BETTER…ADMINISTRATIVE MAKING AT EU LEVEL (when the European Parliament paves the way to an, almost reluctant, European Commission…).

Since years the European Parliament ask the European Commission to submit a formal legislative proposal framing the administrative activity of the European Union as foreseen by art 298 of the Treaty on the functioning of the European Union and by the European Charter of Fundamental Rights.

According to the former “In carrying out their missions, the institutions, bodies, offices and agencies of the Union shall have the support of an open, efficient and independent European administration”.

Even more clearly the art 41 of the Charter (Right to good administration) states that :
1. Every person has the right to have his or her affairs handled impartially, fairly and within a reasonable time by the institutions, bodies, offices and agencies of the Union.
2.This right includes:
(a)the right of every person to be heard, before any individual measure which would affect him or her adversely is taken;
(b)the right of every person to have access to his or her file, while respecting the legitimate interests of confidentiality and of professional and business secrecy;
(c)the obligation of the administration to give reasons for its decisions.
3.Every person has the right to have the Union make good any damage caused by its institutions or by its servants in the performance of their duties, in accordance with the general principles common to the laws of the Member States.
4. Every person may write to the institutions of the Union in one of the languages of the Treaties and must have an answer in the same language.”

More than six year have past since the entry into force of the Treaty, in the meantime the EU administrative constellation has become even more complex with new agencies, authorities and networks but the European Commission has not yet considered that the time has come to bring some order in a domain which many have described as the “maquis” communautaire (instead of “aquis” communautaire..). This is even more appalling bearing in mind the increasing importance recognized also by the Court of Justice to the principle of good administration when assessing the legitimacy of the activity of the EU Member States or even of third countries. ..

It has then to be praised the fact that also in this legislature the Legal Affairs Committee (JURI) of the European Parliament has decided to ask to a group of eminent experts in this domain to write a full fledged legislative text which can “inspire” the European Commission. The full study and the text are accessible here .

Below the text of the draft legislative proposal as well as the first part of the study “The context and legal elements of a Proposal for a Regulation on the Administrative Procedure of the European Union’s institutions, bodies, offices and agencies” authored by Professors  Diana-Urania    Galetta,   Herwig   C.   H.   Hofmann,   Oriol  Mir Puigpelat and Jacques Ziller.

Emilio De Capitani

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Proposal for  a REGULATION OF THE   EUROPEAN PARLIAMENT AND OF THE COUNCIL on the  Administrative Procedure  of  the  European  Union’s  institutions, bodies,  offices  and  agencies

THE EUROPEAN   PARLIAMENT  AND  THE  COUNCIL OF  THE EUROPEAN UNION,
Having    regard    to    the    Treaty    on    the    Functioning    of   the    European    Union,   and    in    particular Article  298   thereof,
Having  regard  to  the proposal  from  the European  Commission,
After  transmission of  the draft legislative act  to  the national  parliaments,
Acting in accordance with  the  ordinary  legislative procedure, Whereas:
(1) With the development of the competences of the European Union, citizens are increasingly confronted with the Union’s institutions, bodies, offices and agencies, without  always having their procedural  rights adequately  protected.
(2) In a Union under the rule of law it is necessary to ensure that procedural rights and obligations are always adequately defined, developed and complied with. Citizens are entitled to expect a high level of transparency, efficiency, swift execution and responsiveness from the Union’s institutions, bodies, offices and agencies. Citizens are also entitled to receive adequate information regarding possibility to take any further  action  in the matter.
(3) The existing rules and principles on good administration are scattered across a wide variety of sources: primary law, secondary law, case-law of the Court of Justice of the European Union, soft law and unilateral commitments by the Union’s institutions.
(4) Over the years, the Union has developed an extensive number of sectoral administrative procedures, in the form of both binding provisions and soft law, without necessarily taking into account the overall coherence of the system. This complex variety of procedures has resulted in gaps and inconsistencies in these procedures.
(5) The fact that the Union lacks a coherent and comprehensive set of codified rules of administrative law makes it difficult for citizens to understand their administrative rights under  Union  law.
(6) In April 2000, the European Ombudsman proposed to the institutions a Code of Good Administrative Behaviour in the belief that the same code should apply to all Union institutions,  bodies,  offices   and   agencies.
(7) In its resolution of 6 September 2001, Parliament approved the European Ombudsman’s draft code with modifications and called on the Commission to submit a proposal for a regulation containing a Code of Good Administrative Behaviour based   on  Article  308  of the  Treaty establishing  the European Community.
(8) The existing internal codes of conduct subsequently adopted by the different institutions, mostly based on that Ombudsman’s Code, have a limited effect, differ from one   another  and  are  not   legally binding.
(9) The entry into force of the Treaty of Lisbon has provided the Union with the legal basis for the adoption of an Administrative Procedure Regulation. Article 298 of the Treaty on the Functioning of the European Union (TFEU) provides for the adoption of regulations to assure that in carrying out their mission, the institutions, bodies, offices and agencies of the Union have the support of an open, efficient and independent European administration. The entry into force of the Treaty of Lisbon also gave the Charter of Fundamental Rights of the European Union (“the Charter”) the  same  legal   value  as  the  Treaties.
(10) Title V (“Citizens’ Rights”) of the Charter enshrines the right to good administration in Article 41, which provides that every person has the right to have his or her affairs handled impartially, fairly and within a reasonable time by the institutions, bodies, offices and agencies of the Union. Article 41 of the Charter further indicates, in a non-exhaustive way, some of the elements included in the definition of the right to good administration such as the right to be heard, the right of every person to have access to their file, the right to be given reasons for a decision of the administration and the possibility of claiming damages caused by the institutions and  its servants  in  the  performance  of their  duties,  and  language  rights.
(11) An efficient Union administration is essential for the public interest. An excess as well as a lack of rules and procedures can lead to maladministration, which may also result from the existence of contradictory, inconsistent or unclear rules and procedures.
(12) Properly structured and consistent administrative procedures support both an efficient administration and a proper enforcement of the right to good administration guaranteed  as a  general  principle  of  Union  law  and under Article  41 of  the Charter.
(13) In its Resolution of 15 January 2013 the European Parliament called for the adoption of a regulation on a European Law of Administrative Procedure to guarantee the right to good administration by means of an open, efficient and independent European administration. Establishing a common set of rules of administrative procedure at the level of the Union’s institutions, bodies, offices and agencies should enhance legal certainty, fill gaps in the Union legal system and should thereby contribute to compliance  with  the  rule  of law.
(14) The purpose of this Regulation is to establish a set of procedural rules which the Union’s administration should comply with when carrying out its administrative activities. These procedural rules aim at assuring both an open, efficient and independent administration and a proper enforcement of the right to good administration.
(15) In line with Article 298 TFEU this Regulation should not apply to the Member States’ administrations.. Furthermore, this Regulation should not apply to legislative procedures, judicial proceedings and procedures leading to the adoption of non-legislative acts directly based on the Treaties, delegated acts or implementing  acts.
(16) This Regulation should apply to the Union’s administration without prejudice to other Union’s legal acts which provide for specific administrative procedural rules. However, sector-specific administrative procedures are not fully coherent and complete. With a view to ensuring overall coherence in the administrative activities of the Union’s administration and full respect of the right to a good administration, legal acts providing for specific administrative procedural rules should, therefore, be interpreted in compliance with this Regulation and their gaps should be filled by the relevant provisions of this Regulation. This Regulation establishes rights and obligations as a default rule for all administrative procedures under Union law and therefore reduces the fragmentation of applicable procedural rules, which result from  sector-specific  legislation.
(17) The procedural administrative rules laid down in this Regulation aim at implementing the principles on good administration established in a large variety of legal sources in light of the case law of the Court of Justice of the European Union. Those principles are set out here below and their formulation should inspire the  interpretation   of  the  provisions  of   this   Regulation.
(18) The principle of the rule of law, as recalled in Article 2 of the Treaty on European Union (TEU), is the heart and soul of the Union’s values. In accordance with that principle, any action of the Union has to be based on the Treaties in compliance with the principle of conferral. Furthermore, the principle of legality, as a corollary to the rule of law, requires that activities of the Union’s administration are carried out in full  accordance with the law.
(19) Any legal act of Union law has to comply with the principle of proportionality. This requires any measure of the Union’s administration to be appropriate and necessary for meeting the objectives legitimately pursued by the measure in question: where there is a choice among several potentially appropriate measures, the least burdensome option has to be taken and any charges imposed by the administration not  be  disproportionate  to  the  aims  pursued.
(20) The right to good administration requires that administrative acts be taken by the Union’s administration pursuant to administrative procedures which guarantee impartiality,  fairness  and   timeliness.
(21) The right to good administration requires that any decision to initiate an administrative procedure be notified to the parties and provide the necessary information enabling them to exercise their rights during the administrative procedure. In duly justified and exceptional cases where the public interest so requires,  the  Union’s   administration   may  delay   or  omit   the  notification.
(22) When the administrative procedure is initiated upon application by a party, the right to good administration imposes a duty on the Union’s administration to acknowledge receipt of the application in writing. The acknowledgment of receipt should indicate the necessary information enabling the party to exercise his or her rights of defence during the administrative procedure. However, the Union’s administration should be entitled to reject pointless or abusive applications as they might  jeopardize  administrative  efficiency.
(23) For the purposes of legal certainty an administrative procedure should be initiated within a reasonable time after the event has occurred. Therefore, this Regulation should  include   provisions   on   a  period  of  limitation.
(24) The right to good administration requires that the Union’s administration exercise a duty of care, which obliges the administration to establish and review in a careful and impartial manner all the relevant factual and legal elements of a case taking into account all pertinent interests, at every stage of the procedure. To that end, the Union’s administration should be empowered to hear the evidence of parties, witnesses and experts, request documents and records and carry out visits or inspections. When choosing experts, the Union’s administration should ensure that they  are  technically   competent  and  not  affected  by  a  conflict   of  interest.
(25) During the investigation carried out by the Union’s administration the parties should have a duty to cooperate by assisting the administration in ascertaining the facts and circumstances of the case. When requesting the parties to cooperate, the Union’s administration should give them a reasonable time-limit to reply and should remind them of the right against self-incrimination where the administrative procedure  may  lead  to  a  penalty.
(26) The right to be treated impartially by the Union’s administration is a corollary of the fundamental right to good administration and implies staff members’ duty to abstain   from   taking   part   in   an   administrative   procedure   where   they   have,   directly or indirectly,    a    personal    interest,    including,    in    particular,    any    family    or    financial interest,  such   as  to   impair  their  impartiality.
(27) The right to good administration might require that, under certain circumstances inspections be carried out by the administration, where this is necessary to fulfil a duty or achieve an objective under Union law. Those inspections should respect certain   conditions  and  procedures  in   order  to   safeguard   the   rights   of  the  parties.
(28) The right to be heard should be complied with in all proceedings initiated against a person which are liable to conclude in a measure adversely affecting that person. It should not be excluded or restricted by any legislative measure. The right to be heard requires that the person concerned receive an exact and complete statement of the claims or objections raised and is given the opportunity to submit comments on  the  truth   and  relevance  of  the   facts  and   on   the  documents  used.
(29) The right to good administration includes the right of a party to the administrative procedure to have access to its own file, which is also an essential requirement in order to enjoy the right to be heard. When the protection of the legitimate interests of confidentiality and of professional and business secrecy does not allow full access to a file, the party should at least be provided with an adequate summary of the content of the file. With a view to facilitating access to one’s files and thus ensuring transparent information management, the Union’s administration should keep records of its incoming and outgoing mail, of the documents it receives and measures it takes, and establish an index of the recorded   files.
(30) The Union’s administration should adopt administrative acts within a reasonable time-limit. Slow administration is bad administration. Any delay in adopting an administrative act should be justified and the party to the administrative procedure should be duly informed thereof and provided with an estimate of the expected date  of  the  adoption   of  the  administrative  act.
(31) The right to good administration imposes a duty on the Union’s administration to state clearly the reasons on which its administrative acts are based. The statement of reasons should indicate the legal basis of the act, the general situation which led to its adoption and the general objectives which it intends to achieve. It should disclose clearly and unequivocally the reasoning of the competent authority which adopted the act in such a way as to enable the parties concerned to decide if they wish   to  defend  their   rights  by  an  application   for  judicial   review.
(32) In accordance with the right to an effective remedy, neither the Union nor Member States can render virtually impossible or excessively difficult the exercise of rights conferred by Union law. Instead, they are obliged to guarantee real and effective judicial protection and are barred from applying any rule or procedure which might prevent,   even   temporarily,  Union  law  from   having   full   force  and   effect.
(33) In accordance with the principles of transparency and legal certainty, parties to an administrative procedure should be able to clearly understand their rights and duties that derive from an administrative act addressed to them. For these purposes, the Union’s administration should ensure that its administrative acts are drafted in a clear, simple and understandable language and take effect upon notification to the parties. When carrying out that obligation it is necessary for the Union’s administration to make proper use of information and communication technologies and  to adapt  to their development.
(34) For the purposes of transparency and administrative efficiency, the Union’s administration should ensure that clerical, arithmetic or similar errors in its administrative  acts are corrected  by  the competent authority.
(35) The principle of legality, as a corollary to the rule of law, imposes a duty on the Union’s administration to rectify or withdraw unlawful administrative acts. However,   considering   that   any   rectification   or   withdrawal of   an   administrative   act may conflict with the protection of legitimate expectations and the principle of legal certainty, the Union’s administration should carefully and impartially assess the effects of the rectification or withdrawal on other parties and include the conclusions of such an assessment in the reasons of the rectifying or withdrawing act.
(36) Citizens of the Union have the right to write to the Union’s institutions, bodies, offices and agencies in one of the languages of the Treaties and to have an answer in the same language. The Union’s administration should respect the language rights of the parties by ensuring that the administrative procedure is carried out in one of the languages of the Treaties chosen by the party. In the case of an administrative procedure initiated by the Union’s administration, the first notification should be drafted in one of the languages of the Treaty corresponding to  the  Member  State  in  which  the  party  is  located.
(37) The principle of transparency and the right of access to documents have a particular importance under an administrative procedure without prejudice of the legislative acts adopted under Article 15(3) TFEU. Any limitation of those principles should be narrowly construed to comply with the criteria set out in Article 52(1) of the Charter and therefore should be provided for by law and should respect the essence of the rights and freedoms and be subject to the principle of proportionality.
(38) The right to protection of personal data implies that without prejudice of the legislative acts adopted under Article 16 TFEU, data used by the Union’s administration   should  be  accurate,  up-to-date   and  lawfully   recorded.
(39) The principle of protection of legitimate expectations derives from the rule of law and implies that actions of public bodies should not interfere with vested rights and final legal situations except where it is imperatively necessary in the public interest. Legitimate expectations should be duly taken into account where an administrative act  is  rectified  or  withdrawn.
(40) The principle of legal certainty requires Union rules to be clear and precise. That principle aims at ensuring that situations and legal relationships governed by Union law remain foreseeable in that individuals should be able to ascertain unequivocally what their rights and obligations are and be able to take steps accordingly. In accordance with the principle of legal certainty, retroactive measures should not be taken  except  in  legally justified circumstances.
(41) With a view to ensuring overall coherence in the activities of the Union’s administration, administrative acts of general scope should comply with the principles  of  good administration  referred  to  in  this  Regulation.
(42) In the interpretation of this Regulation, regard should be had especially to equal treatment and non-discrimination, which apply to administrative activities as a prominent corollary to the rule of law and the principles of an efficient and independent  European  administration,
 
HAVE  ADOPTED  THIS  REGULATION: 
 
CHAPTER I GENERAL   PROVISIONS
 
Article  1 Subject  matter and objective…
  Continue reading

The draft renegotiation deal: A genuine red card? Tusk’s proposal and national parliaments

ORIGINAL PUBLISHED ON EU LAW ANALYSIS (Wednesday, 3 February 2016)

Dr. Katarzyna Granat, (*)

The Draft Decision of the Heads of State or Government, ‘A New Settlement for the United Kingdom within the European Union’, unveiled by Donald Tusk on February 2 2016 offers the first concrete vision of the changes to enhance the role of national parliaments under the UK’s renegotiation efforts. This note provides an analysis of the suggested changes by contrasting them with the mechanisms currently in force under the Lisbon Treaty.

Tusk’s proposal (Section C, points 2-3) envisions that reasoned opinions of national parliaments issued under Article 7.1 of Protocol No. 2 ‘on the application of the principles of subsidiarity and proportionality’ should be ‘duly taken into account’ by all institutions participating in the EU decision-making procedures. In Tusk’s proposal national parliaments may submit reasoned opinions stating that an EU draft legislative act violates the principle of subsidiarity submitted within 12 weeks from the transmission of that draft. If these reasoned opinions represent more than 55% of votes allocated to national parliaments (i.e. at least 31 of the 56 available votes; two votes for each national parliament; in the case of a bicameral parliament, each of the two chambers has one vote; votes of parliaments of member states not participating in the adoption of the act at stake are not counted), the opinions will be ‘comprehensively discussed’ in the Council. If the EU draft legislative proposal is not changed in a way reflecting the concerns of national parliaments in their reasoned opinions, the Council will discontinue the consideration of that draft.

This proposal differs from the current ‘yellow’ and ‘orange’ card schemes of the Lisbon Treaty in a number of ways concerning in particular the timeframe, applicable thresholds and the effects of these procedures.

First, under the existing provisions of the Lisbon Treaty national parliaments may submit a reasoned opinion to the Commission, EP and Council within eight weeks from the transmission of the draft legislative act (Art. 6 of Protocol No.2). Tusk’s proposal hence gives national parliaments more time for the analysis of proposals and drafting reasoned opinions. The need to extend the submission deadline is often underlined by national parliaments and this would probably be welcomed by them. (See COSAC, 24th Bi-annual Report: Developments in European Union Procedures and Practices Relevant to Parliamentary Scrutiny, 4.11.2015 at 22) Yet, it is unclear whether the extension to 12 weeks under Tusk’s proposal also applies to the ‘yellow’ and ‘orange’ card procedures.

Second, although the mechanism of assignment of votes to national parliaments does not change, Tusk’s proposal offers a different threshold of votes to be met by national parliaments. The ‘yellow card’ provision demands that the reasoned opinions on the non-compliance of a Commission proposal with the principle of subsidiarity represent at least one third of all the votes allocated to the national parliaments. For triggering of the ‘orange card’, applicable only in the ordinary legislative procedure, the reasoned opinions of national parliaments need to represent at least a simple majority of the total number of votes allocated to the national parliaments. In contrast, to activate the procedure proposed by Tusk the necessary threshold is 55% of the votes allocated to national parliaments. Hence out of 56 votes of national parliaments at least 19 are necessary for a ‘yellow card’; at least 29 for an ‘orange card’ and 31 to meet the ‘more than 55%’ threshold in Tusk’s proposal. The new procedure thus requires only slightly more votes than the existing ‘orange card’, which, thus far, has never been triggered successfully.

Third, the most substantial change concerns the consequences of activating the new procedure. The ‘yellow card’ involved consequences that were relatively limited: the Commission had to review the draft and then to decide on whether to maintain, amend or withdraw the draft, giving reasons for its decision (Art. 7.2. of Protocol No. 2). For the ‘orange card’, the Commission had similar choices available, but a decision to maintain the proposal required the Commission to prepare its own reasoned opinion with arguments demonstrating compliance of the act with the subsidiarity principle. The EP and the Council would then decide on the fate of the proposal taking into account the arguments on the principle of subsidiarity expressed by the Commission and by national parliaments. If subsequently 55 % of the Council members or a majority of the votes cast in the EP finds a subsidiarity breach, ‘the legislative proposal shall not be given further consideration’. (Art. 7.3 of Protocol No. 2) By contrast, Tusk’s proposal seems to omit the phase in which the Commission can respond to national parliaments and instead moves directly to the Council, which may decide not to continue the consideration of the proposal, if that is not amended to accommodate the ‘concerns’ expressed by national parliaments. Tusk’s proposal binds stopping of the legislative procedure with whether the requests of national parliaments are met, while the ‘orange card’ provided for discontinuation only if the Council finds a subsidiarity breach.

It is worth noting that important details of the procedure such as who is responsible for amending the proposal and more importantly verifying whether the concerns of national parliaments were addressed are left unspecified. Recall that in its interaction with the national parliaments the Commission has often expressed itself satisfied that the concerns of the parliaments expressed in the reasoned opinions have been addressed by the original proposal. (See House of Lords, European Union Committee, 9th Report of Session 2013-14, para 87) Nevertheless, Tusk’s proposal seems to demand a more active response from EU institutions than the ‘orange card’.

Moreover, one should note that Tusk’s proposal does not grant the national parliaments a veto power on any aspect of a Commission proposal. Tusk’s proposal mentions that the discontinuance of the legislative procedure is conditional on the non-accommodation of the ‘concerns’ expressed in the reasoned opinions, with the ultimate decision taken by the Council, and thereby away from the national parliaments.

One further interesting aspect of Tusk’s proposal is that it refers throughout to reasoned opinions on the non-compliance of proposals with the subsidiarity principle, even though in their exercise of subsidiarity scrutiny under Protocol No. 2 national parliaments often critique issues such as the legal basis, proportionality or the political merits of a proposal, thereby going beyond strict subsidiarity review (See F. Fabbrini, K Granat, ‘“Yellow card, but no foul”: The role of the national parliaments under the subsidiarity protocol and the Commission proposal for an EU regulation on the right to strike (2013) 50 Common Market Law Review, 115–143). The question is whether under Tusk’s proposal such a broad approach would also be adopted in the Council. If so, this might cause difficulties in amending a proposal in a way that properly takes account of all the different aspects raised by national parliaments and in consequence makes it also easier to stop the legislative procedure because of the lack of accommodation of the demands of the parliaments.

A broad reading of Tusk’s proposal would therefore probably be more in line with Cameron’s wish of strengthening national parliaments by allowing a threshold of national parliaments ‘to stop unwanted legislative proposals,’ although Cameron underlined also that the EU must commit to a full implementation of the subsidiarity principle. (Letter of D. Cameron to D. Tusk, 10. November 2015 at 4) A more specific answer to the latter issue might be the proposed draft declaration ‘on a subsidiarity implementation mechanism and a burden reduction implementation mechanism’ obliging the Commission to create a mechanism for the review of existing EU legislation for its compatibility with the subsidiarity and proportionality principles with an aim to provide ‘full implementation’ of subsidiarity. (EUCO 7/16)

Last point: the fact that the tabled proposal demands a discussion in the Council could also mean that depending on the relationship between parliaments and their governments represented in the Council, the ministers might show more or less flexibility with the ‘concerns’ of their national parliaments and whether a consensus on stopping or continuing with the legislative procedure could be achieved.

Finally, recall that the rejected ‘red card’ proposed in the Convention on the Future of Europe aimed at a two-third majority of national parliaments that would require the Commission to withdraw its proposal (CONV 540/03, 6.02.2003, p. 3). In comparison, Tusk’s proposal has a lower threshold and does not imply an immediate stopping of the legislative procedure. It could be hence described as a ‘red card light’ and as way of finding a compromise solution without threatening to disrupt the EU legislative procedure.

(*)  Junior Research Fellow & Marie Curie Fellow, Durham Law School 

The ’emergency brake’ on EU citizens’ benefits: Must the Commission or Council control it?

ORIGINAL PUBLISHED ON EU LAW ANALYSIS (Sunday, 31 January 2016)

by Steve Peers,

One issue that has arisen in the UK’s renegotiation of EU membership is the procedure for the UK (or other Member States) invoking an ‘emergency brake’ to limit access to in-work benefits by EU citizens. Should a Member State be able to pull the ‘emergency brake’ on its own initiative (perhaps with a requirement to notify the Commission and Council)? Or should it only be able to make a request to that effect, with the Commission and/or Council deciding on whether to authorise it?

The following analysis demonstrates that there is no legal rule which requires that only the Commission and/or Council can authorise a Member State to pull the emergency brake. Therefore it is a matter of political discretion to decide on who should pull it.

Treaty rules

There is no general rule in the Treaty governing the use of Member States’ safeguards and derogations. The possible limits on free movement rules on grounds of public policy et al refer only to decisions by Member States’ governments, although the EU institutions have the power to adopt legislation on these issues. Similarly, the power to disapply EU law in times of war, threat of war or civil disturbance is invoked by Member States; the Treaty only refers in this case to discussions with the Commission, and a possible special procedure before the Court of Justice. (To keep this text readable for non-lawyers, I have put the precise details of all the laws referred to in an annex.)

On the other hand, there are some Treaty Articles which provide for authorisation for Member States’ action by the Commission (as regards higher national standards following internal market harmonisation), or by the Council (to authorise a state aid which the Commission has ruled out, or to permit a tax rule restricting movement of capital to third countries).

The Treaty provisions most directly relevant to social security and immigration of large numbers of people give the final say to Member States. In particular, if a Member State pulls an ‘emergency brake’ to stop EU decision-making on social security for EU citizens exercising free movement rights, there is discussion in the European Council, but the proposal can ultimately be blocked if there is no agreement there among all Member States. The case law of the CJEU implicitly confirms that if Member States wish to restrict the free movement of EU citizens on grounds of public health, they may do so without being subject to an EU control procedure (Bressol). And the power to control the volumes of non-EU citizens coming from third countries to the EU to work rests entirely with the Member States.

In certain cases, the CJEU has insisted upon a Community (EU) control procedure for Member States’ derogations. But those cases apply to circumstances where the EU both has exclusive competence, and there are Treaty provisions relating to the control procedure. In Commission v UK, the Court relied on the 1972 Act of Accession and the exclusive EU competence over fisheries conservation to justify its conclusion that Member States have ‘special duties of action and abstention’ where the Commission has made proposals to the Council which had not yet been adopted, entailing prior Commission approval of Member State action. In its subsequent judgment in Bulk Oil, the Court essentially confined the Commission v UK judgment to its particular facts.

In Donckerwolke, the Court stated that national measures relating to trade with non-EU countries needed Commission approval. Again, though, this was in light of the exclusive EU competence in the area, and in particular of Article 115 EEC (since repealed), which detailed this process. The exclusive EU powers over these two issues can be distinguished from the shared power over the internal market.

Secondary law

The most relevant provisions in EU secondary legislation tend to give power to Member States to trigger derogations, with at most an information and consultation requirement for the EU institutions. Most significantly, the EU citizens’ Directive leaves it entirely to Member States to trigger the exceptions to EU citizens’ access to benefits. The EU’s patients’ Directive (more on that Directive here) allows Member States to limit reimbursement of costs incurred by patients in other Member States, subject only to a requirement to inform the Commission.

Equally the legislation referring to movements of large numbers of third-country nationals reserves power to Member States. The asylum procedures Directive allows Member States to adopt a longer deadline to decide on asylum applications where there a ‘large number’ of applications, without even a notification requirement. Also, Member States alone decide on whether to derogate from the rules on border procedures in the event of a ‘large number’ of applications at the border or in a transit zone.

Under the Directive on reception conditions for asylum-seekers, Member States may adopt different rules where the normal accommodation to be provided is ‘temporarily exhausted’, with no control requirement. And under the Returns Directive, Member States can derogate from some safeguards on immigration detention if there are an ‘exceptionally large number’ of irregular migrants; but they need only inform the Commission of this decision.

Finally, an example from outside the field of immigration, free movement and social security proves that Member States are often given sole discretion to decide on derogations in other fields of EU law too. The working time Directive provides for four categories of derogations. The first three categories are entirely up to Member States’ discretion. The fourth category, which sets out transitional rules for doctors in training which have now expired, set out rules requiring only a Commission opinion before Member States extended the relevant transitional period.

Of course, secondary EU law is required to comply with EU primary law in the Treaties, and so the lack of EU control procedures over derogations would be invalid if it violated the Treaties. But as discussed in the first part, the Treaties set out no general rule on the EU political institutions’ control of Member States’ derogations from EU law. Indeed, in the particular areas of free movement and social security, they expressly leave the power to decide on such measures to Member States. This is, however, without prejudice to the possibility of judicial control (by the national courts and the CJEU) to determine whether most of these national decisions (except for the ‘emergency brake’ on social security decision-making) have been validly exercised.

 

 

Annex – Articles in Treaty and legislation referred to

Free movement exceptions: Articles 45(3), 52(1), 62 and 65(1) TFEU

Emergency wartime derogation: Article 348 TFEU

Higher national standards following internal market harmonisation: Article 114 TFEU

State aid authorisation: Article 108(2) TFEU

Tax rule restricting movement of capital to third countries: Article 65(4) TFEU

Social security and free movement of persons: Article 48 TFEU

Volumes of third-country nationals coming to work: Article 79(5) TFEU

Fisheries conservation ruling: Case 804/79 Commission v UK, referring to Article 102 of the 1972 Act of Accession (paras 17, 28 and 31 of the judgment)

Case 174/84 Bulk Oil: para 56

EU competences: Articles 3(1) and 4(1)(a) TFEU

EU citizens’ Directive (Directive 2004/38): Article 24

EU’s patients’ Directive (Directive 2011/24): Article 7(9) and (11)

Asylum procedures Directive (Directive 2013/32): Articles 31(3)(b) and 43(3)

Directive on reception conditions for asylum-seekers (Directive 2013/33): Article 18(9)(b)

Returns Directive (Directive 2008/115): Article 18

Working time Directive (Directive 2003/88): Article 17

The Italian Job: the CJEU strengthens criminal law protection of the EU’s finances (Comment to ‘Taricco’ Case)

ORIGINAL PUBLISHED ON EU LAW ANALYSIS

by  Steve Peers

The stereotype of fraud against the EU budget is a sleazy EU official in Brussels receiving manila envelopes stuffed full of bribe money, spending his ill-gotten gains to ensure that his lavish lifestyle becomes ever more decadent. But according to the EU’s annual reports on such fraud, the typical offender is actually rather different: it’s an individual or company who finds ways to get hands on EU money being spent by the Member States, since they are largely in charge of the day-to-day management of EU spending. Furthermore, not all the breaches concern EU spending: some concern the reduction of EU income, for instance by avoiding the customs duties which apply to many goods coming from third countries.

Agreeing and enforcing EU-wide rules for such behaviour has long been a challenge. But in its recent judgment in Taricco, the Court of Justice has made a major effort to strengthen the law in this field.

Background

The CJEU ruled back in the 1980s (in the Greek maize judgment) that Member States could not simply ignore fraud against the EU budget, but had to take effective measures to stop it. This rule was later added to the Treaties, and now forms Article 325 TFEU, which reads in part as follows:

  1. The Union and the Member States shall counter fraud and any other illegal activities affecting the financial interests of the Union through measures to be taken in accordance with this Article, which shall act as a deterrent and be such as to afford effective protection in the Member States, and in all the Union’s institutions, bodies, offices and agencies.
  2. Member States shall take the same measures to counter fraud affecting the financial interests of the Union as they take to counter fraud affecting their own financial interests.

As regards criminal law, the current legal rules on the topic date back to 1995, and were adopted in the form of an international Convention (the ‘PFI Convention’) between the Member States, which came into force in 2002. This treaty applies to all Member States except for Croatia (although the Commission has just proposed its application to that State), and the UK – which was initially a party but no longer has legal obligations to apply the Convention since it opted out of many pre-Lisbon criminal law measures as from 1 December 2014 (on that process, see further here). Among other things, the PFI Convention obliges all Member States to impose criminal sanctions for serious cases of fraud against the EU budget.

The Commission proposed a Directive to replace the Convention in 2012, and this is currently in the late stages of negotiation between the Council and the European Parliament (for an update, see here; on the legal basis, see here). It’s evident that one of the main issues remaining in the negotiations is whether the proposed Directive should apply to VAT fraud, given that a small amount of VAT revenue goes to the EU budget. The Commission and the European Parliament argue that it should, while the Council argues against, presumably because the far larger part of the losses from VAT fraud affects national budgets, not the EU budget. There are other issues in the proposed legislation, such as a more precise possible penalty for fraud, and a rule on ‘prescription’ periods (ie the time limit after which a prosecution can no longer be brought or continued).

The proposed Directive is closely connected to another piece of proposed EU legislation: the Regulation establishing the European Public Prosecutor’s Office (EPPO). That’s because the EPPO will have jurisdiction only over EU fraud, and so it’s necessary to have a definition of that concept. (On the defence rights aspects of the EPPO proposal, see discussion here); for an update on negotiations, see here). And the EPPO Regulation is in turn linked to a third legislative proposal: the Regulation refounding Eurojust, the EU’s agency for coordinating national prosecutions. That’s because there will be close links between Eurojust and the EPPO, and so the Eurojust Regulation can’t be finalized before the EPPO Regulation is agreed. (The Council has agreed all of the Eurojust Regulation except for the bits relating to EPPO links: see the agreed text here. This will still have to be negotiated with the European Parliament, however).

Judgment

The recent CJEU judgment in Taricco concerns alleged VAT fraud against a national budget, and in particular the question of prescription periods. Italian rules on the breaks in prescription periods mean few cases involving VAT fraud are ever seen through to completion, since time simply runs out during the proceedings.  A frustrated Italian court therefore asked the CJEU whether these national rules infringed the economic law of the EU: namely the rules on competition, state aids, economic and monetary union and the main VAT Directive.

According to the CJEU, the national law does not infringe EU competition law, because inadequate enforcement of criminal law does not as such promote cartels. It does not infringe state aid law, because the Italian government was not waiving tax obligations as such. Furthermore, it does not infringe monetary union rules, since it was not closely enough linked to the obligation to maintain sound public finances.

That left the VAT Directive. In fact, that Directive sets out the scope of VAT (ie which goods and services have to be taxed), but does not include any rules on criminal law issues. The Court therefore assumed that the national court was asking it questions about EU law more generally, and proceeded to interpret Article 325 TFEU and the PFI Convention. According to the Court, building on the previous case law such as Fransson, there was not only an obligation pursuant to the VAT Directive and Article 325 TFEU to take effective measures in general against VAT fraud to defend the EU budget, there was also a specific obligation to criminalise such activity, where it was ‘essential to combat certain serious cases of VAT evasion in an effective and dissuasive manner’. This was consistent with obligations under the PFI Convention; the Court confirmed that the Convention applied to VAT fraud, despite the absence of express provisions to this effect under the Convention. Given the size of the alleged fraud in this case (several million euros), it had to be considered serious.

Furthermore, the Court ruled that the operation of the limitation periods in Italian law infringed Article 325 TFEU. A limitation period was not objectionable as such, but national law made it effectively possible to prosecute offences because the way in which it calculated breaks in the prosecution. Also, the national law infringed the principle of equality set out in Article 325, since other national laws on similar types of economic crime did not contain the same problematic rules on calculation of breaks.

The Court then ruled on the consequences of this breach of EU law. In the Court’s view, the national court has to disapply the relevant national law. This obligation was based on Article 325 TFEU, which sets out precise and unconditional rules on effective and equal protection of the EU’s financial interests. So the ‘precedence’ (ie, primacy or supremacy) of EU law required national law to be disapplied.

Finally, the CJEU dismissed a human rights objection to its ruling. While Article 49 of the EU Charter of Fundamental Rights does ban the retroactive application of more stringent criminal penalties than those in force when a crime was committed, the CJEU ruled (following the case law of the European Court of Human Rights on the equivalent Article 7 ECHR) that a limitation period was distinct from a substantive criminal offence. The acts which the defendants were accused of committing were undoubtedly criminal offences in national law at the time of their alleged commission, so there was no retroactivity of criminal law in the sense prohibited by the Charter.

Comments

“You were only supposed to blow the bloody doors off!” This classic quote from The Italian Job aptly summarises the CJEU’s approach to the relationship between national law and EU law in this judgment. Asked only to rule on the interpretation of EU economic law, the Court decided instead to strengthen the constitutional foundations of EU law in the criminal field.

Substantively, the Court’s judgment is significant because it extends EU criminal law obligations to VAT fraud. This is, in the Court’s view, a pre-existing obligation not only in the PFI Convention, but also in the TFEU itself. To overturn it, Member States would therefore have to amend the Treaty, not just the Convention (in the form of the proposed Directive). Also, Member States’ obligations extend not only to criminalisation of serious cases of VAT fraud, but to prescription (and so potentially other procedural issues) as well.  So if Member States (in the Council) do insist on excluding VAT from the scope of the EU fraud Directive, that would have limited impact. Indeed, the Council Presidency has already asked Member States if there is any point maintaining their opposition on this point after the Taricco judgment.

Presumably the Court’s rulings on prescription and criminalisation apply to other forms of EU fraud too. This means that including prescription rules in the Directive (as all of the EU institutions are willing to do) simply confirms the status quo – although the final Directive will likely be more precise on this issue than the CJEU’s ruling. Furthermore, since the Taricco judgment could help to unblock talks on the PFI Directive, this could have a knock-on effect on the negotiations on the EPPO and Eurojust.

Moreover, the Court’s ruling limits the effect of various opt-outs. Ireland and Denmark have opted out of the proposed Directive, but will remain bound by the PFI Convention; the UK has opted out of both. But they remain bound by the Court’s interpretation of the Convention (for Ireland and Denmark) and the Treaty (for all three Member States). This has limited practical impact, as long as national law remains compliant (assuming that it is already compliant) with these measures as interpreted by the Court. While the UK is no longer free to decriminalise fraud against the EU budget, it was never likely to use that ‘freedom’ anyway, particularly as regards VAT fraud, where the main loss would be to the British government’s revenue, not the EU’s.

More fundamentally, the Taricco judgment strengthens the constitutional foundations of criminal law obligations in the EU legal order. While this may only be relevant for EU fraud cases, the Court has already broadened that concept to include VAT fraud. In such cases, there is an obligation for national courts to disapply incompatible national law as regards the procedural aspects of criminal proceedings. Conversely, there is no obligation to disapply incompatible substantive national criminal law, since this would lead to a breach of Article 49 of the Charter.

The ruling is based on the legal effect of the Treaties – the Court does not rule on the legal effect of the ‘third pillar’ Convention. It sets out a test for primacy similar to the test for direct effect (the Court refers to the precise and unconditional nature of the rules in Article 325 TFEU). It is not clear how this rule fits into the EU’s overall constitutional architecture – as a clarification of the general rules or as a special rule relating to protection of the EU’s financial interests. But in any event, the Taricco judgment is a significant contribution toward strengthening the EU’s role in this particular field.

 

The General Principles of EU Administrative Procedural Law

THE TEXT BELOW IS AN EXCERPT OF A STUDY ACCESSIBLE HERE 

Nota Bene: Upon request by the European Parliament JURI Committee this in-depth analysis explains what general principles of EU administrative procedural law are, and how they can be formulated in  the recitals of a  Regulation   on  EU  administrative  procedure.
Authors:  Diana-Urania Galetta, Professor of Administrative Law and European Administrative Law, University of Milan, , Herwig C. H. Hofmann,   Professor   of   European   and   Transnational   Public   Law,   Jean   Monnet Chair, University of Luxembourg,  Oriol  Mir Puigpelat,  Professor  of  Administrative Law,  University of Barcelona and  Jacques Ziller,  Professor of  EU  law, University of  Pavia

EXECUTIVE SUMMARY : Background
The Committee on Legal Affairs of the European Parliament has requested an In-depth Analysis on “The general principles of EU administrative procedural law”. The In-depth Analysis is intended to be presented at a meeting of the Working Group on Administrative Law.
Aim
. The Analysis puts forward drafting proposals for the general principles of EU administrative procedural law to be included in the Recitals of a draft Regulation on EU Administrative procedures. More specifically, the Analysis tries to clarify the content of the general principles of EU administrative procedural law and suggest the most accurate formulation for the corresponding recitals.
The following general principles, which are related to the Right to good administration embedded in Article 41 Charter, to the principle of an open, efficient and independent European administration enunciated in Article 298 TFEU are translated into recitals: 1 Access to information and access to documents; Access to the file ; Duty of care; Data protection; Data quality; Effective remedy; Equal treatment and non-discrimination; Fair hearing; Fairness; Good administration; Impartiality; Legal certainty; Legality; Legitimate expectations; Participatory democracy; Proportionality; Reason giving; Rule of Law; Timeliness; Transparency.
(…)
2.2.   Structure and wording of recitals

Which general principles of EU law need to be referred to in the recitals of an EU regulation on Administrative Procedures depends on the content of the substantive provisions of the regulation.   The   purpose   of   establishing   an   EU   regulation   on   administrative   procedures   is   to improve the quality of the EU’s legal system by fostering compliance with the general principles of EU law in the reality of fragmentation between sector-specific procedures and the reality of the multi-jurisdictional nature and pluralisation of actors involved in the implementation of EU policies.
Fragmentation has often resulted in a lack of transparency, predictability, intelligibility and trust in EU administrative and regulatory procedures and their outcome, especially from the point of view of citizens.
A codification of administrative procedures can contribute to simplifying the legal system of the Union, enhancing legal certainty, filling gaps in the legal system and thereby ideally contributing to compliance with the rule of law. Overall, it can be expected that establishing enforceable rights of individuals in procedures that affect them, contributes to compliance with principles of due process  and  fosters procedural  justice.
Adopting such a regulation further has the potential to contribute not only to the clarity of the legal rights and obligations of individuals and participating institutions, offices, bodies and agencies, but also to the transparency and effectiveness of the legal system as a whole. An EU Regulation on Administrative Procedures has the potential to contribute to the objectives of clarification of rights and obligations. It also contributes to simplification of EU law by ensuring that procedures can follow one single rule-book and better regulation by allowing  to  improve the  overall  legislative quality.
The recitals of an EU regulation on administrative procedures will therefore contain various principles of EU law.
When identifying the principles of EU law which should be referred to in the recitals not only is it important to provide a list of principles but also to give them some order. In establishing such order, it has to be taken into account that there is neither an established ‘hierarchy’ of principles, nor do all general and foundational principles of EU law work in the same way. The important aspect of general principles is that they serve to guide the interpretation of legal rules of all levels of the EU’s legal system and fill gaps. In that context, the reference to a general principle of EU law in the recitals serves to reiterate its importance in interpreting a legal text such as the regulation on EU administrative procedure. It also serves to clarify which principles have been balanced by the legislature in establishing  specific  provisions  of  the regulation.

However, in order to structure the approach to the reference to general principles of EU law in the recitals of the EU regulation on administrative procedure, the various principles can be grouped. Taking into account the very nature of recitals our proposal is mainly grounded in the idea that the recitals not only have a legal purpose (of interpreting the norms in the regulation), but should also have a ‘citizen friendly’ informative purpose. The principles in the recitals therefore need to be presented in a way that may prompt the non-expert to read  them.
(…)
The proposed recitals are not comprehensive: they are limited to the scope of clarifying the content of general principles of EU administrative procedure law, what other general principles are relevant to the implementation and interpretation of administrative procedure rules, and why those principles are important. Other components need to be added to the recitals such  as,  to name  one  example, the legal  basis  of  the act.

Recitals (1) to (5) are intended to explain to a broader public why those principles matter. Recitals (7) to (22) attempt to explain what the content and meaning of those principles are. Recital (6) briefly alludes to internal principles which are very important for the implementation of the principles mentioned in Article 298 (1) TFEU of an open, efficient and independent administration without necessarily creating enforceable subjective rights; contrary to the other principles those internal principles are not further developed in their enunciation in so far as they do not necessarily correspond to subjective rights. One or more specific recitals might be devoted to those principles once the articles of the operative part  of  the  Regulation  will  have been  drafted.
The order in which those principles are presented derives from grounds which are explained in section 1.2 of this note. The recitals include footnotes that are obviously not intended to remain in the proposal of a Regulation. Their purpose is to give the most useful references (mainly about case law)  to  the  reader  of this  note.
(…)
3.2. Proposed Recitals Continue reading

THE LEGAL CHALLENGE TO ECB RESTRICTIONS ON GREEK BANK ACCOUNTS – AND HOW YOU CAN HELP

ORIGINAL PUBLISHED ON EU LAW ANALYSIS

by STEVE PEERS 

Many EU citizens have watched with sympathy and concern as Greek citizens have been limited to withdrawing €60 a day in the last two weeks. This restriction results from a restriction imposed by the European Central Bank (ECB) on the emergency liquidity assistance which it provides to Greek banks.

Apart from the human impact, there are grave legal, political and economic doubts about the ECB’s action. One of the central purposes of a central bank is to function as a lender of last resort to banks – and the ECB is signally failing to do that here. Also, the ECB’s actions give the impression that it is trying to influence the Greek political debate on austerity and membership of the Eurozone – a role which is well outside the Bank’s remit. The banking restrictions obviously damage the Greek economy, and so limit its ability to pay back its creditors in future.  They have nothing to do with the Bank’s task of fighting inflation, and they undermine its broader role in supporting the EU’s economic growth. (For a fuller critique, see here (paywalled); on the legal background, see here). Arguably these restrictions – or further restrictions which the ECB might impose – could lead toward a de facto ‘Grexit’ from monetary union, which is ruled out by EU law (see my discussion here).

It’s possible to challenge the ECB’s actions via the national courts, which can refer the issue to the CJEU, such as in the recent Gauweiler case (discussed here). They can also be challenged in the EU courts, such as in the UK’s recent successful challenge (discussed here). The case law takes a broad view of what ECB acts can be challenged, except where it acts as part of the ‘Troika’ which negotiates bailout conditions, when neither the Bank nor the Commission can be challenged in the EU courts. But the ECB’s restriction of assistance to Greek banks did not fall within the scope of its role in the Troika.

National governments such as Greece can go directly to the EU courts to challenge ECB actions. Other challengers besides the EU institutions would have satisfy standing rules: ‘direct and individual concern’, or (if they are challenging a non-legislative act which does not entail implementing measures) ‘direct concern’. Arguably it would be easy for a Greek bank to satisfy those rules.

In the absence of a legal challenge from a Greek bank or the Greek government, an individual depositor has brought a legal challenge to the ECB’s recent actions before the EU General Court. You can find the full text of the claim here. The ECB might restore assistance if there is a deal in the near future, but it is still worth challenging its actions, so it cannot do this (or threaten to do it) in future.

Obviously there is a possible problem with standing, although a parallel challenge could be brought in the Greek courts. The plaintiff welcomes any advice or support – contact info@alcimos.com. Or you can leave comments on this blog post.

“DON’T MENTION THE EXTRA JUDGES!” WHEN CJEU REFORM TURNS INTO FARCE

PUBLISHED ON EU LAW ANALYSIS ON Friday, 3 July 2015

by Steve Peers

The classic British comedy Fawlty Towers derived its humour from the doomed attempts of the ill-tempered hotel owner Basil Fawlty to control the uncontrollable situations that developed around him, often taking out his frustrations on his waiter, Manuel. No one would seriously suggest emulating Basil Fawlty’s management style. But nevertheless, the debate over the reform of the Court of Justice is increasingly resembling a Fawlty Towers episode.

Let’s review. After several previous failed attempts at reforming the EU judicial system, the Court of Justice suggested that the lower EU court (the General Court) should have double the number of judges – two per Member State, instead of one. The EU’s civil service tribunal (with seven judges) would close down, merged into the General Court. The senior Court of Justice would retain one judge per Member State. For the background, further details and arguments in favour, see my earlierblog post.

This proposal was opposed by many staff in the General Court. So four General Court judges appeared before the European Parliament to object to this plan (let’s call them, collectively, ‘Manuel’). For discussion of Manuel’s counter-arguments, see the recent blog post by Professors Pech and Alemanno; and for Manuel’s written argument itself, see here.

Very recently the proposal was formally adopted by the Council. But it still has to be agreed with the European Parliament (EP), and some Members of the European Parliament (MEPs) appear to have great misgivings, fuelled by the dissenting judges. Cue an angry response by the CJEU’s President Skouris (let’s call him ‘Basil’). As documented by Duncan Robinson in the Financial Times, hecomplained that the EP was willing to listen to the rebels, and threatened retaliationagainst the dissenting judge. Manuel might soon get whacked by that frying pan.

With the greatest respect, there are profound problems with Skouris’ approach. First and foremost, his response has become the story (it’s also been covered elsewhere). This diverts attention from the pros and cons of the argument for CJEU reform. I’m not criticising the journalists – it’s their job to report on his response, and he should have anticipated the effect it would have. Also, now that his response has become the story, it gives the impression that the proposal is a greedy grab for money by the judges. In fact. as I pointed out in my earlier post, the CJEU had previously suggested fewer extra judges. It only asked for doubling the number in despair, when it became clear that Member States could not agree on a more modest number, due to national egotism.

Secondly, Skouris’ angry letters give the impression that the CJEU is an authoritarian institution. Certainly, any ordinary employer would not take kindly to public criticism of its policy by its staff. For instance, if (entirely hypothetically) I had objections to the management of the University of Essex, I would not air them in a public forum. But the CJEU is a public body, in a political system whose legitimacy is clearly fragile. These attempts to silence dissent surely damage the Court’s authority more than the dissent itself would. Anyway, they gave that dissent far more publicity than it would otherwise have had (the well-known ‘Streisand effect’).

Thirdly, by attacking the dissenters instead of countering their arguments, it gives the impression that there is no good argument in favour of the Court’s proposals, since the brave truth-tellers are being silenced. And in tactical terms, it’s particularly hard to see how attacking the very MEPs whom Skouris needs to convince to support his proposals will win them round. Continue reading