Appeal brought on 21 September 2020 by Council of the European Union against the judgment of the General Court (Fourth Chamber) delivered on 08 July 2020 in Case T-110/17, Jiangsu Seraphim Solar System v Commission

(Case C-441/20 P)

Language of the case: English

Parties

Appellant: Council of the European Union (represented by: H. Marcos Fraile, Agent , N. Tuominen, avocat)

Other parties to the proceedings: Jiangsu Seraphim Solar System Co. Ltd, European Commission

Form of order sought

The appellant claims that the Court should:

set aside the Contested Judgment;

reject the application at first instance for the annulment of the Contested Regulation; and

order the Applicant to pay the Council's costs both at first instance and on appeal.

Alternatively:

refer back the case to the General Court for reconsideration;

reserve the costs of the proceedings at first instance and on appeal.

Pleas in law and main arguments

First, the General Court erred in law by ruling that the application is admissible.

The Applicant has to show standing under Article 263 TFEU, in particular direct concern, and interest to act in respect of Article 2 of the Contested Regulation¹ . The anti-dumping duties, due as legal consequence for invalidating the invoices, are not owed to national customs authorities by the Applicant, but by another company, Seraphim Solar System GmbH. Therefore, the Council considers that the Applicant has failed to demonstrate direct concern and interest to act and the General Court erred in decided it had.

The Applicant is furthermore time-barred from raising a plea of illegality under Article 277 TFEU in application of the TWD Textilwerke Deggendorf and Nachi Europe case law of the Court of Justice of the European Union (“Court of Justice”).

Finally, the admissibility of actions against Regulation No 1238/2013² and Regulation No 1239/2013³ is also crystal-clear based on the SolarWorld case law, which ruled that Article 3 of Regulation No 1238/2013 and Article 2 of Regulation No 1239/2013 cannot be severed from the remainder of those Regulations.

Second, the General Court erred in law by finding that Articles 8 and 13 of the Basic Regulations “exhaust” the possibility of collection of duties on imports that have breached an undertaking and any other approach qualifies as “retroactive” collection of duties.

The General Court’s view is based on an erroneous understanding of the Basic Regulations. Articles 10(5) and 16(5) of the Basic Regulations deal in general with the consequences of having found that an undertaking has been breached. This is the equivalent of the “retroactivity within the meaning of the Basic Regulations”, that is to say the imposition of definitive anti-dumping / countervailing duties no more than 90 days from the application of provisional measures to imports subjected to registration under Articles 14(5) and 24(5) of the Basic Regulations.

The scenario at hand, i.e. the violation of an undertaking and its consequences is clearly of a different nature. The only restraint imposed by Articles 10(5) and 16(5) of the Basic Regulations is that such a retroactive collection shall not apply to imports entered during the 90 days retroactive period before the breach or withdrawal of the undertaking.

Moreover, there cannot be any retroactivity when the duties are imposed as from the beginning and only an exception from their collection is foreseen. Indeed, through an undertaking, the exporting producer avoids the application of the duties at issue, if the conditions for benefiting from such a result are provided. However, a customs debt will be incurred whenever the declarant has chosen to release the goods in free circulation, i.e. without collection of an anti-dumping duty, and one or several conditions of that undertaking are found to have been violated.

Third, the General Court erred in law by finding that Articles 14(1) and 24(1) of the Basic Regulations did not authorise the Council to set up a monitoring system for undertakings that included the invalidation of invoices.

Articles 14(1) and 24(1) of the Basic Regulations give very broad powers to the Council when adopting a regulation imposing duties, as clarified by the Court of Justice in Deichmann. Therefore, the General Court erred in law by finding that the Council lacked the power to set up a monitoring system for undertakings, which included the invalidation of invoices.

The General Court’s position goes against the intention of the legislator. There is no justification in EU law for such a far-reaching protection of an economic operator that is violating its voluntarily agreed obligations and, like in the present case, does not even dispute that such violations occurred. This position is also stricter than what is required under World Trade Organisation (“WTO”) law, thus placing the EU at a disadvantage compared to the other WTO members’ trade partners.

In addition, the Contested Judgment makes undertakings disproportionally risky for the Commission. Entering into undertakings carries a risk on the EU side as well as difficulty in monitoring the arrangement. In fact, it is the primary obligation of the party accepting the undertaking that it cooperates with the Commission and thereby ensures a smooth monitoring of the proper fulfilment of the undertaking. Without this guarantee, the Commission would be left with all the risk, while anyone breaching an undertaking would be allowed to keep any advantages accrued during the breach. This interpretation also defeats the purpose of an effective protection of the EU industry from injurious dumping / subsidisation, which is (alternatively) remedied through the undertaking.

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¹ Commission Implementing Regulation (EU) 2016/2146 of 7 December 2016 withdrawing the acceptance of the undertaking for two exporting producers under Implementing Decision 2013/707/EU confirming the acceptance of an undertaking offered in connection with the anti-dumping and anti-subsidy proceedings concerning imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People's Republic of China for the period of application of definitive measures (OJ 2016, L 333, p. 4).

² Council Implementing Regulation (EU) No 1238/2013 of 2 December 2013 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People's Republic of China (OJ 2013, L 325, p. 1).

³ Council Implementing Regulation (EU) No 1239/2013 of 2 December 2013 imposing a definitive countervailing duty on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People's Republic of China (OJ 2013, L 325, p. 66).