JUDGMENT OF THE COURT (Fifth Chamber)

18 November 1999 (1)

(Appeal — Veterinary medicinal products — Somatosalm — Procedure for settingmaximum residue limits — Adaptation Committee — Failure to deliver opinion —Deadline for proposing measures to the Council)

In Case C-151/98 P,

Pharos SA, established in Seraing, Belgium, represented by A. Vandencasteele, ofthe Brussels Bar, with an address for service in Luxembourg at the Chambers ofE. Arendt, 8-10 Rue Mathias Hardt,

appellant,

APPEAL against the judgment of the Court of First Instance of the EuropeanCommunities (Third Chamber) of 17 February 1998 in Case T-105/96 Pharos vCommission [1998] ECR II-285, seeking to have that judgment set aside

the other parties to the proceedings being:

Commission of the European Communities, represented by M. Nolin, of its LegalService, acting as Agent, with an address for service in Luxembourg at theChambers of C. Gómez de la Cruz, also of that service, Wagner Centre, Kirchberg,

defendant at first instance,

Fédération Européenne de la Santé Animale (Fedesa), established in Brussels,Belgium, represented by D. Waelbroeck, of the Brussels Bar, with an address forservice in Luxembourg at the Chambers of Arendt and Medernach, 8-10 RueMathias Hardt,

intervener in the appeal,

THE COURT (Fifth Chamber),

composed of: D.A.O. Edward, President of the Chamber, J.C. Moitinho deAlmeida, L. Sevón (Rapporteur), C. Gulmann and J.-P. Puissochet, Judges,

Advocate General: J. Mischo,

Registrar: H.A. Rühl, Principal Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 29 April 1999,

after hearing the Opinion of the Advocate General at the sitting on 20 May 1999,

gives the following

Judgment

1.

    By application lodged at the Court Registry on 17 April 1998, Pharos SA broughtan appeal under Article 49 of the EC Statute of the Court of Justice against thejudgment of the Court of First Instance of the European Communities of 17February 1998 in Case T-105/96 Pharos v Commission [1998] ECR II-285(hereinafter 'the contested judgment‘), in which the Court of First Instancedeclared that there was no need to adjudicate on the application for a declarationthat the Commission unlawfully failed to pursue the procedure for includingsomatosalm produced by the appellant in the list of substances not subject tomaximum residue levels (hereinafter 'MRL‘) in Annex II to Council Regulation(EEC) No 2377/90 of 26 June 1990 laying down a Community procedure for theestablishment of maximum residue limits of veterinary medicinal products infoodstuffs of animal origin (OJ 1990 L 224, p. 1), and dismissed as unfounded theapplication for an order that the Commission make good the damage which theapplicant considered itself to have suffered through such inaction.

2.

    By application lodged at the Court Registry on 28 July 1998, the FédérationEuropéenne de la Santé Animale (European Federation of Animal Health(Fedesa)) requested leave to intervene in support of the forms of order sought bythe appellant. By order of 28 September 1998, the President of the Court of Justicegranted leave to intervene.

Legislative background

3.

    Article 1(1)(b) of Regulation No 2377/90 defines the MRL as 'the maximumconcentration of residue resulting from the use of a veterinary medicinal product... which may be accepted by the Community to be legally permitted or recognisedas acceptable in or on a food‘.

4.

    In paragraphs 3 to 9 of the contested judgment the Court of First Instance set outthe relevant provisions of Regulation No 2377/90 as follows:

'3.    The Regulation makes provision for four annexes in which apharmacologically active substance intended for use in veterinary medicinesto be administered to ”food-producing animals” may be included:

    —    Annex I, reserved for substances for which an MRL may beestablished following assessment of the risks which the substancepresents for human health;

    —    Annex II, reserved for substances which are not subject to an MRL;

    —    Annex III, reserved for substances for which it is not possible toestablish an MRL definitively, but which, without compromisinghuman health, may be subject to a provisional MRL for a limitedperiod which is dictated by the time required to carry out appropriatescientific studies and which can only be extended once;

    —    Annex IV, reserved for substances for which an MRL cannot beestablished because such substances constitute a threat to consumerhealth in any amount.

4    Under Article 6(1) of the Regulation, in order to obtain the inclusion inAnnex I, II, or III of a new pharmacologically active substance, the personresponsible for marketing the product concerned is to submit an applicationto the Commission containing certain information and particulars.

5    According to Article 6(2), after verifying within a period of 30 days that theapplication is submitted in correct form, the Commission is forthwith tosubmit the application for examination by the Committee for VeterinaryMedicinal Products (hereinafter ”CVMP”).

6    Article 6(3) provides that:

        ”[W]ithin 120 days of referral of the application to the [CVMP], andhaving regard to the observations formulated by the members of theCommittee, the Commission shall prepare a draft of the measures tobe taken. If the information submitted by the person responsible formarketing is insufficient to enable such a draft to be prepared, thatperson will be requested to provide the Committee with additionalinformation for examination. ...”

7    Under Article 6(5), within a further 60 days the Commission is to submitthe draft measures to the Committee for the Adaptation to TechnicalProgress of the Directives on Veterinary Medicinal Products (hereinafter”the Adaptation Committee”).

8    Under Article 8(2) the Adaptation Committee is to deliver its opinion onthe draft measures within a time-limit set by its chairman, having regard tothe urgency of the matter. It is to act by a qualified majority, the votes ofthe Member States being weighted as provided for in Article 148(2) of theTreaty.

9    Article 8(3) provides as follows:

        ”(a)    The Commission shall adopt the measures envisaged where theyare in accordance with the opinion of the [Adaptation]Committee.

        (b)    Where the measures envisaged are not in accordance with theopinion of the Committee, or if no opinion is adopted, theCommission shall without delay propose to the Council themeasures to be adopted. The Council shall act by a qualifiedmajority.

        (c)    If, after a period of three months of the proposal being referredto it, the Council has not acted, the proposed measures shall beadopted by the Commission, unless the Council has votedagainst them by a simple majority.”‘

Facts and procedure before the Court of First Instance

5.

    The facts as set out in the contested judgment are as follows:

'10    The applicant is a company specialising in biotechnology. It is active interalia in the pharmaceuticals industry.

11    In 1994 its pharmaceutical research resulted in the development of aveterinary product called ”Smoltine” designed to help salmon make thetransition from fresh water to sea water. The pharmacologically activesubstance in Smoltine is somatosalm, a substance belonging to thesomatotropin family.

12    On 17 October 1994 the applicant submitted an application for the inclusionof somatosalm in Annex II to Regulation No 2377/90 (hereinafter ”AnnexII”).

13    Having verified that the application had been submitted in correct form, theCommission referred the application for examination to the CVMP,pursuant to Article 6(2) of Regulation No 2377/90.

14    By letter of 13 April 1995 it informed the applicant that the CVMP hadrecommended that somatosalm be included in Annex II. It added that thedraft measures to be taken, drawn up on the basis of the CVMP's proposal,would be sent to the Adaptation Committee for adoption, in accordancewith Article 8 of Regulation No 2377/90.

15    By letter of 31 August 1995 it informed the applicant that it had referredto the Adaptation Committee a draft regulation including somatosalm inAnnex II, but that, at its meeting, the Committee deleted somatosalm fromthe draft.

16    On 16 October 1995 it referred to the Adaptation Committee a new draftregulation including somatosalm in Annex II. However, that draft did notreceive the assent of a qualified majority of the Adaptation Committee tothe measures proposed.

17    Four Member States opposed the measures, taking the view that themoratorium on Bovine Somatotropin (hereinafter ”BST”), imposed byCouncil Decision 90/218/EEC of 25 April 1990 concerning theadministration of Bovine Somatotropin (BST) (OJ 1990 L 116, p. 27), as lastamended by Council Decision 94/936/EC of 20 December 1994 (OJ 1994 L366, p. 19), would be undermined indirectly if somatosalm, which is also asomatotropin, were included in one of the annexes to Regulation No2377/90. Moreover, six Member States abstained from the vote in question.

18    On 6 March 1996, the applicant sent a registered letter to the Commission,formally calling upon it to act by taking ”the necessary steps, in accordance

with Article 175 of the Treaty, to ensure that the procedure for includingsomatosalm in ... Annex II ... is completed as soon as possible”.

19    On 23 April 1996 the Commission sent a letter to the CVMP informing itof its decision to stay the procedure for including somatosalm in Annex IIuntil further scientific information had been obtained. It explained thatthere had been a certain amount of opposition to somatosalm in theAdaptation Committee because the substance could be used to boostgrowth. It therefore asked the CVMP for a further opinion as to whetherabuses of the product were possible.

20    By letter of 14 May 1996 the Commission informed the applicant that it haddecided to ask the CVMP for that further opinion before continuing withthe procedure for including somatosalm in one of the annexes to RegulationNo 2377/90.

21    By letter of 27 June 1996 the CVMP stated in reply to the request for afurther opinion that, following a specific study, it had concluded that the riskthat somatosalm might be abused to boost growth could be considered tobe non-existent.

22    On 25 September 1996, following that reply, the Commission sent theCouncil a new proposal for a regulation including somatosalm in Annex II.

23    The Council did not act on that proposal within the period of three monthsprovided for by Article 8(3)(c) of the Regulation.‘

6.

    It is against that background that the appellant, on 8 July 1996, brought anapplication before the Court of First Instance for a declaration that theCommission unlawfully failed to pursue the procedure for including somatosalmproduced by the appellant in the list of substances not subject to an MRL in AnnexII and for an order that the Commission make good the damage which itconsidered itself to have suffered through such inaction.

7.

    By the contested judgment the Court of First Instance declared that there was noneed to adjudicate on the application for a declaration of failure to act, the subject-matter of the application for a declaration of failure to act having ceased to existsince, on 25 September 1996, the Commission submitted to the Council a proposalfor a regulation including somatosalm in Annex II, and also dismissed the claim fordamages as unfounded.

The appeal

8.

    The appellant seeks the partial annulment of the contested judgment in so far asit dismissed its claim for damages and an order that the Commission bear the costsof both sets of proceedings or, in the alternative, that the case be referred back tothe Court of First Instance for judgment.

9.

    In support of its appeal the appellant relies on two pleas alleging misinterpretation,first, of Article 8(3)(b) of Regulation No 2377/90, which provides that 'theCommission shall without delay propose to the Council the measures to beadopted‘, and, second, of the Regulation itself, since it does not confer on theCommission the right to seek a further opinion from the CVMP.

10.

    Fedesa asks the Court to grant the forms of order sought by the appellant and toorder the Commission to bear the costs of its intervention.

11.

    The Commission contends that the appeal should be dismissed and that theappellant and Fedesa should be ordered to pay their own costs.

Arguments of the parties

12.

    By its first plea the appellant criticises the finding of the Court of First Instance atparagraph 65 of the contested judgment that the expression 'without delay‘ inArticle 8(3)(b) of Regulation No 2377/90, whilst requiring the Commission to actswiftly, allows it some latitude.

13.

    Its principal argument is that it is clear from the various language versions andfrom the general structure of Regulation No 2377/90 that the Commission is notallowed a time margin for submitting a proposal to the Council.

14.

    In the alternative, the appellant submits that, even if the interpretation given toArticle 8(3)(b) by the Court of First Instance were to be upheld, a period of 11months clearly does not correspond to the idea of 'without delay‘. In holding thatthe Commission had met the requirement to act swiftly when it had remainedinactive for six months and not adopted the measure it was required to take until11 months had elapsed, the contested judgment was not properly reasoned.

15.

    By its second plea the appellant submits that the Court of First Instance erred instating in paragraph 69 of the contested judgment that, where it is confronted witha matter which is highly complex and sensitive both scientifically and politically, theCommission has the right to seek a further opinion from the CVMP even thoughRegulation No 2377/90 is silent on the point.

16.

    The appellant submits that the fact that, as stated in paragraph 70 of the contestedjudgment, the Commission, as a result of the further opinion of the CVMP, 'greatly

facilitated the work of the Council, which, having noted the further opinion of theCVMP, did not oppose the inclusion of somatosalm in Annex II‘, is of no relevancein this context. In any event, the interpretation of the facts by the Court of FirstInstance is clearly wrong. The further opinion had no influence on the positiontaken by the Member States.

17.

    Fedesa argues further that the judgment of the Court of First Instance in Case T-120/96 Lilly Industries v Commission [1998] ECR II-2571, paragraph 90, makes clearthat the Commission was not legally entitled to base its decision rejecting therequest for inclusion of the substance in Annex II on the existence of themoratorium on BST, particularly as that moratorium was not introduced to protectpublic health but for socio-economic reasons. According to paragraph 91 of thejudgment in Lilly Industries v Commission, the Commission was not authorised totake account of such considerations.

Findings of the Court

18.

    It is appropriate to consider these two pleas together.

19.

    It should first be observed that, according to consistent case-law, in interpreting aprovision of Community law it is necessary to consider its wording, its context andits aims (Case 337/82 St. Nikolaus Brennerei [1984] ECR 1051, paragraph 10, andCase C-84/95 Bosphorus [1996] ECR I-3953, paragraph 11).

20.

    Nothing in the wording of Article 8(3)(b) of Regulation No 2377/90 suggests anyconclusion regarding the length of time indicated by the expression 'without delay‘,other than that, while a certain degree of rapidity is required, the Commission isnot required to act within a precise period of time nor at once, contrary to theappellant's submission.

21.

    As regards context and aims, it should be observed that, by Article 8 of RegulationNo 2377/90, the Council conferred implementing powers on the Commission, inaccordance with Articles 1 and 2, procedure III, Variant (b), of Council Decision87/373/EEC of 13 July 1987 laying down the procedures for the exercise ofimplementing powers conferred on the Commission (OJ 1987 L 197, p. 33).

22.

    It is clear from Article 8(3) of Regulation No 2377/90 that, once the Commissionhas proposed to it the measures to be taken, the Council has its full legislativepowers, including the right, provided for by Article 189a of the EC Treaty (nowArticle 250 EC), to amend the Commission's proposal by unanimous decision.However, under Article 8(3)(c) of Regulation No 2377/90, if, after a period of threemonths, the Council has not acted on the proposal, the Commission once again hasthe power to adopt the proposed measures, unless the Council has decided againstthem by a simple majority.

23.

    It follows that, where the measures proposed by the Commission are not inconformity with the opinion of the Adaptation Committee, or where no opinion isdelivered, the Commission is not obliged to submit the same measures, withoutamendment, to the Council.

24.

    Accordingly, if the Commission has the right to amend the proposal relating to themeasures to be taken which it submits to the Council, it must have sufficient timeto consider the various courses of action open to it.

25.

    It follows that the Court of First Instance was right to hold, at paragraph 65 of thecontested judgment, that Article 8(3)(b) of Regulation No 2377/90 does not specifyexactly the period within which the Commission must propose to the Council themeasures to be adopted and that in using the expression 'without delay‘ theCommunity legislature, whilst requiring it to act swiftly, did allow the Commissiona certain degree of latitude.

26.

    It also follows that the Court of First Instance was right to hold, at paragraph 69of the contested judgment, that where it is confronted with a matter which is highlycomplex and sensitive the Commission must be accorded the right to seek such anopinion even though Regulation No 2377/90 is silent on the point.

27.

    In circumstances such as those in the present case, in which four Member Stateson the Adaptation Committee, fearing that somatosalm might be used to boostgrowth, opposed the draft measures and six Member States abstained from voting,the Commission cannot be criticised for having sought a scientific opinion in aneffort to prevent its proposal from being rejected by the Council by simple majority.

28.

    As regards the appellant's claim that the Court of First Instance was wrong to takethe view that the further opinion of the CVMP had an influence on the positiontaken by the Member States in the Council, it suffices to note that this claim callsinto question the appraisal of the facts by the Court of First Instance, which theCourt of Justice has no jurisdiction to review on appeal (see Case C-7/95 Deere vCommission [1998] ECR I-3111, paragraph 21).

29.

    Fedesa's argument alleging that the Commission took account of the moratoriumon BST is of no relevance in the present appeal. As Advocate General Mischoobserves at point 68 of his Opinion, the Court of First Instance did not authorisethe Commission to refuse to include somatosalm in Annex II on the basis of thatmoratorium and, second, it was the representatives of the Member States on theAdaptation Committee who raised the matter of the moratorium and not theCommission, which requested a scientific opinion to allay the concerns thus raised.

30.

    As regards the appellant's alternative submission that no grounds or insufficientgrounds were stated for the contested judgment in that the Court of First Instancefound that the Commission respected the obligation to act swiftly, it should be

observed that the amount of time the Commission has to consider the variouscourses of action open to it (see paragraph 24 above) must be appraised in thelight of the complexity of the matter concerned.

31.

    In the present case, it is not disputed that the risk that somatosalm might be usedto boost growth and that its inclusion in Annex II might indirectly undermine themoratorium on BST was raised for the first time in the Adaptation Committee, inwhich four delegations opposed the Commission's draft and six abstained from thevote.

32.

    In the circumstances, a period of 11 months, during which the Commission initiallyreconsidered the file for six months and then sought a second scientific opinion,cannot be considered to be an excessively long period.

33.

    Accordingly, in finding at paragraph 68 of the contested judgment that, sincecertain Member States had objected to the inclusion of somatosalm in Annex IIbecause of the fears outlined above, the Commission could not be criticised forhaving reconsidered the matter for a certain time and then asking the CVMP fora further opinion, the Court of First Instance gave sufficient grounds for itsappraisal of the question whether the Commission respected the obligation to actswiftly.

34.

    It follows from all the foregoing considerations that the pleas put forward by theapplicant are unfounded and that the appeal must be dismissed.

Costs

35.

    Under Article 69(2) of the Rules of Procedure, which applies to appeals by virtueof Article 118, the unsuccessful party is to be ordered to pay the costs, if they havebeen asked for in the successful party's pleadings. Since the Commission has askedfor costs and the appellant has been unsuccessful, it must be ordered to pay thecosts. As regards Fedesa, which intervened in support of the forms of order soughtby the appellant, it must be ordered to bear its own costs and those of theCommission arising from its intervention pursuant to Article 69(4) of the Rules ofProcedure.

On those grounds,

THE COURT (Fifth Chamber),

hereby:

1.    Dismisses the appeal;

2.    Orders Pharos SA to pay the costs;

3.    Orders the Fédération Européenne de la Santé Animale (Fedesa) to pay itsown costs and those of the Commission arising from its intervention.

EdwardMoitinho de Almeida Sevón Gulmann Puissochet

Delivered in open court in Luxembourg on 18 November 1999.

R. Grass

D.A.O. Edward

Registrar

President of the Fifth Chamber

1: Language of the case: French.