Cotton ginning firms' bid for EUR 4.45m compensation dismissed

By Leo Gasteen

The General Court has ruled that the actions brought forward by three cotton ginning firms must be dismissed as unfounded, due to the lack of evidence to support their claim that a 2004 CAP support scheme damaged their businesses.

On the accession of Greece to the European Communities, the support scheme for cotton was introduced. That support scheme was extended when Spain and Portugal acceded to the European Communities. As part of the reform of the common agricultural policy in 2003, the Council adopted new rules for direct support schemes and established certain support schemes for farmers. In that context, in 2004 the Council adopted a new scheme of aid for cotton ('the 2004 aid scheme for cotton').

The three Spanish undertakings in question - Sungro SA, Eurosemillas SA and Surcotton SA- brought these actions for compensation for the losses they allegedly suffered because of the adoption and application, during the 2006/07 marketing campaign, of that scheme. By their actions, the three undertakings claimed compensation from the Council and Commission in total amounts of €37 188 as regards Sungro, €2.66 million as regards Eurosemillas, and €1.73 million as regards Surcotton.

However, their action was dismissed by the General court on grounds that the losses they suffered are connected with the infringement of the principle of proportionality which vitiated the annulled 2004 aid scheme for cotton.

The General Court noted that the Community’s non-contractual liability for unlawful conduct of its institutions is subject to the satisfaction of three cumulative conditions, namely the unlawfulness of the conduct of which the Community institutions are accused, the fact of damage and the existence of a causal link between that conduct and the damage complained of.

Consequently, the General Court found that the evidence put forward by the undertakings was intended to show that there is a link between the decrease in the volume of cotton sales during the 2006/07 marketing campaign and the entry into force of the 2004 aid scheme for cotton and not between that decrease and the unlawful act committed by the Council in adopting that scheme.

The General court concluded that the companies have not established that the losses alleged are directly connected to the infringement of the principle of proportionality by the Council in adopting the 2004 aid scheme for cotton.

General Court of the European Union - Justice and Application - Full text