International Law

Joint Legal Bases, Funds and the Peace Process: Case C-166/07

By Bartolus

We're back ! Thanks for being so patient during the long break.

The Court of Justice handed down an interesting judgment in Case C-166/07 European Parliament v. Council on the use of two legal bases at the same time for the same measure and which comprise different procedures for adoption of that measure.

Back in 1985 the United Kingdom and Ireland made an agreement to cooperate to reconcile the two communities in Northern Ireland. They also set up a fund for financing activities related to that reconciliation process. That fund has legal personality and is an international organization. Then the EU chipped in and adopted Regulation 1968/2006 on the sole basis of Article 308 EC to support the reconciliation process and provide a financial contribution to the fund that Ireland and the United Kingdom had set up.

The European Parliament brought an action to annul Regulation 1968/2006. It claimed that the Council was wrong to use Article 308 EC as the legal basis but should have adopted the Regulation under the third paragraph of Article 159 EC which it claimed confers on the EU institutions the power to adopt specific actions that prove necessary outside the Structural Funds in order to realize the objectives, referred to in Article 158 EC, of strengthening the economic and social cohesion of the Community. Interestingly, the procedure for adoption under Article 159 EC is co-decision with qualified majority voting in Council, while Article 308 EC provides for mere consultation of the European Parliament and unanimity in Council.

The Court of Justice largely agreed with the European Parliament. Largely, not completely: It held that both Articles 159 and 308 EC should have been used as joint legal bases while neither Treaty provision provided on its own a sufficient legal basis for adopting Regulation 1968/2006. As a consequence, the Court annulled the Regulation.

The Court recalled its classic case law according to which Article 308 EC may be used as the legal basis for a measure only where no other provision of the EC Treaty gives the EU institutions the necessary power to adopt it (Case C-84/94 United Kingdom v Council [1996] ECR I-5755, paragraph 48 (working time directive case); Case C-22/96 Parliament v Council [1998] ECR I-3231, paragraph 22; and Case C-436/03 Parliament v Council [2006] ECR I-3733, paragraph 36. For our post on that case see here). Article 308 EC fills the gap where no specific provisions of the Treaty confer on the EU institutions express or implied powers to act, if such powers appear none the less to be necessary to enable the EU to carry out its functions with a view to attaining one of the objectives laid down by the Treaty (Opinion 2/94 [1996] ECR I-1759, paragraph 29, and Joined Cases C-402/05 P and C-415/05 P Kadi and Al Barakaat International Foundation v Council and Commission [2008] ECR, paragraph 211. For our post on that judgment see here).

It recalled also that the choice of the legal basis for a measure must rest on objective factors which are amenable to judicial review, including, in particular, the aim and the content of the measure (Case C-338/01 Commission v Council [2004] ECR I4829, paragraph 54, and Opinion 2/00 [2001] ECR I-9713, paragraph 22).

Consequently, the Court examined the aim and content of Regulation 1968/2006. It agreed with the Council that the range of activities financed by Regulation 1968/2006 extends beyond the scope of the EU?s policy on economic and social cohesion. It also held that Article 159 EC covers only independent action by the EU carried out in accordance with the EU regulatory framework, the content of which does not extend beyond the scope of the Community?s policy on economic and social cohesion. As a result, contrary to the European Parliament?s submission, the third paragraph of Article 159 EC does not by itself confer on the EU the necessary power to pursue the objectives of its policy on economic and social cohesion by means of a financial contribution under conditions such as those provided for by the contested regulation.

Therefore the Court held it is necessary to examine whether the legislature should have used both Article 308 EC and the third paragraph of Article 159 EC as the legal bases for Regulation 1968/2006.

The Court found that, as Regulation 1968/2006 seeks to pursue a policy of economic and social cohesion as well as to bring about economic improvements in disadvantaged areas of two member States and thus relates to the functioning of the common market, the EU legislature ought to have had recourse to both the third paragraph of Article 159 EC and Article 308 EC (Case 242/87 Commission v Council [1989] ECR 1425, paragraphs 6 and 37, and Kadi and Al Barakaat International Foundation v Council and Commission, paragraphs 211 to 214).

That left a problem of procedure because those Treaty provisions lay down different procedures. The Court made it clear that the EU institutions must, when two legal bases are used, comply with the legislative procedures laid down in both, that is to say, both the ?codecision? procedure referred to in Article 251 EC and the requirement that the Council act unanimously as required by Article 308 EC.

Full post as published by EU Law Blog on September 03, 2009 (boomark / email).