Prof Kenneth Armstrong, University of Cambridge
Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.
Just over a year since the United Kingdom (UK) commenced legal proceedings against the Council of the EU challenging its decision to authorise the use of enhanced cooperation for the adoption of the proposed Financial Transaction Tax (FTT), the Court of Justice has, as anticipated, dismissed the UK’s application (Case C-209/13, United Kingdom v Council). This is another defeat for the UK following on from its unsuccessful challenge to the powers of the European Securities and Markets Authority to control ‘short-selling’. Whether the UK will have more success in the third of its triptych of legal challenges to measures adopted in the wake of the financial crisis – the cap of ‘bankers’ bonuses’ – is yet to be determined. However, in the lead up to the European Parliament elections, with the United Kingdom Independence Party riding high in the polls and the UK prime minister declaring that he will not act as prime minister following the 2015 general election unless there will be a referendum on the UK’s continuing membership of the EU, it is clear that these defeats before the Luxembourg court have both political and legal saliency.
Prof. Kenneth A. Armstrong
The United Kingdom government has been spending a lot of time in Luxembourg in the last 18 months. More particularly, it has brought legal actions challenging the legality of a number of EU measures taken in the wake of the financial crisis. The UK has challenged the legality of the Council Decision to authorise enhanced cooperation in the adoption of a proposed Financial Transaction Tax (FTT) Directive (Case C-209/13), and more recently the provisions of the Capital Requirement Directive (CRD) as they relate to bankers’ bonuses (Case C-507/13). Today the Court of Justice has given its judgment in an earlier outing to Luxembourg, (Case C-270/12) in which the UK challenged the powers of the European Securities and Market Authority (ESMA) to take measures to limit or prevent so-called ‘short-selling’. The Court has dismissed the UK’s action in a ruling which highlights the powers and capacities of EU regulatory agencies in the post-Lisbon constitutional order.
The focal point of the legal challenge was Article 28 of Regulation 236/2012 on short-selling and certain aspects of credit default swaps. In essence the legal case centred around two main themes. The first theme amounted to the claim that the powers of ESMA under Article 28 to adopt measures which had legal effects for third parties exceeded the constitutional limits of the authority of an agency as established by the Court in its earlier Meroni and Romano jurisprudence. The second theme turned attention back to the limits of Article 114 TFEU as a legal basis for approximation of the laws of the Member States.
The wide-ranging Opinion of Advocate General Jääskinen delivered in September 2013 concluded that insofar as ESMA exercised centralised implementing powers with legal effects for third parties in circumstances which either replaced the decisions of national competent authorities or filled a void created by their inaction, the result was neither harmonisation nor the adoption of uniform practices as required for Article 114 TFEU as a legal basis for Article 28. Article 352 TFEU could have provided an additional legal basis to support the measure, but in view of UK opposition to Article 28 during the legislative negotiations, this would likely have created a legislative impasse. For the constitutional and administrative lawyers, the Advocate General offered the view that the post-Lisbon landscape had extended judicial review into the work of EU agencies, thereby differentiating modern EU agencies from the type which underpinned the restrictive approach in Meroni and Romano. Meanwhile, while the empowerment of the European Commission to adopt delegated measures of general application argued against the vesting of such a power in agencies, that did not prevent implementing powers being entrusted directly by the EU legislature in EU agencies. Continue reading
Prof. Kenneth A. Armstrong
The Scottish Government has produced its much-anticipated White Paper setting out the case for Scottish independence from the United Kingdom. In over six hundred pages, Scotland’s Future sets out the implications of independence across a spectrum of policy areas, including an independent Scotland’s relationship with the European Union. The core of the argument that is presented by the Scottish Government is for continuity of Scottish membership of the EU. Indeed, the spectre of a UK withdrawal from the EU gives added impetus to the case that is made not just for Scottish membership of the EU but for independence itself.
The White Paper is not a neutral expert analysis of the costs and benefits of Scottish independence. Rather it is a political and constitutional manifesto of the incumbent political party – the Scottish National Party – exercising power under the existing devolution settlement. Its aim is to provide greater clarity on the implications, and apparent benefits, of Scottish independence. Yet, in its analysis of an independent Scotland’s relationship with the EU, the White Paper lacks clarity and candour in three important respects:
- Why is it right to hold a referendum on independence and not to have a referendum on whether an independent Scotland should be inside or outside the EU?
- Why is it better to seek EU membership through a renegotiation of the treaties rather than through the normal accession process?
- Is it self evident that a small state has greater European influence if independent compared to seeking influence via a larger state of which it is a constituent part? Continue reading
Prof. Kenneth A. Armstrong
On 2nd October, the European Commission published its anticipated Communication on Strengthening the Social Dimension of the Economic and Monetary Union. Yet barely had Commissioner Andor finished his press conference to launch the Communication than EP President Schulz intimated that the proposal was not ambitious enough. Observers of the EU will be familiar with the tendency of the Commission to refer to EU social policy as a ‘dimension’ of something else and with the criticism that its initiatives lack ambition. The ‘renewed’ social policy agenda of 2008 and more recently, the belated Europe 2020 ‘flagship initiative’ of the European Platform Against Poverty, were all greeted in more or less muted terms. In part, the rather underwhelming feeling about the Communication is a continuation of a disenchantment with the capacity of the European Union to develop a stronger social identity. But it is also a product of concerns with where EU social governance fits in the new governance architecture for economic and fiscal policy coordination given the political energy which has flowed into reforms to that architecture. Continue reading
Prof. Kenneth A. Armstrong
The Court of Justice has delivered its much anticipated ruling in the challenge brought by Thomas Pringle to the legal provisions establishing the European Stability Mechanism (ESM). In dismissing the challenge, the European Court of Justice – convened as a Full Court of all twenty-seven judges – became the latest court to deal with the legal fall-out from the Eurozone crisis. Constitutional challenges in national courts, including Germany and Estonia, have, this far failed to create significant legal obstacles to the structures put in place by EU states in their attempt to manage the crisis and to provide financial support to Eurozone states.
Although the challenge before the CJEU failed, the Court reiterated that while Member States are free to establish mechanisms like the ESM outside of the structures of the EU treaties, the exercise of their powers through such structures must be consistent with and not incompatible with their continuing obligations under EU law.
The challenge turned on three main questions: (1) had there been an improper use of the simplified revision procedure (introduced by the Lisbon Treaty) to adopt a European Council Decision amending the Treaty on the Functioning of the European Union (TFEU) to make provision for a stability mechanism; (2) was the ESM Treaty in conflict with the obligations of the Member States and EU institutions under the EU treaties; (3) was the entry into force of the ESM Treaty dependent upon the ratification and entry into force of the TFEU treaty amendment? Continue reading
Prof. Kenneth A. Armstrong
European institutions have reacted to the economic crisis by adopting a range of legal instruments intended to strengthen economic governance. With the adoption of the muscular ‘six pack’ of legislative measures, the talk in Brussels was of the return of the ‘Community Method’ as the Europeam Parliament – exercising its new powers of co-decision in the economic field – and the European Commission signalling their collective unwillingness to let ‘intergovernmentalism’ weaken the legislative bargain.
Subsequently, however, the initiative shifted to the leaders of the Member States as talk began of the need for treaty reform. Barely two years on from the completion of the tortuous process leading to the entry into force of the Lisbon Treaty, and despite the prophecy of the UK Foreign Secretary in October 2011 that treaty change was ‘years away’, an informal meeting of the European Council on 30 January 2012 endorsed two new treaty texts to establish a permanent European Stabilisation Mechanism (ESM Treaty) and to enhance coordination, stability and governance in economic and monetary union (CSG Treaty aka ‘Fiscal Compact’ Treaty).
My interest lies not in the content of these reforms but rather the processes associated with these initiatives. At its simplest, the argument is that the choice of legal instrument also entails choices as to the decision-making process to be used. Yet variations in process also entail variation in the mechanisms for democratic and constitutional approval: mechanisms which – like the UK’s recent European Union Act 2011 – have themselves evolved in response to past treaty revisions. In this way, the legal response to the economic crisis is a perfect illustration of the complex interweaving of EU and domestic public law. In this first of two contributions, the issues surrounding the adoption of the ESM Treaty are discussed. The CSG Treaty will be discussed in a subsequent piece.