The scope of application of the
Charter
Takis Tridimas
Article 51(1)
• The Charter applies with due regard to the
principle of subsidiarity and has two
constituencies. It is addressed to:
• The institutions, bodies, offices and agencies
of the Union
• The Member States “only when they are
implementing Union law”
Constituencies
• EU institutions and bodies
• Member States
• Non-state actors
International agreements
• Does the Charter apply to
• (a) action undertaken under parallel international
treaties concluded by Member States?
• (b) EU institutions when they act as delegates of
the Member States or international
organisations?
• C-370/12 Pringle: Treaties did not confer
competence on the Union to establish the ESM.
Therefore the ESM was not “implementing EU
law”. Hence, Article 47 Charter was not applicable
• Language of Article 51 shows that the Charter
applies to EU institutions irrespective of
whether they act under EU law
• Institutions may be delegated tasks which “do
not alter the essential character of the powers
conferred on those institutions by the
Treaties” (Pringle)
• Were institutions not bound, it would run
counter to the fundamental principle of
legality
National measures (I)
• Art 51 Charter confirms case law (AG Trstenjak in
C-411/10 and C-493/10 N.S.)
• C-617/10 Fransson the Court did not follow the
narrow interpretation based on Villalón AG’s
model of ‘specific interest’. It held, instead, that
the Charter is “applicable in all situations
governed by EU law” (C-260/89 ERT); Uncertain
criterion
• The case law assumes the Charter does not
establish any new power for the Union (C-339/10
Asparuhov Estov; C-27/11 Vinkov). Thus it does
not apply to areas of shared competence where
the EU can potentially legislate
National measures (II)
• C-206/13 Siragusa: objectives-based and effectsbased test
• In determining whether a national measure
implements EU law, the Court will take into
account, among others, the following factors:
whether the measure is intended to implement a
provision of EU law; the nature of that measure;
whether it pursues objectives other than those
covered by EU law even if it is capable of
indirectly affecting EU law; and whether there are
specific rules of EU law on the matter or capable
of affecting it.
• Rationale of this approach:
• To ensure that EU standards are not infringed
in areas of EU activity, whether through action
at EU level or through the implementation of
EU law by the Member States.
• To avoid that the level of protection of
fundamental rights varies according to the
national law
• But the criteria are uncertain (C-198/13
Hernández)
National measures (III)
• If EU law mandates Member States to act, their
action falls within the scope of EU law even if the EU
does not provide for the specific conditions or
arrangements of the measure
• C-650/13 Delvigne questioned the compatibility with
the Charter of French law depriving him of the right
to vote for the European Parliament’s elections. The
Court held that his situation fell within the scope of
the Charter and was incompatible with Arts 39 (right
to vote) and 49 (right to retroactive application of
lighter penalty)
• Villalón AG drew a distinction between the
Articles 39 and 49: the same national action
may fall both within and outside the scope of
the Charter depending on the provision
invoked.
• This narrow approach fails to take into
account the inter-relationship of rights and
focuses on the wrong criterion?
National measures (iv)
• C-411/10 and C-493/10 N.S., the conferment
of discretion to Member States makes the
discretionary power subject to EU law
• C-333/13 Dano the Court took a narrower
view of Article 51(1) suggesting that the
existence of an inter-state element does not
necessarily trigger the application of the
Charter; cf C-256/11 Dereci
Horizontal application
• C-282/10 Dominguez Advocate General
Trstenjak read Article 51(1) as precluding the
horizontal effect of the Charter relying on an a
contrario argument
• Charter may aid the interpretation of both
state measures which affect private relations
and also private obligations arising from
contract
• Courts are bound not to give effect to private
obligations which breach fundamental rights
Horizontal application (II)
• Direct horizontality: C-144/04 Mangold;
C-555/07 Kücükdeveci; cf Shelley v.
Kraemer 334 U.S. 1 (1948)
• Villalón AG stated in C-176/12 AMS that
the Charter rights - other that the
principle of equality, or the rights of
free movement - are not of inferior
status
National cases
• Benkharbouche v Embassy of the Republic of Sudan
and Libya. Can the Charter be invoked against foreign
governments? Relying on Mangold and Kücükdeveci,
the Court of Appeal came to the view that, in certain
circumstances, a Charter right could be applied
horizontally
• The Court of Appeal expanded the scope of
application of the Charter beyond the addressees
expressly stated in Article 51(1). It also transcended
the public – private divide
• R (Chester) v Secretary of State for Justice more
restrictive view of the scope of application of the
general principles of law
Conclusion
• Is the case law consistent?
• What model of constitutionalism?
Union Citizenship in 2015
KCL Annual European Law Conference
Professor Eleanor Spaventa
[email protected]
2015: a snapshot
• C-650/13 Delvigne  Voting rights for
prisoners
• C-67/14 Alimanovich/ C-299/14 Garcia
∂
Nieto  work-seekers
entitlement to
JSA/social assistance
• C-218/14 Singh  Rights of residence
divorced spouse
• The UK / MSs agreement
Delvigne
• Exclusion of voting rights for prisoners /
compatibility with Charter?
• Court  MS is ‘implementing’ EU law
as ban on voting applies also to EP
elections
∂
• Charter applicable but no violation
• NB no mention of ECHR or case law 
autonomous interpretation of Charter or
UK-sensitive?
• NB UK courts had taken different view
Singh
• Residency rights for divorced spouses  Art
13 Dir 2004/38  residence retained if
marriage lasted at least 3 ys, 1 in Host State
∂
• Spouses moved to home
state without
having divorced and then divorced
• CJ  no retention of right to reside
(although MS free to provide) if divorce
proceedings initiated abroad
Some issues arising
• No mention of Charter  yet the Charter
should inform interpretation of EU law and
apply to MSs when implementing EU law
• Right to reside granted to avoid blackmail
effect/undue power over
divorcee spouse
∂
• But – if spouse changes MS then TCN loses
right to reside? Even if: spouse moved to
look for job; or because of lack of resources;
• And domestic violence? see pending
reference from CA NA (C-115/15)
Alimanovic/Garcia Nieto
• Workseeker not entitled to social
assistance (including JSA) if benefit
aimed at ensuring ∂basic needs for
human dignity (Vatsouras overruled?)
• No Article 45 TFEU  exclusion of
personal assessment; no Charter
The Treaty and Dir 2004/38
• Dano ruling (2014)  Union citizen only
covered by EU law to the extent to which she
fulfils conditions provided in Dir 2004/38
• Not clear whether this approach only covers
access to welfare benefits
or is more general
∂
(Singh suggests latter); residence?
• In any event redefinition of relationship
between primary and secondary legislation
• And relevance of the Charter greatly reduced
Pre-Dano
Treaty
Proportionality /
FRs / Personal
assessment
∂
Directive 2004/38
 If conditions
satisfied
automatic rights
Post-Dano
Directive
2004/38 only
∂
No purposive
interpretation
Less FRs
No personal
circumstances
UC, Treaty and the Charter
• Treaty rights less (if at all) relevant  Dir
2004/38 exhausts rights for UC (at least
economically inactive but Singh?);
• No personal assessment (Brey?)
• Charter almost irrelevant
∂
• Court “finally” respectful of legislative
power? (Influence of Brexit?)
• Or not justifiable as secondary legislation
details but does not ‘confer’ rights (Art 21?)
UK/MSs agreement
∂
And looking forward
• Cases C-165/14 Marin and C-304/14
CS  Joint Opinion 4/2/16  Ruiz
Zambrano situation
∂ but claimant with
criminal record
• Case C-115/15 NA, retention of right of
residence after divorce
Europe and the Welfare State
– Friends, Foes or…?
Europe’s relationship with the national welfare states pulls headlines these years. Especially the negotiations
regarding a new settlement for the UK in a reformed European Union (“Brexit”) and the referendum to follow
seem to have brought the tensions in this relationship to its highest culmination so far. Thus, the paper goes to the
heart of some of the puzzles and seeks to throw light upon the prevailing tensions. The analysis anchors around the
following two themes: 1) the conundrum of the overall feud: a clash of different logics; and 2) the overall role of the
CJEU in building up or curing the tensions. Recurring issues are among others judicial activism and social benefits.
In the conclusions, it is among others assessed to which degree the perceived tensions constitute myths rather than
realities – or the other way around.
Ulla Neergaard
Europe and the Welfare State
Professor, Dr. Ulla Neergaard
(University of Copenhagen/
Visiting Professor at University of Oxford/St. John’s College)
Annual European Law Conference
King’s College London, 11 March 2016
2
Europe and the Welfare State
- Friends, Foes, or…?
Introduction
Shakespeare, 1599:
“He that is thy friend indeed,
He will help thee in thy need:
If thou sorrow, he will weep;
If thou wake, he cannot sleep:
Thus of every grief in heart
He with thee doth bear a part.
These are certain signs to know
Faithful friend from flattering foe.”
3
Introduction (continued)
Letter of 10 November 2015 from PM David Cameron, to President of the
European Council, Donald Tusk, regarding a new settlement for the UK
in a reformed European Union (“Brexit”):
“The UK believes in an open economy. But we have got to be able to cope with
all the pressures that free movement can bring -on our schools, our hospitals
and our public services. Right now, the pressures are too great… We need to
ensure that when new countries are admitted to the EU in the future, free
movement will not apply to those new members until their economies have
converged much more closely with existing Member States… And it means
addressing ECJ judgments that have widened the scope of free movement in a
way that has made it more difficult to tackle this kind of abuse… [W]e can
reduce the flow of people coming from within the EU by reducing the draw
that our welfare system can exert across Europe. So we have proposed that
people coming to Britain from the EU must live here and contribute for four
years before they qualify for in-work benefits or social housing. And that we
should end the practice of sending child benefit overseas.”
4
Introduction (continued)
European Council: Decision of the Heads of State or
Government… Section D concerning social benefits and free
movement (18-19 February 2016):
“Free movement of workers within the Union is an integral part of the
internal market which entails, among others, the right for workers of the
Member States to accept offers of employment anywhere within the Union.
Different levels of remuneration among the Member States make some offers
of employment more attractive than others, with consequential movements
that are a direct result of the freedom of the market. However, the social
security systems of the Member States, which Union law coordinates but
does not harmonise, are diversely structured and this may in itself attract
workers to certain Member States. It is legitimate to take this situation into
account and to provide, both at Union and at national level, and without
creating unjustified direct or indirect discrimination, for measures limiting
flows of workers of such a scale that they have negative effects both for the
Member States of origin and for the Member States of destination.”
5
Introduction (continued)
Outline
1.
The Conundrum of the Overall Feud: A Clash of
Different Logics
2.
The Role of the CJEU in the Building Up or Curing
of the Tensions
3.
Afterword – Myths and Realities
6
1. The Conundrum of the Overall Feud:
A Clash of Different Logics
7
1. The Conundrum of the Overall Feud:
A Clash of Different Logics
A. The Social Dimension of the EU
•
•
•
•
•
Originally founded largely without any social dimension, designed as it was
mainly as an economic constitution; since then important developments have
taken place.
More or less synonymous with concepts such as the EU’s Social Constitution,
EU’s Socio-Economic Model, the European Social Model, and perhaps even
the grander concepts European Pillar of Social Rigths or European Social
Union.
Elusive and contested in nature and difficult completely to pin-point.
Based on a fairly limited amount of express EU competences and thus based
on imperfect and incomplete instruments and institutions.
Directed by an underlying ideology largely based on a social market economy
implying a form of market capitalism combined with a social policy.
8
1. The Conundrum of the Overall Feud:
A Clash of Different Logics
B. The Social Dimension of the Eurozone
Main analysed measures, etc., regarding the Eurozone:
March 2010: Europe 2020
May 2010: European Financial Stability Mechanism (or EFSM)
June 2010: European Financial Stability Fund (or EFSF)
September 2010: European Semester (plus 2012 European Semester, 2013 European Semester, 2014 European Semester)
March 2011: Euro Plus Pact (or EPP)
November 2011: Six-Pack
March 2012: Treaty on Stability, Coordination and Governance (or Fiscal Compact/TSCG)
June 2012: Four Presidents' Report
October 2012: European Stability Mechanism (ESM)
November 2012: A Blueprint for a deep and genuine economic and monetary union. Launching a European debate
May 2013: Two-Pack
October 2013: Strengthening the Social Dimension of the Economic and Monetary Union
May 2015: 2015 European Semester
June 2015: Five Presidents' Report
July 2015: Recommendations (directed at each of the Member States)
July 2015: aGreekment and Memoranda of Understanding (or MoU)
September 2015: State of the Union 2015: Time for Honesty, Unity and Solidarity (speech by President of the European
Commission, Jean-Claude Juncker)
September 2015: The Euro and the Future of Europe (speech by Vice-President Dombrovskis)
9
1. The Conundrum of the Overall Feud:
A Clash of Different Logics
B. The Social Dimension of the Eurozone
• The Eurozone was born without a social dimension, which also after the
crisis breaks out is still completely absent.
• It then first appears mainly in the shape of an awareness of the negative
social impact of the crisis, visions of a fairly limited content (social cohesion,
combatting poverty, etc.) and use of certain social indicators in
measurements of the economic situation.
• Later on, it becomes more apparent and seems connected with the concepts
“sustainable social welfare” and “modernisations of welfare systems”.
• Although the Eurozone lacks as a point of departure the explicit power to
impose socio-economic redistributive choices on the Member States, the
reality is that it is empowered to lay down budgetary discipline and balance
rules, which implies that severe constraints have been put on Member
States’ autonomy in their exercise of some of their core social functions.
10
1. The Conundrum of the Overall Feud:
A Clash of Different Logics
C. The Welfare States (Member State-level)
• Generally constructed in rather different variations.
• Highly complex natures.
• The different constructions reflect different historical, cultural and
ideological choices.
• They have importance in identity shaping.
• Have in varying degrees e.g. a publicly owned infrastructure and taxfinanced welfare services or as a guiding principle a connection between
individual contribution and the size of the benefits to be received.
• E.g. labour market regulation, consumer protection, and fundamental
rights may be of importance.
• Certain services are universal in character, so that everyone under certain
conditions is secured access.
• They have originally been constructed on a principle of territoriality, so
that solidarity mechanisms are limited within a given “territory”.
11
1. The Conundrum of the Overall Feud:
A Clash of Different Logics
D. Overall Observations
• Member States have traditionally viewed social policies as a vital element of
their self-understanding, and consequently social policies have continued to
be one of the few policy areas, where national governments have tried to
resist integration.
• Nevertheless, an influence from the EU on Member States’ constructions of
welfare has for long been apparent especially through the waves of
liberalisation and privatisation, which have changed the traditional way of
setting up welfare services in many Member States.
• The economic crisis has through the Eurozone reforms accentuated this
development as these may be viewed as directed by a more neoliberal
framework, which is likely to be much stronger than what rules in Member
States.
• In recent years, especially the Eurozone reforms have thus implied that severe
constraints have been put on certain Member States’ autonomy in their
exercise of some of their core social functions.
12
1. The Conundrum of the Overall Feud:
A Clash of Different Logics
D. Overall Observations
• The two levels in many ways follow different logics and in particular different
understandings of solidarity, freedom, and delimitations of territoriality,
which therefore unavoidably clash.
• In particular, the solidarity mechanisms inherent in the national welfare
states may become undermined by market access justice at the EU level,
which is problematic as no transnational solidarity truly exists.
• Due to differences in levels of welfare from state to state, and economies of
the Member States not being sufficiently converged, certain welfare states
may feel challenged due to a lack of an overall “well-functioning market”
(“market failures”).
13
2. The Role of the CJEU in the Building
Up or Curing of the Tensions
A. Judicial Activism and the CJEUs Overall Role in Redesigning
Welfare States
B. Free Movement and the Overall Role of the CJEU with Regard
to Social Benefits
C. Interim Conclusions
14
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
A. Judicial Activism and the CJEUs Overall Role in Redesigning Welfare States
European Council: Decision of the Heads of State or
Government… Section D concerning social benefits
and free movement (18-19 February 2016):
“The references in the Treaties and their preambles to
the process of creating an ever closer union among the
peoples of Europe do not offer a legal basis for
extending the scope of any provision of the Treaties or
of EU secondary legislation. They should not be used
either to support an extensive interpretation of the
competences of the Union or of the powers of its
institutions as set out in the Treaties….”
15
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
A. Judicial Activism and the CJEUs Overall Role in Redesigning Welfare States
Kutscher (judge of the CJEU), 1976:
“The Community judge must never forget that the Treaties establishing the European
Communities have laid the foundations of an ever closer union among the peoples of
Europe and that the High Contracting Parties were anxious to strengthen the unity of
their economies and to ensure their harmonious development (Preamble to the EEC
Treaty). The principle of the progressive integration of the Member States in order to
attain the objectives of the Treaty does not only comprise a political requirement; it
amounts rather to a Community legal principle, which the Court of Justice has to bear
in mind when interpreting Community law, if it is to discharge in a proper manner its
allotted task of upholding the law when it interprets and applies the Treaties. How
else should the Court of Justice carry out this function which it has been assigned
except by an interpretation of Community law geared to the aims of the Treaty, that
is to say, one which is dynamic and teleological?”
16
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
A. Judicial Activism and the CJEUs Overall Role in Redesigning Welfare States
Micklitz, ‘Judicial Activism of the European Court of Justice and the
Development of the European Social Model in Anti-Discrimination
and Consumer Law’, 2010:
“Mangold, Laval… and Viking… represent different social issues. All three
illustrate the Member States’ concern that the shaping of the social legal
order lies in their own hands and that the ECJ has no jurisdiction to deal with
matters that so heavily affect the national social welfare systems, whatever
that might look like. So in essence what is at stake is the relationship
between the economic European legal order and the national social welfare
system.”
17
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
B. Free Movement and the Overall Role of the CJEU with Regard to Social
Benefits
General Observations:
• Although the organisation of welfare is primarily meant to be handled at the
national level, the reality is that due to other – and often more powerful competences belonging to the EU, the latter in actual fact has a huge
influence on the development of the area.
• The negative integration (free movement rules) led by the CJEU implies that
these national competences to some degree become an illusion or
misleading.
• For instance, Garben points out: “… regardless of assurances to the contrary,
areas of Member State competence can be deeply affected by European
integration. Negative integration through CJEU case law limits the capacity
of national communities to organise these sensitive areas in the way they see
fit.”
18
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
B. Free Movement and the Overall Role of the CJEU with Regard to Social
Benefits
General Observations:
• One of the most remarkable developments in EU law is the expansive
interpretation of free movement provisions, especially with regard to the
general scope and the understanding of restrictions combined with a
restrictive understanding of justifications.
• Hereby, the huge – and not necessarily anticipated - impact on national
welfare states has been possible.
• Now all aspects of these different free movement provisions may affect the
degree to which Member States have discretion to choose what kind of
welfare state and welfare law they wish.
• Generally speaking, the CJEU tends to interpret EU internal market law in a
way that treats limitation of market access in a wide sense as a restriction
and thus - unless justified - contrary to EU law.
19
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
B. Free Movement and the Overall Role of the CJEU with Regard to Social
Benefits
Analysis of Recent Case Law – Point of Departure:
• It is common understanding that the strength of rights under the legal
framework connected with union citizenship originally was imaginatively
shaped by the CJEU - most clearly in Grzelczyk.
• The legal framework of union citizenship has never been crystal clear, and
today it is constituted by a complicated web of primary and secondary law.
• The detailed interpretation of the key rules on union citizenship has proven
increasingly controversial.
• Liberal judgments of the CJEU is often soon after followed by a conservative
counter-reaction, leading to an overall lack of direction, which manifests
itself in incoherent and conceptually flawed judgements.
• There is not much doubt that the rights of the economically inactive from
the early days have been limited, but at times the CJEU has tried to delimit
the differences between this group from that of the economically active.
20
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
B. Free Movement and the Overall Role of the CJEU with Regard to Social
Benefits
Important Recent Cases
•
•
•
•
Case C-333/13 Dano (Grand Chamber)
Case C-67/14 Alimanovic (Grand Chamber)
Case C-299/14 Garcia-Nieto
Opinion in Case C-308/14 Commission v UK
21
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
B. Free Movement and the Overall Role of the CJEU with Regard to Social
Benefits
Dominant narrative in literature and in various law blogs:
 The CJEU’s recent case law in this particular area and in particular in these
cases is under radical change.
 It is claimed that the CJEU with alacrity backs off from national welfare
systems with regard to “non-market-citizens” - but most likely not otherwise.
22
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
B. Free Movement and the Overall Role of the CJEU with Regard to Social
Benefits
Nic Shuibhne, CMLR - generally:
 “… recent case law raises questions about the extent to which the existence and not just the
exercise of free movement rights has been undermined and, therefore, whether the claim of Union
citizenship as a fundamental status grounded in meaningful primary rights can really be
sustained.”
 “When that filter is set aside so strikingly, explicit articulation and careful explanation of the
constitutional propriety of that decision are owed to Union citizens, not to mention the national
authorities that must deal with it – including the national courts. This is especially true when
previous case law has been apparently but not openly reversed.”
Thym, CMLR – about Dano:
 “In sum, the Dano judgment presents us with a noteworthy shift of emphasis, which accentuates
Member State interests, while side-lining countervailing constitutional arguments that could have
justified a different outcome.”
Kramer, European Law Blog – about García-Nieto:
 ”In the light of this case law, the García-Nieto judgment not only confirms the Dano–Alimanovic
line of jurisprudence, but also adds another dimension to the realization that the heyday of a
justice-driven EU social citizenship is behind us.”
23
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
B. Free Movement and the Overall Role of the CJEU with Regard to Social
Benefits
O’Brien (EU Law Analysis) – generally and about C-308/14 Comm. v UK:
 “The political message being sent by irate governments to ‘back off’ from national welfare
systems’ assumed prerogative to discriminate between home nationals and EU nationals is being
received and applied with alacrity by the Court of Justice… The result may, in the current
environment, be unsurprising. But getting there with existing legal tools is problematic. The
Opinion contains a number of uncomfortable contortions to give undue deference to the
national rules, and avoid tackling the underlying conflict of rules and approaches. It represents
quite startling judicial activism in embroidering the legislation with unwritten limitations as to
personal scope, tinkering with the subject matter, and asserting an unwritten licence to
discriminate whenever something smells like a welfare benefit.”
Peers, EU Law Analysis – about Alimanovic:
 “As in Dano, the CJEU does not expressly overturn prior case law, but makes it easier for
Member States to justify refusal of benefits than might otherwise have been the case under prior
case law.”
24
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
B. Free Movement and the Overall Role of the CJEU with Regard to Social
Benefits
Example of express understanding of Member States’ worries - Case C-67/14
Alimanovic, para. 62:
“Moreover, as regards the individual assessment for the purposes of making an
overall appraisal of the burden which the grant of a specific benefit would
place on the national system of social assistance at issue in the main
proceedings as a whole, it must be observed that the assistance awarded to a
single applicant can scarcely be described as an ‘unreasonable burden’ for a
Member State, within the meaning of Article 14(1) of Directive 2004/38.
However, while an individual claim might not place the Member State
concerned under an unreasonable burden, the accumulation of all the
individual claims which would be submitted to it would be bound to do so.”
Case C-184/99 Grzelczyk, para. 44 – in contrast?
“…a certain degree of financial solidarity between nationals of a host Member
State and nationals of other Member States” should be accepted…
25
2. The Role of the CJEU in the Building Up
or Curing of the Tensions
C. Interim Conclusions
• Free movement and non-discrimination principles have had and still have a
tremendous impact on the prevailing tensions; not least through the activities
of the CJEU.
• This is mainly because the provisions have been interpreted as having the force
to challenge national competences even in the social realm.
• There are several recent cases, which in literature are seen as representing a
significant and recent change by the CJEU with regard to social benefits.
• The CJEU has even expressly indicated its sympathy with troubled Member
States in its recent case law.
• Although any court including the CJEU should pay attention to the
surrounding society - having a clear self-interest in taking political preferences
into account – if this tendency is correctly identified it could be said to hamper
the overall standard and consistency of the case law.
26
3. Afterword – Myths and Realities
27
3. Afterword – Myths and Realities
Overall Observations
• It was originally not intended to create a United States of Europe with
a strong, centralised welfare state.
• Today, this still holds true, but also brings clear challenges.
• In particular, it may be concluded that the prevalent tensions are
understandable and unavoidable given a certain degree of imbalance
already in the construction itself of the complex system.
28
3. Afterword – Myths and Realities
Myths or Realities?
• The perceived threats to national welfare state systems seem to a large
degree as exaggerated at least in economic terms, and thus although a
reality, somehow also having become almost mythical.
• Although much national regulation of relevance to the provision of welfare
to some degree may be disrupted by EU law, if one believes in more welfare
in the end becoming the outcome, and the advantages of the EU at the
same time also ensuring benefits/rights transnationally, then it is not
necessarily to be viewed as a threat but rather as a possibility.
• Thus, much of the tensions as perceived by the national welfare states
seem to be more of a symbolic or emotional nature than as truly
problematic issues.
• However, it is of course fully understandable, if the peoples of Europe
would feel reluctance and irately fight against what they see as a loss of
what is an essential element in their daily lives.
29
3. Afterword – Myths and Realities
The Role of the CJEU
• The CJEU has all along been an interesting “partner” influencing the
relationship between “Europe and the Welfare State” over the years: at
times increasing the amount of tensions; at other times decreasing
them – but all along being central in how the contours of the
battlefield is being defined.
• Nearly thirty years ago Cappelletti warned that the path-breaking “On
Law and Policy in the European Court of Justice” by Rasmussen might
have an ill-directed influence; today one can however add that the
apparent loss of full confidence in the CJEU and the EU as based on
the rule of law could indeed be worrying.
Academic excellence for business and the professions
EU External Relations
Recent Case Law
Panos Koutrakos
Professor of EU Law
Jean Monnet Professor of EU Law
Outline
I.
II.
III.
IV.
Competence
Legal basis
Institutional aspects
What to look forward to
I. COMPETENCE
• Does it exist?
• Exclusive or shared?
• Article 3(2) TFEU: ‘The Union shall also have exclusive competence
for the conclusion of an international agreement when its conclusion
is provided for in a legislative act of the Union or is necessary to
enable the Union to exercise its internal competence, or in so far as
its conclusion may affect common rules or alter their scope’.
Case C-114/12 Commission v Council
(Neighbouring Rights)
• Negotiation of Council of Europe Convention on Neighbouring
Rights
• Commission: authorisation to negotiate
• Decision by Council and Representatives of the Governments of the
Member States meeting in the Council
• Art. 3(2) TFEU: ‘may affect common rules or alter their scope’
– If agreement ‘largely covered’ by EU rules
– no possible contradiction required
Opinion 1/13 (Hague Convention on the civil
aspects of international child abduction)
•
•
•
•
•
•
•
All Member States are parties
EU not a party
Accession of new Member States – Declarations of acceptance
EU competence: exclusive, shared, or non-existent?
Article 81(3) TFEU
Article 3(2) TFEU: ‘may affect common rules or alter their scope’
Regulation 2201/2003 concerning jurisdiction and the recognition
and enforcement of judgments in matrimonial matters and the
matters of parental responsibility
Opinion 1/13 (Hague Convention on the civil
aspects of international child abduction)
• ‘a comprehensive and detailed analysis of the relationship between
the envisaged international agreement and the EU law in force’
(para. 74)
• Reg. 2001 covers ‘to a large extent’ the main aspects of Hague
Convention
• ‘may have an effect’ ‘even if there is no possible contradiction’ (para.
86)
• Nonetheless, reference to possible problems in the absence of EU
exclusive competence
II. LEGAL BASIS
• Constitutional significance
• Decision-making input
• Re-organisation of EU external relations: common set of objectives
for all EU external policies (trade, social, political) in Article 21(3)
TEU
Case C-377/12 Commission v Council (EUPhilippines Partnership and Cooperation Agreement)
• Commission: trade (207 TFEU) + development (209 TFEU)
• Council: yes, but also readmission (79(3)), transport (91, 100), and
environment (191(4) TFEU)
• ECJ: broad notion of development cooperation BUT ‘its main
purpose’ may not be the implementation of another policy
• As for provisions on other policies:
– do they contribute to the pursuit of development objectives?
– do they contain obligations secondary and indirect in relation to
development objectives?
III. INSTITUTIONAL ASPECTS
• Article 218 TFEU
• Increasing significance of EP
• Increasing willingness to flex its muscle
• Duty of cooperation
Case C-658/11 EP v Council (EU-Mauritius
Agreement)
• EUNAVFOR
• EU-Mauritius Transfer Agreement
• Article 218(10) TFEU: ‘The European Parliament shall be
immediately and fully informed at all stages of the procedure’.
• Text sent 3 months following adoption and signing and 17 days
following OJ publication
The judgment in EU-Mauritius Agreement case
• ‘essential procedural requirement’ (para. 80)
81. That rule is an expression of the democratic principles on which the
European Union is founded. In particular, the Court has already
stated that the Parliament’s involvement in the decision-making
process is the reflection, at EU level, of the fundamental democratic
principle that the people should participate in the exercise of power
through the intermediary of a representative assembly …
82. From that point of view, the Treaty of Lisbon has even enhanced
the importance of that rule in the Treaty system by inserting it in a
separate provision that is applicable to all types of procedures
envisaged in Article 218 TFEU.
How wide is the scope
of the duty to inform the EP?
• Case C-263/14 EP v Council (EU-Tanzania Transfer Agreement)
• Article 218 (10) TFEU: ‘at all stages’; ‘fully’; ‘immediately’
• Notification of decision to authorise negotiations (but not about
negotiating directives)
• No information during negotiations
• Information 9 days following authorisation to sign, but not on
wording
• OJ publication
• AG Kokott: violation of 218(10) TFEU
C-73/14 Council v Commission
(re: International Tribunal for the Law of the Sea)
• Article 335 TFEU: ‘In each of the Member States, the Union shall
enjoy the most extensive legal capacity accorded to legal persons
under their laws; it may, in particular, acquire or dispose of movable
and immovable property and may be a party to legal proceedings.
To this end, the Union shall be represented by the Commission….
• Article 16(1) TEU: ‘The Council … shall carry out policy-making and
coordinating functions as laid down in the Treaties’.
• Article 218(9) TFEU: ‘The Council … shall adopt a decision
suspending application of an agreement and establishing the
positions to be adopted on the Union's behalf in a body set up by an
agreement, when that body is called upon to adopt acts having legal
effects …’
The judgment in Case C-73/14 ITLOS
• Broad interpretation of Article 335 TFEU
• Narrow interpretation of Article 218(9) TFEU
• Article 16(1) TFEU: about policy formulation, not ‘observations’
• Sincere co-operation (Article 13(2) TFEU)
Context specific? AG Sharpston
90. The subsequent clarification and application of existing commitments of the EU under
international law through international judicial proceedings, including ITLOS advisory
proceedings, represent in most cases merely the consequences of the Council’s earlier
‘policy’ choices and thus do not require defining a new policy.
91.
Although that is the situation here, I would be reluctant to accept that this will
always be the case. Thus, it is not unforeseeable that, in the context of international
judicial proceedings in which the EU has standing, the EU might need to take a position
on an issue that is not yet covered either by existing EU commitments under international
law which are to be interpreted (and applied) in those proceedings or by any other rules
of international law on which the EU has already taken a position. In such circumstances,
the Council’s prerogatives would need to be respected. However, it seems to me that the
ITLOS proceedings at issue here, and the submissions made by the EU, concerned
matters arising within the operation of UNCLOS and the UN Fish Stocks Agreement.
Case C-28/12 Commission v Council (Air
Transport Agreement with USA)
•
•
•
•
•
EC+ MSs – USA Air Transport Agreement
Iceland and Norway Accession Agreement - Ancillary Agreement
Decision on signature and provisional application
Article 218(1), (5), (8) TFEU: Council - QMV
Decision by the Council and the Representatives of the
Governments of the Member States meeting within the Council
The judgment in Case C-409/13
• A right to withdraw but not a right to veto
• ‘would have distorted an essential element of the proposal … in a
manner irreconcilable with the objective pursued by that proposal of
improving the effectiveness of EU policy concerning MFA’ (para. 90)
• Duty of co-operation: effort to compromise; advance warning.
What to look forward to
• Arbitral awards pursuant to intra-EU BITs
• T-694/15 Micula v Commission
• 704/15 Micula and Others v Commission
• Is payment of damages awarded by an arbitral tribunal a state aid
under EU law?
What to look forward to
•
•
•
•
•
• Opinion 2/15
EU-Singapore Free Trade Agreement
Transport
Investment
Sustainable development
Intellectual property
What to look forward to
Case C-72/15 Rosneft
• Jurisdiction re: CFSP sanctions decision under 267
TFEU?
• No CFSP jurisdiction principle (275 TFEU, 24 TEU)
• Exceptions under 275 TFEU:
– 40 TEU compliance;
– Annulment of sanctions against persons
• Effective remedy?
Academic excellence for business and the professions
EU External Relations
Recent Case Law
Panos Koutrakos
Professor of EU Law
Jean Monnet Professor of EU Law
King’s College London, 11 March 2016
‘THE ECB’S DISCRETIONARY POWERS AND ROLE IN THE SOVEREIGN DEBT
CRISIS: AN OVERVIEW’
Phoebus L. Athanassiou, Principal Legal Counsel,
European Central Bank
I wish to begin by thanking Professors Biondi and Tridimas for their warm welcome,
and for the kind invitation they extended to me, in December last year, to participate
in this conference. As a former King’s College student I am delighted to stand before
you today to briefly address the topic of the ECB’s monetary policy discretionary
powers and role since the start of the sovereign debt crisis. It is a topic that I can
only hope to touch on very superficially, both because of its great delicacy and
complexity and because of my own limitations. What I hope to be able to do in the
next 20 minutes is to share with you a personal take as to where the start of the
crisis found the ECB, and where its perceived end has left it in terms of its monetary
policy discretionary powers and institutional role.
I.
THE
ECB
AND
ITS
PURCHASE
PROGRAMMES:
LESSONS
FROM
GAUWEILER
I have chosen the 16 June 2015 ruling of the ECJ in Gauweiler 1 – only the second2
ECJ decision to assess the legality of the Euroarea response mechanisms to the
sovereign debt crisis - as the starting point of my analysis. Before reaching the
1
2
Gauweiler, (C-62/14), ECLI:EU:C:2015:400.
The first was Pringle (C-370/12), ECLI:EU:C:2012:756, discussed in Part II of this presentation.
conclusion that the ECB had not acted ultra vires in stating its intention to launch its
‘OMT’ bond purchase programme, the ECJ assessed at length the conditions subject
to which a Eurosystem government bond purchase programme would be consistent
with the ECB’s monetary policy mandate, without circumventing the monetary
financing prohibition of Article 123 TFEU. What are those conditions, and what do
they tell us about the limits to the ECB’s monetary policy discretionary powers and
the EU law constraints against the background of which those powers are to be
exercised?
Germany’s Federal Constitutional Court had, in its preliminary reference request (the
first ever in the history of a Court known for its ‘difficult’ relationship with the ECJ),
expressed reservations as to the legality of OMTs, which, in its view, risked violating
the monetary policy mandate of the ECB and circumventing the monetary financing
prohibition. In a nutshell, the view held by the Federal Constitutional Court was that
OMTs complemented the financial assistance provided by the Member States and,
subsequently, the ESM, to troubled Euroarea Member States and, to that extent,
were ultra vires and in violation of Article 123 TFEU. Accordingly, the ECJ divided
the substantive part of its judgment in two distinct components, to address each of
the two main reservations of the referring Court.
One of the core issues that the referring Court expressed concerns about in its
preliminary reference request was whether OMTs qualified as monetary policy rather than economic policy – measures (the former are the preserve of the ECB,
under Article 127 TFEU, while the latter are the preserve of the Member States,
under Article 119 TFEU). According to the ECJ, both the objectives of a measure,
and the instruments employed to achieve them, are relevant for its classification as a
monetary policy measure or otherwise (para. 46). Starting with the objectives of a
measure, the fact that this may also serve goals other than price stability (the
primary objective of the Eurosystem) or have indirect effects on the stability of the
euro area (which is a matter of economic policy) did not, in the ECJ’s view, detract
from its classification as a monetary policy measure (paras 51 & 52). 3 Turning to the
choice of instruments employed to achieve the objectives of a monetary policy
measure, the ECJ judgment in Gauweiler confirms that the ECB can legitimately
engage in secondary market government bond purchases, as monetary policy
measures, where their objective is to restore the smooth operation of the monetary
policy transmission mechanism, and to safeguard the singleness of the monetary
policy in the euro area (paras 53-56). The targeted nature (selectivity) of OMTs,
which, in the referring Court’s view, was a feature typical of economic (rather than
monetary) policy measures did not invalidate OMTs as legitimate instruments of
monetary policy: to achieve, through OMTs, its monetary policy objective of restoring
the monetary policy transmission mechanism, the ECB was free to act selectively,
where the disruption it sought to restore was, as in this case, localised (paras 55 &
89). Besides, the conditionality attaching to the proposed OMTs did not equate
them to economic policy measures (it did not, in other words, subordinate the
implementation of OMTs, as monetary policy measures, to economic policy
considerations, linked to a bond-issuer’s compliance with the terms of an economic
adjustment programme), first because the effects of bond purchases on the issuer’s
impetus to comply with the terms of such programme were only indirect (paras 5859), second because the element of conditionality built into OMTs ensured that the
latter would ‘not work against the effectiveness of the economic policies followed by
3
In this respect, also see para. 56 of the Court’s ruling in Pringle, where the Court argued, mutatis mutandis,
that ‘an economic policy measure cannot be treated as equivalent to a monetary policy measure for the sole
reason that it may have indirect effects on the stability of the euro’.
the Member States’ (para. 60), and third because compliance with conditionality was
a necessary but not sufficient condition for OMT purchases4 (para. 62). 5
Having determined that OMTs qualified as genuine monetary policy measures, the
ECJ proceeded to examine their proportionality. Applying its settled case law, the
ECJ divided its proportionality analysis in two parts: first, were OMTs appropriate to
attain their legitimate monetary policy objectives and, second, did they only go as far
as what was necessary to achieve those objectives? In terms of the
appropriateness of OMTs, the ECJ noted first, that these were accompanied by an
adequate statement of reasons (paras. 70-71), and second that the policy decision to
launch them was based on a thorough, reasoned analysis of the economic situation
in the euro area, which, at the ECB’s discretion, pointed to their advisability, and was
not vitiated by manifest errors of assessment (paras. 72-74) despite the challenges
against them (para. 75). It followed that OMTs passed the appropriateness test, in
the sense that the ECB was entitled to take the view that OMTs could serve its
legitimate monetary policy objectives (para. 77), a view that was proven correct by
the stabilising impact on the euro area of the announcement of the mere intention to
launch OMTs (para. 79). Turning to the second part of the proportionality test, the
ECJ took note of the various constraints built into OMTs. Given their temporary
nature, their quantitative limits, the narrow scope of eligible bonds and eligible
issuers, and, by implication, the limited amount of commitments that the Eurosystem
would undertake by purchasing OMT-eligible bonds, OMTs did not, in the ECJ’s
4
5
Disruptions in the operation of the monetary policy transmission mechanism were also necessary.
In this respect, the ECJ parted company with the opinion of AG Cruz Villalón who, in his assessment of the
extent to which the ECB’s decision to launch OMTs was reconcilable with its monetary policy mandate,
argued that because the ECB played an active part in the design of financial assistance programmes, and
because OMTs were unilaterally linked, through conditionality, to those programmes, to make the purchase of
government bonds subject to compliance with conditions set by the ECB itself, rather than by a third party,
may be an instrument to enforce those conditions and their macroeconomic (rather than monetary policy)
rationale thereby detracting ‘from or even distort the monetary policy objectives that the OMT programme
pursues’ (para. 145).
view, go beyond what was necessary to achieve the legitimate objectives of the
Eurosystem (paras 81-91).
The second core issue that the referring Court had expressed concerns about was
that of the compatibility of OMTs with the monetary financing prohibition, citing
the risk of its possible circumvention through the programme. The ECJ found that
sufficient safeguards had been built into the prospective OMTs to avert the risk of its
implementation generating effects equivalent to direct purchases. These included
first, the discretionary nature of purchases under OMTs, second the observance of a
‘black-out’ period before any purchases could be conducted, third that no prior public
announcement would precede the purchase of bonds nor would any information be
divulged with regard to the volumes to be purchased (para. 106), fourth the
temporary nature of OMTs, conditional on the need to restore the monetary policy
transmission mechanism and safeguard the singleness of the monetary policy of the
euro area, and their selectivity, both of which limited the OMTs’ impact on the
financing conditions of the beneficiary states (paras 113-116), fifth the ECB’s option
to sell the purchased bonds at any time (para. 117), sixth the restriction of purchases
to bonds issued by Member States already en route to recovery (i.e. Member States
having regained - or in the process of regaining - market access (para. 119)), and
seventh the OMTs’ conditionality element, which precluded the risk of the prospect of
bond purchases dis-incentivising Member States from proceeding with fiscal
consolidation (para. 120). Finally, the ECJ acknowledged that while OMTs ‘could
expose the ECB to a significant risk of losses’, such risks were inherent in open
market operations (which is why the Statute provides for a method of sharing losses)
and did not weaken the Article 123 compliance guarantees built into OMTs. In the
ECJ’s view, the design of the proposed OMTs was ‘likely to reduce the risk of losses
to which the ECB is exposed’, without the need for the ECB to shield itself from the
risk of losses by claiming a privileged creditor status (paras 123-126).
What does Gauweiler tell us about the limits to the ECB’s monetary policy
discretionary powers at times of crisis, the EU law constraints subject to which those
powers are to be exercised, and the features of any supervening or future ECB bond
purchase programmes? A first lesson from the ECJ’s judgment is that to attempt to
separate monetary from economic policy, as the Federal Constitutional Court did in
its preliminary reference request, where it emphasised the ECB’s primary – but
disregarded its secondary – objective, can be both artificial and misleading. The
dividing line between the two is, ever so often, far from clear, not least because EMU
provisions vest the ECB with both monetary and economic policy powers. 6 Besides,
the selectivity of a legitimate monetary policy measure is no more sufficient to turn it
into an ultra vires economic policy measure than its correlation to external
conditionality compliance: both selectivity and conditionality are, in varying degrees,
essential to the assessment of the necessity, proportionality and risk profile of a
monetary policy measure but of limited, if any, relevance to the assessment of the
ECB’s competence to adopt it in the first place, as a legitimate component of its
monetary policy. Provided the objectives pursued by a measure match those of the
ECB, and the instruments employed coincide with those listed in EU primary law, the
measure in question qualifies as one of monetary policy, however much it may also
6
In this respect, see Article 127, paragraph 1 TFEU, second sentence. We would read Pringle to corroborate this
proposition: the Court’s finding, in Pringle, that the establishment of the ESM fell within the area of economic
policy and did not violate the exclusive competence of the Union, under Article 3(1)(c), in the area of monetary
policy, despite the fact that its objective was to ‘safeguard the stability of the euro area as a whole’ (Pringle, para.
56), does not point to the existence of a hard dividing line between monetary and economic policy. Indeed, in
paragraph 56 of its judgment in Pringle, the Court explicitly acknowledged that economic policy measures may
have an indirect impact on monetary policy. What is crucial to the ultimate classification of an act is a comparison
of the objective or objectives it purportedly serves against the actual instruments chosen for its pursuit. Both in
Pringle and in Gauweiler, the instruments of choice matched the purported objectives, even if, in Pringle, the
Court seemed to place the main emphasis on objectives, as a means of determining the nature of a measure as
one of legitimate monetary policy (Pringle, para. 53, as compared with para. 60 thereof).
serve other (e.g. economic) aims. A second lesson from Gauweiler is that ECB
monetary policy measures need to comply with the ECJ’s established proportionality
test if they are to withstand scrutiny: what this effectively means is that the ECB is
under a duty to provide an adequate statement of reasons for its monetary policy
decisions (as Article 296 TFEU, second sentence, explicitly requires in the context of
legal acts adopted by the EU Institutions), with the assessment of adequateness
being a function of the particulars of the monetary policy measure in question.
However, in line with the established jurisprudence of the ECJ, there are boundaries
to the ECJ’s powers of judicial review, ultimately linked to the ECJ’s lack of inherent
expertise in matters of monetary policy: provided policy choices are the product of
objective examination, and ‘an adequate statement of reasons’ is provided, it is not
for the Court to second-guess the Governing Council in matters of monetary policy,
given their complex, technical nature and the judiciary’s limited power of appreciation
of the intricacies of monetary policy. That monetary policy can be contested is
undisputed: by avoiding to supplant, on legal grounds, the ECB as Europe’s Chief
Economist, the ECJ has, effectively, redirected the debate around the ECB’s
monetary policy choices to its natural arena, that of political economy and the highlevel, non-legal, choices that shape those choices. A third lesson is that a legitimate
monetary policy measure, similar to the one at stake in Gauweiler, will clear the
monetary financing hurdle if sufficient safeguards have been built into it to avoid the
risk of a circumvention of Article 123 TFEU. What those safeguards would need to
be, will, to some extent, depend on the specificities of the monetary policy measure
in question; that said, ‘black-out’ periods, the discretion to sell bonds purchased at
any time and limits to the volume of bonds to be purchased are likely to feature
amongst the list of obvious safeguards where the measure in question is some type
of purchase programme. As the ECB is both allowed and expected to operate in the
open market, notwithstanding the risks inherent in market activities, the risk of losses
is not, in and of itself, sufficient for an ECB discretionary monetary policy measure to
be successfully challenged on the basis that it may violate the monetary financing
prohibition, nor can breaches of Article 123 TFEU be inferred from the fact that the
ECB has failed to claim a privileged creditor status. It is against the above three
lessons that the validity of other, present or future ECB monetary policy nonstandard measures is to be judged, it is to Gauweiler that lawyers are bound to look
when faced with challenges against the legality of such measures, and it is for that
reason that Gauweiler is such a crucial judgment for the ECB and the future of its
monetary policy action, especially at times of crisis, rather than a mere ‘footnote’ or a
‘side-show’, as some commentators have suggested.
Interestingly, at least one prominent purchase programme has been launched since
the public announcement of the OMTs namely, the Public Sector Purchase
Programme (PSPP). The PSPP, which was launched on 9 March 2015, targets
marketable debt instruments issued by euro area central governments, certain
agencies located in the euro area or certain international or supranational institutions
(referred to in legal texts as ‘international organisations and multilateral development
banks’) located in the euro area. The PSPP’s compliance with the three main
lessons derived by the Court in Gauweiler (and, by necessary implication, with the
ECB’s mandate) is, in the speaker’s view, beyond dispute: both its objective (to
target persistently low inflation) and the instruments used for its pursuit (purchases,
on the secondary market, of government bonds) are consistent with those expected
of a genuine monetary policy measure; the PSPP is proportionate to the monetary
policy objectives it pursues; finally, the PSPP does not violate the monetary financing
prohibition, given the black-out periods it sets to guarantee that transactions are not
tantamount to purchases in the primary market, its purchase limits, its rules on
portfolio allocation and its transparency requirements. Besides, whatever the merit of
selectivity and conditionality as challengeable aspects of a monetary policy measure,
the PSPP is easier to defend compared to OMTs. This is because, unlike OMTs, the
PSPP encompasses all euro area Member States bonds (hence, its launch raises no
selectivity issues), while it also contains no overarching reference to the issuer’s
compliance with economic adjustment programme conditionality (given that its
objective is a euro area-wide issue).
One final remark is apposite. It would be tempting to argue that the Court could have
reached, in Gauweiler, the same overall conclusion, as it did, in respect of the
legitimacy of OMTs, by stressing the secondary objective of the ECB (that of the
‘support of the general economic policies in the Union’) instead of construing, at
length, the objective of OMTs, and the instruments used for their pursuit, to decide
whether OMTs were within the ECB’s mandate. While at first sight attractive, this
argument would, ultimately, appear to rest on a misconception: ECB action is only
legitimate if it serves its primary objective under the Treaty (price stability). Support
of the general economic policies in the Union is not a free-standing ECB objective
and cannot legitimize ECB action the objective of which is not geared, first and
foremost, towards maintaining price stability. It follows that, while tortuous, the path
chosen by the Court in Gauweiler was the only one available to it to assess the
legitimacy of OMTs, once it had declared the request for a preliminary ruling
admissible.
II. THE ECB AND ITS ROLE IN THE TROIKA: LESSONS FROM PRINGLE
The ECB’s activities since the start of the sovereign debt stage of the financial crisis
have not been limited to the launch of extraordinary bond purchase programmes or
the adoption of other, non-standard monetary policy measures. The ECB has found
itself thrust into an altogether new role, that of its participation in the work of the
Troika. The importance of this particular aspect of the ECB’s activities was
recognized by the AG in his opinion in Gauweiler and, before that, by the ECJ, in its
judgment in Pringle, a preliminary reference ruling from the Supreme Court of the
Republic of Ireland and the first ECJ decision to assess the legality of the Euroarea
response mechanisms to the sovereign debt crisis. I will devote the remainder of my
presentation today to this aspect of the ECB’s response to the crisis, in search of
what it may have to tell us about the institutional transformation of the ECB since the
start of the crisis.
When the sovereign debt stage of the financial crisis kicked in, the ECB’s expertise
was viewed by many as a useful complement to that of the Commission and the IMF,
in their efforts to advise on robust EU/IMF financial adjustment programmes.
Accordingly, the ECB was to take on the task of supporting the Commission in
negotiating, at technical level, and at monitoring the implementation of the various
EU/IMF programmes concluded since 2010, following a statement to this effect of
the euro area Heads of State or Government, dated 11 February 2010. 7 Each of the
legal bases for the different types of financial assistance facilities since the start of
the sovereign debt stage of the financial crisis has set out the contours of the ECB’s
role in the Troika. The ESM Treaty, the most recent of these, tasks the ECB with
supporting the Commission first in assessing the debt sustainability of euro area
7
See Statement by the heads of State or Government of the European Union on Greece, of 11 February 2010.
Member States requesting financial support, their financing needs and the existence
or otherwise of risks to euro area financial stability, as part of the negotiations for a
Memorandum of Understanding and the corresponding financial adjustment
programme, and second with monitoring Member State compliance with programme
conditionality. 8
As some, at least, of the above are not traditional central banking tasks, it falls to
consider three key points: first, what the actual role of the ECB in the Troika is,
second whether the ECB’s role in the Troika is in conflict with its statutory
mandate, and third whether the ECB’s role in the Troika attributes new
decision-making powers to the ECB.
Starting with the first point (that of the ECB’s role in the Troika), each of the legal
bases catering for the different types of financial assistance facilities made available
to troubled euro area Member States since the start of the sovereign debt stage of
the financial crisis has conferred tasks on the Commission, alongside the obligation
to undertake these “in liaison with” or “in cooperation with” the ECB. This choice of
this set-up was dictated by the dual need to respect, on the one hand, the ECB’s
independence 9 and, on the other hand, the principle of conferral, according to which
EU institutions only have the powers expressly conferred upon them by primary EU
8
9
For the first Greek programme (financed through bilateral loans), the ECB’s involvement is mentioned in the
private law inter-creditor agreement between the participating Member States; for later programmes, financed
by the European Financial Stability Facility (EFSF), a private company, the ECB’s role is set out in the private
law EFSF Framework Agreement; for programmes co-financed by the European Financial Stabilisation
Mechanism (EFSM), an EU instrument financed out of the EU budget, the legal basis of the ECB’s involvement
is the Council Regulation establishing the EFSM; for programmes financed by the European Stability
Mechanism, the role of the ECB is established in the ESM Treaty. The ECB’s role in official surveillance has
been established in EU secondary legislation, notably in the context of the “Six Pack” and “Two Pack”.
The core of the argument is that no piece of secondary legislation (with the exception of the SSM Regulation,
which is based on the enabling provision of Article 127(6) of the Treaty) could impose new tasks on the ECB,
as this would violate the prohibition of Article 130 TFEU (also binding on the EU legislator), to give instructions
to the ECB.
law. 10 The foregoing legal considerations aside, what the set-up opted for, in
connection with the ECB’s involvement in the work of the Troika, suggests is that the
ECB’s status in the Troika is that of the ‘junior partner’, tasked with the provision of
technical advice. 11
Turning to the second point (whether the ECB’s role in the Troika is in conflict with
its monetary policy mandate), the ECJ did not detect, in Pringle, any conflict between
the ECB’s statutory tasks and those allocated to it under the ESM Treaty, which
were ‘in line with the various tasks which the FEU Treaty and the Statute of the
ESCB [and of the ECB] confer on that institution’, given the ECB’s primary law task
of supporting the general economic policies in the Union, and its right, under Article
23 of its Statute, to establish relations with international organisations (para. 165).
The third point (whether the ECB’s role in the Troika attributes new decision-making
powers to it) is, perhaps, the most crucial, from an institutional perspective. By way
of introduction, it is important to note that the role of the Troika is not one of decisionmaking but of technical analysis and advice: the actual decision-making body (the
one in whose remit it falls to decide whether to grant financial assistance, and under
which conditions) is the Eurogroup. 12 The logical implication is that neither the
powers of the Commission nor, a fortiori, those of the ECB, as the Troika’s ‘junior
partner’ have been expanded on account of their participation in the Troika. Pringle
10
The core of the argument is that no new tasks could be conferred on the ECB, without a revision of the
Treaties.
11
There is support for this proposition in the opinion of AG Kokott in Pringle, where she expressed the opinion
that the tasks entrusted to the ECB under the ESM Treaty “are relatively minor in comparison with those of
the Commission”, that, given that the ESM Treaty requires the Commission mainly to act ‘in liaison’ with the
ECB “it is not so much that tasks are allocated to the European Central Bank but that it has a qualified right to
be consulted” and that, “the European Central Bank is under no obligation to perform the tasks allocated to it
in the ESM Treaty” (paras 179 and 181).
12 It is the Eurogroup that instructed the Commission to negotiate the first MoU with Greece and set the
parameters for that negotiation in a Council Decision of 10 May 2010 addressed to Greece (2010/320/EU),
OJ 11.06.2010, p. 6.
is authority for this proposition. There, in upholding the compatibility with EU law of
the tasks allocated to the Commission and the ECB under the ESM Treaty, the ECJ
stated that, “the duties conferred on the Commission and ECB within the ESM
Treaty, important as they are, do not entail any power to make decisions of their
own” (para. 161), and that “the tasks conferred on the Commission and ECB do not
alter the essential character of the powers conferred on those institutions by the EU
and the FEU Treaties” (para. 162).
Should the ECB simultaneously participate, as technical adviser, in the Troika and
activate an OMT-type bond-purchase programme that requires, inter alia,
compliance by the relevant programme country with the conditions of its financial
adjustment programme? While recognizing that there is no obstacle to the ECB’s
regular participation in financial assistance programmes, AG Cruz Villalón
expressed, in his opinion in Gauweiler, the view that, ‘… if exceptional circumstances
were to arise which were grounds for activating the OMT programme, it would, for
that programme to retain its function as a monetary policy measure, be essential for
the ECB to detach itself thenceforth from all direct involvement in the monitoring of
the financial assistance programme applied to the State concerned … under no
circumstances would it be possible for the ECB, in a situation in which a programme
such as OMT is under way, to continue to take part in the monitoring of the financial
assistance programme to which the Member State is subject when, at the same
time, that State is the recipient of substantial assistance from the ECB on the
secondary government bond market’ (paragraph 150). The AG concluded that, ‘the
OMT programme is to be regarded as a monetary policy measure, provided that the
ECB refrains — once the time has come to put that programme into effect — from
any direct involvement in the financial assistance programmes of the ESM or the
EFSF’ (paragraph 151). In its ruling in Gauweiler, the ECJ did not raise the prospect
of any potential conflict of interests for the ECB when simultaneously participating,
as technical adviser, in the Troika and activating an OMT-type bond purchase
programme. As explained earlier in my presentation, the Court saw conditionality as
an instrument through which to ensure that, ‘the ECB’s monetary policy measures …
will not work against the effectiveness of the economic policies followed by the
Member States’. 13 The Court viewed adherence to programme conditionality
positively, as a means through which to avoid the risk of the launch of OMTs
lessening the incentives of beneficiary Member States to follow a sound budgetary
policy. 14 Ultimately, the concern expressed by AG Cruz Villalón on a possible ECB
conflict of interest reflects the eschewed perception of the ECB as taking up a policy
role when acting as a member of the Troika.
To summarise the position, it follows from Pringle, and the legal bases for the ECB’s
action as member of the Troika, that the ECB only participates in it as an expert
technical advisor, without any newly attributed decision-making authority. The fact
that the ECB has been more visible, as member of the Troika, than one would
normally expect of a mere advisor, is attributable to the weight and authoritativeness
of its advice. Its visibility should not, however, be mistaken for an indication that the
ECB assumed the same level of responsibility as the Commission or, a fortiori, the
Eurogroup, for the work of the Troika. It could, no doubt, be argued that the task of
advising the Commission would not be inconsistent with a phasing-down in the
ECB’s visibility and involvement in the work of Troika. However, what appears
undisputed is that a fundamental change in the ECB’s involvement in the work of the
13
Gauweiler, para 60.
14
Ibid., para 120.
Troika would be hard to reconcile with the ECB’s compliance with the principle of
sincere cooperation vis-à-vis the Commission, which is required to liaise with the
ECB in performing its Troika role. De lege lata, both the ESM Treaty and secondary
EU law require a certain measure of ECB involvement in the Troika and, for as long
as these legal texts remain unchanged, no fundamental reconsideration of the ECB’s
involvement in the work of the Troika appears likely.
Thank you for your attention.
Developments in EU
Competition Law
Professor Alison Jones
King’s College London
Overview
EU Competition Law
Outline of developments in the last year
Issues and themes
Focus on Three Pillars of EU Competition Law
Applicable to Undertakings – Cases at EU level
Article 101 & Article 102
EUMR
• Prohibit anticompetitive
agreements between
undertakings and abuse of a
dominant position held by an
undertaking(s)
• Enforced publicly by the
Commission (subject to
review by the EU courts) and
NCAs (together the ECN) and
privately by litigants before
national courts
• Prohibits mergers with an EU
dimension which will
significantly impede effective
competition within the EU
• Enforced exclusively by the
Commission, subject to
review the EU courts
State aid and EU law before English courts dealt with in other sessions
2016 Speech by Commissioner Vestager on Setting Priorities in
Antitrust
Will the case improve people’s lives e.g., will it make a key sector like energy, financial services or the digital economy - work better?
Will it have an impact beyond the case itself?
• Applying law to new scenarios, eg SEP cases;
• Reminding business of law e.g., restrictions to online trade;
• Deterrence, e.g., cartels
Enforcement by Commission appropriate? Or NCAs or other body
more appropriate? Not every case of unfairness for competition law
Outline of Developments in the
Last Year
Cartel Fines in € million
2012-Jan 2016
2000
1500
1000
500
0
2012
2013
2014
2015
2016
Article 101: Cartels still core priority (despite relatively
low level of fines in 2015)
Commission Cartel Decisions
• 2015 : 5 cartel decisions (ICAP- Yen Libor; Parking Heaters; Food
repackaging; Cargo Train Operators; Optical Disc Drives); (parental
liability ; leniency (including for JV and parents); settlements);
• 2016: Car part producers (20th settlement – full immunity for Denso);
• Dropped case against 13 banks in CDS, but new cases in pipeline
EU Courts
• Many cartel appeals – fine levels/ equal treatment/recidivism/
parental liability/ single continuous infringement / due process etc;
• Annulment of fines in Airfreight, Case T-67/11, Martinair v
Commission etc: Commission had described a single and continuous
agreement in its statement of reasons, but finding not clearly
reflected in the operative part of the decision. Contradictions/
inconsistencies infringed rights of defence and precluded review by
the Court
Article 101: Cartels – some other important points
C-194/14,
AC-Treuhand
Liability for ‘facilitators’: Art 101(1) catches agreements between
undertakings, even where its purpose is to restrict competition on a market
on which one of the undertakings is not active
C-373/14,
Toshiba
Market sharing agreement between EEA and Japanese producers restricted
competition by object
C-286/13 P,
Dole
Upheld Commission’s finding that regular pattern of communications
relating to price-setting factors could be regarded, by its very nature, to be
harmful to the proper functioning of competition, reiterating - even if no
direct connection between practice and consumer prices
C-172/14,
ING Pensii
Division of customers by insurance companies restricted competition by
object
Reach of Article 101: establishing an agreement or
concerted practice?
Parallel pricing, exchange of information,
price signalling
• Exchanges of information, C-286/13 P, Dole
• C-74/14, Eturas – when can concerted practice be
established through online communications
• Price signalling through public announcements,
Container Liner Shipping market testing commitments
• Cement proceedings relating to parallel pricing
closed. Note opinions of AG Wahl on Commission’s
requests for information in this case e.g., Case C247/14 P Heidelberg Cement etc
Article 101: Horizontal cooperation and Vertical
Agreements
Horizontal Cooperation
• Investigations: Honeywell/Du Pont, MasterCard and
International Skaters Union
• Effects of horizontal cooperation agreements should be
assessed even if contain severe restraints?
• Cartes Bancaires;
• Commission’s SWD on restrictions of competition by
object – revised June 2015
• Skyteam another airline alliance (similar to One World,
Star Alliance) – revenue sharing JV between airlines for
extensive cooperation on pricing, capacity, scheduling
and revenue management coordination and designed to
achieve efficiencies - commitments decision
Article 101: Horizontal cooperation and Vertical
Agreements
Vertical Agreements
• No Commission decisions, but:
• Considerable activity at national level, not always consistent
(Online Booking);
• Commission e-commerce inquiry;
• Hollywood studios – investigation into geo-blocking; whether
restrictions preventing cross-border access to online/satellite
pay-TV services in agreements concluded between US film
studios and EU pay-TV broadcasters infringe Article 101
• Judgment in C-345/14, SIA ‘Maxima Latvija’ - a clause in
commercial lease giving tenant right to oppose the lease of
commercial premises in the shopping centre to other tenants is
not ‘among the agreements which it is accepted may be
considered, by their very nature, to be harmful to the proper
functioning of competition’
Article 102
Commission
• A number of important on-going Commission investigations
(including e.g., Gazprom/ Google/ Qualcomm);
• Commitments, Bulgarian Energy Holding
EU Court Judgments on Abuse
• Margin Squeeze: Case T-486/11, Orange Polska SA v Commission
(another margin squeeze case);
• Rebates: C-23/14, Post Danmark II (standardised retroactive rebates),
and Intel (exclusivity rebates) pending before Court of Justice;
• Seeking an injunction by a patent-holder: Case C-170/13, Huawei
(following Commission’s Samsung and Motorola cases)
Huawei: The questions referred
Essentially, the Landgericht Düsseldorf asked
the CJ whether, and if so when, the seeking of
an injunction by a patent-holder against a
patent infringer may constitute an abuse* of a
dominant position contrary to Article 102
In this case, the patent-holder was a holder of
a standard-essential patent (‘SEP’) who has
committed to license that SEP to all third
parties on Fair, Reasonable and NonDiscriminatory (‘FRAND’) terms
* Existence of dominant position not contested by parties or raised by referring court
Some core issues to be decided
Is there a role for competition law in this sphere
(should it be left to national patent/ contract law to
determine?)
How should patent and competition law be
reconciled? Relationship to existing abuses?
What about fundamental right of access to court?
1. A role for competition law?
Some national courts resolving applying principles of
national law (infringement of a European patent to be dealt
with by national law – but must ensure certain measures
available (Dir 2004/48/EC)) (also US)
Huawei: antitrust is relevant. Existence of a dominant
position not contested – so court simply went on to
consider the question posed relating to the existence of an
abuse – but maintaining balance between free competition
and safeguarding IPR/ effective judicial protection
2. How should IP/competition law be
reconciled/ balance be maintained?
Starting point: competition law does not interfere with
exercise of exclusive IPR – exercise not in itself an abuse
But might an IPR holder go beyond legitimate right to
exclude in order to stifle competition?
Case-law - can be abusive in exceptional circumstances to
refuse to license: Volvo/Magill/IMS
Court of Justice: circumstances different in Huawei to
previous cases
Huawei - Court of Justice
Distinguishing/ core features in this case
• (1) SEP: essential to standard - indispensable to competitors
manufacturing products complying with standard (otherwise
compromises essential function)(§§ 49-50);
• (2) SEP status only because of owner’s irrevocable FRAND
commitment: a) SEP-holder can, by bringing action for
injunction/recall, prevent competitors’ products from
appearing/ remaining on market and reserve to itself
manufacture of products; b) FRAND commitment creates
legitimate expectations that FRAND licence will be granted so
refusal to do so may in principle constitute an abuse (§§ 51-53)
Abuse can be raised as defence to action for injunction/ recall of products – but because only
obliged to grant FRAND licence – not abuse if SEP-proprietor complies with certain conditions
Notice: Must have contact with alleged infringer even if already using teaching of SEP (it may not
be aware);
If implementer expressed willingness to conclude FRAND licence. SEP-holder to present specific,
written offer - amount of royalty / way calculated (best placed eg to ensure no discrimination) ,
For alleged infringer to respond promptly in good faith – accept or with FRAND counter-offer
SEP-holder to consider, if rejects
Alleged infringer/implementer to provide security
Parties can, by common agreement, request independent determination (implementer cannot be
criticized for challenging/reserving right to challenge validity of essentiality of patents)
3. Access to court?
The principle of access to court is
ITT v
Promedia: a fundamental right and a general
principle ensuring the rule of law
• Art 102 can only deny right exceptionally e.g., not an attempt to
establish rights but serves to harass the opposite party and part of plan
to eliminate competition
• Huawei: Court recognised high level of protection for IPR holders
conferred by EU law (Directive and Charter) – cannot in principle be
deprived of right to have recourse to legal proceedings to ensure
effective enforcement of exclusive rights
• FRAND commitment does not negate rights but justifies imposition of
obligation to comply with specific requirements when bringing action for
injunction/recall
• Abusive nature of exercise of IPR can be raised in defence to actions for
injunction/ recall of products (refusal to grant licence on FRAND terms)
A new type of abuse
• Refusal to license SEP on FRAND terms may in
principle be abuse
• Abuse may be raised as defence to action for
injunction
• Holder of FRAND-encumbered SEP does not
abuse DP by bringing action for infringement
seeking an injunction/recall as long as: (1) alerted
infringer and presented written offer etc to
willing licensee; and (2) alleged infringer not
diligently responded to offer etc
• A number of issues left unresolved
EUMR
Commission
Judgments
• No prohibition since 2013
• Majority of Phase II cleared subject to
commitments (8 out of 10 in 2015-6)
• 2014 White Paper – still considering –
especially proposals on minority noncontrolling interests
• Case T-175/12, Deutsche Börse – upholding
prohibition of Deutsche Börse/ NYSE
Euronext merger
• Case T-160/10, Niki Luftfahrt GmbH upholding clearance of Lufthansa/Austrian
Airlines merger
Other, for example
ECN: Rejection of complaint which been dealt with by an NCA, T355/13, Easyjet; Consultation on how to empower NCAs to be more
effective enforcers, including ensuring independence of NCAs
Private Enforcement: Jurisdiction and Brussels Regulation - Case C352/13, Cartel Damage Claims v Akzo Nobel
Procedural Issues: Case C-583/13 P, Deutsche Bahn v Commission,
Cement cases
Commitments Decisions: SkyTeam and Bulgarian Energy Holding
State Aid case law – 2015/2016
Prof. Andrea Biondi
King’s College London
[email protected]
State Aid case law – the numbers
General Court


Cases pending as at 31 12-2014
2011- 2012 - 2013 - 2014
179
152
146
288

completed in 2014: 51

European Court of Justice

Cases completed in 2014: 41
The menu
1
• Notion of ‘Aid’
• ‘Compatibility – aid to banks litigation’
2
3
• Some procedural/constitutional issues
Notion of Aid (Art 107(1)TFUE)
Aid: objective notion
Art.107(1)
Conditions
Granted by the state or through state
resources
Advantage
Selectivity
Distorsion of competition/effect on trade
State Resources

Case T-305/13 SACE (2015): general and
specific indicators Imputability (Stardust test)
Selective Advantage
Favouring certain undertakings or production of certain goods
Advantage
Selective
Market Operator Principle
Case C-39/14 BVVG (2015):
 No aid – public authorities entitled to
reject a bid grossly disproportionate, but
price still close as possible to the market
value of the land at issue.
No justifications available (protection of
heritage).
Selectivity
The ‘classic’ test
– Favouring certain undertakings or the
production of certain goods in comparison with
other undertakings which are in a legal and
factual situation that is comparable in the
light of the objective pursued by the measure
in question.
– Justified by the logic of the system
– Case C-143/99 Adria Wien Pipeline [2001] ECR
I-8365
Selectivity: variations on a theme or
a return to the Treaty?


T-399/11 Banco Santander v. Commission
(2014)
Spanish tax regime on financial goodwill is
not planned to offer an advantage to any
particular category of undertakings or the
production of certain goods, but instead it
attempts to regulate certain economic
transactions.
Selectivity: variations on a theme or a return to
the Treaty?





T-513-T-719/13, Spain v Commission/PYMAR (2015)
Tax lease schemes - Bank acts as intermediary between a
maritime shipping company and a shipyard.
The bank through public interest company (EIG) buys the
ship and sells shares in that company to investors who gain
tax advantages based on depreciation rules.
That advantage – 85%-90% - is passed to the shipping
company in the form of a rebate on the price of the vessel.
The investors keep the rest of the money as a return on
their investment.
Selectivity: variations on a theme or
a return to the Treaty?



No State aid when an advantage is
accessible to all undertakings that carry
out a particular investment available to all
type of undertakings;
Not selective on the mere basis that it
was subject to an authorisation procedure.
Not a new development…?
Selectivity :And the CJEU?
Case C-15/14 Commission v MOL (2015):
 Selectivity different from detection of an
economic advantage.
 Necessity to determine whether the
measure in question confers an exclusive
benefit to certain undertakings.
 Mere discretion not enough .
Selectivity: 3 parts test cases
Case C-5/14, Kernkraftwerke Lippe-Ems
GmbH, (2015)
Duty on nuclear fuel not selective. Methods
of producing electricity and other than that
based on nuclear fuel, are not, in the light of
the objective pursued by those rules, in a
comparable factual and legal situation.
Selectivity:3 parts test cases


T-620/11 GFKL v European Commission
(2016) and C 287/11,Heitkamp BauHolding
GmbH (2016)
German tax law on ‘carrying forward
losses’ Not allowed when a company was
acquired by another: SELECTIVE
Compatibility – Aid to banks







Case T-499/12 HSH Investment Holdings Coinvest-C and HSH
Investment Holdings FSO v Commission EU:T:2015:840
Case C-667/13 Banco Privado Português and Massa Insolvente do
Banco Privado Português EU:C:2015:151
Joined Cases C-352/14 and 353/14 Iglesias Gutiérrez and Rion
Bea EU:C:2015:691
Case C-526/14 Kotnik and others, Opinion of AG Wahl,
EU:C:2016:102
Case T-812/14 R BPC Lux 2 and others v Commission EU:T:2015:119
Case T-814/14 Banco Espírito Santo v Commission EU:T:2015:936
Case C-93/15 P Banco Privado Português and Massa Insolvente do
Banco Privado Português v Commission EU:C:2015:703
Commission ‘soft law’ powers




Case C-526/14 Kotnik and others, Opinion of AG Wahl
(2016);
Banking Communication cannot be de facto bind Member
States;
If rules in the Banking Communication are not complied
with, this would not, in itself, constitute a valid reason for
the Commission to declare the aid incompatible;
See however C-431/14 Greece v Commission, Opinion of
Advocate General Sharpston (2016).
The ‘constitutional’ status of state
aid law




Klausner
Holz
Niedersachsen GmbH v Land NordrheinWestfalen (2016)
Case
C-505/14
State aid v res judicata
A question of supremacy?
Role of national courts
Conclusions…
Case C-518/13, Eventech Ltd
…
EU law in English Courts
Kieron Beal QC
Introduction
• UK membership of EU under its greatest scrutiny yet
• Lawyers In For Britain publication, 11/3/2016 :
www.lawyers-inforbritain.uk
• Not to be confused with Lawyers for Britain
• Sense of what has the ECJ ever done for us?
Yes, Monty Python has copyright protection
. . . And lawyers. But hopefully not in this room
Recent developments
•
UK Courts increasingly confident when determining EU law issues
•
Revised approach to the test for proportionality shows this
•
Of course, occasional blips
•
But UK Courts recognise role of EU law and afford it supremacy where
appropriate
•
More mature approach to References. Made only where EU legislation
is challenged or where novel or difficult issues arise
Proportionality (1)
•
The historic position: R (Eastside Cheese Co) v Secretary of State for
Health [1999] 3 CMLR 123, CA per Lord Bingham CJ at [48].
•
R (Sinclair Collis Ltd) v Secretary of State for Health [2011] EWCA Civ
437, CA per Arden LJ at [153]-[155], [181] and Lord Neuberger MR at
[203]. But see Laws LJ at [40]-[41].
•
Academic and judicial criticism: Professor Tridimas, cited by Laws LJ in
Sinclair Collis; Sinclair Collis Ltd v Lord Advocate [2012] CSIH 80; 2013
SC 221 per Lord Carloway at [56]-[59].
•
R (British Telecommunications plc) v. Secretary of State for Business,
Innovation and Skills [2011] EWHC 1021 (Admin) per Kenneth Parker J
at [207] to [218]
Proportionality (2)
•
R (GBGA) v. Secretary of State for Culture, Media and Sport [2014]
EHWC 3236 (Admin), [2015] 1 CMLR 28 per Green J at [99] to [110]
•
R (Lumsdon) v. Legal Services Board [2015] UKSC 41, [2015] 3 WLR
121, SC, per Lords Reed and Toulson at [22]-[82]. [103]: Sinclair Collis
no longer provides “reliable guidance”.
•
R (BASCA) v. Secretary of State for Business, Innovation and Skills
[2015] EWHC 1723 (Admin), [2015] 3 CMLR 28 per Green J at [135][148].
Proportionality (3)
• Modest qualifications – one pre-dating Lumsdon and one postdating it.
• R (on the application of Rotherham MBC) v Secretary of State
for Business, Innovation and Skills [2015] UKSC 6, [2015] 3
CMLR 20, per Lord Sumption at [22]-[24] and [47], Lord
Neuberger at [61]-[65]. But see Lord Mance at [142]; and Lord
Carnwath at [168]-[171].
• Case C-333/14 Scotch Whisky Association [2015]
ECLI:EU:C:2015:845, ECJ at [35] and [51]-[59].
Occasional blips
•
HMRC v. Aimia Coalition (LMUK) [2013] UKSC 15 per Lord Reed at [30] to [47].
See:
–
–
–
•
Lord Hope dismissing the appeal at [87]: “I think that it was a pity that a preliminary
ruling was sought in this case.”;
Lord Walker at [118]: “I was one of the Law Lords who, five years ago, directed a
reference to the Court of Justice, but with hindsight I recognise that it was
unnecessary, and that it would have been better not to have made a reference.”
Lord Carnwath at[120]: “In the light of the CJEU judgment, I would have regarded the
appeal as bound to succeed.”
R (AB) v. Secretary of State for the Home Department [2013] EWHC 3452
(Admin), per Mostyn J. Disbelief that Charter of Fundamental Rights could apply
in the UK, as a likely result of political statements made at the time.
The Charter in the UK
• “European summit Charter on rights ‘no more binding
than the Beano’,” The Telegraph, 14 October 2000
• “Historic EU deal, but at what price?” Daily Mail, 23
June 2007: “Mr Blair's final appearance on the
European stage produced a clear negotiating
success as Britain won a legally-binding opt-out from
the controversial charter.”
The Charter
The Beano
Maturing symbiosis (1)
•
Moved on from dark days of AB, although ministers still capable of
making fundamental mistakes with EU law (Macedonia not in the EU
etc).
•
Now CFR routinely deployed: The Rugby Football Union v.
Consolidated Information Services Ltd (formerly Viagogo) [2012] UKSC
55, [2012] 1 WLR 3333, SC per Lord Kerr at paras 45-46 (which predates AB).
•
R (Teresa Gudanaviciene) v. The Director of Legal Aid Casework
[2014] EWCA Civ 1622, CA.
Maturing symbiosis (2)
•
Trilogy of three cases from Lord Dyson MR.
•
R (Evans) v. Attorney General and Information Commissioner [2014]
EWCA Civ 254, [2014] QB 855, CA per Lord Dyson MR at [57]; upheld
on appeal on different grounds: [2015] UKSC 21, SC
•
Benkharbouche v. Embassy of the Republic of Sudan [2015] EWCA
Civ 33, per Lord Dyson MR at [77]-[81]
•
Google Inc v. Judith Vidal-Hall [2015] EWCA Civ 311, CA per Lord
Dyson MR and Sharp LJ at [98]. Last two on appeal to the SC.
Maturing symbiosis (3)
•
Emerging coherence of integrated EU rights protection under domestic law
•
R (Clientearth) v. DEFRA: [2015] UKSC 28, [2015] 3 C.M.L.R. 15, SC
•
Case C-300/11 ZZ (France) v Secretary of State for the Home Department
[2013] Q.B. 1136, CJEU and [2014] EWCA Civ 7; [2014] Q.B. 820, CA.
•
Mirga v. SSHD [2016] UKSC 1, [2016] 1 W.L.R. 481, SC
•
But see R (Chester and another) v. Secretary of State for Justice [2013] UKSC
63, [2014] AC 271, SC per Lord Mance at [39] and [40]; and Pham v. SSHD
[2015] UKSC 19, per Lord Neuberger at [90].
Francovich damages
• Delaney v. Secretary of State for Transport [2015] EWCA Civ
172, [2015] 1 W.L.R. 5177, CA versus
• Recall Support Services [2014] EWCA Civ 1370, [2015] 1
C.M.L.R. 38, CA.
Appropriate use of references
•
R (David Davis and others) v. SSHD [2015] EWHC 2092 (Admin) and
then on appeal issues arising from a review of the legality of the DRIPA
regime were referred to the ECJ: [2015] EWCA Civ 1185; [2016]
H.R.L.R. 1.
•
R (GBGA) v. HM Treasury and HMRC [2015] EWHC 1863 (Admin);
[2016] S.T.C. 151, per Charles J.
•
R (Western Saharan Campaign) v. DEFRA [2015] EWHC 2898
(Admin), per Blake J.
•
R (Simply Pleasure Ltd) v. Westminster CC: [2015] UKSC 25; [2015]
A.C. 1600, SC.
Agreed references?
•
Case C-477/13 R (Pillbox 38 Ltd) v. SSH (AG Kokott, Opinion of 23
December 2015), judgment awaited.
•
Capernwray Missionary Fellowship of Torchbearers v. HMRC [2015]
UKUT 368 (TCC), Judge Berner
The future?
Fin
www.blackstonechambers.com
King’s College Annual European Law Conference
11 March 2016
“A NEW SETTLEMENT FOR THE UNITED KINGDOM
WITHIN THE EUROPEAN UNION”:
LEGAL ISSUES
Daniel Denman
Director, European Law Group, Government Legal Department
Letter from David Cameron to Donald Tusk, 10 November 2015
Proposals for reform
1. Economic Governance
There are today effectively two sorts of members of the European Union. There are Euro members and
non-Euro members. As set out in Protocol 15, the United Kingdom has a permanent opt-out from the
Eurozone. Other countries will in due course join the Euro. But, for now, there are nine of us outside;
and it matters to all of us that the Eurozone succeeds.
So we do not want to stand in the way of measures Eurozone countries decide to take to secure the
long-term future of their currency. But we want to make sure that these changes will respect the
integrity of the Single Market, and the legitimate interests of non-Euro members.
I am confident we can achieve an agreement here that works for everyone. Britain is not seeking a new
opt-out for the UK in this area – we have the opt-out from the single currency we need. Nor are we
looking for a veto over what is done in the Eurozone. What we seek are legally binding principles that
safeguard the operation of the Union for all 28 Member States – and a safeguard mechanism to ensure
these principles are respected and enforced.
These principles should include recognition that:
• The EU has more than one currency.
• There should be no discrimination and no disadvantage for any business on the basis of the
currency of their country.
• The integrity of the Single Market must be protected.
• Any changes the Eurozone decides to make, such as the creation of a banking union, must
be voluntary for non-Euro countries, never compulsory.
• Taxpayers in non-Euro countries should never be financially liable for operations to
support the Eurozone as a currency.
• Just as financial stability and supervision has become a key area of competence for
Eurozone institutions like the ECB, so financial stability and supervision is a key area of
competence for national institutions like the Bank of England for non-Euro members.
• And any issues that affect all Member States must be discussed and decided by all Member
States.
2. Competitiveness
People across Europe want the European Union to help generate growth and jobs. The United
Kingdom has always been a champion of making Europe more competitive.
So the United Kingdom welcomes the current European Commission’s focus on supporting economic
growth and scaling back unnecessary legislation. This has included some important measures that
British businesses have called for, such as the further steps towards a single digital market, which
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could add 3 per cent to EU GDP; and a Capital Markets Union, which will help get finance to
entrepreneurs and growing businesses.
The United Kingdom also welcomes the new trade strategy published last month, reflecting an agenda
we have been advocating for years and including pursuing potentially massive trade deals with
America, China, Japan and ASEAN.
But with the best will in the world, we would all acknowledge that the EU can go much further. In
particular, for all we have achieved in stemming the flow of new regulations, the burden from existing
regulation is still too high. So the United Kingdom would like to see a target to cut the total burden on
business.
The EU should also do more to fulfil its commitment to the free flow of capital, goods and services.
The United Kingdom believes we should bring together all the different proposals, promises and
agreements on the Single Market, on trade, and on cutting regulation into a clear long-term
commitment to boost the competitiveness and productivity of the European Union and to drive growth
and jobs for all.
3. Sovereignty
As you know, questions of sovereignty have been central to the debate about the European Union in
Britain for many years. I have three proposals in this area.
First, I want to end Britain’s obligation to work towards an “ever closer union” as set out in the Treaty.
It is very important to make clear that this commitment will no longer apply to the United Kingdom. I
want to do this in a formal, legally-binding and irreversible way.
Second, while the European Parliament plays an important role, I want to enhance the role of national
parliaments, by proposing a new arrangement where groups of national parliaments, acting together,
can stop unwanted legislative proposals. The precise threshold of national parliaments required will be
a matter for the negotiation.
Third, I want to see the EU’s commitments to subsidiarity fully implemented, with clear proposals to
achieve that. As the Dutch have said, the ambition should be “Europe where necessary, national where
possible”.
In addition, the UK will need confirmation that the EU institutions will fully respect the purpose
behind the JHA Protocols in any future proposals dealing with Justice and Home Affairs matters, in
particular to preserve the UK’s ability to choose to participate. National Security is – and must remain
– the sole responsibility of Member States, while recognising the benefits of working together on
issues that affect the security of us all.
4. Immigration
The UK believes in an open economy. But we have got to be able to cope with all the pressures that
free movement can bring – on our schools, our hospitals and our public services. Right now, the
pressures are too great.
The issue is one of scale and speed. Unlike some other Member States, Britain’s population is already
expanding. Our population is set to reach over 70 million in the next decades and we are forecast to
become the most populous country in the EU by 2050. At the same time, our net migration is running
at over 300,000 a year. That is not sustainable. We have taken lots of steps to control immigration
from outside the EU. But we need to be able to exert greater control on arrivals from inside the EU
too.
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Britain has always been an open, trading nation, and we do not want to change that. But we do want to
find arrangements to allow a Member State like the UK to restore a sense of fairness to our
immigration system and to reduce the current very high level of population flows from within the EU
into the UK. These have been unplanned and are much higher than forecast – far higher than anything
the EU’s founding fathers ever envisaged. These very substantial flows of population have, of course,
also had a significant impact on a number of Member States, many of whose most highly qualified
citizens have departed en masse. So this is a shared challenge.
We need to ensure that when new countries are admitted to the EU in the future, free movement will
not apply to those new members until their economies have converged much more closely with
existing Member States.
We also need to crack down on the abuse of free movement, an issue on which I have found wide
support in my discussions with colleagues. This includes tougher and longer re-entry bans for
fraudsters and people who collude in sham marriages. It means addressing the fact that it is easier for
an EU citizen to bring a non-EU spouse to Britain than it is for a British citizen to do the same. It
means stronger powers to deport criminals and stop them coming back, as well as preventing entry in
the first place. And it means addressing ECJ judgments that have widened the scope of free movement
in a way that has made it more difficult to tackle this kind of abuse.
But we need to go further to reduce the numbers coming here. As I have said previously, we can
reduce the flow of people coming from within the EU by reducing the draw that our welfare system
can exert across Europe. So we have proposed that people coming to Britain from the EU must live
here and contribute for four years before they qualify for in-work benefits or social housing. And that
we should end the practice of sending child benefit overseas.
I understand how difficult some of these issues are for other Member States and I look forward to
discussing these proposals further so we can find a solution that deals with this issue.
Next steps
As we agreed, the details of the reforms in each area are a matter for the negotiation itself. But I hope
that this letter can provide a clear basis for reaching an agreement that would, of course, need to be
legally-binding and irreversible – and where necessary have force in the Treaties.
Vienna Convention on the Law of Treaties
Article 2. Use of terms
1.
For the purposes of the present Convention:
(a) “Treaty” means an international agreement concluded between States in written form and
governed by international law, whether embodied in a single instrument or in two or more
related instruments and whatever its particular designation;…
Article 31. General rule of interpretation
1.
3.
A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given
to the terms of the treaty in their context and in the light of its object and purpose.
…
There shall be taken into account, together with the context:
(a) Any subsequent agreement between the parties regarding the interpretation of the treaty or
the application of its provisions;…
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Edinburgh Decision, 11-12 December 1992
Decision of the Heads of State and Government, meeting within the European Council, concerning
certain problems raised by Denmark on the Treaty on European Union
The Heads of State and Government, meeting within the European Council, whose Governments are
signatories of the Treaty on European Union, which involves independent and sovereign States having
freely decided, in accordance with the existing Treaties, to exercise in common some of their
competences,
– desiring to settle, in conformity with the Treaty on European Union, particular problems existing at
the present time specifically for Denmark and raised in its memorandum ‘Denmark in Europe’ of 30
October 1992,…
Have agreed on the following decision:
Section A
Citizenship
The provisions of Part Two of the Treaty establishing the European Community relating to citizenship
of the Union give nationals of the Member States additional rights and protection as specified in that
Part. They do not in any way take the place of national citizenship. The question whether an individual
possesses the nationality of a Member State will be settled solely by reference to the national law of
the Member State concerned…
Rottmann, C-135/08, EU:C:2010:104
40.
It is true that Declaration No 2 on nationality of a Member State, annexed by the Member States
to the final act of the Treaty on European Union, and the decision of the Heads of State and
Government, meeting within the European Council at Edinburgh on 11 and 12 December 1992,
concerning certain problems raised by Denmark on the Treaty of European Union, which were
intended to clarify a question of particular importance to the Member States, namely, the
definition of the ambit ratione personae of the provisions of European Union law referring to
the concept of national, have to be taken into consideration as being instruments for the
interpretation of the EC Treaty, especially for the purpose of determining the ambit ratione
personae of that Treaty.
41.
Nevertheless, the fact that a matter falls within the competence of the Member States does not
alter the fact that, in situations covered by European Union law, the national rules concerned
must have due regard to the latter…
42.
It is clear that the situation of a citizen of the Union who, like the applicant in the main
proceedings, is faced with a decision withdrawing his naturalisation, adopted by the authorities
of one Member State, and placing him, after he has lost the nationality of another Member State
that he originally possessed, in a position capable of causing him to lose the status conferred by
Article 17 EC and the rights attaching thereto falls, by reason of its nature and its consequences,
within the ambit of European Union law.
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Treaty on Stability, Coordination and Governance
Article 7
While fully respecting the procedural requirements of the Treaties on which the European Union is
founded, the Contracting Parties whose currency is the euro commit to supporting the proposals or
recommendations submitted by the European Commission where it considers that a Member State of
the European Union whose currency is the euro is in breach of the deficit criterion in the framework of
an excessive deficit procedure. This obligation shall not apply where it is established among the
Contracting Parties whose currency is the euro that a qualified majority of them, calculated by analogy
with the relevant provisions of the Treaties on which the European Union is founded, without taking
into account the position of the Contracting Party concerned, is opposed to the decision proposed or
recommended.
Article 16
Within five years, at most, of the date of entry into force of this Treaty, on the basis of an assessment
of the experience with its implementation, the necessary steps shall be taken, in accordance with the
Treaty on the European Union and the Treaty on the Functioning of the European Union, with the aim
of incorporating the substance of this Treaty into the legal framework of the European Union.
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A NEW SETTLEMENT FOR THE UNITED KINGDOM
WITHIN THE EUROPEAN UNION
Extract of the conclusions of the European Council of 18-19 February 2016
THE UNITED KINGDOM AND THE EUROPEAN UNION
1.
At their December meeting, the members of the European Council agreed to work together
closely to find mutually satisfactory solutions in all the four areas mentioned in the British
Prime Minister’s letter of 10 November 2015.
2.
Today, the European Council agreed that the following set of arrangements, which are fully
compatible with the Treaties and will become effective on the date the Government of the
United Kingdom informs the Secretary-General of the Council that the United Kingdom has
decided to remain a member of the European Union, constitute an appropriate response to the
concerns of the United Kingdom:
(a) a Decision of the Heads of State or Government, meeting within the European Council,
concerning a new settlement for the United Kingdom within the European Union (Annex
I);
(b) a statement containing a draft Council Decision on specific provisions relating to the
effective management of the banking union and of the consequences of further integration
of the euro area which will be adopted on the day the Decision referred to in point (a) takes
effect (Annex II);
(c) a Declaration of the European Council on competitiveness (Annex III);
(d) a Declaration of the Commission on a subsidiarity implementation mechanism and a
burden reduction implementation mechanism (Annex IV);
(e) a Declaration of the European Commission on the indexation of child benefits exported to
a Member State other than that where the worker resides (Annex V);
(f) a Declaration of the Commission on the safeguard mechanism referred to in paragraph 2(b)
of Section D of the Decision of the Heads of State or Government (Annex VI);
(g) a Declaration of the Commission on issues related to the abuse of the right of free
movement of persons (Annex VII).
3.
Regarding the Decision in Annex I, the Heads of State or Government have declared that:
(i) this Decision gives legal guarantee that the matters of concern to the United Kingdom as
expressed in the letter of 10 November 2015 have been addressed;
(ii) the content of the Decision is fully compatible with the Treaties;
(iii) this Decision is legally binding, and may be amended or repealed only by common accord
of the Heads of State or Government of the Member States of the European Union;
(iv) this Decision will take effect on the date the Government of the United Kingdom informs
the Secretary-General of the Council that the United Kingdom has decided to remain a
member of the European Union.
4.
It is understood that, should the result of the referendum in the United Kingdom be for it to
leave the European Union, the set of arrangements referred to in paragraph 2 above will cease to
exist.
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ANNEX I
DECISION OF THE HEADS OF STATE OR GOVERNMENT, MEETING WITHIN THE
EUROPEAN COUNCIL, CONCERNING A NEW SETTLEMENT FOR THE UNITED
KINGDOM WITHIN THE EUROPEAN UNION
The Heads of State or Government of the 28 Member States of the European Union, meeting within
the European Council, whose Governments are signatories of the Treaties on which the Union is
founded,
Desiring to settle, in conformity with the Treaties, certain issues raised by the United Kingdom in its
letter of 10 November 2015,
Intending to clarify in this Decision certain questions of particular importance to the Member States so
that such clarification will have to be taken into consideration as being an instrument for the
interpretation of the Treaties; intending as well to agree arrangements for matters including the role of
national Parliaments in the Union, as well as the effective management of the banking union and of
the consequences of further integration of the euro area,
Recalling the Union’s objective of establishing, in accordance with the Treaties, an economic and
monetary union whose currency is the euro and the importance which a properly functioning euro area
has for the European Union as a whole. While nineteen Member States have already adopted the
single currency, other Member States are under a derogation which applies until the Council decides
that the conditions are met for its abrogation and two Member States have, pursuant to Protocols No
15 and No 16 annexed to the Treaties, respectively no obligation to adopt the euro or an exemption
from doing so. Accordingly, for as long as the said derogations are not abrogated or the said protocols
have not ceased to apply following notification or request from the relevant Member State, not all
Member States have the euro as their currency. Recalling that the process towards the establishment of
the banking union and a more integrated governance of the euro area is open to Member States that do
not have the euro as their currency,
Recalling that the Treaties, together with references to the process of European integration and to the
process of creating an ever closer union among the peoples of Europe, contain also specific provisions
whereby some Member States are entitled not to take part in or are exempted from the application of
certain provisions or chapters of the Treaties and Union law as concerns matters such as the adoption
of the euro, decisions having defence implications, the exercise of border controls on persons, as well
as measures in the area of freedom, security and justice. Treaty provisions also allow for the nonparticipation of one or more Member States in actions intended to further the objectives of the Union,
notably through the establishment of enhanced cooperation. Therefore, such processes make possible
different paths of integration for different Member States, allowing those that want to deepen
integration to move ahead, whilst respecting the rights of those which do not want to take such a
course,
Recalling in particular that the United Kingdom is entitled under the Treaties:
— not to adopt the euro and therefore to keep the British pound sterling as its currency
(Protocol No 15),
— not to participate in the Schengen acquis (Protocol No 19),
— to exercise border controls on persons, and therefore not to participate in the Schengen area
as regards internal and external borders (Protocol No 20),
— to choose whether or not to participate in measures in the area of freedom, security and
justice (Protocol No 21),
— to cease to apply as from 1 December 2014 a large majority of Union acts and provisions in
the field of police cooperation and judicial cooperation in criminal matters adopted before
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the entry into force of the Lisbon Treaty while choosing to continue to participate in 35 of
them (Article 10(4) and (5) of Protocol No 36),
Recalling also that the Charter of Fundamental Rights of the European Union has not extended the
ability of the Court of Justice of the European Union or any court or tribunal of the United Kingdom to
rule on the consistency of the laws and practices of the United Kingdom with the fundamental rights
that it reaffirms (Protocol No 30),
Determined to exploit fully the potential of the internal market in all its dimensions, to reinforce the
global attractiveness of the Union as a place of production and investment, and to promote
international trade and market access through, inter alia, the negotiation and conclusion of trade
agreements, in a spirit of mutual and reciprocal benefit and transparency,
Determined also to facilitate and support the proper functioning of the euro area and its long-term
future, for the benefit of all Member States,
Respecting the powers of the institutions of the Union, including throughout the legislative and
budgetary procedures, and not affecting the relations of the Union institutions and bodies with the
national competent authorities,
Respecting the powers of the central banks in the performance of their tasks, including the provision
of central bank liquidity within their respective jurisdictions,
Having regard to the statement containing the draft Decision of the Council on specific provisions
relating to the effective management of the banking union and of the consequences of further
integration of the euro area,
Having regard to the Conclusions of the European Council of 26 and 27 June 2014 and of 18 and 19
February 2016,
Noting the Declaration of the European Council on competitiveness,
Noting the Declaration of the Commission on a subsidiarity implementation mechanism and a burden
reduction implementation mechanism,
Noting the Declaration of the Commission on the safeguard mechanism referred to in paragraph 2(b)
of Section D of the Decision,
Noting the Declaration of the Commission on issues related to the abuse of the right of free movement
of persons,
Having taken into account the views expressed by the President and members of the European
Parliament,
HAVE AGREED ON THE FOLLOWING DECISION:
SECTION A
ECONOMIC GOVERNANCE
In order to fulfil the Treaties’ objective to establish an economic and monetary union whose currency
is the euro, further deepening is needed. Measures, the purpose of which is to further deepen economic
and monetary union, will be voluntary for Member States whose currency is not the euro and will be
open to their participation wherever feasible. This is without prejudice to the fact that Member States
whose currency is not the euro, other than those without an obligation to adopt the euro or exempted
8
from it, are committed under the Treaties to make progress towards fulfilling the conditions necessary
for the adoption of the single currency.
It is acknowledged that Member States not participating in the further deepening of the economic and
monetary union will not create obstacles to but facilitate such further deepening while this process
will, conversely, respect the rights and competences of the non-participating Member States. The
Union institutions, together with the Member States, will facilitate the coexistence between different
perspectives within the single institutional framework ensuring consistency, the effective operability
of Union mechanisms and the equality of Member States before the Treaties, as well as the levelplaying field and the integrity of the internal market.
Mutual respect and sincere cooperation between Member States participating or not in the operation of
the euro area will be ensured by the principles recalled in this Section, which are safeguarded notably
through the Council Decision referring to it.
1.
Discrimination between natural or legal persons based on the official currency of the Member
State, or, as the case may be, the currency that has legal tender in the Member State, where they
are established is prohibited. Any difference of treatment must be based on objective reasons.
Legal acts, including intergovernmental agreements between Member States, directly linked to
the functioning of the euro area shall respect the internal market, as well as economic and social
and territorial cohesion, and shall not constitute a barrier to or discrimination in trade between
Member States. These acts shall respect the competences, rights and obligations of Member
States whose currency is not the euro.
Member States whose currency is not the euro shall not impede the implementation of legal acts
directly linked to the functioning of the euro area and shall refrain from measures which could
jeopardise the attainment of the objectives of economic and monetary union.
2.
Union law on the banking union conferring upon the European Central Bank, the Single
Resolution Board or Union bodies exercising similar functions, authority over credit institutions
is applicable only to credit institutions located in Member States whose currency is the euro or
in Member States that have concluded with the European Central Bank a close cooperation
agreement on prudential supervision, in accordance with relevant EU rules and subject to the
requirements of group and consolidated supervision and resolution.
The single rulebook is to be applied by all credit institutions and other financial institutions in
order to ensure the level-playing field within the internal market. Substantive Union law to be
applied by the European Central Bank in the exercise of its functions of single supervisor, or by
the Single Resolution Board or Union bodies exercising similar functions, including the single
rulebook as regards prudential requirements for credit institutions or other legislative measures
to be adopted for the purpose of safeguarding financial stability, may need to be conceived in a
more uniform manner than corresponding rules to be applied by national authorities of Member
States that do not take part in the banking union. To this end, specific provisions within the
single rulebook and other relevant instruments may be necessary, while preserving the levelplaying field and contributing to financial stability.
3.
Emergency and crisis measures designed to safeguard the financial stability of the euro area will
not entail budgetary responsibility for Member States whose currency is not the euro, or, as the
case may be, for those not participating in the banking union.
Appropriate mechanisms to ensure full reimbursement will be established where the general
budget of the Union supports costs, other than administrative costs, that derive from the
emergency and crisis measures referred to in the first subparagraph.
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4.
The implementation of measures, including the supervision or resolution of financial institutions
and markets, and macro-prudential responsibilities, to be taken in view of preserving the
financial stability of Member States whose currency is not the euro is, subject to the
requirements of group and consolidated supervision and resolution, a matter for their own
authorities and own budgetary responsibility, unless such Member States wish to join common
mechanisms open to their participation.
This is without prejudice to the development of the single rulebook and to Union mechanisms
of macro-prudential oversight for the prevention and mitigation of systemic financial risks in
the Union and to the existing powers of the Union to take action that is necessary to respond to
threats to financial stability.
5.
6.
7.
The informal meetings of the ministers of the Member States whose currency is the euro, as
referred to in Protocol (No 14) on the Euro Group, shall respect the powers of the Council as an
institution upon which the Treaties confer legislative functions and within which Member States
coordinate their economic policies.
In accordance with the Treaties, all members of the Council participate in its deliberations, even
where not all members have the right to vote. Informal discussions by a group of Member States
shall respect the powers of the Council, as well as the prerogatives of the other EU institutions.
Where an issue relating to the application of this Section is to be discussed in the European
Council as provided in paragraph 1 of Section E, due account will be taken of the possible
urgency of the matter.
The substance of this Section will be incorporated into the Treaties at the time of their next
revision in accordance with the relevant provisions of the Treaties and the respective
constitutional requirements of the Member States.
SECTION B
COMPETITIVENESS
The establishment of an internal market in which the free movement of goods, persons, services and
capital is ensured is an essential objective of the Union. To secure this objective and to generate
growth and jobs, the EU must enhance competitiveness, along the lines set out in the Declaration of
the European Council on competitiveness.
To this end, the relevant EU institutions and the Member States will make all efforts to fully
implement and strengthen the internal market, as well as to adapt it to keep pace with the changing
environment. At the same time, the relevant EU institutions and the Member States will take concrete
steps towards better regulation, which is a key driver to deliver the abovementioned objectives. This
means lowering administrative burdens and compliance costs on economic operators, especially small
and medium enterprises, and repealing unnecessary legislation as foreseen in the Declaration of the
Commission on a subsidiarity implementation mechanism and a burden reduction implementation
mechanism, while continuing to ensure high standards of consumer, employee, health and
environmental protection. The European Union will also pursue an active and ambitious trade policy.
Progress on all these elements of a coherent policy for competitiveness will be closely monitored and
reviewed as appropriate.
SECTION C
SOVEREIGNTY
1.
It is recognised that the United Kingdom, in the light of the specific situation it has under the
Treaties, is not committed to further political integration into the European Union. The
substance of this will be incorporated into the Treaties at the time of their next revision in
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accordance with the relevant provisions of the Treaties and the respective constitutional
requirements of the Member States, so as to make it clear that the references to ever closer
union do not apply to the United Kingdom.
The references in the Treaties and their preambles to the process of creating an ever closer
union among the peoples of Europe do not offer a legal basis for extending the scope of any
provision of the Treaties or of EU secondary legislation. They should not be used either to
support an extensive interpretation of the competences of the Union or of the powers of its
institutions as set out in the Treaties.
These references do not alter the limits of Union competence governed by the principle of
conferral, or the use of Union competence governed by the principles of subsidiarity and
proportionality. They do not require that further competences be conferred upon the European
Union or that the European Union must exercise its existing competences, or that competences
conferred on the Union could not be reduced and thereby returned to the Member States.
The competences conferred by the Member States on the Union can be modified, whether to
increase or reduce them, only through a revision of the Treaties with the agreement of all
Member States. The Treaties already contain specific provisions whereby some Member States
are entitled not to take part in or are exempted from the application of certain provisions of
Union law. The references to an ever closer union among the peoples are therefore compatible
with different paths of integration being available for different Member States and do not
compel all Member States to aim for a common destination.
The Treaties allow an evolution towards a deeper degree of integration among the Member
States that share such a vision of their common future, without this applying to other Member
States.
2.
The purpose of the principle of subsidiarity is to ensure that decisions are taken as closely as
possible to the citizen. The choice of the right level of action therefore depends, inter alia, on
whether the issue under consideration has transnational aspects which cannot be satisfactorily
regulated by action by Member States and on whether action at Union level would produce
clear benefits by reason of its scale or effects compared with actions at the level of Member
States.
Reasoned opinions issued by national Parliaments in accordance with Article 7(1) of Protocol
No 2 on the application of the principles of subsidiarity and proportionality are to be duly taken
into account by all institutions involved in the decision-making process of the Union.
Appropriate arrangements will be made to ensure this.
3.
Where reasoned opinions on the non-compliance of a draft Union legislative act with the
principle of subsidiarity, sent within 12 weeks from the transmission of that draft, represent
more than 55 % of the votes allocated to the national Parliaments, the Council Presidency will
include the item on the agenda of the Council for a comprehensive discussion on these opinions
and on the consequences to be drawn therefrom.
Following such discussion, and while respecting the procedural requirements of the Treaties, the
representatives of the Member States acting in their capacity as members of the Council will
discontinue the consideration of the draft legislative act in question unless the draft is amended
to accommodate the concerns expressed in the reasoned opinions.
For the purposes of this paragraph, the votes allocated to the national Parliaments are calculated
in accordance with Article 7(1) of Protocol No 2. Votes from national Parliaments of Member
States not participating in the adoption of the legislative act in question are not counted.
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4.
The rights and obligations of Member States provided for under the Protocols annexed to the
Treaties must be fully recognised and given no lesser status than the other provisions of the
Treaties of which such Protocols form an integral part.
In particular, a measure adopted pursuant to Title V of Part Three of the Treaty on the
Functioning of the European Union (TFEU) on the area of freedom, security and justice does
not bind the Member States covered by Protocols No 21 and No 22, unless the Member State
concerned, where the relevant Protocol so allows, has notified its wish to be bound by the
measure.
The representatives of the Member States acting in their capacity as members of the Council
will ensure that, where a Union measure, in the light of its aim and content, falls within the
scope of Title V of Part Three of the TFEU, Protocols No 21 and No 22 will apply to it,
including when this entails the splitting of the measure into two acts.
5.
Article 4(2) of the Treaty on European Union confirms that national security remains the sole
responsibility of each Member State. This does not constitute a derogation from Union law and
should therefore not be interpreted restrictively. In exercising their powers, the Union
institutions will fully respect the national security responsibility of the Member States.
The benefits of collective action on issues that affect the security of Member States are
recognised.
SECTION D
SOCIAL BENEFITS AND FREE MOVEMENT
Free movement of workers within the Union is an integral part of the internal market which entails,
among others, the right for workers of the Member States to accept offers of employment anywhere
within the Union. Different levels of remuneration among the Member States make some offers of
employment more attractive than others, with consequential movements that are a direct result of the
freedom of the market. However, the social security systems of the Member States, which Union law
coordinates but does not harmonise, are diversely structured and this may in itself attract workers to
certain Member States. It is legitimate to take this situation into account and to provide, both at Union
and at national level, and without creating unjustified direct or indirect discrimination, for measures
limiting flows of workers of such a scale that they have negative effects both for the Member States of
origin and for the Member States of destination.
The concerns expressed by the United Kingdom in this regard are duly noted, in view of further
developments of Union legislation and of relevant national law.
Interpretation of current EU rules
1.
The measures referred to in the introductory paragraph should take into account that Member
States have the right to define the fundamental principles of their social security systems and
enjoy a broad margin of discretion to define and implement their social and employment policy,
including setting the conditions for access to welfare benefits.
(a) Whereas the free movement of workers under Article 45 TFEU entails the abolition of any
discrimination based on nationality as regards employment, remuneration and other
conditions of work and employment, this right may be subject to limitations on grounds of
public policy, public security or public health. In addition, if overriding reasons of public
interest make it necessary, free movement of workers may be restricted by measures
proportionate to the legitimate aim pursued. Encouraging recruitment, reducing
unemployment, protecting vulnerable workers and averting the risk of seriously
undermining the sustainability of social security systems are reasons of public interest
12
recognised in the jurisprudence of the Court of Justice of the European Union for this
purpose, based on a case by case analysis.
Based on objective considerations independent of the nationality of the persons concerned
and proportionate to the legitimate aim pursued, conditions may be imposed in relation to
certain benefits to ensure that there is a real and effective degree of connection between the
person concerned and the labour market of the host Member State.
(b) Free movement of EU citizens under Article 21 TFEU is to be exercised subject to the
limitations and conditions laid down in the Treaties and the measures adopted to give them
effect.
The right of economically non-active persons to reside in the host Member State depends
under EU law on such persons having sufficient resources for themselves and their family
members not to become a burden on the social assistance system of the host Member State,
and on those persons having comprehensive sickness insurance.
Member States have the possibility of refusing to grant social benefits to persons who
exercise their right to freedom of movement solely in order to obtain Member States’ social
assistance although they do not have sufficient resources to claim a right of residence.
Member States may reject claims for social assistance by EU citizens from other Member
States who do not enjoy a right of residence or are entitled to reside on their territory solely
because of their job-search. This includes claims by EU citizens from other Member States
for benefits whose predominant function is to cover the minimum subsistence costs, even if
such benefits are also intended to facilitate access to the labour market of the host Member
States.
(c) Those enjoying the right to free movement shall abide by the laws of the host Member
State.
In accordance with Union law, Member States are able to take action to prevent abuse of
rights or fraud, such as the presentation of forged documents, and address cases of
contracting or maintaining marriages of convenience with third country nationals for the
purpose of making use of free movement as a route for regularising unlawful stay in a
Member State or address cases of making use of free movement as a route for bypassing
national immigration rules applying to third country nationals.
Host Member States may also take the necessary restrictive measures to protect themselves
against individuals whose personal conduct is likely to represent a genuine and serious
threat to public policy or security. In determining whether the conduct of an individual
poses a present threat to public policy or security, Member States may take into account
past conduct of the individual concerned and the threat may not always need to be
imminent. Even in the absence of a previous criminal conviction, Member States may act
on preventative grounds, so long as they are specific to the individual concerned.
Further exchange of information and administrative cooperation between Member States
will be developed together with the Commission in order to more effectively fight against
such abuse of rights and fraud.
Changes to EU secondary legislation
2.
It is noted that, following the taking effect of this Decision, the Commission will submit
proposals for amending existing EU secondary legislation as follows:
13
(a) a proposal to amend Regulation (EC) No 883/2004 of the European Parliament and of the
Council on the coordination of social security systems in order to give Member States, with
regard to the exportation of child benefits to a Member State other than that where the
worker resides, an option to index such benefits to the conditions of the Member State
where the child resides. This should apply only to new claims made by EU workers in the
host Member State. However, as from 1 January 2020, all Member States may extend
indexation to existing claims to child benefits already exported by EU workers. The
Commission does not intend to propose that the future system of optional indexation of
child benefits be extended to other types of exportable benefits, such as old-age pensions;
(b) in order to take account of a pull factor arising from a Member State’s in-work benefits
regime, a proposal to amend Regulation (EU) No 492/2011 of the European Parliament and
of the Council on freedom of movement for workers within the Union which will provide
for an alert and safeguard mechanism that responds to situations of inflow of workers from
other Member States of an exceptional magnitude over an extended period of time,
including as a result of past policies following previous EU enlargements. A Member State
wishing to avail itself of the mechanism would notify the Commission and the Council that
such an exceptional situation exists on a scale that affects essential aspects of its social
security system, including the primary purpose of its in-work benefits system, or which
leads to difficulties which are serious and liable to persist in its employment market or are
putting an excessive pressure on the proper functioning of its public services. On a
proposal from the Commission after having examined the notification and the reasons
stated therein, the Council could authorise the Member State concerned to restrict access to
non-contributory in-work benefits to the extent necessary. The Council would authorise
that Member State to limit the access of newly arriving EU workers to non-contributory inwork benefits for a total period of up to four years from the commencement of
employment. The limitation should be graduated, from an initial complete exclusion but
gradually increasing access to such benefits to take account of the growing connection of
the worker with the labour market of the host Member State. The authorisation would have
a limited duration and apply to EU workers newly arriving during a period of 7 years.
The representatives of the Member States, acting in their capacity as members of the Council,
will proceed with work on these legislative proposals as a matter of priority and do all within
their power to ensure their rapid adoption.
The future measures referred to in this paragraph should not result in EU workers enjoying less
favourable treatment than third country nationals in a comparable situation.
Changes to EU primary law
3.
With regard to future enlargements of the European Union, it is noted that appropriate
transitional measures concerning free movement of persons will be provided for in the relevant
Acts of Accession to be agreed by all Member States, in accordance with the Treaties. In this
context, the position expressed by the United Kingdom in favour of such transitional measures
is noted.
SECTION E
APPLICATION AND FINAL PROVISIONS
1.
Any Member State may ask the President of the European Council that an issue relating to the
application of this Decision be discussed in the European Council.
2.
This Decision shall take effect on the same date as the Government of the United Kingdom
informs the Secretary-General of the Council that the United Kingdom has decided to remain a
member of the European Union.
14
ANNEX II
STATEMENT ON SECTION A OF THE DECISION
OF THE HEADS OF STATE OR GOVERNMENT,
MEETING WITHIN THE EUROPEAN COUNCIL,
CONCERNING A NEW SETTLEMENT FOR THE UNITED KINGDOM
WITHIN THE EUROPEAN UNION
The Heads of State or Government declare that the Council Decision on specific provisions relating to
the effective management of the banking union and of the consequences of further integration of the
euro area will be adopted by the Council on the date of the taking effect of the Decision of the Heads
of State or Government, meeting within the European Council, concerning a new settlement for the
United Kingdom within the European Union, and will enter into force on that same day.
The draft Decision is set out below:
DRAFT COUNCIL DECISION
on specific provisions relating to the effective management of the banking union
and of the consequences of further integration of the euro area
THE COUNCIL OF THE EUROPEAN UNION,
Whereas:
(1)
Supplementing Decision 2009/857/EC of 13 December 2007, provisions should be adopted in
order to allow for the effective management of the banking union and of the consequences of
further integration of the euro area.
(2)
The mechanism in this Decision contributes to the respect of the principles laid down in Section
A of the Decision of the Heads of State or Government as regards legislative acts relating to the
effective management of the banking union and of the consequences of further integration of the
euro area, the adoption of which is subject to the vote of all members of the Council.
(3)
In accordance with paragraph 1 of Section E of the Decision of the Heads of State or
Government, meeting within the European Council, concerning a new settlement for the United
Kingdom within the European Union, any Member State may ask the President of the European
Council that an issue relating to the application of that Decision be discussed in the European
Council.
(4)
This Decision is without prejudice to the specific voting arrangements agreed by the
representatives of the 28 Member States meeting within the Council on 18 December 2013,
concerning the adoption of Decisions by the Council on the basis of Article 18 of Regulation
(EU) No 806/2014 of the European Parliament and of the Council.
(5)
In the application of this Decision, and in particular with reference to the reasonable time for the
Council to discuss the issue concerned, due account should be taken of the possible urgency of
the situation,
HAS ADOPTED THIS DECISION:
15
Article 1
1.
If, in relation to the legislative acts to which Section A of the Decision of the Heads of State or
Government applies, the adoption of which is subject to the vote of all members of the Council,
at least one member of the Council that does not participate in the banking union indicates its
reasoned opposition to the Council adopting such an act by qualified majority, the Council shall
discuss the issue. The Member State concerned shall justify its opposition by indicating how the
draft act does not respect the principles laid down in Section A of that Decision.
2.
The Council shall, in the course of these discussions, do all in its power to reach, within a
reasonable time and without prejudicing obligatory time limits laid down by Union law, a
satisfactory solution to address concerns raised by the member or members of the Council
referred to in paragraph 1.
3.
To that end, the President of the Council, with the assistance of the Commission and in
compliance with the Rules of Procedure of the Council, shall undertake any initiative necessary
to facilitate a wider basis of agreement in the Council. The members of the Council shall lend
him or her their assistance.
While taking due account of the possible urgency of the matter and based on the reasons for
opposing as indicated under paragraph 1, a request for a discussion in the European Council on
the issue, before it returns to the Council for decision, may constitute such an initiative. Any
such referral is without prejudice to the normal operation of the legislative procedure of the
Union and cannot result in a situation which would amount to allowing a Member State a veto.
Article 2
This Decision, which supplements Decision 2009/857/EC, shall enter into force on the date of
the taking effect of the Decision of the Heads of State or Government, meeting within the
European Council, concerning a new settlement for the United Kingdom within the European
Union. It shall cease to apply if the latter ceases to apply.
Done at …, [date]
For the Council
The President
[name]
ANNEX III
EUROPEAN COUNCIL DECLARATION ON COMPETITIVENESS
Europe must become more competitive if we are to generate growth and jobs. Although this goal has
been at the heart of EU activities in recent years, the European Council is convinced more can be done
in order to exploit fully the potential of all strands of the internal market, promote a climate of
entrepreneurship and job creation, invest and equip our economies for the future, facilitate
international trade, and make the Union a more attractive partner.
The European Council highlights the enormous value of the internal market as an area without
frontiers within which goods, persons, services and capital move unhindered. This constitutes one of
the Union’s greatest achievements. In these times of economic and social challenges, we need to
breathe new life into the internal market and adapt it to keep pace with our changing environment.
Europe must boost its international competiveness across the board in services and products and in key
areas such as energy and the digital single market.
16
The European Council urges all EU institutions and Member States to strive for better regulation and
to repeal unnecessary legislation in order to enhance EU competitiveness while having due regard to
the need to maintain high standards of consumer, employee, health and environmental protection. This
is a key driver to deliver economic growth, foster competitiveness and job creation.
To contribute to this objective, the European Parliament, the Council and the Commission have agreed
the Interinstitutional Agreement on Better Law-Making. Effective cooperation in this framework is
necessary in order to simplify Union legislation and to avoid over-regulation and administrative
burdens for citizens, administrations and businesses, including small and medium-sized enterprises,
while ensuring that the objectives of the legislation are met.
The focus must be on:
—
—
—
a strong commitment to regulatory simplification and burden reduction, including through
withdrawal or repeal of legislation where appropriate, and a better use of impact assessment
and ex post evaluation throughout the legislative cycle, at the EU and national levels. This work
should build on the progress already made with the regulatory fitness programme (REFIT),
doing more to reduce the overall burden of EU regulation, especially on SMEs and microenterprises,
establishing where feasible burden reduction targets in key sectors, with commitments by EU
institutions and Member States.
The European Council welcomes the Commission’s commitment to review every year the success of
the Union’s efforts to simplify legislation, avoid over-regulation and reduce burdens on business. This
annual overview done in support of the Commission’s REFIT programme will include an Annual
Burden Survey and also look at the stock of existing EU law.
The European Council also asks the Council to examine the annual reviews conducted by the
Commission under its Declaration on Subsidiarity with a view to ensuring that these are given
appropriate follow-up in the different areas of the Union’s activities. It invites the Commission to
propose repealing measures that are inconsistent with the principle of subsidiarity or that impose a
disproportionate regulatory burden.
The European Council stresses the importance of a strong, rules-based multilateral trading system and
the need to conclude ambitious bilateral trade and investment agreements with third countries, in a
spirit of reciprocity and mutual benefit. In this context it welcomes the recent agreement reached by
the WTO in Nairobi. Work must be advanced in negotiations with the US, Japan and key partners in
Latin America, notably Mercosur, and in the Asia-Pacific region. Trade must benefit all, consumers,
workers and economic operators alike. The new trade strategy (‘Trade for All: towards a more
responsible trade and investment policy’) is a crucial component.
The European Council will keep developments under review and asks the General Affairs Council and
the Competitiveness Council to regularly evaluate progress on the various elements set out in this
Declaration.
17
ANNEX IV
DECLARATION OF THE EUROPEAN COMMISSION
on a subsidiarity implementation mechanism
and a burden reduction implementation mechanism
The Commission will establish a mechanism to review the body of existing EU legislation for its
compliance with the principle of subsidiarity and proportionality, building on existing processes and
with a view to ensuring the full implementation of this principle.
The Commission will draw up priorities for this review taking into account the views of the European
Parliament, the Council and the national parliaments.
The Commission will propose a programme of work by the end of 2016 and subsequently report on an
annual basis to the European Parliament and the Council.
The Commission is fully committed to and will continue its efforts to make EU law simpler and to
reduce regulatory burden for EU business operators without compromising policy objectives by
applying the 2015 Better Regulation Agenda, including in particular the Commission’s regulatory
fitness and performance programme (REFIT). Cutting red tape for entrepreneurship, in particular
small and medium-sized enterprises, remains an overarching goal for all of us in delivering growth
and jobs.
The Commission, within the REFIT platform, will work with Member States and stakeholders,
towards establishing specific targets at EU and national levels for reducing burden on business,
particularly in the most onerous areas for companies, in particular small and medium-sized enterprises.
Once established, the Commission will monitor progress against these targets and report to the
European Council annually.
ANNEX V
DECLARATION OF THE EUROPEAN COMMISSION
on the indexation of child benefits exported
to a Member State other than that where the worker resides
The Commission will make a proposal to amend Regulation (EC) No 883/2004 of the European
Parliament and of the Council on the coordination of social security systems in order to give Member
States, with regard to the exportation of child benefits to a Member State other than that where the
worker resides, an option to index such benefits to the conditions of the Member State where the child
resides.
The Commission considers that these conditions include the standard of living and the level of child
benefits applicable in that Member State.
18
ANNEX VI
DECLARATION OF THE EUROPEAN COMMISSION
on the safeguard mechanism referred to in paragraph 2(b) of Section D
of the Decision of the Heads of State or Government,
meeting within the European Council, concerning a new settlement
for the United Kingdom within the European Union
With reference to paragraph 2(b) of Section D of the Decision of the Heads of State or Government,
meeting within the European Council, concerning a new settlement for the United Kingdom within the
European Union, the European Commission will table a proposal to amend Regulation (EC) No
492/2011 on freedom of movement for workers within the Union to provide for a safeguard
mechanism with the understanding that it can and will be used and therefore will act as a solution to
the United Kingdom’s concerns about the exceptional inflow of workers from elsewhere in the
European Union that it has seen over the last years.
The European Commission considers that the kind of information provided to it by the United
Kingdom, in particular as it has not made full use of the transitional periods on free movement of
workers which were provided for in recent Accession Acts, shows the type of exceptional situation
that the proposed safeguard mechanism is intended to cover exists in the United Kingdom today.
Accordingly, the United Kingdom would be justified in triggering the mechanism in the full
expectation of obtaining approval.
ANNEX VII
DECLARATION OF THE EUROPEAN COMMISSION
on issues related to the abuse of the right of free movement of persons
The Commission notes the Decision of the Heads of State or Government, meeting within the
European Council, concerning a new settlement for the United Kingdom within the European Union
and notably its Section D.
The Commission intends to adopt a proposal to complement Directive 2004/38/EC on free movement
of Union citizens in order to exclude, from the scope of free movement rights, third country nationals
who had no prior lawful residence in a Member State before marrying a Union citizen or who marry a
Union citizen only after the Union citizen has established residence in the host Member State.
Accordingly, in such cases, the host Member State’s immigration law will apply to the third country
national. This proposal will be submitted after the above Decision has taken effect.
As regards situations of abuse in the context of entry and residence of non-EU family members of
mobile Union citizens the Commission will clarify that:
—
—
Member States can address specific cases of abuse of free movement rights by Union citizens
returning to their Member State of nationality with a non-EU family member where residence in
the host Member State has not been sufficiently genuine to create or strengthen family life and
had the purpose of evading the application of national immigration rules,
the concept of marriage of convenience – which is not protected under Union law – also covers
a marriage which is maintained for the purpose of enjoying a right of residence by a family
member who is not a national of a Member State.
19
The Commission will also clarify that Member States may take into account past conduct of an
individual in the determination of whether a Union citizen’s conduct poses a ‘present’ threat to public
policy or security. They may act on grounds of public policy or public security even in the absence of
a previous criminal conviction on preventative grounds but specific to the individual concerned. The
Commission will also clarify the notions of ‘serious grounds of public policy or public security’ and
‘imperative grounds of public security’. Moreover, on the occasion of a future revision of Directive
2004/38/EC on free movement of Union citizens, the Commission will examine the thresholds to
which these notions are connected.
These clarifications will be developed in a communication providing guidelines on the application of
Union law on the free movement of Union citizens.
20
“BREXIT”
ISSUES FOR LAW MAKERS –
IMPLICATIONS FOR THE LEGAL ORDER
The Centre of European Law –
Annual European Law Conference
11TH MARCH 2016
Dorothy Livingston, Consultant, Competition, Regulation and Trade, London
49552890.1
CONTENTS
Introduction
The UK-EU relationship
Other international trading relationships
Tasks for UK Law-makers
Tasks for EU Law makers
2
INTRODUCTION
•
The British Government has promised a
referendum on EU membership
•
Referendum to be held 23 June 2016
•
Question “Should the United Kingdom
remain a member of the European Union
or leave the European Union?”
•
Significant legal and economic implications
if the UK were to leave the EU
•
This presentation will outline the issues for
law makers raised by a possible British exit
3
IMPACT ON THE UK-EU RELATIONSHIP
What would the UK/EU relationship look like post-“BrExit”?
•
Very much dependent on what would replace EU membership
•
A number of possible structural outcomes
•
Two years' notice of withdrawal
•
Terms of leaving would be negotiated during that period
Contrast the consequences of a “yes” vote
• New legislation – to implement parts of UK/EU Agreement
• Revised EU Treaty in due course
4
IMPACT ON THE UK-EU RELATIONSHIP
Alternative structural options
EEA
(European
Economic
Area)
EEA membership requires
EFTA membership too, but
UK could be an EFTA
member without being an
EEA member
EFTA
(European
Free Trade
Association)
WTO
(World Trade
Organisation)
EFTA membership
and entry into an FTA
may exist alongside
each other, but it is
not essential
EU
membership
Canada style
EU/UK
Bespoke
Trade
Agreement
EU/UK FTA
(Free Trade
Agreement)
Customs
Union
5
IMPACT ON RELATIONSHIPS WITH THE REST OF THE
WORLD
•
EU has over 50 international trade agreements with third countries from which the UK
benefits and many more under negotiation
•
These already cover 32 Commonwealth members and all but 5 of the remainder are in
active / often advanced negotiations with the EU e.g. Canada has now reached the
ratification stage
•
UK loses out on all of these when it leaves the EU and none of the alternatives give
access to any of the country specific arrangements
•
The UK should be able to rejoin the WTO as an independent member relatively easily
•
A mammoth task to replicate or improve on even the most important of the existing
EU/third country specific arrangements
•
May have better tailored deals with some countries, but this depends on what can be
agreed and how far the UK is constrained by the deal it does with the EU
6
TASKS FOR UK LAW MAKERS
Mind the gap!
•
UK Domestic legal framework would be significantly affected
•
After 43 years of interconnectedness, much law in applicable in the UK consists of:
1.
Directly-effective EU legislation
2.
Legislation enacted by Parliament implementing EU Directives, or
3.
Legislation enacted by Parliament supplementing directly-effective EU law
•
“BrExit” would leave huge gaps in the UK legislative framework
•
Inevitable period of uncertainty and transitional arrangements
•
Complications of increased devolution e.g. in environmental law
An extensive law-making effort to 'plug the gap'
7
TASKS FOR UK LAW MAKERS
How would the UK ‘plug the gap’?
•
Government and devolved administrations perform review exercise
•
Consider which EU laws should replicated, reformed or effectively repealed
Replicate
• Preserve existing
EU law in new
domestic
legislation
Reform
• Amend existing EU
law in divergent
domestic
legislation
Repeal
• Scrap existing EU
law - deregulation
8
TASKS FOR UK LAW MAKERS
What would a transitional phase involve for domestic law?
•
Immediate transitional provisions implemented over several years
•
A period of uncertainty and potential practical difficulties, including:
•
interpretation of "co-opted" laws – EU purposive interpretation vs. domestic rules
of statutory interpretation
•
decisions of the CJEU – whether British courts would be bound to follow, have
regard to, or be free to depart
•
roles of EU bodies – alternative UK bodies (or removing references altogether)
where EU laws assign ongoing roles to Commission or another EU body
•
“Grandfathering” EU rights, e.g. EU trademarks, in the UK legal system
9
TASKS FOR UK LAW MAKERS INTERNATIONALLY
•
Negotiations with EU under Article 50 and to establish new trading relationship
•
Resolving intensive negotiations with third countries to re-establish trade relationships
•
Possibly dealing with outcome of second Scottish referendum
10
TASKS FOR EU LAW MAKERS
•
Dealing with UK exit negotiations under Article 50 which EU controls
•
Possibly dealing with outcome of Scottish referendum which results in Scotland being put
forward as a successor to the UK in the EU
•
Adjusting third party treaties which make specific references to UK or which contain
quotas which assume a certain market size for EU
•
Dealing with probable loss of UK judges, MEPs and commission officials without dual
nationality
•
Relocating UK based regulators etc. e.g. EBA/proposed EU patent court
•
Otherwise, legally, business as usual, although loss of the UK will not make other issues
easier
Contrast: if UK vote to remain:
• Implementation of legislative change in the event of a positive vote
11
Treaty on European Union
Article 49
(ex Article 49 TEU)
Any European State which respects the values referred to in Article 2 and is
committed to promoting them may apply to become a member of the Union. The
European Parliament and national Parliaments shall be notified of this application.
The applicant State shall address its application to the Council, which shall act
unanimously after consulting the Commission and after receiving the consent of
the European Parliament, which shall act by a majority of its component members.
The conditions of eligibility agreed upon by the European Council shall be taken
into account.
The conditions of admission and the adjustments to the Treaties on which the
Union is founded, which such admission entails, shall be the subject of an
agreement between the Member States and the applicant State. This agreement
shall be submitted for ratification by all the contracting States in accordance with
their respective constitutional requirements.
Article 50
1. Any Member State may decide to withdraw from the Union in accordance with
its own constitutional requirements.
2. A Member State which decides to withdraw shall notify the European Council
of its intention. In the light of the guidelines provided by the European Council,
the Union shall negotiate and conclude an agreement with that State, setting
out the arrangements for its withdrawal, taking account of the framework for its
future relationship with the Union. That agreement shall be negotiated in
accordance with Article 218(3) of the Treaty on the Functioning of the
European Union. It shall be concluded on behalf of the Union by the Council,
acting by a qualified majority, after obtaining the consent of the European
Parliament.
3. The Treaties shall cease to apply to the State in question from the date of
entry into force of the withdrawal agreement or, failing that, two years after the
notification referred to in paragraph 2, unless the European Council, in
agreement with the Member State concerned, unanimously decides to extend
this period.
4. For the purposes of paragraphs 2 and 3, the member of the European Council
or of the Council representing the withdrawing Member State shall not
participate in the discussions of the European Council or Council or in
decisions concerning it.
A qualified majority shall be defined in accordance with Article 238(3)(b) of the
Treaty on the Functioning of the European Union.
5. If a State which has withdrawn from the Union asks to rejoin, its request shall
be subject to the procedure referred to in Article 49.
10/49555971_1
1