Judgments nº T-220/96 of Court of First Instance of the European Communities, Wednesday April 24, 2002

• Resolution Date: Wednesday April 24, 2002
• Issuing Organization: Court of First Instance of the European Communities
• Decision Number: T-220/96

JUDGMENT OF THE COURT OF FIRST INSTANCE (Fourth Chamber)

24 April 2002 (1) (Non-contractual liability for an unlawful act - Regulation (EEC) No 2340/90 - Embargo on trade with Iraq - Impairment of rights equivalent to expropriation - Causal link)

In Case T-220/96,

Elliniki Viomichania Oplon AE (EVO), established in Athens (Greece), represented by T. Fortsakis, lawyer, with an address for service in Luxembourg,

applicant,

v

Council of the European Union, represented by S. Kyriakopoulou, acting as Agent,

and

Commission of the European Communities, represented by M. Condou-Durande, acting as Agent, with an address for service in Luxembourg,

defendants,

APPLICATION for compensation for the damage allegedly suffered by the applicant as a result of the adoption of Council Regulation (EEC) No 2340/90 of 8 August 1990 preventing trade by the Community as regards Iraq and Kuwait (OJ 1990 L 213, p. 1),

THE COURT OF FIRST INSTANCE

OF THE EUROPEAN COMMUNITIES (Fourth Chamber),

composed of: P. Mengozzi, President, V. Tiili and R.M. Moura Ramos, Judges,

Registrar: J. Palacio González, Administrator,

having regard to the written procedure and further to the hearing on 12 July 2001,

gives the following

Judgment

Facts

1.

The applicant, Elliniki Viomichania Oplon AE (EVO), is a company incorporated under Greek law which manufactures and markets arms and ammunition nationally and internationally.

2.

On 12 January 1987, the applicant concluded with the Ministry of Defence of the Republic of Iraq a contract ('the contract‘) to provide a number of lots of ammunition for a price, calculated per item free on board, totalling (USD) 65 124 000 United States dollars. On 25 September 1987, the contracting parties signed an annex under which the applicant agreed to supply an additional quantity of ammunition for a price of USD 18 090 000. Under the terms of payment fixed in Article 3 of the contract, 10% of the price of each lot of ammunition was payable on shipment, upon presentation of the bill of lading and a commercial invoice. The remainder, that is, 90%, was to be paid 24 months after each shipment, plus interest calculated at an agreed rate of 4% per annum. Payment was to be made by means of a letter of credit issued by the Central Bank of Iraq to the Commercial Bank of Greece in favour of the applicant. By telex of 21 January 1987, the Central Bank of Iraq informed the Commercial Bank of Greece that a letter of credit, expiring on 25 March 1990, had been issued in favour of theapplicant. The validity of that letter of credit was extended several times; the last extension, until 30 May 1991, was communicated to the Commercial Bank of Greece by telex from the Central Bank of Iraq of 23 April 1989.

3.

Article 12(1) of the contract stipulates that all disputes arising in connection with the contract were to be finally settled by the International Chamber of Commerce, Geneva.

4.

Between 25 October 1987 and 30 May 1989, the applicant sent 10 lots of ammunition under the contract and received after each shipment 10% of the price for each lot. Under the terms of the contract the remaining 90% was to be paid 24 months after each shipment.

5.

On 2 August 1990, the United Nations Security Council adopted Resolution 660 (1990) to the effect that there had been a breach of international peace and security resulting from Iraq's invasion of Kuwait and that Iraqi forces should withdraw immediately and unconditionally from the territory of Kuwait.

6.

On 6 August 1990, the United Nations Security Council adopted Resolution 661 (1990) in which, declaring that it was 'mindful of its responsibilities under the Charter of the United Nations for the maintenance of international peace and security‘ and noting that the Republic of Iraq had not complied with Resolution 660 (1990), it decided to impose an embargo on trade with Iraq and Kuwait. The embargo was subsequently confirmed by the United Nations Security Council in Resolutions 670 (1990) of 25 September 1990 and 687 (1991) of 3 April 1991.

7.

On 8 August 1990, the Council, referring to the 'serious situation resulting from the invasion of Kuwait by Iraq‘ and to United Nations Security Council Resolution 661 (1990), adopted, on a proposal from the Commission, Regulation (EEC) No 2340/90 preventing trade by the Community as regards Iraq and Kuwait (OJ 1990 L 213, p. 1).

8.

Article 1 of Regulation No 2340/90 prohibits as from 7 August 1990 the introduction into the territory of the Community of all commodities or products originating in, or coming from, Iraq or Kuwait and the export to those countries of all commodities or products originating in, or coming from, the Community. Article 2 of the same regulation prohibits as from 7 August 1990: (a) all activities or commercial transactions, including all operations connected with transactions which have already been concluded or partially carried out, the object or effect of which is to promote the export of any commodity or product originating in, or coming from, Iraq or Kuwait; (b) the sale or supply of any commodity or product, wherever it originates or comes from, to any natural or legal person in Iraq or Kuwait or to any other natural or legal person for the purposes of any commercial activity carried out in or from the territory of Iraq or Kuwait; and (c) any activity the object or effect of which is to promote such sales or supplies.

9.

The documents before the Court show that the Central Bank of Iraq refused to pay the applicant the remaining 90% of the price of the goods plus the agreed interest, that is, USD 75 451 500, which was owed to it under the contract, invoking United Nations Security Council Resolutions 661 (1990), 670 (1990) and 687 (1991).

10.

Since the applicant had not received payment of the sum owed, it sought, jointly with another Greek company owed money by the Republic of Iraq, and obtained, on 30 August 1990, an order for the temporary seizure of the Iraqi oil tankers Alfarahidi and Jambur which were anchored in the port of Piraeus.

11.

On 28 May 1991, the applicant brought proceedings before the Polimeles Protodikio Athinon (Court of First Instance (several judges), Athens) (Greece) against the Central Bank of Iraq. On 12 November 1992, that court delivered its judgment ordering the Central Bank of Iraq to pay the applicant the sum of USD 75 451 500, plus interest at the statutory rate. That judgment was declared provisionally enforceable in respect of the sum of USD 35 000 000. The applicant attempted to have it enforced in Iraq, but was prevented by the retaliatory measures taken by that country as a result of the embargo. The judgment of 12 November 1992 was upheld by the Efetio Athinon (Court of Appeal, Athens) on 19 June 1996.

12.

On two occasions, namely from 10 to 14 July 1994 and from 22 to 24 July 1995, representatives of the applicant and of the Iraqi Government met in order to clarify any matters pending between the parties in relation to the contract. At the first meeting, the Iraqi Government proposed to pay its debt to the applicant by means of the Iraqi assets frozen in banks in the United States of America, on condition that the attachment on the Iraqi oil tankers anchored in the port of Piraeus be lifted and that the applicant abandon all proceedings before the Greek courts and the International Chamber of Commerce, Geneva. At the second meeting, the representatives of the applicant and of the Iraqi Government considered the possibility that the sum owed might be paid by means of crude oil and oil products and they agreed to meet again at a later date in order to fix the timetable and procedure for payment.

Procedure

13.

In those circumstances, by application lodged at the Court Registry on 27 December 1996, the applicant brought the present action.

14.

The written procedure was closed on 23 July 1997.

15.

On 28 April 1998, the...