The Commission’s power of initiative: the CJEU sets important constraints

 

Steve Peers

As every EU politics or law student learns, a key feature of the Commission’s role as the ‘motor’ of EU integration is its near-monopoly on making proposals for EU action. But does that near-monopoly – which the Commission likes to call its ‘right of initiative’ – imply a corresponding power to withdraw proposals? And if so, are there any constraints on such a power? The CJEU answered these questions in an important judgment today.

Background

The case concerned a proposal for framework legislation on ‘macro-financial assistance’ for non-EU countries. This type of assistance helps out non-EU countries which are in severe economic difficulties, for instance helping them to make an imminent loan payment. It obviously helps the economies of the countries concerned, thus indirectly helping EU companies that export to them; and it undoubtedly cements the political relationship between the EU and those countries.

Before the Treaty of Lisbon, such aid was granted on the basis of the EU’s ‘residual powers’, which are now provided for in Article 352 TFEU. However, that Treaty created a specific ‘legal base’ for the EU to adopt rules on macro-economic support for third states: Article 212 TFEU, which provides for the use of the ‘ordinary legislative procedure’ to adopt legislation on this. The Treaty of Lisbon also created an Article 213 TFEU, which allows assistance to be granted in urgent cases without going through a full legislative process.

In 2011, the Commission proposed ‘framework legislation’ on macro-financial assistance, which would have given it the power to decide on the crucial question of which third countries receive this money. The Commission’s decisions on this issue would be controlled by means of the variant of the ‘comitology’ rules known as the ‘examination procedure’, which gives Member States’ experts’ the power to block draft Commission decisions. There’s no significant role for the European Parliament (EP) in that process.

The Commission’s suggestions did not satisfy the EP or the Council. The EP suggested instead that Commission Decisions on which countries receive macro-financial help be subject to ‘delegated acts’: Commission decisions which can be blocked by either the Council or the EP. For its part, the Council position was that each decision to grant aid to a third country had to be subject to the ordinary legislative procedure. The two institutions began negotiations, and eventually agreed to use the ordinary legislative procedure to this end.

Since the Commission objected to this aspect of the EP/Council deal in principle, it withdrew its proposal before the institutions could adopt the legislation concerned. The Council responded by taking the rare step of suing the Commission. While the Council was supported by ten Member States, the EP did not intervene on either side – despite the huge stakes for that institution.

The judgment

The Court’s judgment started out by accepting that the Commission’s power to make proposals gives it a corollary power to withdraw them. However, that power did not constitute a ‘right of veto’ in the legislative process, since that would upset the principle of institutional balance and conferral of powers. In short, the Commission has the power to withdraw proposals – but that power is constrained.

So how exactly is that power constrained?  The Court ruled that the Commission had to give the EP and the Council its reasons for such withdrawals, which must include ‘cogent evidence or arguments’. Such withdrawal decisions must be subject to judicial review, in the form of actions for annulment. However, it was sufficient to give those reasons to a Council working party and an EP/Council negotiation meeting.

As for the substantive grounds for withdrawing its proposal, the CJEU ruled that the amendment which the EP and Council wanted would have changed an ‘essential element’ of the proposal, and would have been irreconcilable with the ‘objective’ of improving the efficiency of EU policy in this area. Next, the CJEU ruled that there was no infringement of the principle of democracy, since it was inherent in the Commission’s right of initiative that it could withdraw proposals as long as the Council had not yet acted. So the Commission did not infringe the principles of conferral of powers and institutional balance.

Finally, the Court considered a separate issue: whether the manner of the Commission withdrawing its proposal breached the principle of ‘sincere cooperation’ between the EU institutions. On this point, the Court ruled that the Commission could not be criticized for withdrawing its proposal at a very late stage in the Council/EP negotiations, since only then had it become clear that the co-legislators would insist that the ordinary legislative procedure had to be used for the approval of each new macro-financial assistance decision. Moreover, the Commission had attempted to reconcile the position of the other institutions, and had proposed compromises. It seems implicit from the Court’s analysis here that the EP’s position (delegated acts instead of a comitology process) would not have altered the essential elements of the proposal.

Comments

First of all, what are the immediate consequences of this judgment? The failure of the legislative process in this case didn’t stop the EU granting macro-financial assistance to third States. In practice, in the absence of framework legislation on this subject, the EU has been adopting individual legislative measures to assist each country – which is exactly what the Commission objected to in the first place.

What procedure should govern such decisions, as a matter of principle? The CJEU seems to adopt the Commission’s view that efficiency is the main criterion. There is indeed a good argument for efficiency in the specific context of macro-economic assistance – since the bills usually have to be paid imminently, and the third country concerned is often in desperate straits. But the Commission and Court don’t refer to this specific context, and don’t balance the need for efficiency against the contrary case for full democratic control.

For example, one recent major beneficiary of EU macro-financial assistance has been Ukraine, and the EU’s relations with that country have been highly controversial. Ideally, there should be a full democratic debate on whether the EU should support that country’s economy, allowing those who sympathise with Putin’s Russia or who have other reasons to criticize the Ukrainian government to debate the merits of that assistance with those who support that government. Perhaps a good compromise would have been an agreement by the Commission to make a full legislative proposal whenever a significant minority (say a quarter of the Member States and/or a quarter of the Members of the European Parliament) indicate a wish to debate the merits of giving macro-financial assistance to a particular third State.

Secondly, the broader consequences of today’s judgment concern the relations between the EU’s three political institutions. The judgment has both procedural and substantive dimensions. Procedurally, it seems very easy to justify a Commission withdrawal: it need only inform EP/Council ‘trialogue’ (negotiation) meetings, or a Council working party of its intentions. Here the Court is legitimising these informal elements of EU governance (thanks to Ron Patz for raising this point). However, with respect, its approach is not convincing. Since a legislative proposal affects the EP as well as the Council, informing a Council working party cannot be sufficient. In fact, informing a trialogue committee shouldn’t be sufficient either, since there are many MEPs and Member States not represented there (the Council Presidency negotiates on behalf of all Member States as represented in the Council).

More broadly, the Commission should have to justify its withdrawals openly to the general public. It usually does this when it withdraws proposals as part of its work programme, but the principle of openness (as set out in the Treaties) justifies it becoming a legal rule, applying to every case of withdrawal. The best practice would be to adopt a formal Commission Decision to withdraw each proposal published in the EU’s Official Journal, giving effect to the principle of active transparency.

Indeed, it’s disturbing that the Court conceives of the EU system purely in terms of the institutions’ accountability to each other, rather than to the public generally. The Court’s dismissal of the ‘democratic principles’ argument is far too brief, failing to place that principle on an equal footing (never mind a superior footing) with the institutional rules on the Treaty. The better approach would have been to interpret the lacuna in the Treaties regarding withdrawal of Commission proposals in light of this democratic principle, emphasising the key role which that principle gives to the EU institutions with a greater claim to electoral legitimacy.

On the other hand, the Court does confirm that there must be judicial control of the withdrawal of Commission proposals. The application of the annulment procedure means that not only the Council, but also the EP and individual Member States can sue the Commission for withdrawing a proposal. Other parties are likely to lack standing to do so, except for a limited number of cases where Article 263 TFEU confers it to bring challenges to non-legislative acts. The alternative possibility of bringing proceedings via national courts to challenge withdrawals appears unworkable at first sight.

What are the substantive constraints to the Commission’s withdrawal of its proposals? The CJEU hints that there might be additional constraints after the Council has ‘acted’; presumably this refers to the Council adoption of its first reading position. Only a minority of EU legislative proposals go past this first reading – and half of those have in practice been agreed between the EP and Council already at that stage. It’s not clear what additional constraints might then exist, besides those set out in the Treaty (for instance, it’s easier to amend a Commission proposal in some cases after first reading). It’s also possible that the Court would take a different approach to non-legislative measures, or those subject to a special legislative procedure.

So let’s focus on the usual case – a withdrawal of a proposal for a legislative act pursuant to the ordinary legislative procedure, before the Council adopts its first reading position. The Court did not suggest that a change in the essential elements of a Commission proposal was the only ground to withdraw a proposal. Presumably it is still open to the Commission to withdraw proposals on other salient grounds, in particular the most common grounds for withdrawal: where the proposal is obsolete, or there is no chance of its adoption.

However, the existence of judicial review must mean that the Commission’s assessment in this regard could be open to challenge. The Court might also be called upon to clarify in another case what constitutes a change in the ‘essential elements’ of a proposal, where (for instance) the EP and Council want to widen or narrow that proposal’s scope significantly. There is no reason why the ‘essential elements’ rule is restricted to cases where the objective is improving the efficiency of EU actions, since there are many other possible objectives for EU action.

What other grounds for withdrawal exist? It seems implicit in the judgment that the Commission cannot simply argue that it has changed its mind, otherwise judicial review would have no purpose. There must be substantive reasons justifying that change of mind. Would it be sufficient that there is a new Commission? This is obviously a live issue, given that the Juncker Commission recently withdrew a number of proposals (for instance, the ‘circular economy’ proposals) on the grounds that it had changed its legislative priorities, and wished to start the process from scratch (see discussion here).  At first sight, since the proposals can always be redrafted during the legislative procedure, this is not a sound enough reason to withdraw a proposal, in light of today’s judgment – and there is still time to bring an annulment action against these withdrawals.  There might conceivably be an argument that a new Commission has more flexibility to withdraw proposals – but that begs questions as to whether it has a genuine democratic mandate, in particular if the Commission President did not campaign on the basis that the proposals in question should be withdrawn.

Finally, it might be arguable that today’s judgment has implications not only for the Commission, but for the ‘sincere cooperation’ during the legislative procedure between the EP and the Council. For instance, the EP and Council have been far apart for years as regards a proposal for maternity leave. As I recently pointed out (see here), the EP has shown recent signs of willingness to negotiate, which the Council has rejected.  For its part, the Commission has done little to try and broker a compromise, but has simply resorted to threatening to withdraw the proposal if there is no deal. Can the EP sue the Council for its intransigence? Can it sue the Commission if it follows through on its threat to withdraw the proposal, having played no constructive role in the talks? If the EU institutions and Member States make frequent use of the possibilities opened up by today’s judgment, this judicial intervention into the legislative process raises many such important questions.

 

Barnard & Peers:  chapter 3, chapter 5, chapter 8

Is it different this time? The Commission’s 2015 work programme

 

Steve Peers

Today the new European Commission announced its first annual work programme. Quite apart from the usual restructuring and renaming of policies, it promises to take a different approach to prior Commissions. In particular, this Commission apparently plans to propose fewer new EU measures and to withdraw many more pending proposals than usual.

But is the Juncker Commission’s approach actually different from the approach of previous Commissions? The best way to test that is to compare today’s work programme to the first work programme of previous Commissions.

The incoming Barroso Commission of 2005 suggested 32 pages of proposals, with no reference to withdrawal of pending measures. In 2010, the incoming ‘Barroso II’ Commission listed 25 pages of proposals, although only five pages concerned proposals that the Commission was definitely planning to make in 2010. The other 20 pages listed those proposals which were planned for the rest of the five-year mandate, although in the end some of those proposals – like two Directives on labour migration – were tabled in 2010 after all. And the 2010 work programme listed 58 proposed measures which were going to be withdrawn, although in all but one case the withdrawals were due to obsolescence.

How does that compare to the 2015 work programme? First of all, the list of planned proposals is similar to that in 2010: four pages, 23 proposals, compared to five pages and 34 proposals five years ago. Admittedly, the 2010 list comprised only the Commission’s biggest priorities, while the 2015 list is supposedly exhaustive, according to press reports. So is the Commission really planning to propose less than one new measure per Commissioner next year?

Of course not. A close look at the fine print reveals that some of the 23 items on the list will actually comprise more than one proposal. For instance, the review of immigration policy mentions both smuggling of migrants and the ‘Blue Card’ Directive on highly-skilled migrants. It would be technically possible to table one legislative proposal addressing both issues – indeed, that would be unremarkable compared to how immigration legislation is drafted in many countries. However, the EU’s tradition is to propose and adopt different legal acts in such cases. Similarly, the plans concerning labour mobility, the internal market, energy and the digital single market will necessarily entail proposing more than one item of legislation. This is particularly obvious as regards the digital single market, where the work programme refers to a ‘package’ of laws.

Secondly, the list of withdrawn proposals for 2015 – already nicknamed the ‘kill list’ – is somewhat longer, totalling 80 items. Two-thirds of these are obsolete, but around 25 of them are withdrawn for more political reasons: either there is no reasonable prospect of agreement, or the Commission wants to redraft them itself in light of changed priorities.

The first reason for withdrawal is hardly unheard of; in most years, the Commission withdraws a couple of proposals which have met with implacable opposition in the European Parliament or (more often) the Council. The second reason for removal is very rare indeed. The Commission justifies it in light of the principle of ‘discontinuity’ – the practice, quite common (perhaps even ubiquitous) in democratic systems, of retiring all legislative proposals when a new legislature is elected.

To be frank, the Commission has rather botched its application of this principle. It’s usually known simply as the principle of legislative discontinuity, and entails the automatic withdrawal of all legislative proposals on the table when a parliamentary chamber is dissolved before an election. The Commission is applying the rule only partially, withdrawing only certain proposals that it disagrees with. In any event, the principle is firmly rooted in the electoral process that leads to a change of (at least some) parliamentarians.

This distinction isn’t simply pedantic, since it goes to the heart of the Commission’s legal and political legitimacy to withdraw these proposals. Legally speaking, the Treaties refer to the Commission’s powers to make and amend proposals, but say nothing about any power to withdraw them. Should that power not rest instead with the EU’s two legislative chambers, which have been respectively directly (the Parliament) and indirectly (the Council) elected? For many years, this has been a theoretical point, since the Commission’s assumption that it has untrammelled powers to withdraw its proposals has gone unchallenged. But this Thursday, a CJEU Advocate-General is due to give his view on whether the Commission indeed has an unlimited power to withdraw its proposals, in a case brought by the Council. (Remember that like any such opinion, it won’t be binding; it will be up to the judges of the CJEU to give a final ruling, sometime next year).

Politically speaking, the Commission could try to claim some legitimacy to withdraw these proposals if they had mentioned during Jean-Claude Juncker’s campaign for the Commission Presidency, either during the European Parliament elections or when he was asking for a majority of the Parliament (and a qualified majority in the European Council) to approve him. Alternatively, these withdrawals might be legitimate if the other Commissioners had stated their intention to withdraw them in their hearings before the European Parliament. But it can hardly be claimed that withdrawal of proposals on waste or air pollution were a central feature of Juncker’s, or the Commission’s, campaign to be appointed.

Some of today’s withdrawals are supposedly not permanent, because the Commission has announced its intention to propose replacement measures next year. But it’s not absolutely certain that the Commission will keep this promise. Others are contingent, because the Commission has given the legislators a deadline to discuss a possible deal, failing which it will withdraw its proposal. It’s an interesting strategy, which will empower the half of the legislature that is reluctant to consider these proposals (usually the Council), at the cost of the other half (usually the European Parliament).

In the case of the maternity leave Directive, it raises the interesting question of how many feminists are also pragmatists. It’s politically impossible to obtain the lengthened maternity leave on full pay that a majority in the European Parliament desire: so should they settle for anything, as long as it’s an improvement on the status quo? Unlike an actual baby (cf the judgment of Solomon), it is possible to obtain only half of one’s legislative objectives – or probably significantly less than that in this case. This particular legislative proposal has been gestating now for six years; it might yet be born next year, but there’ll probably be a lot of shouting first.

 

Barnard & Peers: chapter 3