European Union Law

• Author: International Law Group
• Pages: 63-64

Page 63

The Agreement establishing the World Trade Organization (WTO) seeks to reduce customs, tariffs and other trade barriers among the contracting parties. The 1993 EU regulation dealing with the import of bananas contained preferential provisions for certain African, Caribbean and Pacific States. The WTO eventually held the EU banana regime incompatible with WTO trading rules. See 2000 International Law Update 191; 2001 International Law Update 62 &108. The EU later revised its banana regime, but the U.S. still obtained WTO authorization to impose increased customs duties on EU products in the amount of $191.4 million per year. In June 2001, the U.S. suspended these duties.

Six EU companies (applicants) that export a variety of products, including the Italian battery manufacturer FIAMM, sued in the CFI claiming compensation from the EU Commission and the Council of the European Union for damages they had allegedly suffered because of the U.S.'s retaliatory action.

The Court first points out that the EU may incur non-contractual or tort liability for the unlawful conduct of its institutions (1) if the EU institutions' conduct is unlawful, (2) if actual damage results, and (3) if a causal link exists between the institutions' conduct and the damage. Here, however, the Court is unable to decide whether the Commission and the Council had acted unlawfully because they fall within the purview of the WTO regime. Thus, the CFI has to dismiss the applicants' claims for damages.

The Court does hold, however, that the EU may incur liability even in the absence of unlawful action by its institutions. Where applicants cannot show that the EU institutions' conduct is unlawful, companies that unduly suffer because of their conduct may obtain compensation if (1)...