2 The legal issuesthe evidence |
The Government's view
THE PRIME MINISTER'S STATEMENTS
AFTER THE EUROPEAN COUNCIL OF 9 DECEMBER
13. The Prime Minister said that the UK wielded
its veto in the European Council on 9 December:
other Member States would not agree to including safeguards on
the internal market and financial services within the EU Treaties;
· to stop
EU institutions being used under the EU Treaties for the benefit
of the eurozone without the safeguards above.
14. On the latter points, the Prime Minister
said in his press conference after the European Council meeting:
[...] there are also risks with others going
off and forming a separate
treaty; and we should acknowledge that. So we will insist that
the EU institutionsthe Court, the Commissionthat
they work for all 27 nations of the European Union.
Indeed, those institutions are established by
the Treaty and that Treaty is still protected.
In his statement to the House on 12 December, the
Prime Minister said this:
I understand why they would
want to use EU institutionsbut
this is new territory and does raise important issues that we
will want to explore with the euro-plus countries. So in the months
to come we will be vigorously engaged in the debate about how
institutions built for 27 should continue to operate fairly for
all member states, Britain included. The UK is supportive of the
role of the institutions, not least because of the role they play
in safeguarding the single market, so we will look constructively
at any proposals with an open mind. But let us be clear about
one thing: if Britain had agreed treaty change without safeguards,
there would be no discussion. Britain would not have proper protection.
CORRESPONDENCE WITH THE GOVERNMENT
DURING THE NEGOTIATION OF THE SCG TREATY
15. The negotiations on the draft SCG Treaty
took place within the Ad Hoc Working Group on the Fiscal Stability
Union, which met on 20 December 2011, 6 January and 12 January.
The draft Treaty was also discussed at a Eurogroup-plus meeting
on 23 January and at a Sherpa meeting on Friday 27 January. The
UK Government was present at each such meeting. There was also
a meeting on the 10 February to discuss the arrangements for the
operation of Article 8 of the Treaty.
16. Several iterations of the draft were made
public over the course of the negotiations. In the light of these,
we wrote to the Minister for Europe on 12 January asking that
he send us the latest draft of the SCG Treaty, together with a
commentary on it, in time for our last meeting before the European
Council on 31 January. We were becoming increasingly concerned
about the legality of the proposed roles of the Court of Justice
and the Commission:
The role of the latter as foreseen in Article
8 of the 10 January version of the agreement strikes us as particularly
problematic. We say this in view of the fact that the Commission
is an EU institution with no inherent jurisdiction; as such its
competence to act in new fields, and the cost of so doing, have
to be agreed to by all 27 EU Member States; and in view of the
prohibition of infringement proceedings in Article 126(10) TFEU,
to which the objective and procedures in Article 8 bear close
17. We also had reservations about the encouragement
in Article 10 of the draft Treaty for contracting States to use
enhanced cooperation, also a mechanism the scope of whose use
had been agreed to by 27 EU Member States, to ensure the proper
functioning of the eurozone. We asked of the Minister:
] whether the Government
thinks reference to its use in a non-EU Treaty is appropriate;
whether encouraging its use "whenever appropriate and necessary"
is consistent with the EU Treaty requirement that it be used "as
a last resort" (Article
20(2) TEU); and what safeguards the UK thinks will be necessary
to ensure that greater use of enhanced cooperation does not undermine
the internal market or economic cohesion in the EU, does not create
barriers or discrimination in trade within the EU, and does not
distort competition within the EU, all of which prohibitions are
required by Article 326 TFEU.
18. The Minister's reply
of 24 January addressed
] the use of enhanced
cooperation envisaged will be under the EU Treaties and thus will
be compliant with all the safeguards and procedural steps provided
in the EU Treaties"but did not provide a response
on the use of the institutions. This is perhaps the more surprising,
in terms of genuine engagement with
the Committee, in light of the fact that the Prime Minister and
Foreign Secretary after the 31 January European Council both stated
that there were real concerns about the use of the institutions.
These concerns were more formally expressed in a letter of 22
February from the UK's Permanent Representative to the EU, Sir
John Cunliffe, to the Secretary-General of the Council, Mr Uwe
in which he stated that:
avoid the SCG Treaty setting objectionable precedents, "[
the EU institutions must only be used outside the EU Treaties
with the consent of all Member States";
the SCG treaty "[
] should not undermine the operation
of the single market or otherwise infringe on areas of policy
that are properly for discussion by all member States in the EU
UK had previously raised these issues in the negotiations, and
in writing, and in view of its "continuing concerns"
on the above points "we must reserve our position on the
proposed treaty and its use of the institutions, in particular
in Article 3(2), Article 7, and Article 8."
THE MINISTER FOR EUROPE'S EVIDENCE
TO THE COMMITTEE ON 23 FEBRUARY
The scrutiny process
19. We first of all asked the Minister to explain
why his reply to
our letter of 12 January
had failed to respond to our questions about the safeguards which
the Government had been seeking at the European Council meeting
of 8-9 December 2011, and about the legality of the use of proposed
EU institutions in the draft SCG Treaty.
The Minister replied that the Government had recently decided
to release greater detail
of the UK's approach to the December European Council negotiations;
but that it could not be expected to give a "running commentary"
on the negotiation of the draft SCG Treaty, which were confidential
and in which the UK was
not a participant;
and that it did not come to a formal view on the use of the institutions
until the European Council on 31 January, although it had communicated
its concerns informally throughout the negotiations.
Our concern was not, however, to inquire into the negotiations,
but rather to know what safeguards the UK had demanded before
agreeing to a revision of the Treaties, and to know the Government's
views on the use of the EU institutions and of enhanced cooperation
in the draft Treaty. Our views are well summarised in a point
made to the Minister by Mr Clappison:
] that was an excellent
answer, which was very comprehensive and showed tremendous grasp
of the details but, as the Chairman has just said, we would
have appreciated that before we embarked on our inquiry, not least
because it would have given us the opportunity to ask some of
the expert witnesses we have had along to the inquiry about the
points that you have just very properly made in your answer
now. The answer to the Chairman's letter, which you gave us back
in January, was very short; it was not much more than a page long.
It looks like an answer to a question that was not asked, and
no answers to the questions that were asked.
The Government's legal concerns with the SCG Treaty
20. We asked the Minister
to explain the Government's legal concerns with the SCG Treaty,
in the light of the Prime Minister's comments after the European
Council on 31 January and of Sir John Cunliffe's letter of 22
February. He said that there were elements of the SCG Treaty that
gave the Government "some concern, lest they be used in the
future either to set unwelcome precedents or to impinge upon the
integrity of European law and the arrangements set out in the
We pressed him for detail of what this actually meant. He replied
In respect of Article 7, first of all, on the
reverse qualified majority voting mechanism, our concern is less
with the content of this particular case, because we are not in
the euro and, by virtue of our protocol, we are exempt from penalties
and sanctions under the Stability and Growth Pact or excessive
deficit procedures, than the potential this might have for a precedent
possibly being set for the use of this mechanism in other areas
of the European Union treaties.
In Article 8, our concerns centre on the possible
role both of the Commission and of the European Court of Justice.
Here we are talking about the role of the Commission to judge
national budgets. The principle that we continue to assert is
that we think EU institutions should only be used outside the
EU treaties with the consent of all Member States, and any such
use must respect the treaties, because it is the treaties
that have primacy in any clash. With regard to the role of the
European Court of Justice under Article 8, in part the answer
there is the same as I have just given in respect of the Commission's
role under Article 8; it is about everybody having to agree
to the institution operating outside the scope of the treaties,
and that action in respect of the treaties, at all times.
Article 273 allows Member States to ask the institutions
to act on their behalf in matters beyond the Treaty, but on the
subject matter that is
dealt with by the Treaty. There is nothing in the treaties that
provides for a state's obligation to write a deficit break into
its law or constitution, so the question in our minds is if that
takes the Court into new territory.
But the Minister was reluctant to elaborate much
further. When asked about Article 7, he said that he thought it
was possible for a non-EU Treaty to stipulate voting procedures,
such as reverse qualified majority, in an EU institution, which
would appear to ignore
the Government's concerns about the precedent this might set for
other areas of the EU treaties.
21. On Article 8, it appeared
the Government's concern was whether the Court of Justice's jurisdiction
over a contracting State's compliance with Article 3(2), in other
words over its balanced budget rules, was consistent with the
Court's jurisdiction under Article 273 TFEU,
and whether the Commission's
role was provided for in the existing Treaties.
However, the basis for the latter concern was harder to discern.
When asked whether the Commission had de facto infringement powers,
in that the trigger for the legal proceedings was a negative Commission
report which meant that the matter "will be brought to the
Court of Justice by one or more of the Contracting Parties",
the Minister and his legal adviser disagreed. The reasons they
gave were that Article 8(1) did not impose an obligation on a
contracting State because: "will", as opposed to "shall",
was not mandatory Treaty language"It is because the
Treaty does not say that they must bring the action; it says they
will bring the action";
there was no sanction against a State for failure to bring an
action; and the provision
was clear that it is the States which bring the action.
When the Chairman sought simple clarification on whether the Government
thought the role of the Commission in Article 8 was lawful in
EU terms, the answer received
was: "I think there is possibly a range of views on this
issue" and the
Government was "reserving [its] position".
22. On the emphasis on enhanced
cooperation in Article 10, the Minister's answers were clearer.
First, even though the Treaty placed an emphasis
on enhanced cooperation, it could only be applied in accordance
with the procedures and limitations set out in the EU Treaties:
Nothing in the Intergovernmental Treaty can amend
or set aside what is written down in the EU treaties about
how enhanced cooperation has to operate: the rule that it must
be used as a "last resort"; that it must "not undermine
the [single] market or economic, social and territorial cohesion;
it [must] not [constitute] a barrier to or discrimination
in trade between Member States; [it must not] distort competition
between [Member States]" and it must "respect the competences,
rights and obligations of those Member States [that] do not participate
in [a specific enhanced cooperation initiative]". Those
rules all continue to apply,
whether there is enhanced cooperation that springs from the Intergovernmental
Treaty or springs from some other initiative among a variety of
EU Member States. Clearly we could not block a proposal for enhanced
cooperation that respected all those requirements. We would consider
carefully whether to resist, including if necessary through challenge
in the EU courts, any resort to enhanced cooperation that we considered
did not satisfy all the conditions laid down in the treaties themselves
for its use.
These considerations would apply, for example, to
the recent application to proceed by way of enhanced cooperation
on the financial transaction tax proposal.
23. Secondly, the risk of caucusing within the
eurozone or among the contracting State was overstated:
Also, one ignores the reality I observe in the
EU week by week, in which the 17, let alone the 25 parties of
this treaty, simply do not act as a cohesive bloc but pursue alliances
with other countries, including us, on a whole range of issues.
Since the December European Council, many of the countries that
have signed the Intergovernmental Treaty have been extremely eager
to show that they want to work with us as a key partner on a whole
range of measures, and especially the single market.
What are the consequences of the Government's
24. We pushed the Minister to answer this question.
There seemed to us an inherent contradiction in the Government's
stance towards the SCG Treaty, which the Minister summarised as
] while we do not
want to block our partners from undertaking these economic and
political tasks, we also reserve our legal position very clearly
in respect of certain aspects of
this Treaty, particularly in regard to the proposed use of the
institutions in certain Articles.
Our concern was that the Government's
legal reservations did not appear to be premised upon the possibility
of misuse, or even abuse, of the powers given
to the EU institutions under Articles 3(2) and 8; rather to relate
to the consistency of such powers with the EU Treaties and to
their use without the consent of all 27 Member States.
We pressed the Minister on this, asking him to say whether the
Government was concerned with the way the SCG Treaty was drafted
or might be applied. "We have had concerns about both"
was his reply.
This prompted a question asking
the Minister to confirm whether the Government had given its consent
for the use of the EU institutions, to which he replied: "We
have not been asked and we have not volunteered it. At the moment,
it is a hypothetical question." The Minister refused to accept
that the absence of the UK's consent to the use of the EU institutions
in the SCG Treaty must mean that the Treaty was unlawful per
[...] if we have not given our consent, it is not lawful [
Mr Lidington: The Intergovernmental
Treaty itself says that, if there is any conflict between it and
the EU treaties, it is the EU treaties that shall prevail.
Mr Clappison: I am not asking
that question. I am asking, quite simply, if we have given our
consent to the use of the EU treaties. If your answer is we have
not been asked to do it, we have not given our consent. We would
agree with that.
Mr Lidington: That is right.
Mr Clappison: In the terms
of this letter, if we have not given our consent, then the use
is not lawful.
Mr Lidington: I think that is taking
it a step further [...].
The view of the expert legal
VALUE OF AN INTERGOVERNMENTAL TREATY
25. The idea of enshrining balanced budget rules
and a concomitant enforcement
mechanism in the EU Treaties was thought to have been an initiative
principally of the French and Germans. The Foreign Secretary's
letter to the Chairman of the Foreign Affairs Committee confirms
this to be the case: "On 7 December, Angela Merkel and Nicolas
Sarkozy sent a further letter to Mr. van Rompuy with a different
set of ideas. They made clear that they were seeking change to
the EU treaties [...].Their proposals were not discussed [
in advance of the European Council."
Professors Craig and Dougan thought the ultimate objective was
to give the balanced budget rules a more elevated status and greater
legitimacy than would have been the case if they had been proposed
in EU secondary legislationEU Treaty revisions require
ratification through national parliaments and so engage the attention
of the public more. So when the UK vetoed a revision of the EU
Treaties, a non-EU treaty was preferred to a Directive. One of
the paradoxes of this, according to Professor Craig, was that
legal force of the SCG Treaty was "almost certain to be less
peremptory than it would have been if the same rules had been
embodied in ordinary EU legislation."
Professor Dougan agreed that a treaty, be it in the context of
the EU or public international law (non-EU), was a political necessity
for Germany, but the SCG Treaty was not a legal necessity for
of its provisions were aspirations rather than obligations.
26. A concern shared by several of the legal
experts was that the
considerable legislative overlap between the SCG Treaty and current
or proposed EU secondary legislationthe innovations of
the Treaty were limited to a) the domestic implementation of b)
stricter balanced budget rules and c) their enforcement by the
Commission and Court of Justice in Articles 2(3) and 8, and d)
the voting obligations on the excessive deficit procedure in Article
7made the framework of eurozone rules less transparent
and even harder to comprehend.
THE RULE OF LAW - A PRINCIPLE INFRINGED?
27. Professor Craig argued that what had been
agreed at the December European Council and in the negotiation
of the SCG Treaty should raise a concern over
the application of the rule of law in the EU. He characterised
it as follows: presented with a veto on changing the EU's competence
over eurozone States through a revision of the EU Treaties, the
EU 25 had proceeded to achieve the same ends through a non-EU
treaty in circumstances where EU rules on how change should occur
had been blocked:
] the question you
raised is a question that has been nagging at many commentators
or observers. It is the question I addressed in the first part
of the paper, which I called the background principle. I think
that, whichever way you look at it, the bottom line is that you
have a decisional rule-you have a rule about how decisions are
meant to be madethat is embodied within the Lisbon Treaty.
It is a rule about how change
should occur, and it is a rule that says you should undertake
change if there is unanimity. It also contains quite sophisticated
rules for further change to be able to take place through enhanced
co-operation within the framework of the Lisbon Treaty. Whatever
one believes about its desirability or not, this new treaty does
raise an issue of principle, which you can call a rule-of-law
issue of principle, that is concerned with whether we should bear
with equanimity the idea of those decision-making rules being
circumvented by a treaty outside the fabric of the Lisbon Treaty
in circumstances where the rules as to how change should be undertaken
within the Lisbon Treaty are not capable of being met, particularly
given that the SCG treaty can only work through the participation
of the EU institutions in the way that is written into that treaty.
That does raise an issue of principle, which is a rule-of-law
28. We asked Professor Craig about the legality
of giving new powers, through a non-EU intergovernmental treaty,
to the EU institutions. He replied that, unequivocally, new powers
could not (lawfully) be given to the institutions through a treaty
of this kind. The
more equivocal issue was whether a similar point of principle
arose in the instance of EU institutions using existing powers
under the SCG Treaty. In other words, cutting and pasting existing
institutional powers under EU primary and secondary law into the
SCG Treaty. Though tempted at first to distinguish this use of
the EU institutions as
unproblematic, on reflection he had revised his opinion: "It
is not that straightforward because to say that there is an existing
power to do X, whatever X is, under the Stability and Growth Pact,
does not per se legitimate the use of that very same power in
the context of a different treaty."
29. When asked whether the approach taken at
the December European Council and in the negotiation of the SCG
Treaty set a new precedent, Professor Craig replied that:
There is absolutely no doubt that, if this is
ratified, it will be a precedent in the sense that it will be
a solid piece of evidence that the EU as a whole, having been
blocked or stopped from achieving its goals through the normal
methods of treaty revision, will have recourse to a treaty of
this kind outside the existing Lisbon Treaty, and that EU institutions
will be involved in it. That is a precedent.
30. Professor Dougan took a different view:
] I do not see the
same types of issues, particularly as regards the principle of
whether member states, having failed to achieve a treaty amendment
so as to pursue an objective that they want to achieve, can then
pursue that objective outside the EU framework
by means of ordinary international law. That is one issue that
Professor Craig flagged up, and it is one that I would disagree
31. For Professor Dougan, the real question was
not the principle of whether a non-EU treaty could confer functions
on the EU institutionsit
could: it was the conditions under which those functions were
conferred. For authority he relied on two casesthe Bangladesh
case and the Lomé
which the Court of Justice recognised the principle that the Member
States could draw upon the EU institutions for non-EU purposes,
but he agreed with Martin Howe that in those cases
all Member States had agreed to the proposals.
] in both casesAdvocate-General
Jacobs, as he then wasdealt more with the possibility that
there could be situations where individual member states or even
external organisations such as
the UN might ask the Commission to carry out certain delegated
functions on their behalf. The test that the advocate-general
proposed in those cases is probably a very sensible one. The question
is: is it incompatible with its obligations under the treaties?
If, for example, the member states were asking the Commission
to behave in a way that infringed its duty of impartiality or
its duty of independence, we would all have a real problem. If
they are not asking the Commission to behave in that way, however,
it does not seem objectionable.
32. On the question of whether all Member States
needed to consent, Professor Dougan thought that an analogy could
be made with enhanced cooperation, in which fewer than the EU
27 could use the EU institutions to legislate:
It is perfectly possible within the treaties
to make use of the institutions for the interests of certain member
states against the opposition of others. That is within the scope
of the treaties, so obviously it is not a direct analogy, but
it is a useful indication that, as a point of principle, it may
be possible. The real question is whether that would make the
Commission behave in a way that would be incompatible with its
duty of impartiality. If it would, that is a real problem, but
if it would not, it should not be.
33. Martin Howe was not so sure:
] that the existence
of the enhanced co-operation procedure actually assists the argument
that the Commission can act privately for a sub-group of member
states. What one can draw from that is
a contrary argument, which is that the treaty authorises the institutions
to act under certain defined conditions on behalf of sub-groups
of member states who wish to engage in enhanced co-operation.
Hence, the argument would go that, in general, a sub-group
of member states that wants to get together outside the authorised
framework of enhanced co-operation cannot hijackto use
a pejorative wordthe institutions for its private purposes.
34. Professor Peers referred
also to the Bangladesh and Lomé Convention
In the debate on the draft REU treaty, it has
often been assumed that giving any role to an EU institution outside
the scope of its current powers under EU law would be legally
questionable. However, the case law of the Court of Justice of
the EU has not ruled this out in all cases. In particular, the
Court of Justice has ruled that Member States can act collectively
outside the framework of the EU Treaties in areas where the EU
and Member States share a parallel competence, and in that context
can confer powers to act upon the EU institutions: see Case C-316/91
EP v Council and C-181/91 and C-248/91 EP v Council and Commission.
These cases involved collective action by all Member States,
although the Court did not refer to this factor expressly in its
judgment. So the question remains open whether or not it would
be legal in principle for some Member States to confer additional
power upon the EU institutions by means of an international treaty
outside the EU framework. If this is legal in principle, there
would probably be conditions upon the use of those institutions,
in particular a requirement of compliance with EU law.
35. Professor Peers' conclusions
were less conclusive than those of Professor Dougan:
Article 14(2) includes a target date of entry
into force, but this does not really have any legal relevance,
as the treaty will still enter into force one month after it has
sufficient ratifications, whether that takes place before or after
the target date. The
bigger issue is the number of ratificationsoriginally nine
eurozone States, then fifteen, and now twelve (2/3 of the eurozone
States). This provision fails to provide for the legal position
if fewer than twelve eurozone States have ratified the treaty
before 1 January 2013; this issue ought to be clarified.
VOTING OBLIGATIONS IN ARTICLE 7
36. Article 7 "commits"
contracting States to supporting the Commission's recommendations
in the Council in relation to the excessive deficit procedure
in Article 126 TFEU, unless there is a (reverse) qualified majority
against. We asked Professor Dougan and Martin Howe whether they
thought it was possible for a non-EU treaty
to stipulate voting procedures in an EU institution. Professor
Dougan replied that:
there was a commitment to vote presumptively in favour of a Commission
proposal, it was not an absolute commitment. Contracting States
could decide to change their minds: none of them is bound to follow
the Commission proposal;
qualified majority voting was not unique to the SCG Treaty. It
was a feature a central feature some would say of
the Six Pack of legislative measures. Its role precisely
was to try to increase the automatic nature of sanctions against
Member States that are incurring excessive deficits. It was not
unique in that regard, even if still relatively unusual.
37. Professor Peers took the same view:
Article 7 only specifies
that Member States "commit" to apply it; this falls
short of a fully-fledged legal obligation. It leaves open the
possibility that Member States might decide not to support the
Commission's proposals or recommendations. Since this
Article does not amend the role of the Commission or the Council
as such, it would not breach any rule (if there is one) that a
group of Member States cannot confer new powers upon the EU institutions.
To some extent this reverse voting rule is already set out in
EU legislation, for instance in Articles 5(2) and 6(2) of Reg.
1173/2011, concerning the enforcement of the excessive deficit
rules as regards the imposition of fines on eurozone Member States.
ROLE OF THE COMMISSION IN ARTICLE
38. Professor Craig thought that the Commission
had de facto infringement powers in Article 8: it was the trigger
for legal proceedings because the contracting States were under
a "mandatory obligation"
to bring an action in the event of a negative report from the
Commission. This was "simply a legal contrivance" to
try to circumvent the injunction on the Commission from bringing
an action in its own name when the jurisdiction of the
Court of Justice was premised on Article 273 TFEU.
There was a further conflict with the EU Treaties: the Commission
was prevented by Article 126(10) TFEU from bringing infringement
proceedings in the context of the excessive deficit procedures
in Article 126 (1)-(9) TFEU. Martin Howe agreed with these views.
39. Professor Peers thought Article 8 conferred
significant powers on the Commission in a procedure similar to
the pre-judicial stage of the infringement procedure:
On the other
hand, the option to invite the European Commission to give its
opinion on whether a Member State has complied with the debt brake
rule, the Commission's role in a procedure similar to the pre-judicial
stages of the infringement procedure in such a case, and the subsequent
obligation to bring an action against a Member State which has
breached the debt brake rule, in the Commission's view, would
all confer significant additional powers upon that institution.
Article 8 should also be clarified to make clear
that the Member State which has allegedly breached Article 3(2)
would be joining in the action against itself.
40. For Professor Dougan the key consideration
in assessing the legality of the role of the Commission was that
the contracting States had ceded jurisdiction over Article 8 to
the Court of Justice by voluntary agreement.
In light of this, a wide margin of discretion should be given
to the contracting States "subject to EU law and not breaching
the treaties directly, to design the type of enforcement system
they want to have imposed upon themselves."
It was not therefore a question of whether the Commission's role
was new, but whether its role infringed the existing Treaties.
As the Commission had no formal role
in bringing proceedings under Article 8, its role was not problematic.
Further, it could be said to be analogous with the monitoring
role of the Commission elsewhere under the Treaties.
DOES ARTICLE 8(1) PLACE LEGALLY
BINDING OBLIGATIONS ON CONTRACTING STATES?
41. We asked Professors
Craig, Dougan and Peers to comment on the Government's assertion
that the use of "will" in Article 8(1)"the
matter will be brought to the Court of Justice of the European
Union by one or more Contracting Parties"meant that
States were not under a mandatory obligation to bring proceedings,
so could elect not to. None agreed.
JURISDICTION OF THE COURT OF JUSTICE
IN ARTICLE 8
42. Professor Craig thought that whether what
was presently contained in Article 8 was lawful or not would ultimately
depend on the interpretation by the Court of Justice of the meaning
and scope of Article 273 TFEU; this in turn would depend upon
whether the Court, if the question were put to it, found that
the present mechanism whereby the Commission, in effect, triggers
the action was lawful under the Article 273.
The prohibition on the
Commission bringing enforcement action under Article 126(1-9)
in his view reinforced "very considerably" the conclusion
that to construe Article 273 as allowing de facto a Commission
enforcement action for breach of the selfsame rules "looks
very odd indeed".
43. When pressed to give a best guess on whether
the Court of Justice would find in favour of jurisdiction to hear
proceedings brought under Article 8, Professor Craig thought with
some certainty that it would in the case of inter-State proceedings,
because these were "a
special agreement for the purposes of coming within Article 273",
but that these would be very rare indeed.
But in the case of proceedings triggered by a negative report
from the Commission, he was less sure:
I simply do not know what they will do about
the first half of Article 8. I find that one more difficult to
guess. There will be a temptation to validate it, to legitimate
it, and say that the Commission is not formally bringing the action
and that is good enough and therefore you can use 273. The problem
with that conclusion is that it looks pretty artificial and, as
I intimated in my paper in the evidence I gave, on many occasions
in the past where member states have tried through various contrivances
to get round a rule in the
treaty by factually organising their behaviour in such a way as
to minimise the likelihood of engagement with a particular treaty
Article, the Court of Justice and the Commission legal service
and the Council legal service have quite rightly said, "No,
we are not going to allow that to happen. We will look at the
44. Professor Peers thought
that Article 8 related "to the subject matter of the Treaties"
and was confident that it did not exceed the scope of Article
According to the preamble to the draft treaty,
Article 8 is based on Article 273 TFEU, which provides that:
"The Court of Justice
shall have jurisdiction in any dispute between Member States which
relates to the subject matter of the Treaties if the dispute is
submitted to it under a special agreement between the parties."
Therefore it cannot be objected that this provision
per se is in breach
of EU law. Although it has been argued that Article 8 exceeds
the scope of Article 273 TFEU, since the 0.5% debt brake rule
is new to EU law, and is therefore outside the "subject-matter"
of the Treaties, this argument is not convincing. Article 344
TFEU subjects all disputes concerning the "interpretation
or application" of the Treaties to the exclusive
jurisdiction of the Court of Justice.
Since Article 273 provides for only optional jurisdiction
of the Court of Justice, the two provisions cannot overlap. So
Article 273 cannot apply to EU law as such, since Article 344
applies to EU law; it follows that Article 273 applies (only)
to disputes regarding measures which are not part of EU
law as such, but which are connected to
the "subject-matter" of the Treaties. Obviously the
debt-brake rule meets that criterion.
45. Professor Hix and Martin Howe thought the
Court would take an expedient approach to its jurisdiction under
Article 273 TFEU, in reflection of the
ultimate political objective: "where there's a political
will, the EU will find a way around this";
and, in the case of Martin Howe:
The Court reflects political developments and
the political ethos of the European Union in which it operates.
One would be asking that Court, as it were, to ban the Commission
from performing an activity that the Commission itself wants to
perform and which the majority of member states want it to perform,
in the face of the objection of maybe the United Kingdom and possibly
one or two others. Unless the legal arguments are crystal clear,
the prospects of winning that might not be too good.
46. Professor Dougan's views
were consistent with his answers on the Commission's role under
Article 8, which he did not consider to be legally objectionable.
He also thought that the enforcement mechanism under Article 8
could amount to a "special arrangement" for the purposes
of Article 273 TFEU, and prayed in aid to this end the published
legal advice of the Council
47. None of the expert witnesses
thought that the reference to "mak[ing] active use"
of enhanced cooperation "whenever appropriate and necessary"
in Article 10 was legally significant. The reference was merely
declaratory of powers that already existed in the EU Treaties,
the procedures for which took precedence over the SCG Treaty.
Additionally, Article 10 made explicit mention to the
relevant Treaty provisions.
48. Professors Hix
and Dougan agreed that Article 10 was more significant as a declaration
of political intent, enhanced cooperation only having been used
on two previous occasions.
Professor Craig, like the Minister for Europe, was more sanguine
about the prospect of unity among the eurozone or EU 25.
WAS THE UK RIGHT TO EXERCISE ITS
VETO AND WHAT ARE THE CONSEQUENCES?
49. Both Professor Hix and Craig questioned whether
the UK would have vetoed the provisions contained in the SCG Treaty,
had they been known at the December European Council. The SCG
Treaty was a significantly watered down version of the tougher
language used in the Statement of the eurozone Heads of State
or Government at the December European Council.
The substance of the SCG Treaty over and beyond existing EU obligations
was minimal; even the balanced budget rules in Article 3(2), when
examined closely, no longer had to be enshrined in a constitutional
or statutory rule.
50. Professor Hix thought that veto had not achieved
anything in the short-term; in the long-term he was concerned
that it may well lead to a growing separation of European integration
into two tracks.
51. Professor Dougan thought the EU 25 had pretty
much achieved the fiscal compact they had hoped for in a revision
of the EU Treaties. What was important was not the form the implementation
of the balanced budget rules
would take, it was the fact that the substantive obligation goes
further than what already existed under EU lawthe lower
limit of the structural deficit being 0.5% (as opposed to 1%).
He concluded that the
Government's veto was, accordingly, of little positive consequence
for the UK, and that it had forfeited some of its natural leadership
in single market integration and liberalisation policies.
11 See http://ukeu.fco.gov.uk/en/news/?view=News&id=703971982 Back
HC Deb, 12 December 2011, col 521 Back
Ev 71 Back
Ev 71 Back
Ev 73 Back
On 30 January in an interview on BBC Radio 4's Today programme,
the Foreign Secretary said that there were "some real legal
concerns" about the use of the Court of Justice; that the
UK could not veto its use as this was a (non-EU) intergovernmental
treaty; but that it could take legal action if necessary. And
in the press conference after the European Council Summit, the
Prime Minister said that "there are a number of legal concerns
on the use of EU institutions"; that the UK did not want
to stand in the way of the draft treaty, but that it could "take
action if [
] national interests are threatened." Back
Ev 74 Back
Ev 73 Back
Ev 71 Back
Qq 125, 136, 137 Back
Q 125. This information was set out in a letter to the Chairman
of the Foreign Affairs Committee, and published on its website:
Qq 130, 137 Back
Q 136 Back
Q 127 Back
Q 134; see also Q 135 Back
Q 142 Back
Article 273 TFEU gives the Court "jurisdiction in any
dispute between Member States which relates to the subject matter
of the Treaties if the dispute is submitted to it under a special
agreement between the parties." A recital confirms this is
what the intergovernmental agreement relies upon to invoke the
jurisdiction of the Court of Justice. Back
Qq 163, 164 and 180 Back
Q 156; see also Qq 153 and 155 Back
Q 154 Back
Qq 158, 160 and 161 Back
Q 165 Back
Qq 166-168 Back
Q 182 Back
Qq 185 and 186 Back
Q 184; see also the last paragraph of Q 182 Back
Q 138 Back
See the answer to Q 142, cited above, and the letter from Sir
John Cunliffe, Ev 74. Back
Q 173 Back
Qq 177-179 Back
See footnote 21 Back
Q 6 Back
Q 62 Back
Q 61 Back
Qq 2, 64 and 67 Back
Q 12 Back
Q 15 Back
Q 15 Back
Q 17 Back
Q 66 Back
C-181/91 and C-248/91 European Parliament v Council and Commission,
30 June 1993 Back
Case C-316/91 European Parliament v Commission, 2 March 1994 Back
Q 66 Back
Q 78 Back
Q 78 Back
Q 79 Back
Para 2, Ev w3 Back
Para 30, Ev w3 Back
Q 73 Back
Q 74 Back
Para 21, Ev w3 Back
Q 21 Back
Qq 86 and 87 Back
Para 23, Ev w3 Back
Qq 80 and 87 Back
Q 80 Back
Q 83 Back
See Ev 83, 84 and 85 Back
Q 26 Back
Q 27 Back
Q 29 Back
Q 26 Back
Q 29 Back
Para 22, Ev w3 Back
Q 44 Back
Q 65; see also Q 88 Back
Q 88 Back
Qq 35, 42, 89, 92 Back
Professor Hix did not think enhanced cooperation could be used
for EU policies such as taxation which required unanimity, the
financial transaction tax being a specific example (see Qq 40
and 43). We do not think that is correct, and, indeed, the Minister
for Europe confirmed that an application from nine Member States
to proceed with the financial transaction tax proposal by means
of enhanced cooperation had been lodged (see para 22 above). Back
Qq 36-39, 89, 94-95 Back
Q 41 Back
Qq 45 and 46 Back
Qq 22 and 46 Back
Q 69. For Professor Peers' comments, see also para 9 of Ev w3. Back
Q 103 Back