In Vino Veritas: the CJEU again strengthens the EU’s external role

Steve Peers

Only a few Member States produce good wine; but it is quaffed enthusiastically in all of them. That simple fact lies at the heart of today’s judgment in Germany v Council, in which the CJEU, consistently with a string of recent judgments, significantly strengthened the EU’s role in external relations.

Background

In particular, this case concerned the situation where Member States are ‘trustees’ of the EU’s external competence. This occurs where (as is often the case), the EU is not able to sign up to a treaty or participate in an international organisation, even though it has external competence as regards the subject-matter of that organisation or treaty. In that case, as established in prior case law, Member States must act on the EU’s behalf.

However, the Treaties don’t regulate this situation directly, and before today, there was little case law regulating the details of such ‘trusteeship’. So the exercise of the EU’s powers in such scenarios can be awkward. For instance, earlier this year the Council could not agree on a Commission proposal to coordinate Member States’ positions on behalf of the EU as regards possible new ILO measures regarding forced labour (see further my blog post on this issue).

Today’s judgment concerned the International Organisation of Vine and Wine (OIV), an international organisation which was originally set up back in 1924, but which was reconstituted with a new name in 2001. Its membership includes 21 Member States, including some (such as Finland) which are not known for their quality of wine production, although the scope of the OIV also extends to grapes and (unfortunately for small children) raisins.

In practice, the main focus of the OIV is drafting technical resolutions on wine production and quality. These resolutions don’t bind the members as such, so essentially constitute ‘soft law’. The OIV adopts these measures at a lengthy annual conference held each summer in a rather pleasant location. There are probably many opportunities for delegates to sample all the latest fine wines. In short, OIV membership appears to be a little-known – but doubtless much-loved – perk for agriculture ministers and their officials.

But after 90 years of such genteel wine-tasting, this classy organisation was dragged into the mud of an arcane EU inter-institutional dispute. This began when the EU legislation establishing a common market organisation for wine was amended in 2008, in order to make the organisation’s resolutions binding as regards EU law. The Commission promptly proposed that the EU become a member of the organisation, alongside its Member States.

There was not enough support among Member States for the Council to adopt this proposal. Instead, the individual Member States coordinated their voting in the OIV’s annual meeting. The Commission then threatened those Member States with infringement actions if they continued to vote in the OIV to adopt measures which affected the EU acquis. So as a compromise, the Council agreed to adopt a Decision which would coordinate their position on behalf of the EU as a whole.

The Council acted on the basis of Article 218(9) TFEU, which provides as follows:

The Council, on a proposal from the Commission or the High Representative of the Union for Foreign Affairs and Security Policy, 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, with the exception of acts supplementing or amending the institutional framework of the agreement

Germany, supported by several other Member States, then challenged this Decision on two grounds. First, it argued that Article 218(9) TFEU only permits the Council to establish the position of the EU as such, as distinct from the action of its Member States. Secondly, it argued that Article 218(9) TFEU only applies where the measures in question are binding as a matter of international law, rather than as a matter of EU law.

The judgment

The Advocate-General’s opinion agreed with Germany on both points, but the Court’s judgment rejected them both. First of all, as regards the scope of Article 218(9), the Court pointed out that the words ‘on the Union’s behalf’ did not specifically limit themselves to cases where the Union was party to the agreement in question. The Court did agree that the previous provisions of the external relations Title of the Treaty only referred to treaties signed by the EU. So did the reference to suspending a treaty, set out in Article 218(9) itself.

However, when it came to a decision adopted by a body established by an agreement, the word ‘agreement’ had a different, wider meaning, applying not only to treaties which the EU was a party to, but also to treaties which only the Member States (or some of them) were party to. The Court justified this distinction on the grounds that the Treaty rules on the negotiation, conclusion or suspension of agreements only applied to the EU itself, whereas the EU does not have to be a party to an agreement in order to control Member States’ actions as regards implementing measures.

On the second point, the Court described the soft-law decision-making process of the OIV, and then noted that due to the link with OIV measures made by EU law, those measures ‘were capable of decisively influencing the content’ of EU legislation. Therefore those measures had ‘legal effect’, and the Council could rightly adopt a Decision establishing the EU’s position on what they should be.  

Comments

The Court’s judgment means that the EU is in a strong position to coordinate its Member States’ action in international organisations, where the Member States are trustees of the Union’s external competence. In fact, as the Advocate-General’s opinion pointed out, there is now no real difference between the EU being a party to the OIV and not being a party to it.

First of all, there can now be no doubt that the EU has such a coordination power, on the basis of Article 218(9) TFEU. Secondly, since the scope of that power is linked to the existence and nature of the EU’s external competences, the Court’s recent judgment in the broadcasting rights case, giving a generous interpretation of the EU’s exclusive external powers after the Treaty of Lisbon, is relevant here.

That recent judgment is arguably also relevant by analogy to the interpretation of the condition that the planned acts must have ‘legal effects’. This condition applies, as today’s judgment makes clear, whenever EU legislation has made an express link to the measures which an international organisation might adopt. But the Court did not limit the notion of ‘legal effects’ to such cases. The concept might therefore also apply where there is merely an indirect potential impact upon EU legislation (cf the broadcasting rights case), or where the measure in question has effect only upon third parties, or within the international organisation itself.

What does this mean in practice? Where the EU has exclusive external powers, Member States can’t act to affect EU law, even if the EU is not a member of the international organisation (see the Commission v Greece judgment, as regards the IMO). The Council Decisions coordinating Member State positions have to include a substantive legal base, so the nature of the EU’s competence is clear (CITES judgment). Even where the EU and the Member States share competence, and the EU has not regulated the issue in question, the existence of an EU strategy might prevent Member States from acting alone (see by analogy Commission v Sweden, although that case concerned a treaty which both the EU and its Member States were parties to).

Of course, the obligation of Member States to act as trustees in the EU’s interest does not mean that they will necessarily agree on a proposed Council Decision to coordinate their action (for instance, see the example of the ILO forced labour measures, referred to above).

The Court’s judgment necessarily does not directly touch upon the question of the process by which the EU authorises its Member States to sign or conclude treaties (as distinct from acting within an international organisation) as trustees of EU competence. But if the judgment is read literally, it will have a significant impact on that process. For although the judgment states that Article 218(1) to (8) TFEU only applies to the negotiation and conclusion of agreements by the EU, the EU practice until now is to use these provisions also to approve the negotiation and conclusion of treaties by the Member States, acting as trustees of the EU’s interest. (See for instance, the Council Decision concerning the domestic workers convention, based on Article 218(6) and (8)).

Oddly, there was no real discussion in this litigation of the possible alternative route of using the EU’s internal legislative powers to regulate Member States’ behaviour within international organisations. The Advocate-General briefly (and bizarrely) mentioned the possible use of Article 352 TFEU, the ‘residual powers’ clause in the Treaties, but why not simply use Article 43 TFEU, the power relating to the common agricultural policy?

This would entail the adoption of a legislative act. While it might be argued that this is too cumbersome a process to use every time the OIV holds an annual meeting, it might instead be possible to adopt only one legislative measure, which sets out a general framework for coordinating Member States’ action as regards all future OIV meetings.

Adopting a legislative act in relation to an international treaty might seem odd at first sight, but it isn’t really. It was, of course, a legislative act that first gave legal effect to OIV soft law in the EU legal order in the first place. More broadly, the EU often adopts legislative acts to coordinate Member States’ treaty-making competence, in areas subject either to EU exclusive competence (cf investment agreements) or to shared competence, where there is a large EU role (cf air transport treaties).

And if the Court really meant to say that Article 218(1) to (8) can no longer be used to allow Member States to sign and ratify international treaties as trustees of EU competence, then legislative acts will have to be used in this context too. So it would have made more sense for the Court to rule that EU internal legislative powers must be used to regulate all aspects of Member States’ trusteeship.

Some final thoughts on the role of the other EU institutions, and the position of non-participating Member States, following this judgment. First, the European Parliament (EP). It didn’t participate in the proceedings, but perhaps it should have done. As the Advocate-General pointed out, the judgment is the worst-case outcome for the EP, since it did not have the opportunity to approve EU membership in the OIV, and nor can it control the Council’s adoption of measures which impact ultimately upon the interpretation of EU legislation. In future, the EP would have the opportunity to address such issues when the EU legislation making such a link to international measures is adopted. But in this case, the legislation was adopted before the Treaty of Lisbon, when the EP was only consulted upon agricultural legislation. At least, as the Advocate-General pointed out, the EP must be ‘immediately and fully informed’ of the Council Decisions relating to Member States’ trusteeship pursuant to Article 218(10) TFEU, which the CJEU has recently interpreted broadly.

As for the CJEU, it has special jurisdiction relating to envisaged international treaties pursuant to Article 218(11) TFEU. If Article 218(9) applies to Member States’ trusteeship, then surely so does Article 218(11). Indeed, as the Advocate-General pointed out, the Court has already ruled as much. In fact, it will imminently be ruling again on such a case (Opinion 1/13, on the Hague Convention on child abduction). So we will be able in a week’s time to see how the two judgments fit together.

Finally, what about the position of Member States which are not members of the OIV? Actually, the operative part of the Court’s ruling makes no reference to this issue, and the judgment is logically equally applicable whether some or all Member States are party to the international agreement in question.

But in the particular context of the OIV, the Court’s confirmation that the Council has the power to coordinate Member States’ positions in the EU’s interests makes obvious sense. Due to the link between OIV resolutions and EU law, those resolutions impact all Member States, because they affect the quality and price of wine drunk in every Member State. Furthermore, they affect the operation of the common market in wine, which is paid for by all EU taxpayers, whether they are teetotallers or exclusively drink beer or even (inexplicably) whisky.  In this light, the decision of the UK (not a member of the OIV) to intervene, with other Member States, in support of Germany, rather than the EU institutions, is simply Pavlovian.

Barnard & Peers: chapter 24