Case T-479/14 Kendrion v EU (Court of Justice): Damages, duration of judicial proceedings, appropriate defendant.

The General Court handed down an order recently in Case T-479/14 Kendrion NV v EU represented by the Court of Justice, EU:T:2015:2. It finds that the Court of Justice is the right defendant in an action for damages in a claim for compensation for the loss and damage caused by unreasonable delay in judicial proceedings in the General Court.

A rich and spicy situation ! The General Court dismissing an inadmissibility plea by the Court of Justice.

Here’s some explanation and background how such a situation can arise.

Background

Now and again, plaintiffs in cases before the General Court in competition cases would complain about the time it took for the General Court to examine the case. The plaintiff would, on appeal ask for a reduction in the fine imposed by the Commission as compensation for the financial damage which it claimed to have sustained as a result of the excessive duration of the proceedings before the General Court. At first, the Court of Justice granted such an application, for reasons of economy of procedure and in order to ensure an immediate and effective remedy regarding a procedural irregularity of that kind and, accordingly, reduced the amount of the fine (Baustahlgewebe C-185/95 P, EU:C:1998:608, paragraph 48).

The Court of Justice later changed its position and held where there are no indications that the excessive length of the proceedings before the General Court affected their outcome, failure to deliver judgment within a reasonable time cannot lead to the setting aside of the judgment under appeal (Der Grüne Punkt – Duales System Deutschland,  C-385/07 P, EU:C:2009:456, paragraphs 190 – 196). The Court of Justice made clear that the setting aside of the judgment under appeal would not remedy the infringement of the principle of effective legal protection committed by the General Court. Having regard to the need to ensure that EU competition law is complied with, the Court of Justice held that it cannot allow an appellant to reopen the question of the existence of an infringement, on the sole ground that there was a failure to adjudicate within a reasonable time, where all of its pleas directed against the findings made by the General Court concerning that infringement and the administrative procedure relating to it have been rejected as unfounded.

The Court of Justice held that the appropriate remedy is in damages and that a failure on the part of the General Court to adjudicate within a reasonable time can give rise to a claim for damages brought against the EU under Article 268 TFEU and the second paragraph of Article 340 TFEU.

Recently, the Court of Justice confirmed in Case C-40/12 P Gascogne Sack Deutschland v Commission, EU:C:2013:768Case C-50/12 P Kendrion v Commission, EU:C:2013:771 and Case C-58/12 P Groupe Gascogne v CommissionEU:C:2013:770three cases concerning a cartel in which the Commission had imposed fines and thus entirely analogous to the situation that gave rise to its judgment in Baustahlgewebethat the appropriate and effective remedy was one in damages and not in a reduction of the fine.

The Court of Justice held in those judgments that a claim for compensation for the damage caused by the failure by the General Court to adjudicate within a reasonable time may not be made directly to the Court of Justice in the context of an appeal, but must be brought before the General Court itself which has jurisdiction under Article 256(1) TFEU, to determine such claims for damages, sitting in a different composition from that which heard the dispute giving rise to the procedure whose duration is criticized.

Kendrion NV, Gascogne Sack Deutschland and Groupe Gascogne have now brought such a claim in damages before the General Court (Case T-479/14 Kendrion v Court of Justice OJ 2014 C 253, p. 65, Case T-577/14 Gascogne Sack Deutschland v Court of Justice  OJ 2014 C 351, p. 19 and Case T-843/14 Groupe Gascogne  v Court of Justice).

(Update: two Spanish bag makers (parent and subsidiary) have lodged a claim in damages on 27 January 2015: Case T-40/15 Aspla and Armando Alvarez v Commission and Court of Justice – unpublished to date. Also ,  a Dutch company Aalberts Industries is also claiming damages in Case T-725/14 Aalberts Industries v Commission and Court of Justice against the Court for delays in adjudicating the copper-fittings cartel case, Case T-385/06).

The Court of Justice lodged a preliminary exception as to inadmissibility in the first case, Case T-479/14.

The admissibility of the action against the Court of Justice

In its recent order, of 6 January 2015, the General Court rejected the Court of Justice’s inadmissibility plea.

It held, firstly, that according to settled caselaw that the proper identification of the institution charged with representing the EU in a damages action based on Articles 268 and 340 (2) TFEU is a matter that goes to the admissibility of the action (Judgments of 13 November 1973, Werhahn and others v Council, 63/72 à 69/72, EU:C:1973:121, paragraphs 7 to 9, and of 14 December 2005, Beamglow v Parliament and others, T‑383/00, EU:T:2005:453, paragraphs 74 and 75 ; order of 22 February 2001, Lamberts v Ombudsman and Parliament, T‑209/00, EU:T:2001:66, paragraph 17).

It also held that according to settled caselaw when the EU is liable for a tortious act of one of its institutions, it is represented by the institution that committed the act (Judgments in Werhahn and others v Council, EU:C:1973:121, paragraph 7 ; of 9 November 1989, Briantex et Di Domenico v EEC  and Commission, 353/88, EU:C:1989:415, paragraph 7 ; of 4 February 1998, Bühring v Council v Commission, T‑246/93, EU:T:1998:21, paragraph 26, and Beamglow v Parliament and others, T‑383/00, EU:T:2005:453, paragraph 68; Order of 6 September 2011, Mugraby v Council and Commission, T‑292/09, EU:T:2011:418, paragraph 24).

The General Court held that it was clear in this case that the tortious act was committed by the General Court, that according to Article 13 TEU the Court of Justice is an EU institution and that according to Article 19 TEU the Court of Justice comprises the General Court. Consequently, it behoves the Court of Justice to represent the EU in the present action.

The General Court then rejected a number of arguments made by the Court of Justice.

First it held that it was not bound by the opinion of AG Sharpston in the case of Gascogne Group v Commission (C‑58/12 P, EU:C:2013:360) which seems to indicate that the EU should be represented by the Commission. The General Court, like the Court of Justice itself, is not bound by an AG’s opinion (Judgment of 22 November 2012, E.ON Energie v Commission, C‑89/11 P, EU:C:2012:738, paragraph 62) and AG Sharpston’s opinion on the issue differs from that of AG Poiares Maduro in Joined Cases FIAMM and others v Council and Commission (C‑120/06 P et C‑121/06 P, EU: C:2008:98).

Next, it held that the Court’s judgment in Reynolds Tobacco and others v Commission (C-131/03 P, EU:C:2006:541 – Disclaimer: I represented the Commission in that case) did not establish a general principle that the EU should be represented by the Commission in cases before the EU judicature as that case concerned the representation of the EU before a Federal Court in the USA.

The General Court also rejected an argument based on the sound administration of justice according to which the Court of Justice is not well placed to defend the case. It recalled that the Court of Justice had already held that the General Court had exceeded a reasonable time to hand down its judgment in the case of Kendrion v Commission.

The General Court rejected the argument that the budgetary rules meant that the Commission should be the defendant as the Commission is charged with the execution of the budget. It held that according to those budgetary rules, each institution is responsible for executing the budget as regards its own expenditure.

Finally, the General Court rejected the Court’s arguments based on the impartiality and independence of the Court. It held that the present case was distinguishable from the judgment of 10 July 2008 of the ECtHR in Mihalkov v Bulgaria which concerned a criminal conviction and a prison sentence ordered by a lower court. The General Court remarked that the Court of Justice has appeared as a litigant before the EU judicature on many occasions without the impartiality and independence of the court seised being questioned (see, judgments of 25 May 2000, Kögler v Court of Justice, C‑82/98 P, EU:C:2000:282; 14 April 2005, Gaki-Kakouri v Court of Justice, C‑243/04 P, EU:C:2005:238 ; 15 November 2011, CTG Luxembourg PSF v Court of Justice, T‑170/10 et T‑340/10, EU:T:2011:660, and of 17 Octobre 2012, Evropaïki Dynamiki v Court of Justice, T‑447/10, EU:T:2012:553; orders of 14 April 2011, Marcuccio v Court of Justice, C‑460/10 P, EU:C:2011:262 ; of 7 March 2013, Marcuccio v Court of Justice, C‑433/12 P, EU:C:2013:156, and of 29 avril 2013, Marcuccio v Court of Justice, T‑355/12, EU:T:2013:223).

The case will proceed on the merits before the General Court, as will the other two cases pending.

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