upon an infringement of Article 2(7) of the basic regulation. The judgment under appeal must for that reason be set aside, without there being any need to examine the second ground of appeal.
The action at first instance
35 In accordance with Article 61 of the Statute of the Court of Justice of the European Union, if the appeal is well founded, the Court must quash the decision of the General Court. It may then itself give final judgment in the matter, where the state of the proceedings so permits. That is the case here.
36 It follows, first, from paragraphs 29 to 34 of the present judgment that the Commission ought to have examined the substantiated claim submitted to it by the appellant pursuant to Article 2(7)(b) and (c) of the basic regulation for the purpose of claiming MET in the context of the anti-dumping proceeding which was the subject of the contested regulation. It must be held, second, that it cannot be ruled out that such an examination might have led to the imposition on the appellant of a definitive anti-dumping duty different from the 16.5% duty applicable to it pursuant to Article 1(3) of the contested regulation. Indeed, it is apparent from that provision that a definitive anti-dumping duty of 9.7% was imposed on the only Chinese trader in the sample which obtained MET. As is apparent from paragraph 42 of the judgment in Brosmann Footwear (HK) and Others v Council, however, had the Commission found that market economy conditions prevailed also for the appellant, the latter ought, when the calculation of an individual dumping margin was not possible, also to have benefited from that same rate.
37 In those circumstances, the contested regulation must be annulled in so far as it concerns the appellant.
The temporal effects of the present judgment
38 The Commission requests the Court, should it annul the contested regulation, to limit the temporal effects of the present judgment, pursuant to the second paragraph of Article 264 TFEU. To that end, the Commission refers to the significant financial implications which, in its view, the annulment of the contested regulation would entail for both the budget of the European Union and the budgets of the Member States.
39 In that connection, it must be held that, since the contested regulation is annulled only in relation to the appellant, the financial implications to which the Commission refers stem not from the operative part of the present judgment, but from the interpretation of the basic regulation according to which the Commission and the Council are required – when certain exporting producers established in a non-market economy country have been sampled, pursuant to Article 17 of that regulation, and the calculation of an individual dumping margin for non-sampled exporting producers is not possible – to apply, pursuant to Article 9(6) of that regulation, to any non-sampled trader which ought to be granted MET in terms of Article 2(7)(b) of that regulation the weighted average duty of the sampled traders benefiting from MET.
40 The Court had already given such an interpretation of the basic regulation in its judgment in Brosmann Footwear (HK) and Others v Council without limiting the temporal effects of that interpretation.
41 In those circumstances, the request that the temporal effects of the present judgment be limited must be rejected.
Costs
42 Under Article 184(2) of its Rules of Procedure, where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to the costs. Under Article 138(1) of those Rules, applicable to the procedure on appeal by virtue of 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. Under Article 140(1) of the Rules of Procedure, the institutions which have intervened in the proceedings must bear their own costs, while under Article 140(3) of those Rules the Court may order an intervener other than those mentioned in the preceding paragraphs to bear its own costs.
43 Since the appeal brought by the appellant has been allowed and the contested regulation annulled in so far as it concerns the appellant, the Council must be ordered to pay the costs incurred by the appellant, both at first instance and in connection with the present proceedings, as asked for in the form of order sought by the appellant. In addition, the Commission must be ordered to bear its own costs, both at first instance and in connection with the present proceedings.
On those grounds, the Court (Third Chamber) hereby:
1. Sets aside the judgment of the General Court of the European Union of 4 March 2010 in Joined Cases T-407/06 and T-408/06 Zhejiang Aokang Shoes and Wenzhou Taima Shoes v Council;
2. Annuls Council Regulation (EC) No 1472/2006 of 5 October 2006 imposing a definitive anti-dumping duty and collecting definitely the provisional duty imposed on imports of certain footwear with uppers of leather originating in the People’s Republic of China and Vietnam in so far as it concerns Zhejiang Aokang Shoes Co. Ltd;
3. Orders the Council of the European Union to pay the costs incurred by Zhejiang Aokang Shoes Co. Ltd. both at first instance and in connection with the present proceedings;
4. Orders the European Commission to bear its own costs, both at first instance and in connection with the present proceedings.
[Signatures]
* Language of the case: English.
© European Union
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