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(p. 72) 3. The Transfer of Powers and Union Competences 

(p. 72) 3. The Transfer of Powers and Union Competences
Chapter:
(p. 72) 3. The Transfer of Powers and Union Competences
Author(s):

Nigel Foster

DOI:
10.1093/he/9780198839804.003.0003
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date: 01 March 2021

3.1 Introduction

The nature of the European Union (EU) was not set out clearly when it was first established, involving as it did a mix of intergovernmental and supranational elements, and it has developed considerably since then to become a very complex entity. As a result, many questions have been raised about the Union and its relationship with the member states. How democratic is it? Is it moving towards a federal set-up of some sort? Whilst demanding constitutionality of new member states, to what extent does the Union itself conform to the constitutional standards regarded as imperative for modern democracies? To a large extent, these questions were taken on following the Laeken Summit by the Convention on the Future of Europe. This prepared the Constitutional Treaty that was agreed by the member states in 2004, although subsequently abandoned in 2007 following its rejection by the electorates in France and the Netherlands. This chapter attempts to explore this multifaceted and increasingly intricate relationship between the Union and the member states. It commences with a consideration of constitutionalism within the Union and a particular aspect of that; the democratic legitimacy of the Union. This chapter then moves on to consider the transfer of sovereign powers and division of competences between the Union and member states. In doing so, it will concentrate on what has become a very emotive topic in EU law and that is the division and control of competences between the Union and the member states. In this context, the principles of subsidiarity and proportionality, which are the political solutions to the question about how power is shared between the Union and the member states, are prominent topics. Subsidiarity is a way of deciding how to determine where the line between Union and member states’ competences should be drawn. Even after the division of competences has been decided, which determines whether it is the EU or the member states who have the right to act and thus enact legislation in certain areas, there remains the question of the status of those acts produced under the Union competence and whether they take priority over national law. This means the issue of supremacy, which will be considered fully in Chapter 5.

First, however, we shall explore the requirements of constitutionality, and as a part of that democracy, which, following the entry into force of the Lisbon Treaty, is an express and therefore much more prominent basic value of the Union—see new Arts 10–12 of the Treaty on European Union (TEU).

3.2 The Constitutional Basis of the Union

3.2.1 The Community and Union Treaties

Within the usual understanding of international law norms, treaties are only agreements between signatory member states. They do nothing other than obligate the states to comply with the terms of the agreement, which are usually limited to distinct subject areas, such (p. 73) as free trade in goods. In contrast, the previous EC and EU Treaties (now Treaty on the Functioning of the EU (TFEU) and TEU) provide the Union with certain characteristics that go much further than a simple international agreement. They provide for their own institutional set-up, exclusive competences in some areas, and their own law-making powers to enable them to enact regulations, directives, and decisions that are binding in the member states. Laws are enacted by the Union’s own set of institutions, including the participation in that process by a directly elected European Parliament (EP), thus involving a distinct political input. However, the member states in the Council of Ministers remain in the driving seat as far as an overall view of the legislative processes is concerned and, following the Lisbon Treaty, the European Council is confirmed as the political driving force of the EU, situated as an official main institution at the apex of the institutional set-up. Very significant in this new order is that some of the secondary legislation that can be enacted are self-executing laws that are directly applicable in the member states. Furthermore, the process for enacting that legislation is increasingly by (qualified) majority voting, which means that member states can be overruled, yet the law still applies and is binding in all member states. The Union and member states are required also to uphold the express commitments to the rule of law and fundamental rights. There is a supreme or constitutional court, the Court of Justice (CJEU), to adjudicate on disputes between the constituent bodies. Furthermore, the agreements reached are not static ones, although there was little change for the first 20 years of life of the Communities; the Communities and now the Union have developed as the treaties have progressively been amended and expanded. Thus, the competences of both the Communities and now Union, and the internal institutions, have been increased considerably.

Much of this is in keeping with expectations of what would normally appear in a constitutional document. Indeed, the status of the treaties as a constitutional framework was not long in doubt in the view of the Court of Justice, which confirmed in its leading judgments of Case 26/62 Van Gend en Loos and Case 6/64 Costa v ENEL that the Community treaties went beyond the usual intergovernmental treaties and agreements between sovereign states, and had in fact created a new legal order.

On the side of caution for a moment, there are also certain attributes of the Communities and now Union that do not comply with constitutionalism or statehood. There is no overall competence of the Union to decide its own competence. The member states remain, certainly on paper, those that decide whether the competences of the Union should be increased. We should note here though that there have been increases in competences which are not attributed to the member states but internally to the EU institutions, which we will consider in Section 3.5.3. Furthermore, the Union has only an incomplete external competence: there is no single body that makes law and represents the Union externally, as would the government of a federal state;1 and, extremely importantly, there is no coherent identity held by the people of Europe.2 So, whilst there are some features of constitutionalism, the Union is far from constituting a federal or confederal state. For the moment, after considering the important, but sometimes overlooked, protocols, the further question of how constitutionalism is being developed within the Union will be considered—in particular in respect of the division of competences and subsidiarity.

3.2.1.1 Protocols

A particular complication to the body of constitutional law is the addition of numerous protocols the status of which is declared in Art 51 TEU to be an integral part of treaty law. (p. 74) Protocols are instruments that have been used increasingly in the Union legal order. They are agreements of the member states that have been reached usually at the same intergovernmental conference (IGC) when substantial treaty amendments have been agreed but which, for varying reasons, have not been incorporated into the main body of the treaties. They often provide further definition to principles outlined in the treaties, such as the protocol on subsidiarity—but all too often they contain some of the most controversial decisions reached by the member states, such as the old protocol on social policy from 1992, which was not agreed by all member states, or important decisions on enlargement or the institutions, or the relationship of the national parliaments to the Union. Protocols dealt with the opt-outs from various stages of the integration process, such as monetary union for the UK, or the opt-outs of the Schengen Agreement for the UK, Ireland, and Denmark. There are protocols on what the member states and EU institutions must understand from a Court of Justice judgment: for example, in the Barber case of 1990 that sought to prevent the retroactive effect of a Court judgment so as to limit the exposure of businesses and the insurance industry to backdated claims for equal pay. Others are of a more technical nature and contain, for example, detailed rules on the Court of Justice or the European Central Bank (ECB).3

Each of the treaty amendments have added protocols to the body of the constitutional law of the Union, including the 2007 Lisbon Treaty. Because they are the equivalent, and have the status, of treaty law and may alter either directly or impliedly the treaty provision, they amend the constitutional base of the Union. This is not very helpful, because there are now so many protocols on all sorts of matters that gaining an overall view of the constitutional and legal basis of the Union has become, if not impossible, then extremely difficult. The abandoned Constitutional Treaty was supposed to tidy up the law base of the Union, but only consolidated numerous protocols instead, which was the same approach taken by the Lisbon Treaty, which merely consolidated the protocols attached to the various treaties into one set of 37 protocols.4

3.2.2 Insistence of Constitutionality

A further element of a constitution is the requirement to be constitutional itself. Articles 2, 6, and 49 TEU require the Union itself, and present and future member states, to respect certain principles including liberty, democracy, human rights and fundamental freedoms, and the rule of law.

In providing a basic level for the governance of the EU, the treaties, in the view of the Court of Justice in cases including Les Verts5 and in its Opinion on the European Economic Area (EEA),6 represented the constitutional framework of the Communities (now EU). In Les Verts, the CJEU held that the European Community is based ‘on the rule of law, inasmuch as neither its member states nor its institutions can avoid a review of the question whether the measures adopted by them are in conformity with the basic constitutional charter, the Treaty’.7

As such, then, a constitutional framework already exists without any further need or without actually changing anything; however, the Constitutional Treaty would certainly have contained all of the elements of constitutionality. All of the basic principles and rules (p. 75) were present in Part I in typical constitutional manner. These included the outline of competences, the principles of representative and participatory democracy, rules regulating the entry and exit of member states, and the range of values now contained in Art 6 TEU. Whilst these have been retained within the treaties under the Lisbon Treaty, it remains unclear whether this makes the EU any more federal or supranational than it was under the previous treaties; there are supporters and arguments on both sides.

3.2.3 The Abandoned Constitutional Treaty

Although this treaty was abandoned in 2007 following its rejection by the electorates of Holland and France, because of its importance in the development of the Union and especially concern about constitutionality, it needs to be considered here. In the run-up to the 2004 IGC, which debated the results of the Convention on the Future of Europe and the new forthcoming treaty, there was a lot of discussion about the meaning of the title given to the results of the work carried out by the Convention and in particular one word within that title. The word that was picked over, discussed, defined, and analysed was ‘constitution’ within the overall title then of ‘Draft Treaty establishing a Constitution for Europe’. As much attention was given to this word as was given to the word ‘federal’ when the TEU was being debated in Maastricht. Both words, it seems, for some parties including certain member states, are highly emotive because of the political connotations and consequences attached to them. ‘Federal’ was so emotive that it was dropped in favour of the euphemism ‘ever closer union’ which was accepted and written into the TEU. The term ‘constitution’ in this later debate was also regarded as a highly sensitive word, but was, surprisingly, accepted far more readily by the member states. It seems the ‘C’ word was not as offensive as the ‘F’ word but, in the aftermath period of reflection following the rejection by France and the Netherlands, even this term fell out of favour and was removed from the Lisbon Treaty reforms, along with the other symbols that represent statehood, such as references to the Union flag, anthem, or Union day. Hence, even the debate about whether a single constitutional document is needed for the EU is something that has been taken off the burner entirely.8

A constitution is, according to the Oxford English Dictionary, ‘a body of fundamental principles according to which a State or other organization is governed’, within which fairly simple definition lies some of the difficulty pounced upon by both sides of the argument. As a body of fundamental principles, a constitution sets outs the range of powers, duties, and obligations of the constituent parts of the organization—that is, the governing or central body and its members. On the one hand, some argued that a constitution was something enjoyed by as humble an organization as a local allotment association or a local political social club, and therefore nothing to be feared. On the other hand, a view was put forward that a constitution is something so closely connected with states and statecraft that, in the European context, it actually meant the establishment of or progress towards the ‘dreaded’ European superstate—or some sort of acknowledgement at least that the EU was a true state and not simply a collective of sovereign member states. In other words, the term ‘constitution’ in this context could only mean elevating the EU to some form of statehood or federal state and therefore was to be avoided at all costs.

Leaving aside the further consequences of the adoption of this term for the moment, it is clear that it can apply to a range of organizations and obviously includes states. The question (p. 76) might then be posed, in relation to the EU, whether as an organization, of whatever type, it should and does have a constitution.

We need first, then, to consider whether the EU should have a constitution. If we mean a body of fundamental principles to regulate both the internal and external affairs of the organization, the answer must be ‘yes’. It makes sense that an organization, and particularly one so large and so complex as the EU, definitely should have a constitution.

Secondly, it is a simple question to ask ‘Does the Union have a set of fundamental principles or rules or laws?’ The answer is, again, ‘yes’—in the form of the treaties, as amended and extended. The subsequent question is then begged: ‘Do these amount to a constitution?’ This is where we need to look deeper. Presently, these are not termed a ‘constitution’, but this does not mean to say that there is not a constitutional order in the EU. The UK, for example, has survived many centuries without having a constitution as such.9 The discussion of ‘constitutionalism’ in the Union, however, is not only about whether there is, or is not, something called a ‘constitution’, but it is also very much connected to the debates surrounding the governance of the EU and the transfer of power to the Union from the member states. Having transferred powers and thus competences from the member states to the Union by and within the treaties, the focus is on how these competences or powers are divided between the member states and the Union, and exercised by the institutions of the Union. This, in turn, involves discussion of further principles regulating this division and exercise of power—namely, ‘subsidiarity’ and proportionality and other alternative means, as will be discussed in turn in the following sections, after considering a particular aspect of constitutionalism and that is Democracy in the EU.

3.3 Democracy in the Union

3.3.1 The Democratic Credentials of the Union

Article 2 TEU requires that the Union is founded on democracy, amongst other values; Article 10 TEU states that the EU is founded on representative democracy; and Art 11 TEU provides for a participatory democracy. Under Art 49 TEU, any potential new member state needs to comply with those principles. It is not, however, clear whether the Union itself fully corresponds to them. As first established, there was certainly very little democratic input. The European Parliament has though been directly elected since 1979 and the increase in its powers by the Lisbon Treaty further corrects the original imbalance of power with the Council of Ministers in favour of the EP, as is considered in Chapters 2 and 4. It can also be argued further that the individual ministers from the member states who constitute the Council are part of and represent nationally elected bodies, and therefore provide the Council with indirect democracy. They are not, however, directly accountable to the European citizens. In addition, they can only indirectly pursue a national mandate in the Council negotiations and under qualified majority voting (QMV) they can be outvoted. Furthermore, the European Council plays an increasing role in policy formulation and overall steering of the Union, in particular now very formally following its elevation to a full EU institution by the Lisbon Treaty. It too though enjoys indirect democracy as it is made up of elected heads of state and government. The Commission still has the right of initiative of legislation and, although the European Parliament and, in the limited circumstances outlined in Art 289(4), other EU bodies can ask the Commission to propose law, they cannot insist that it does so. Although the Commission is not elected, its appointment can only take place following the agreement of the European Council (indirectly democratic) and approval of the EP (directly democratic), so that too is imbued with a level of (p. 77) democratic legitimacy. The European Parliament, as a result of cumulative improvements, has modest increasing parliamentary control over the legislature and executive, taking part in the latter’s appointment and being able to question both. All these aspects mean that the accusation of democratic deficit that is levelled at the Union is a much weaker one today and in fact compares well with some of the member states whose democratic credentials are incomplete.10 At the Laeken Summit in December 2001, the member states called for more democracy and laid down principles calling for more openness and transparency in the Union.

3.3.2 Transparency and Open Governance

The lack of previous openness and transparency, particularly in the Council of Ministers’ decision-making processes, is regarded as one of the reasons for European voter apathy in the European Parliament elections and is itself symptomatic of the alleged democratic deficit in the Union. This was recognized increasingly as a result of the initial Danish rejection of the TEU and later with the Irish rejection of the Nice Treaty in the early 1990s, the Dutch and French rejections of the Constitutional Treaty in 2005, and the further Irish rejection of the Lisbon Treaty in 2008. Some steps, though, have been taken to tackle the problem and to provide for more open governance, although a lot of distrust among the European electorates of the EU and its main institutions remains, as can be witnessed by the low voting turnout in the 2009 and even lower in the 2014 European Parliament elections. Voting patterns have also changed and there is considerable support for Eurosceptic parties.11

Specific measures to increase openness include two decisions12 which were enacted to provide access to Commission and Council documents, but which allowed the institutions to subject those rights to their own internal rules. The Court of First Instance (CFI) and the Court of Justice were, however, able to define ever more expansive individual rights stemming from the decisions. In Case T-194/94 Carvel, the right of access was held to be an individually enforceable right. Case T-175/95 (the Swedish Journalists case) opened up access to Council documents from the third pillar to public scrutiny. The case caused the Council to create restrictions to access in its Decision 2000/527.13 Case C-353/99 P Heidi Hautala v Council appeared to establish a right to information in the face of the weakness of the actual rights contained in the decisions. However, the member states did agree at Amsterdam to a new Art 255 of the Treaty Establishing the European Community (EC) (now Art 15 TFEU) to provide a treaty right of access to documents, the details of which were to be determined by subsequent legislation. After much wrangling, a new EU measure, Regulation 1049/2001,14 was adopted, which while containing various exceptions to access to the documents held by the Council, the Commission, and the European Parliament, was regarded as a positive step forward in creating a more open form of decision-making in the Union.

It has, since its enactment, been the subject of many challenges before the Court of Justice to try to determine the extent of the exceptions to access to documents. In the leading case, Case C-64/05 P Sweden v Commission, Art 4(5) of the Regulation, which provides an exception to the main principle that documents should be disclosed when any member state from which a document originated requests in advance that it be withheld, was challenged as to its scope. Previously, it had been held that the exception did indeed protect (p. 78) documents arising from the member states.15 Because many of the working documents of the institutions do arise from the member states, all of these would be potentially protected if the member states were so to desire. In the Case C-64/05 P Sweden v Commission appeal case, the Court of Justice held that this exception, which amounted in effect to a blanket veto, was incompatible with the spirit of transparency contained within the regulation and the specific obligation to disclose. If the reason not to disclose was not one of those listed in Art 4(1)–(3), then disclosure would be presumed unless the member state were able to provide special reasons for not disclosing it. Another exception in Art 4(2) provides that the institutions may refuse disclosure of documents that are concerned with inspections, investigations, and audits unless there is an overriding public interest in disclosure. This was held by the CFI (now the General Court) not to apply to those inspections, investigations, and audits that had been completed.16 Only rarely in ongoing proceedings would disclosure be approved, although blanket refusals remain unacceptable.17

The case law on transparency is thus creeping towards a clearer understanding of the limits and understanding of it for all parties.

Finally, introduced by the Lisbon Treaty, is the requirement that the Council meet in public when deliberating and voting on draft legislative acts (Art 16(8) TEU).18

Additionally, the Commission has embarked on an initiative setting up a Task Force on subsidiarity, proportionality, and doing less more efficiently with these aims:

  • to make recommendations on how to better apply the principles of subsidiarity and proportionality

  • to identify policy areas where work could be re-delegated or definitely returned to EU countries

  • to find ways to better involve regional and local authorities in EU policy-making and delivery.19

It has now published annual reports and an overall report on how the principles of subsidiarity and proportionality are strengthened in the policy-making processes.20

3.4 The Transfer of Sovereign Powers

When the European Communities were first set up, as catalogued in Chapter 1, it was done in cognizance of the fact that, in order to be able to achieve the goals set for it, the member states had to pool their resources in the new entity or, in other words, had to transfer some of their sovereign rights to the Communities and their institutions in order for them to do their work. This was later made plain by the European Court of Justice in the seminal Van Gend en Loos case, but with the proviso that the power transfer, or transfer of sovereignty, (p. 79) was done within limited fields only and was not a general transfer of power. A general transfer would include the ability to decide its own competences and is often described in German as Kompetenz-Kompetenz—the ability to redefine competences without reference to any other or outside body. In similar terms, the term ‘omnipotence’, as employed in the Dicean discussion about parliamentary sovereignty in the UK, conveys the same conceptual meaning. This was certainly not the case with the transfers of powers by the member states to the Communities and Union. The power that the Union possesses is there by virtue of its transfer by the member states. However, the Communities and now Union are not static entities; rather, they have developed considerably since first being established and the competences have grown also with the complexity of the Union. Each successive treaty amendment has transferred further powers to the Union, with a corresponding loss of sovereignty in those areas as agreed by the member states. How these powers are divided and employed is considered in Section 3.5 following.

3.5 Competences, their Division, and Subsidiarity

Allied to the topics of the transfer of member states’ sovereign powers and the supremacy of EU law are the issues of competences, their division, and the principles of subsidiarity and proportionality—tools by which the most appropriate division of competences can be determined.

Van Gend en Loos clearly showed that the transfer of sovereign powers from and by the member states to the Community was the very empowerment of the Community itself. This transfer provides the competence for the Community (EU) to make its own laws although at the time, as was stated by the Court of Justice, this was in limited fields. The original treaties, though—and indeed those still applicable—do not provide a clear-cut expression of the relationship between the law of the EU (namely, the law created under the treaties by the institutions) and the national or domestic laws of the member states. There was no rule to say, in the event of conflict between rules covering the same subject matter, which should take priority. Neither did the original treaties make any expression as to their own status; that is, were they constitutional rules or just another international treaty between member states?

Whilst the question of supremacy was quickly and clearly settled by the CJEU, at least from the Community (EU) standpoint (discussed in Chapter 5), the matter of competence is not so easily dealt with. In order for EU law to be supreme, the EU must possess the competence to act in the first place. If it does not have the competence to act in a certain way or to create certain new laws then, logically, such laws cannot take priority over member states’ national law. This interlinked relationship between supremacy and competence can be observed in Case 22/70 Commission v Council (ERTA) (at [30]–[31]) and in Opinion 1/94, in which it was held that if the Community (EU) has competence, then the member states cannot act contrary to it—which is another way of expressing EU law supremacy.

3.5.1 The Conferral and Division of Competences

One of the most fundamental elements of a constitutional order is the vertical division of competence or power between the constituent elements and the central element of the organization in question. In the EU constitutional order, the law-making powers of the Union and its ability to take independent action were originally provided by a transfer of sovereign powers from the member states when either, as original member states, they created the Communities or, as later entrants, they joined the Community (EU). This transfer or, as can otherwise equally be expressed, this conferral of competences was expressly (p. 80) acknowledged by the Court of Justice in Van Gend en Loos and is essentially the legitimization of Community action, but it is to be stressed, once again, that this transfer is only within the areas agreed by the member states. This is expressed now in Art 1 TFEU.21 This was also confirmed in Case 188–90/80 France, Italy & the UK v Commission by the CJEU. On the face of it, any transfer of power and competences should, in theory, be a clear-cut process whereby any exercise of these powers by the Union institutions can only be within the terms granted by the member states and contained in the treaties. In other words, there should be nothing done by the EU institutions that is not expressly permitted by the treaties. This, in EU law jargon, is called ‘attributed competence’. The other side of this particular coin is that what is attributed to the Union by the member states is consequentially removed from member states’ competence—that is, the member states no longer have competence in the fields transferred.22

3.5.2 Exclusive, Concurrent, and Complimentary Competences

The range of actions of the Union can be seen in Art 3 TEU and Arts 2–6 TFEU, which set out in general terms the objectives and activities of the Union, but do not specifically detail any one of them. This is left to specific titles and chapters in the TFEU. Where the treaty specifies an object, it invariably provides a power to achieve that object: for example, Arts 45–6 TFEU set out respectively the objective and power of achieving the free movement of workers in the EU.

If the division—also termed allocation—of competences and those that were exclusively the Union’s were clearly set out, there would be no particular difficulty. Unfortunately, in the beginning, the division of competences was not clearly set out, largely because the initial treaties were much more limited in scope, so this was less of a concern. A further unique dynamic of the EU, in contrast with traditional international organizations, is that the Communities (and now Union) were not intended to be a static one-off creation, but to be a long-term and evolving creation. Indeed, as discussed in Chapter 1, the founding intentions were that integration in one area was expected to spread to other areas and powers would be needed to regulate those new areas. In addition, the Community and now Union would have to react to events in the world as they unfolded and affected it. Hence, it was anticipated that the competences of the Communities and now Union equally needed to be dynamic and evolving, and not static. This meant that the EU would also have to be reactive and have the competences capable of expansion and reaction.

It is necessary, therefore, to consider what the competences were, how they developed in the EU legal order, how the member states considered and reacted to this, and what measures were taken to control the competence creep—that is, the gradual loss or transfer of competences away from the member states that they and their citizens considered was and is taking place.

The Union enjoys exclusive competences in a few areas only, such as for certain aspects of the common customs duties, commercial policy to third countries (as upheld by the Court of Justice in its Opinion 1/75), and parts of the Common Fishing Policy (CFP). (p. 81) The division of competences is set out in Art 2 and exclusive competences listed in Art 3 TFEU, and include also competition policy for the internal market and monetary policy for the eurozone.

In other areas, the dividing line is not so clear and competence is concurrent—also termed ‘shared’ or ‘non-exclusive’ competence—between the member states and the EU.

Article 4 TFEU provides:

  1. 1. The Union shall share competence with the Member States where the Treaties confer on it a competence which does not relate to the areas referred to in Articles 3 and 6.

  2. 2. Shared competence between the Union and the Member States applies in the following principal areas:

    1. (a) internal market;

    2. (b) social policy, for the aspects defined in this Treaty;

    3. (c) economic, social and territorial cohesion;

    4. (d) agriculture and fisheries, excluding the conservation of marine biological resources;

    5. (e) environment;

    6. (f) consumer protection;

    7. (g) transport;

    8. (h) trans-European networks;

    9. (i) energy;

    10. (j) area of freedom, security and justice;

    11. (k) common safety concerns in public health matters, for the aspects defined in this Treaty.

In addition, as introduced by the Lisbon Treaty (Art 2 TFEU), are coordinated and complementary competences for the Union to support member state action.23 Article 2(4) provides that the EU also has the competence to pursue a common foreign and security policy.

Finally, there are areas of law over which powers have not been transferred to the Union and over which the member states retain their own exclusive competence.

It is in the area of shared competences that most difficulties arise, because it can be unclear whether the Union or the member states enjoy the competence for a particular action. Furthermore, the degree of sharing also alters according to the subject matter. For example, in areas such as the internal market, as soon as the Union acts under its competence, it assumes exclusive power to act and the member states are then deprived of the power to act in conflict. If the Union chooses not to act, the member states retain the power to act. Thus, where it does act, it takes over competence. This is known as ‘pre-emption’. A good example can be seen in the area of the free movement of goods, which will be considered in Chapter 8. The Court of Justice held, in one of its most famous and leading (p. 82) cases,24 that only where the Community had not acted could the member states act independently and, even then, if concerned with a general area that was otherwise regulated by the EC, the member states could act only within prescribed limits. As a result, there can be a genuine grey area between what is sanctioned and what is not; namely, what is within the Union competence and what is still within the member state competence.

This is a matter that has troubled the Communities and Union time and again, particularly as it became clear from the progressive judgments of the Court of Justice that the EU has taken over from the member states in some areas to which the member states were not sure they had agreed or, indeed, to which they had thought that they had not agreed, or thought that they had excluded from EU competence. For example, in Case C-262/88 Barber, pension payments were held to be pay and therefore within the equal pay competence, and not therefore a matter of state competence and exclusive regulation, as was previously considered to be the case because of its assumed connection with state pension policy (a matter still within the exclusive competence of the member states according to Directive 79/7).25 Hence, there was a reaction by some of the member states that considered that the Commission and Community were extending their competences by stealth, and not with the agreement of the member states.

The next sections consider how competences could be, and were, extended and what measures were subsequently developed by the member states to control or limit this expansion or creep of competences. These notably include subsidiarity, restrictive drafting, and proportionality.

3.5.3 Extension of Competences

Under traditional international law understanding, the only way in which to add any competences to a created international organization is by treaty amendment. Whilst treaty amendment has taken place in the EU, it is only one of three ways in which the competences of the Union can be extended.

The first—that is, treaty amendment—is deliberate and clear-cut. The fields of Union competence have expanded greatly as a result of the member states assigning additional competences to the Union, with successive treaty changes, such as the adding of a chapter on environmental policy to the EC Treaty by the Single European Act (SEA) or monetary Union by the Maastricht Treaty. The Lisbon Treaty also contains the agreement of the member states to extend areas of Union competence further into intellectual property rights, sport, tourism, and civil protection, amongst others. The TEU, Art 48, also allows for an increase in competences, either by the ordinary legislative procedure, if they are considered as minor, or if not, following a Convention of the parliaments, member states, Commission, and EP to consider them. Equally competences may be reduced as also noted in Section 3.5.9.

The second and third ways are not express, and were those which led to the use of the term ‘competence creep’ to describe the manner in which the Union’s and institutions’ competences have advanced incrementally. This increase is effected by both general or residual law-making powers and implied powers that have been employed by the institutions, including the Commission. These have often been subject to the review of the Court of (p. 83) Justice, highlighting that this too is a dynamic and evolving area of EU law. The difficulties experienced in this area were, in fact, specifically taken on in the Lisbon Treaty.

3.5.4 Residual Powers

The second way in which competences have been extended is via the so-termed residual law-making powers that include both specific and general variants.

3.5.4.1 Specific Residual Powers

The specific variants are those that grant subsidiary law-making powers to complete goals in specific areas such as Arts 114–15 TFEU, which provide for measures for the completion of the internal market and for the approximation of laws affecting the establishment or functioning of the internal market.

Article 114 TFEU provides that, to achieve the objectives of the internal market, set out in Art 26 TFEU, where powers are not otherwise provided by the treaty, action can be taken by QMV. In other words, action can be taken outside the express and exclusive grant of powers to the Union by a majority and not by the agreement of all member states.

Article 115 TFEU is an exception to the powers granted in Art 114, which is a general power to enact harmonizing legislation. It contains safety measures, however, so that member states and institutions do not go too far: the Council must act by unanimity and must consult the European Parliament.

These Articles should not be used, however, where other Articles would be more suitable. See, for example, Case C-376/98 Germany v European Parliament and Council (Tobacco Advertising I), in which Art 95 EC (now Art 114 TFEU) was held to be inappropriate and thus lacking the competence to enact a measure aimed more at the protection of health, rather than at completing the internal market. However, in Case C-210/03 R v Secretary of State for Health, ex p Swedish Match, the Court of Justice held that if obstacles to trade emerge, the Commission can intervene to harmonize even if the internal market is not the prime motive—in that case, concerned with the banning of a type of snuff. In Case C-377/98 Netherlands v European Parliament and Council (Biotechnology Directive), the CJEU held that Art 95 EC (now Art 114 TFEU) can be used in an area dealing with intellectual property, even though the directive provided that the member states could restrict patents and thus free movement of goods on the grounds of public morality. And, finally, in the second Tobacco Advertising case, C-380/03 Germany v European Parliament and Council, Art 95 EC (now Art 114 TFEU) could be used to enact a directive restricting the advertising of tobacco products, where differences in the national laws relating to this advertising would have the effect of creating obstacles to free trade; the Community directive was thus necessary to harmonize the internal market to allow it to function properly. Whilst Art 114 as conceived was for the harmonization or approximation of laws, and not for completely new laws, the CJEU has been flexible in its interpretation of that. In Case C-217/04 UK v EP & Council (ENISA)26 it held that Art 114 could be used to create a new EU body which itself contributed to the process of harmonization by providing assistance to member states in assimilating their laws to harmonization legislation already in existence.

Note also in this context Art 113 TFEU, which provides a residual specific power for the Council, acting unanimously and consulting the EP and EESC, to adopt harmonizing legislation in the areas of turnover taxes, excise duties, and indirect taxes where necessary to ensure the establishment and functioning of the internal market and to avoid distortion of competition.

(p. 84) 3.5.4.2 General Residual Powers

The general variant is Art 352 TFEU, the residual law-making power, and now known as the ‘flexibility clause’, which provides that, where doing so in furtherance of any of the objectives of the treaties and where no specific power exists, the Union may act by means of the Council after obtaining the consent of the European Parliament. Article 352(2) TFEU requires the Commission also to draw such proposals to the attention of the national parliaments in accordance with the subsidiarity principle, considered in Section 3.5.6.

Article 352(4) TFEU does not permit harmonization of member states’ laws or apply to the areas of Common Foreign and Security Policy (CFSP). It is also subject to Declaration Nos 41–2, also considered at the end of this section, restricting the objectives to which Art 352 TFEU applies to those contained in Art 3(2)–(3) and (5) TEU. It remains to be seen whether the Court of Justice will regard Art 352 TFEU as being so constrained.

Because these are general powers, they have led to problems regarding exactly how far they sanction EU activity in the face of member states’ activity. However, they have been generously interpreted by the CJEU. Article 308 EC (now Art 352 TFEU) was used as the treaty base for the original Equal Treatment Directive 76/207 because, at the time, the relevant treaty base (then Art 119 of the Treaty Establishing the European Economic Community (EEC)) only extended as far as equal pay. Article 308 EC was also used quite extensively to introduce legislation concerned with environmental matters where there was not, at the time, a treaty Article base available.

A limit to such use was found when the Court of Justice held, in its Opinion 2/94 of 1996, that Art 235 EEC (as Art 308 was then, now Art 352 TFEU) could not be used to accede to the European Convention on Human Rights (ECHR) because of the profound constitutional impact that it would have on the Community and the member states, which was neither envisaged nor, indeed, sanctioned by the EC Treaty.27 Furthermore, the use of Art 308 EC would be improper if a specific treaty base were shown to exist (see Case 8/73 HZA Bremerhafen v Massey-Ferguson) and which should, therefore, have been used instead. More recently, in Cases C-402/05 P and C-415/05 Kadi v Council, a challenge to the use of Art 308 EC (now Art 352 TEU) was made following freezing the assets of persons whom the United Nations (UN) considered to be related to terrorists following the 9/11 attacks. It was argued that this was beyond the competence of the EU, but it was not accepted by the CJEU, which linked the economic action of the Council to the common market—a link that seems somewhat tenuous. It would seem, therefore, that even very weak links to the Union and its activities will suffice to justify the use of Art 352 TFEU. Article 352 TFEU can also be used in pursuit of the objectives of the Union now, as opposed previously to only the EC, so its potential scope for use is much wider. This is countered by the requirement that measures taken under this Article will be subject to the same procedure as that required for the monitoring of subsidiarity, requiring consultation of the national parliaments, and still restricts the European Parliament’s role, but now to consent rather than only consultation. Measures cannot be used to harmonize national laws in areas in which harmonization is excluded by the treaties or in pursuit of CFSP objectives. Declarations 41–2 also seek to delimit or restrict the use of Art 352 in pursuit of the general objectives of the Union set out in Art 3(1) TEU, not in the area of the CFSP, nor to effectively amend or expand the scope of the treaties outside of the procedures set out to do so already contained within the treaties.

However, increases in the competences of the EU outside express treaty sanction have been increasingly criticized and challenged in general democratic terms. Even if using either Art 115 or Art 352 TFEU requiring unanimity of all member states in the Council (p. 85) of Ministers, national parliaments are being by-passed and the change is being effected without any formal treaty amendment process. Hence, there have been challenges to some proposed and completed Community (EU) actions by the member states in Council before the Court of Justice (see Case 242/87 Council v Commission (Erasmus)), and by a series of amendments to the treaties to try to curb this development and drafting the legal bases restrictively, so that the Commission cannot use the base for further legislative intervention. See, for example, Art 149 TFEU, under the Employment Title, or Art 168(5) TFEU, which provides for ‘incentive measures designed to protect and improve human health, excluding any harmonization of the laws and regulations of the member states’—in other words, the EU can take action, provided that it does not interfere with the existing laws in the member states. See also now the new requirement in Art 296 TFEU as a further means by which competence creep may be halted. Article 296 provides that, ‘When considering draft legislative acts, the [European Parliament] and the Council shall refrain from adopting acts not provided for by the relevant legislative procedure in the area in question.’

Further attempts, outside specific treaty Article amendments, to try to delineate or make clearer that area of grey and to define the division of competences, are the introduction of the principles of subsidiarity and proportionality. These were designed to address the concerns of the member states about how competence is being exercised, albeit without much clear success so far.

3.5.5 Implied Powers

The exercise of implied powers is the third method of competence expansion. This was recognized by the Court of Justice in cases dealing with both internal and external powers of the Commission where there are no express powers in the treaty. Powers are nevertheless required to achieve an EU goal and are thus implied to meet the general objectives set out in the treaties. This development is also referred to as ‘parallelism’.

3.5.5.1 Internal

The Court of Justice supported implied powers in the Community legal order as early as Case 8/55 Fedechar and interpreted them expansively in Cases 281, 283–5, and 287/85 Commission v Germany (Migration Policy), in which Art 118 EEC (now Art 153 TFEU) provided for cooperation between member states in a social field and was employed by the Commission to enact a decision requiring the member states to supply information. When the decision was challenged, the CJEU held that where an Article of the EEC Treaty confers a specific task on the Commission, it must be accepted, if that provision is not to be rendered wholly ineffective, that it confers on the Commission necessarily and per se the powers that are indispensable in order to carry out that task, such as the gathering of information.

3.5.5.2 Impact on External Competences

In Case 22/70 Commission v Council (ERTA), the then six member states had negotiated independently a road transport agreement with other non-EC states that was then adopted by resolution of the Council, but subsequently challenged by the Commission because there was a previous Community act regulating this area. The Court of Justice held that the authority of the Community to conclude international agreements arises not only from express conferment, but also impliedly from other treaty provisions providing express internal competences in the same area. Thus, where the internal powers have been acted upon, the member states are prevented from acting externally in those areas—particularly where such action would impact on the internal policy. Thus, the Union alone is in the position to carry out the contractual obligations towards third countries. In the particular (p. 86) case, because the member states’ negotiations were the continuance of agreements reached originally before the internal policy was formulated, it was held that the member states within the Council were entitled to act.28

However, a ruling by the Court of Justice did set some limits on implied powers. Opinion 1/94 concerned the competence of the Community or member states within the Community to conclude the General Agreement on Trade in Services (GATS) and Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) of the World Trade Organization (WTO) talks. The Court of Justice held that implied powers operate only between the member states and the Community, and not the Commission and the Council, hence whilst there was joint competence in these areas, there was not an exclusive Community competence. That Opinion has effectively been overruled in Case C-414/11 Daiichi Sankyo29 as far as the Union’s involvement in intellectual property agreements is concerned, due to the Amendment of Art 207 TFEU which specifically refers to the commercial aspects of intellectual property agreements. That then just serves to reinforce the earlier case law that the Union’s external powers to act will be implied where not already express. See also Cases 467–9/98 Commission v Finland (Air Transport), in which it was confirmed that where the Community has acted in pursuit of exclusive internal powers that it possesses, any action by the member states in adopting an international agreement (bilateral agreements with the USA) affecting the common Community rules was an unlawful intrusion on Community competence. There was no express power to regulate air transport with consequences outside the EU; however, that power was nevertheless implied in view of the impact on the internal exclusive power if member states were to go it alone. In considering EC competence in respect of joining the Lugano Convention, the CJEU held in Opinion 1/03 that where the EC had already exercised its powers internally in the area, this would also then provide it with an exclusive external competence in the same area where necessary to preserve the effectiveness of EC law and the proper functioning of the systems established by its rules.

Following the entry into force of the Lisbon Treaty, Art 3(2) TFEU effectively puts into statutory form and, indeed, strengthens the position reached already in the jurisprudence of the Court of Justice by providing:

The Union shall also have exclusive competence for the conclusion of an international agreement when its conclusion is provided for in a legislative act of the Union or is necessary to enable the Union to exercise its internal competence, or in so far as its conclusion may affect common rules or alter their scope.

This is effectively repeated in the Title on International Agreements, Art 216(1) TFEU:

  1. 1. The Union may conclude an agreement with one or more third countries or international organisations where the Treaties so provide or where the conclusion of an agreement is necessary in order to achieve, within the framework of the Union’s policies, one of the objectives referred to in the Treaties, or is provided for in a legally binding Union act or is likely to affect common rules or alter their scope.

It remains to be seen if the member states will react to the exercise of external powers taken under these provisions and whether the EU Institutions and CJEU will treat them as providing the same powers.

(p. 87) 3.5.6 The Principle of Subsidiarity

Subsidiarity requires decisions to be taken at the most appropriate level, whether that is at the level of the Union or the level of the member states. Thus, the desire to regulate activities within the Union should not insist on action at the Union level when it is not necessary. While there was arguably always the view that legal measures that were taken centrally by the Union institutions should be taken only where necessary and that, if such measures were not suitable, member states were allowed to regulate matters individually, this understanding did not find formal expression in any EU provision. There are implied examples of its use, such as the discretion given to the member states to meet the requirements of a directive, or the principles of mutual recognition and the rule of reason established by the Court of Justice in the Cassis de Dijon case,30 but, as originally established, the Communities had no express statement of this principle.

The principle of subsidiarity made its first express appearance in the Community legal order in 1986 when introduced by the treaty amendments made by the SEA. At that time, however, it was introduced specifically in respect of environmental measures under old Art 174(4) EC (now Art 191 TFEU) only. Essentially, it provided that the Community should take action only where objectives could be better attained at the Community level than the level of individual member states. It was introduced generally into the Community legal order by the TEU and is now to be found in Art 1 TEU, which provides that decisions are to be taken openly and as closely as possible to the citizen. Article 5(1) TEU then provides: ‘The use of Union competences is governed by the principles of subsidiarity and proportionality’, and further provides in Art 5(3) TEU that:

in areas which do not fall within its exclusive competence, the Union shall act, only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the member states, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.

Article 5 TEU also encapsulates the principle of conferral, which was also expressly included by the Lisbon Treaty in new Arts 4–5 TEU, providing that the EU can act only to the extent that competences have been conferred on it to do so. The exact meaning of Art 5(3) TEU is, however, far from clear, particularly regarding where the line might be drawn between the competence of the Union and the competences of the member states. Thus, the general introduction of these concepts has not proved to be the instant fix desired by the member states, let alone a concept that is readily understandable, or indeed translatable, into a clear-cut process by which it is decided whether Union action is appropriate and thus lawful within the terms of the concept. It seems to suggest that decision-taking that might be accumulated in the centre, namely by the institutions, but which is not actually necessary at this level, should instead be taken by the member states. Decisions, in short, should be taken closer to the people, which is the formulation of the principle contained in the statement made in Art 1 TEU. Thus, it needs to be shown that EU actions are necessary, in that the member states are unable to achieve the same objectives, and that there are greater benefits to be achieved at the Union level. In support of Art 5 TEU are Art 10 TEU, which requires decisions to be taken as openly and as closely as possible to the citizen, and Art 13 TEU, which requires that each institution act within the limits of the power conferred on it.

The difficulties with this principle thus remain who decides when to apply it and whether it has been observed in the decision-making process. If the matter is one within the exclusive competence of the Union, subsidiarity does not apply. The problem is, though, as noted earlier, that ‘exclusivity’ itself is not a clear-cut term. The practice has arisen now that, in (p. 88) order to justify taking the action, the Commission needs to outline why it has competence to take the particular action, and does so in the preamble and recitals to proposed legislation31—although it may be argued that this has become more of a cant by the Commission than clear justification.32

It may therefore give rise to considerable litigation to determine whether it has been adhered to correctly. Whilst the principle itself was not disturbed by the Treaty of Amsterdam, that treaty did add a protocol—Protocol 2—as an attempt to clarify its meaning, which has since been amended and expanded by the Lisbon Treaty.33 It requires the Commission to consult widely before formally proposing legislation and, in an amendment brought in by the Lisbon Treaty, its draft legislative acts shall be forwarded to the national parliaments at the same time as they are to the European Parliament and Council. Indeed, the Protocol has been tightened up in its latest version, under which the Commission must accompany drafts with detailed statements as to how the proposal complies with the principles of subsidiarity and proportionality, and provide evidential support to demonstrate that Union action is required and the general and financial impact of the proposed legislation (Art 5 of the Protocol).

Articles 6–7 further outline the national parliaments’ ability to object to the proposal and the procedure by which those objections are further considered by the Union institutions in the legislative processes, along with that the Commission must issue a reasoned opinion if it wishes to maintain the proposal for further consideration in the legislative process. National parliaments have eight weeks to comment, each having two votes to object, and if votes amounting to one-third of the total votes object, the Commission is ‘yellow carded’ and is required to reconsider its proposal. This happened in 2012 when the Commission proposal for a Posted Workers Directive was objected to. The Commission subsequently amended the proposal and a watered-down version (Directive 2014/67) was adopted. If consequently a majority of the member states’ parliaments consider subsidiarity to have been breached, an orange card is raised which the Commission has to rebut by reasoned opinion which is forwarded to the EP and Council to vote on. Subsequently, the yellow-card system was used to object to a Commission Proposal to establish a European Prosecutor’s Office; however, the Commission nevertheless proceeded. All in all, it is quite a convoluted process, the further details of which will not therefore be rehearsed here and the principle remains difficult to be precise about. In addition to the requirement in Art 12 TEU,34 there is also Protocol (No 1) on the Role of National Parliaments, which also outlines how national parliaments, when considering draft EU legislation, should determine whether the principle of subsidiarity has been complied with.

(p. 89) As a last resort—previously impliedly, but now expressly stated under Art 8 of Protocol 2—legislative acts may be challenged under Art 263 TFEU for infringing the principle. Some of these challenges are considered in the next section.

Whilst no new challenges have yet reached the Court of Justice focused specifically on the amended protocol, challenges from before the changes took place have been made.

3.5.6.1 Challenges for Non-Compliance with the Principle

Non-compliance with the subsidiarity principle is a ground for annulment under an Art 263 TFEU judicial review action before the Court of Justice, as is made clear by Protocol 2, noted earlier. However, even though there had been actions to challenge EU legislation for a breach of the principle in the past, there has been limited judicial guidance on its true value. This is no surprise given the obscurity of the principle, which involves the balancing of economic and political priorities—principles that the CJEU is reluctant to second-guess.

In Case C-84/94 UK v Council (Working Time Directive) and Case C-377/98 Netherlands v European Parliament and Council (Biotechnology Directive) arguments raised by the member states in the cases that subsidiarity had not been observed were rejected by the Court of Justice. In UK v Council (Working Time Directive), the CJEU dismissed this part of the action with little discussion merely to confirm that the Council had a clear power to act on working hours as an issue of the health and safety of workers. In other words, if it had the competence to act, it could act. However, in Case C-376/98 Germany v European Parliament and Council (Tobacco Advertising Ban Directive), the harmonizing Directive 98/43 banning most forms of tobacco advertising was enacted under Art 95 EC (now Art 114 TFEU) as an internal market measure. This was challenged by Germany, arguing that the measure was more closely allied to a public health measure and thus should have been enacted under Art 152 EC (now Art 168 TFEU), which expressly prohibits harmonizing legislation. The Court of Justice held that measures under (the then) Art 95 EC must have the primary object of improving conditions for the establishment or functioning of the internal market, and that other Articles of the treaty may not be used as a legal basis in order to circumvent the express exclusion of harmonization. It held further that to construe the internal market Article as meaning that it vests in the Community (EU) legislature a general power to regulate the internal market would be incompatible with the principle embodied in (the then) Art 5 EC that the powers of the Community are limited to those specifically conferred upon it. The CJEU thus held that the measure did little to enhance the internal market and annulled it entirely. The CJEU also indicated that in cases in which there was no specific competence covering the subject matter of the measure, the internal market-base Art 95 EC (now Art 114 TEU) could be used.

The judgment is not a clear endorsement that subsidiarity is a clearly justiciable issue; rather, it is another confirmation that where an incorrect legal base is used, this provides grounds for the annulment of the measure based on it.35 The judgment is regarded as a reply to national courts, in particular, the German Federal Constitutional Court,36 which might have been minded to take EU law into its own hands, by showing that the Court of Justice is prepared to police incursions into the member states’ competences by the EU’s institutions. Cases C-154–5/04 Alliance for Natural Health provide another view of the CJEU that arguments based on a possible breach of subsidiarity will not allow it to interfere with decisions that are the result of the exercise of legislative discretion. In Case C-58/08 Vodafone and Others, decided in 2010, the Court of Justice did not interfere with the Roaming Regulation 717/2007 (OJ 2007 L171/32) on the basis of either subsidiarity or proportionality. It was argued that roaming charges should be capped only by each individual country and not (p. 90) by EU action. The Court of Justice held that the power to act had been conferred on the EU and that the need for Union action to maintain the smooth functioning of the internal market and competition was clear. The exercise of the discretion by the EU legislature had not been disproportionate.

It would seem that if a measure is enacted which is clearly and genuinely concerned with the internal market, and thus which can only effectively be regulated on an EU-wide basis by the EU, it will be extremely difficult for this to be challenged on the ground of a breach of subsidiarity. Almost inevitably, the CJEU will be given further opportunities to come up with clearer and more workable definitions of its meaning. It is possible that the principle of subsidiarity will also join the ranks of general principles of EU law, although it is one introduced deliberately by the member states rather than created or introduced by the Court of Justice.

As a final thought on subsidiarity, one cannot help thinking that, whatever its true value, it is not directly concerned with the rights of the citizens, but rather with the division of power between the member states and the Union. Quite where a decision is taken, providing it is taken, has little import for the citizens and more for the member states.

3.5.7 Restrictive Drafting

Legal bases have been drafted restrictively so that the Commission cannot use the base for further legislative intervention.

See, for example, Article 168(5) TFEU, which provides for action to promote cooperation in public health matters, but ‘excluding any harmonization of the laws and regulations of the member states’. In other words, the Union can take action provided that it does not interfere with the existing laws in the member states. Another method, in addition to specific treaty Article amendments to control the extension and exercise of competences, is the introduction of the principles of subsidiarity and proportionality, which now find formal treaty expression. These are designed to address the concerns of the member states about how implied competences were being employed by the Commission, albeit without much clear success thus far.

3.5.8 Proportionality

Proportionality, apart from being a legal principle in its own right and often employed by individuals in challenges to Union action, is also contained in Art 5 TEU and is linked to the subsidiarity principle, in that both are concerned with the control and exercise of powers by the institutions; however, unlike subsidiarity, proportionality also applies to matters of exclusive EU competence.

The treaty definition of ‘proportionality’ under Art 5(2) TEU provides that: ‘Under the principle of proportionality, the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties.’

Like subsidiarity, it too is subject to Protocol 2, and Union acts are open to possible challenges if breaching proportionality. Draft legislation must also state how it complies with the principle of proportionality. It was, for example, raised in Case 84/94 UK v Council (Working Time Directive) by the UK under the argument that the restrictions imposed on working time were not minimum requirements, but were excessive—that is, disproportionate. This view was rejected by the Court of Justice on the ground that unless there had been a manifest error or misuse of powers, the Council must be allowed to exercise its discretion in law-making involving social policy choices.

The extent to which proportionality can be employed to challenge Union law in an action to annul a harmonization measure dealing with food supplements was shown to be (p. 91) limited. In Cases C-154–5/04 Alliance for Natural Health, the CJEU expressed the view that arguments based on a possible breach of proportionality will not allow it to interfere with decisions that are the result of the exercise of legislative discretion. Legality can be affected only as a result of the legislative act being manifestly inappropriate.

This was confirmed in similar terms in the follow-up case, Case C-344/04 R v Department of Transport, ex p International Air Transport Association and European Low Fares Airline Association, at [80]:

With regard to judicial review of the conditions referred to in the previous paragraph, the Community legislature must be allowed a broad discretion in areas which involve political, economic and social choices on its part, and in which it is called upon to undertake complex assessments. Consequently, the legality of a measure adopted in those fields can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue.

However, in Case C-310/04 Spain v Council (Spanish Cotton Subsidies),37 the CJEU held that the Council in legislating had failed to take into account all the relevant matters and in particular labour costs, and had thus as a consequence not complied with the principle of proportionality. The case remains as a rare example of success in pleading proportionality, and in the Vodafone case, considered also earlier in respect of subsidiarity, proportionality was also tested and satisfied in that no other means was considered to be available to the Commission to ensure there was no distortion in the functioning of, nor to competition in, the internal market, other than the reduction in roaming charges.

3.5.9 The Lisbon Treaty and the Division and Control of Competences

The concerns about the lack of democratic accountability, transparency, and clear-cut division of competences in the Union, and that the Union is taking over far more power from the member states than is desirable or necessary, to some degree led to the rejection of the Constitutional Treaty by the electorates in France and the Netherlands in 2005. This is ironic, in that the rejections and the subsequent shelving of the Constitutional Treaty at the time delayed progress in providing a clearer, constitutional, treaty basis for the division of power, because the Constitutional Treaty contained Articles that were intended to address these very issues (although it may be argued that they did so imperfectly, albeit along the right lines). Apart from repeating the principle of subsidiarity, the Constitutional Treaty set out, for the first time in the EU, a far clearer division of competences. These were carried over into the Lisbon Treaty almost unaltered but, as with many of the amendments, the changes made to both the TEU and the previous EC Treaty were more complicated than they needed to be. Hence, the new Arts 4–5 TEU provide the principles of competence, fidelity, conferral, subsidiarity, and proportionality, and new Arts 2–6 TFEU provide further details about the categories and areas of Union competence and the division of competences first provided by the Constitutional Treaty.

Just to recap and summarize the limits of EU competences and the control mechanisms introduced by the member states, Article 5(1) TEU provides that the limits of Union competences are governed by the principle of conferral, and that the use of Union competences is governed by the principles of subsidiarity and proportionality. Article 5 TEU goes on to outline that ‘conferral’ means that the Union shall act within the limits of the competences conferred upon it by the member states in the Constitution to attain the objectives set out in the Constitution, and makes clear that competences not conferred upon the Union in the Constitution remain with the member states. Furthermore, the principle of subsidiarity (p. 92) was restated in Art 5(3), which also relies on a protocol for further definition, the Articles of which also provide a procedure whereby the national parliaments can police the use of subsidiarity and address the Commission if they feel that it has been breached.

Article 3 TFEU sets out the exclusive competences, for example the customs duties, in which the member states are not able to act at all; Art 4 TFEU sets out the areas of concurrent or shared competences, whereby the member states may only act if the EU has not yet acted or has ceased to act; and Art 6 TFEU provides competences for the EU to act in support of the member states’ own actions only.

Finally, in the attempt to counter competence creep, the Lisbon Treaty introduced a requirement in Article 296 TFEU that relates to the competence and legal base issues, and states that: ‘When considering draft legislative acts, the EP and the Council shall refrain from adopting acts not provided for by the relevant legislative procedure in the area in question.’ Furthermore, Protocol 25 on shared competences and three declarations attached to the treaties also address these issues. Protocol 25 states that ‘when the Union has taken action in a certain area, the scope of this exercise of competence only covers those elements governed by the Union act in question and therefore does not cover the whole area’. The proposal also provides that one or more member states may request the Commission to submit proposals to repeal a legislative act. A revised declaration (No 18) on competences confirms the respective rights of the member states and Union, the latter represented by the Commission in these matters. Declaration Nos 24 and 42 are also pertinent here in that they seek to prevent further competence creep arising from the conferral of legal personality on the EU as a whole and the use of the general law-making power under Art 352 TFEU. The revisions made by the Lisbon Treaty also allow for a reduction in the competences of the EU under Art 48 TEU and by the ordinary revision procedure by member states (or EP or Commission) submitting a proposal to the Council which is then submitted to the European Council and notified to national Parliaments. This has not happened yet. The Commission though has been working on how the principles of subsidiarity and proportionality can be strengthened in policy-making in the EU.38

The next chapter will consider how the powers which have been transferred to the EU are used by the Union in terms of the forms of secondary laws that can be enacted by them and, allied to that and to this chapter, the choice of legal base for EU secondary law. First, though, the range of sources of EU law will be considered.

Further Reading

Books

Azoulai, L (ed), The Question of Competence in the European Union, Oxford University Press, 2014.Find this resource:

Craig, P, The Lisbon Treaty: Law, Politics and Treaty Reform, Oxford University Press, 2010.Find this resource:

Kiiver, P, The Early Warning System for the Principle of Subsidiarity: Constitutional Theory and Empirical Reality, Routledge, Abingdon, 2014.Find this resource:

Konstantinides, T, Division of Powers in European Union Law: The Delimitation of Internal Competences between the EU and the Member States, Kluwer Law International, London, 2009.Find this resource:

Lenaerts, K and Van Nuffel, P, Constitutional Law of the European Union, 2nd edn, Sweet & Maxwell, London, 2004.Find this resource:

Articles

Albi, A and Van Elsuwege, P, ‘The EU Constitution, National Constitutions and Sovereignty: An Assessment of a European Constitutional Order’ (2004) 29 EL Rev 741.Find this resource:

Barti, M, ‘Will the New Institutional Framework of Subsidiarity Lower the EU Democratic Deficit?’ (2015) 21 ELJ 23.Find this resource:

Beck, G, ‘The Problem of Kompetenz-Kompetenz: A Conflict between Right and Right Where There Is No Praetor’ (2005) 30 EL Rev 42.Find this resource:

Craig, P, ‘Constitutions, Constitutionalism and the European Union’ (2001) 7 ELJ 125.Find this resource:

Craig, P, ‘Competence, Clarity, Conferral, Containment and Consideration’ (2004) 29 EL Rev 323.Find this resource:

Craig, P, ‘Subsidiarity: A Political and Legal Analysis’ (2012) 50 JCMS 72.Find this resource:

Cygan, A, ‘The Parliamentarisation of EU Decision-making? The Impact of the Treaty of Lisbon on National Parliaments’ (2011) 36 EL Rev 480.Find this resource:

Dashwood, A, ‘The Relationship between the Member States and the European Union/European Community’ (2004) 41 CML Rev 355–81.Find this resource:

Davies, G, ‘Subsidiarity: The Wrong Idea, in the Wrong Place, at the Wrong Time’ (2006) 43 CML Rev 63.Find this resource:

Fabbrini, F and Granat, K, ‘Yellow Card but No Foul: The Roles of the National Parliaments under the Subsidiarity Protocol and the Commission Proposal for an EU Regulation on the Right to Strike’ (2013) 50 CML Rev 115.Find this resource:

Harbo, T-I, ‘The Function of the Proportionality Principle in EU Law’ (2010) 16 ELJ 158.Find this resource:

Horsley, T, ‘Subsidiarity and the European Court of Justice: Missing Pieces in the Subsidiarity Puzzle’ (2012) 50 JCMS 267.Find this resource:

Kumm, M, ‘The Jurisprudence of Constitutional Conflict: Constitutional Supremacy in Europe before and after the Constitutional Treaty’ (2005) 11 ELJ 262–307.Find this resource:

Kumm, M, ‘Constitutionalising Subsidiarity in Integrated Markets: The Case of Tobacco Regulation in the European Union’ (2006) 12 ELJ 503.Find this resource:

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Weatherill, S, ‘Competence Creep and Competence Control’ (2005) 24 YEL 1.Find this resource:

Notes:

1 Although the creation of the High Representative to coordinate all external relations of the EU (under Art 24(1) TEU) can be regarded as a step in this direction.

2 Allied to this—or, as argued by some, the root of this—is that there is no single identifiable European people, or demos as it is termed.

4 38 now with the 2013 Irish Protocol: OJ 2013 L60/131.

5 Case 294/83 Parti Ecologiste ‘Les Verts’ v European Parliament [1986] ECR 1339.

6 Opinion 1/91 (Draft Opinion on the EEA) [1991] ECR I-6079.

7 See also now the Kadi case [2008] ECR I-6351, which clearly demonstrates the respect of the rule of law and human rights in the EU by the Court of Justice. This case is considered in further detail in Chapters 4 and 5.

8 Note though that 16 member states agreed in Declaration 52 attached to the treaties ‘that the flag with a circle of twelve golden stars on a blue background, the anthem based on the “Ode to Joy” from the Ninth Symphony by Ludwig van Beethoven, the motto “United in diversity”, the euro as the currency of the European Union and Europe Day on 9 May will for them continue as symbols to express the sense of community of the people in the European Union and their allegiance to it’.

9 That is, as a single and complete document.

10 Eg the UK which has two-thirds of the legislature unelected!

11 See the figures for the transnational European Parliament groupings provided in the table in Chapter 2, Section 2.5.1.1 and the further references to the election results in that section. Note though also that some individual states have experienced even lower electorate turnouts than the EP.

12 Decision 93/731 (OJ 1993 L340/43) and Decision 94/90 (OJ 1994 L46/58).

13 OJ 2000 L212/09.

14 OJ 2001 L145/43.

15 See Case T-168/02 IFAW v Commission [2004] ECR II-4135.

16 In Cases T-391/03 and T-700/04 Franchet et al v Commission [2006] ECR II-2023.

17 See Case T-237/02 Technische Glaswerke Ilmenau v Commission [2006] ECR II-5131. See also the more recent Cases C-39/05 and C-52/05 Sweden & Turco v Council [2008] ECR I-4723, in which the Court of Justice held that reliance on the exceptions of Art 4 must be reasoned and explained, along with how specifically the documents requested cannot be revealed despite any overriding public interest argument.

18 The Article states that the Council shall divide its business into two parts, dealing with legislative acts and non-legislative activities, with the presumption that the latter can be considered behind closed doors, the equivalent of non-reserved and reserved business common to many meetings.

21 ‘1. This Treaty organises the functioning of the Union and determines the areas of, delimitation of, and arrangements for exercising its competences.’

22 See Art 2(1) TFEU and Arts 4–5 TEU. Art 4(1): ‘1. In accordance with Article 5, competences not conferred upon the Union in the Treaties remain with the Member States.’ Art 5(1)–(2): ‘1. The limits of Union competences are governed by the principle of conferral. The use of Union competences is governed by the principles of subsidiarity and proportionality. 2. Under the principle of conferral, the Union shall act only within the limits of the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein.’

Competences not conferred upon the Union in the treaties remain with the member states. Furthermore, each of the institutions is bound to act within the limits of the powers conferred on them (Art 13(2) TEU).

23 Art 2(3) and (5) TFEU outline these. The Union can assist member states in coordinating their economies. Art 6 provides that:

The Union shall have competence to carry out actions to support, coordinate or supplement the actions of the Member States. The areas of such action shall, at European level, be:

  1. (a) protection and improvement of human health;

  2. (b) industry;

  3. (c) culture;

  4. (d) tourism;

  5. (e) education, vocational training, youth and sport;

  6. (f) civil protection;

  7. (g) administrative cooperation.

24 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis de Dijon) [1978] ECR 649, [1979] 3 CMLR 494. The member states, though, have tried to limit this pre-emption by Protocol 25 on the exercise of shared competence to specific acts and not whole areas.

25 Art 7 of the Directive (OJ 1979 L6/24):

  1. 1. This Directive shall be without prejudice to the right of Member States to exclude from its scope:

    1. (a) the determination of pensionable age for the purposes of granting old-age and retirement pensions and the possible consequences thereof for other benefits; …

26 [2006] ECR I-3371.

27 Note that even where there is an express treaty commitment to accede to the ECHR now (Art 6 TEU), the draft agreement to facilitate that was held by the Court of Justice in Opinion 2/13 not to conform with the overall requirements of the EU legal order. See Chapter 4 for further details.

28 The case then is rather ironic in that it was the member states (albeit within the Council) which helped develop this particular form of competence creep by legitimizing the action taken as Community action, not expressly granted though by the treaties, something about which the member states were in future to complain.

29 [2013] ECR I-520.

30 The rule of reason and the principle of mutual recognition are discussed in Chapter 7.

31 See eg Directive 2002/14 on employee consultation, recital 17 (Foster (ed), EU Treaties and Legislation, latest edn).

32 See eg recital 36 from Directive 2006/54: ‘Since the objectives of this Directive cannot be sufficiently achieved by the Member States and can therefore be better achieved at Community level, the Community may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.’

33 Protocol (No 2) on the Application of the Principles of Subsidiarity and Proportionality (N Foster, EU Treaties and Legislation, latest edn, Oxford University Press). Note that, under Art 51 TEU, protocols enjoy treaty status.

34 Art 12 TEU provides that:

National Parliaments contribute actively to the good functioning of the Union:

  1. (a) through being informed by the institutions of the Union and having draft legislative acts of the Union forwarded to them in accordance with the Protocol on the role of national Parliaments in the European Union;

  2. (b) by seeing to it that the principle of subsidiarity is respected in accordance with the procedures provided for in the Protocol on the application of the principles of subsidiarity and proportionality …

35 See, for further details on the legal base, Chapter 4, Section 4.10.1.

36 This is considered in Chapter 5, Section 5.5.2 concerned with EU law reception in Germany.

37 [2006] ECR I-7285.

38 See the text in Section 3.3.2.