Luxembourg, 26/01/2000 (Agence Europe) - The European Court of Justice is currently deliberating in the "Dorsch Consult Ingeniergesellschaft" affair, of the name of the German engineering company which is claiming the amount of a debt Iraq owes the company but which has not been recovered due to the Gulf war. Dorsch Consult has asked the Court of Justice to annul the ruling of the Court of First Instance (CFI) which had refused it compensation. The company is claiming over DM two million from the Council and European Commission, increased by an annual interest rate of 8% from 9 August 1990, date when the embargo against Iraq took effect.
The engineering company won a services contract regarding the follow-up to the construction of the Iraq Express Way No1 in 1975 for a 6-year duration, renewable once. On 16 September 1990, Iraq adopted, with retroactive effect, its Law No. 57 on the protection of Iraqi interests and rights. Since that date, the Germany company explained, recovery of its debt had been impossible. It thus considers that the European Community should compensate it, as the Iraqi law was only a "countermeasure" taken by the Iraqi authorities against the Community's embargo, adopted by the Council on 8 August 1990.
The Court of First Instance rejected the claim. For the European judges: i) Dorsch was unable to prove the link between the Iraqi attitude and the adoption of the regulation; ii) Law No.57 was repealed on 3 March 1991, this obstacle having thus disappeared on that date; iii) Dorsch had itself suggested selling the credit line to the Council and Commission as counterpart to the payment of the corresponding amount, which proves that the company did not consider the credit totally irretrievable; iv) Dorsch's injury was no more "special" than that suffered by other companies to whom Iraq owed money; v) Dorsch was unable to prove that it was part of a small circle of companies penalised because their contracts dated back to the time when Germany had not made of Iraq a commercially high risk country with payment guarantees for creditor companies.
The Court of First Instance also stressed that the trade embargo against Iraq had been decreed by the UN Security Council and not the EU: EU Member States are held, under Article 25 of the United Nations' Charter to agree to and implement UN resolutions. It added that, by definition, an embargo comprised effects that affected the free exercise of commercial activities, thereby causing injury to parties that had no responsibility for the situation.
Dorsch is calling on the Court of Justice to annul this CFI ruling. According to the company: i) its injury may be temporary, but real; ii) the CFI neglected elements of proof that the company supplied to it, including hearings, as witnesses, of the then Presidents of the Council and Commission; iii) it had tried, in vain, to contact the authorities and financial organisation concerned, the Rafidan bank; iv) the Court itself is said to have recognised in the Bosphorus ruling that a political embargo had limits.
Antonio La Pergola, as Advocate General (he is now judge at the Court) proposed that the Court reject Dorsch's arguments. For the Advocate General, the Bosphorus ruling, on the contrary, indicated that the fundamental rights of ownership and freedom to do business may be limited by interests of a general interest, stipulating: i) there is no obstacle to the debt being paid some day, interest included; ii) the embargo did not prevent the company turning to Iraqi lawyers on the ground; iii) Dorsch did not succeed in proving that it had suffered a particular or disproportionate sacrifice.
The date at which the Court has to issue its ruling has not yet been set.