On 22 November 2017, the Court of Justice of the European Union ("CJEU") delivered its judgment in Case C-691/15 P European Commission v Bilbaína de Alquitranes, SA and Others, concerning an appeal brought by the Commission against the judgment of the General Court of 7 October 2015, Bilbaína de Alquitranes and Others v Commission (Case T-689/13) by which the General Court partially annulled Commission Regulation (EU) No 944/2013 (the "Regulation") adapting to technical progress the Classification and Labelling Regulation 1272/2008 (the "CLP Regulation"), in so far as it classified pitch, coal tar, high-temp ("CTPHT") as toxic for the aquatic environment.
In the first case, the General Court considered that the Commission had committed a manifest error of assessment by not taking into account the low water solubility of CTPHT and by assuming instead 100% solubility of all constituents. The Commission brought an appeal against this judgment before the CJEU which dismissed the appeal, confirmed the unlawful classification of CTPHT as toxic for the aquatic environment and, therefore, ordered the partial annulment of the Regulation. The applicants in the General Court and the respondents in the CJEU included members of Cefic's Coal Chemicals Sector Group (''CCSG'') as well as downstream users of CTPHT and were represented by a Fieldfisher team led by partner Koen Van Maldegem.
Background
CTPHT is a substance of unknown or variable composition, complex reaction products or biological materials ("UVCB substance"), which contains polycyclic aromatic hydrocarbons ("PAHs"), and which is used mainly to produce refractories and electrode binders for the aluminium and steel industries.
During the classification process, ECHA disregarded studies submitted by CCSG on CTPHT and instead based the classification of CTPHT on the summation method set forth in the CLP Regulation. According to that approach, the 16 PAH constituents of CTHPT were analysed separately in accordance with their aquatic toxicity effects.
The General Court considered that the Commission (and ECHA) committed a manifest error of assessment because it failed to take into account the low water solubility of CTPHT, as demonstrated by evidence provided by the industry, and instead assumed that all PAH constituents of CTPHT dissolve in water. Because of this error, the Court partially annulled the Regulation in so far as it classified CTPHT as Aquatic Acute 1 (H400) and Aquatic Chronic 1 (H410).
For more details on the background and the judgment of the General Court, see our previous publication at the following link.
In its appeal, the Commission argued in particular that the Court had infringed the CLP Regulation because, in the application of the summation method, the Commission has no discretion and cannot apply any other factors than the ones which are expressly referred to in the CLP Regulation. The Commission also argued that the General Court failed to state reasons since it was not clear in the judgment whether the Commission was wrong in applying the summation method or whether it had applied the summation method wrongly. It finally alleged an abuse of the limits of judicial review and distortion of the evidence.
Ruling
On the alleged failure to state reasons, the CJEU considered that the General Court had clearly and unequivocally stated that the Commission had committed a manifest error of assessment when applying the summation method and that it gave sufficient reasons for its decision.
More importantly, on the alleged infringement of the CLP Regulation, the CJEU assessed whether the Commission, when it applied the summation method, should have limited its assessment solely to the factors expressly referred in Annex I to the CLP Regulation, or whether on the contrary, the Commission, should have exercised its discretion and examined other factors not expressly referred to in the relevant provisions. In this regard, the CJEU first held that point 4.1.3.5.5 of Annex I to the CLP Regulation did not provide for the use of criteria other than those expressly referred to in that provision, but that it was not expressly prohibited either, and that this provision had to be read in context. The CJEU therefore concluded that, when applying the summation method, the Commission was not required to limit its assessment solely to the factors expressly referred to in point 4.1.3.5.5 of Annex I to the CLP Regulation, to the exclusion of any other factor. On the contrary, in accordance with its duty to act diligently, the Commission is required to examine carefully and impartially other factors which, although not expressly referred to by those provisions, are nevertheless relevant.
The CJEU therefore considered that the General Court was right to conclude that the Commission failed to comply with its obligation to take into consideration all the relevant factors and circumstances so as to take due account of the proportion in which the 16 PAH constituents were present in CTPHT and their chemical effects.
On the alleged abuse of the limits of judicial review and distortion of the evidence, the CJEU held that the General Court did not substitute its own assessment of the scientific and technical facts for that of the EU authorities. According to the CJEU, the General Court rather focused its assessment exclusively on the procedural question of determining whether the Commission, in classifying CTPHT, complied with its obligation to take into account all relevant factors or not.
The General Court's judgment, which was backed by the CJEU decision, has far-reaching consequences for EU chemicals litigation. The case sets an important precedent since, to our knowledge, it is the first time that it was clearly held that the Commission, and indirectly ECHA, has committed a manifest error of assessment in the review of chemicals. Additionally, the CJEU clearly confirms that the Commission (and ECHA) can have discretion even in cases where the legal text does not provide for additional criteria (also to the benefit of industry).Traditionally, where chemical legislation has been concerned, and REACH and CLP in particular, the General Court has tended to limit its review and justified the assessment made by ECHA or the Commission by referring to (i) complex scientific and technical facts, (ii) the broad power of discretion of the EU institutions (e.g. the Commission and ECHA) and (iii) the precautionary principle. This argumentation almost always resulted in judgments supporting the authorities.
This also means that, from now on, the Commission and ECHA will have to demonstrate that they have taken into account comments and scientific data submitted by concerned companies and will have to duly justify the reasons for not agreeing with or following such data.
