Cases T-252/07, T-271/07 and T-272/07

Sungro, SA and Others

v

Council of the European Union and European Commission

(Non-contractual liability – Common agricultural policy – Amendment of the Community support scheme for cotton – Chapter 10a of Title IV of Regulation (EC) No 1782/2003, inserted by Article 1(20) of Regulation (EC) No 864/2004 – Annulment of the provisions in question by a judgment of the Court – Causal link)

Summary of the Judgment

1.      Non-contractual liability – Conditions – Unlawfulness – Loss – Causal link

(Art. 288, second para., EC)

2.      Non-contractual liability – Conditions – Unlawfulness – Loss – Causal link

(Arts 235 EC and 288, second para., EC; Council Regulations No 1782/2003, Title IV, Chapter 10a , and No 864/2004, Art. 1(20))

3.      Actions for damages – Subject-matter – Compensation for loss arising from costs incurred in relation to legal proceedings before the Community Courts

(Art. 288, second para., EC; Rules of Procedure of the General Court, Art. 91)

1.      For the purposes of the Community’s non‑contractual liability, for the condition relating to the existence of a causal link between the conduct alleged and the damage pleaded to be satisfied, the alleged loss must be a sufficiently direct consequence of the conduct complained of and such causal link must be the determining cause of the loss.

In order to determine the harm attributable to a wrongful act of a Community institution, account must be taken of the effects of the failure which caused liability to be incurred and not of those of the measure of which it forms part, provided that the institution could or should have adopted a measure having the same effect without breaching any rule of law. The analysis of the causal link cannot start from the incorrect premiss that, in the absence of unlawful conduct, the institution would have refrained from acting or would have adopted a contrary measure, which could also amount to unlawful conduct on its part, but must be based on a comparison between the situation arising, for the third party concerned, from the wrongful act and the situation which would have arisen for that third party if the institution’s conduct had been in conformity with the law.

(see paras 47-48)

2.      Regulation No 864/2004, and particularly the Chapter 10a regarding aid for cotton producers which it inserted in Title IV of Regulation No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers, forms part, as is clear from its statement of reasons, of the reform of the common agricultural policy initiated by Regulation No 1782/2003, the purpose of which is to substitute a policy of supporting prices and production for a policy of direct support for farmers’ incomes and one of the essential elements of which is the decoupling of direct support for producers and the introduction of a single payment scheme.

For the purposes of actions for damages under Article 235 EC and the second paragraph of Article 288 EC, brought by cotton ginning undertakings following the annulment by the Court of the said Chapter 10a and seeking compensation for the loss allegedly suffered as a result of the adoption and application of those provisions, it is for the applicants to show that, in the absence of the unlawfulness found, the contested regulation would not have been adopted or would necessarily have been different in content. In fact, it was not the contested provisions themselves, but the failure to take account of all the relevant factors and circumstances, in particular by carrying out a study of the reform’s impact, before the adoption of those provisions which was criticised by the Court’s judgment from the point of view of an infringement of the principle of proportionality. In those circumstances, it was therefore for the applicants to show that, by adopting a new scheme in compliance not only with the law by carrying out a study of the reform’s impact, but also with the objectives underlying the reform of the common agricultural policy, the Council was inevitably led to adopt a system and rate of decoupling aid to producers different from those provided for by the contested provisions.

There is no causal link between any decrease in income due solely to the reform of the common agricultural policy in the cotton sector and the unlawful act found by the Court, since that act casts no doubt on the decision to undertake such a reform.

(see paras 60-61, 63)

3.      The costs incurred in relation to judicial review proceedings before the Community judicature must be regarded as covered by the decisions given on costs, under the specific procedural rules applicable to that type of expenditure, in the decisions bringing the proceedings to an end and on conclusion of the special proceedings provided for in cases where the amount of the costs is challenged. Those proceedings exclude any claim for the same sums, or sums expended for the same purposes, in connection with proceedings alleging non‑contractual liability of the Community, including those incurred by parties who, having been unsuccessful, have had to pay the costs.

(see para. 69)