26.1  Of all the international and regional arrangements to emerge in the aftermath of the Second World War, the European Union is perhaps the most difficult to classify. More than a classic intergovernmental organization, and less than an embryonic State, the EU’s wide-ranging responsibilities and byzantine structures can make it a challenging prospect for diplomats from within the Union as well as for those engaging with its work from other countries.

26.2  The origins of the European Union lie in the 1951 Treaty of Paris concluded by ‘the Six’ (Belgium, France, Italy, Luxembourg, the Federal Republic of Germany, (p. 372) and the Netherlands) which established the European Coal and Steel Community (ECSC). This followed an initiative by the French foreign minister, Robert Schuman, who the previous year had issued a declaration proposing that ‘Franco-German production of coal and steel as a whole be placed under a common High Authority, within the framework of an organization open to the participation of the other countries of Europe’. This, he urged, would make war between France and Germany ‘not merely unthinkable but materially impossible’ as well as establishing ‘common foundations for economic development’.²

26.3  The ECSC was only one of a number of regional arrangements set up in Europe in the years after the Second World War. The Organisation for European Economic Cooperation (OEEC), the precursor of the Organisation for Economic Cooperation and Development (OECD), had already been established in 1948. The following year the Council of Europe was established providing the forum for the elaboration of the European Convention on Human Rights signed in 1950. 1948 also saw the conclusion of the Brussels Treaty whose mutual defence and security cooperation arrangements provided the basis for the Western European Union set up in 1954 (see also Chapters 25 and 28).

26.4  All these regional arrangements had their roots in the efforts to address the challenges facing post-war Europe—the prevention of future conflict, economic recovery and development, promoting political and social stability, and dealing with the security demands of the Cold War. They also reflected debates across Europe about the nature of the cooperation and integration needed to address these challenges. Most of these new organizations retained an essentially intergovernmental character based on collective decision-making by the constituent Member States. In contrast, the ECSC, while operating within a limited field, was endowed with some supranational characteristics. Alongside a Council of Ministers (composed of representatives of Member States) its institutional framework comprised an executive High Authority, a Court of Justice, and a Common Assembly (composed of nominated members of national parliaments).

26.5  This framework itself represented a compromise between those advocating that power should be vested in supranational institutions and those concerned that control should rest with the governments of Member States. The Schuman Declaration had referred to the common foundations for economic development ‘as a first step in the federation of Europe’ and the debate between those regarding (p. 373) the regional structures as a stepping stone to deeper political integration and those supporting the maintenance of what de Gaulle advocated as the Europe des patries,³ in which States remain the pre-eminent constituents, has persisted throughout much of the subsequent development of the European Union.

26.6  Plans for an integrated European military force, the European Defence Community, had been put forward in parallel to those for the ECSC. But following their rejection, the Six, meeting at the Messina Conference in 1955, focused on closer economic cooperation. This led to two further treaties signed in 1957—one establishing the European Atomic Energy Community (Euratom) and the Treaty of Rome establishing the European Economic Community (EEC), subsequently renamed the European Community (EC).⁴ These three regional organizations—ECSC, Euratom, and EEC (collectively termed ‘the European Communities’)—had similar institutional frameworks and supranational characteristics. While they each initially had their own Council of Ministers and Commission (or High Authority in the case of the ECSC), the 1965 Merger Treaty created a single institutional framework under which a single Council of Ministers, Commission, Court, and Assembly served all three Communities.

26.7  Like the ECSC, Euratom was limited in its scope focusing on the ‘conditions necessary for the speedy establishment and growth of nuclear industries’ and reflecting both the confidence of the period in the potential of atomic energy and concerns about the security of fissile material. Conversely the EEC has proven significantly wider in its scope and provided the main vehicle for the subsequent expansion in the activities of the European Communities.

26.8  Central to the Treaty of Rome was the creation of a European common market—a customs union within which barriers to economic activity between its Member States would be removed. This comprised several key elements: the removal of barriers to the free movement of goods, labour, business, and capital between Member States (the ‘four freedoms’); the creation of a common customs tariff (CCT) and common trade or commercial policy (CCP) in relation to third countries; and common rules regulating competition and government subsidies. In addition, separate provision was made for common policies in relation to transport and agriculture. The Common Agricultural Policy (CAP) (p. 374) reflected concerns, particularly in France, to protect domestic production, with the financing of agriculture subsidies becoming a particularly significant area of EC expenditure.

26.9  While these areas remain core to the work of the European Communities, the establishment of the European Communities in the 1950s was only the beginning of a continuing process of development marked by a significant increase in membership, important changes to the institutional framework, and expanding areas of activity.

26.10  In 1973 the membership of the European Communities increased for the first time with the admission of Denmark, Ireland, and the United Kingdom. From the early 1950s, the participation of the United Kingdom in particular had been a focus of political discussion and diplomatic activity. Within the United Kingdom itself this reflected debates about the country’s position in the post-war world and ambivalence about the Communities’ supranational elements. It is claimed that the British observer at the Messina Conference left with the words: ‘Gentlemen, you are trying to negotiate something which you will never be able to negotiate. But if negotiated, it will not be ratified. And if ratified, it will not work.’⁵ However by 1961, and again in 1967, the UK had applied to join the Communities. On each occasion this was effectively vetoed by the French President de Gaulle—who was concerned about UK and French differences on the CAP, trade, and relations with the US—and it was only with his departure in 1969 that accession negotiations could be opened.

26.11  The expansion of membership from six to nine States in 1973 was followed by the admission of Greece in 1981; Spain and Portugal (1986); Austria, Finland, and Sweden (1995); Cyprus, the Czech Republic, Estonia, Latvia, Lithuania, Malta, Hungary, Poland, Slovakia, and Slovenia (2004); and Bulgaria and Romania (2007). This expansion has been dictated by various factors: the extent to which existing Member States have been ready to admit new countries, the domestic, political, and economic assessments underlying individual governments’ decisions to apply for membership, and—in relation to those admitted in the 1980s and the first decade of the twenty-first century—a desire to support new democracies emerging from military and Communist dictatorship and in so doing to reinforce stability and security in Europe.

(p. 375) 26.12  Membership is open to all European States which respect key principles such as democracy and fundamental rights⁶ and the process of enlargement is continuing, focusing in particular on the Western Balkan countries. Accession negotiations were also launched with Turkey in 2005 and are expected to extend over several years. Not all expansion has arisen from the accession of new members. In 1990, the territory of the former German Democratic Republic was absorbed into the European Communities as a result of German reunification. Conversely, Greenland, which had previously been covered by Denmark’s membership, ceased to be part of the Communities in 1996.

26.13  Some European States have decided not to join, reflecting in particular domestic concerns about control over national resources and the autonomy of national decision-making. Norway actually completed two accession negotiations in 1972 and 1994 which were both then rejected in referendums. In 1960, a European Free Trade Association (EFTA) was established by States remaining outside the European Communities but subsequent accessions to the Communities have left only four EFTA States—Iceland, Lichtenstein, Norway, and Switzerland. Of these, Iceland, Lichtenstein, and Norway concluded the European Economic Area (EEA) Agreement in 1992 with the European Communities and its Member States creating a single free trade area across their respective territories.

26.14  The increase in membership from six to 27 States has inevitably changed the character of the organization. It has increased its global significance in terms of population, economic importance, and the diplomatic and military weight of its membership. At the same time resources have had to be committed to absorb less economically developed countries while the increase in national perspectives and interests and sheer number of delegations has placed additional pressures on the decision-making process.

26.15  In parallel to the expansion in membership, the Communities have continuously evolved both in their activities and in their structures and decision-making procedures. This has been reflected above all in a succession of agreements revising the original Treaties which have both reformed the institutional framework and provided for new areas of responsibility.

(p. 376) 26.16  The first substantial amending treaty was the Single European Act signed in 1986. This significantly extended majority voting, in particular to facilitate the completion of an internal single market, and made other changes including increasing the powers of the European Parliament, setting out new powers for the EEC in areas such as the environment, research, and economic and social cohesion, and formalizing procedures for cooperation on foreign policy issues (European Political Cooperation). The most significant modifications to the structure of the founding treaties were however made by the next agreement, the Treaty on European Union (TEU—also known as the Maastricht Treaty) signed in 1992.

26.17  The Treaty on European Union followed parallel negotiations between Member States on closer economic and political integration. It introduced into the Treaty of Rome new provisions and institutional arrangements paving the way for Economic and Monetary Union (EMU) and the introduction of the European single currency, the euro, in 1999. It also established, as free-standing chapters in the TEU itself, two new areas of intergovernmental cooperation, distinct from the decision-making procedures of the European Community treaties: the Common Foreign and Security Policy (CFSP) and Justice and Home Affairs (JHA) covering cooperation on civil and criminal justice matters and immigration (see also paragraph 26.36 below).

26.18  The TEU made a range of other changes. These included both changes to the institutional framework—creating new bodies such as a Committee of the Regions and again increasing the powers of the European Parliament, notably through the new co-decision procedure—and conferring new powers on the EEC in areas such as social policy, culture, education, development aid, consumer protection, and industry policy. In recognition of the fact that the EEC had clearly expanded beyond its original economic remit, its name was changed simply to the ‘European Community’. A new overarching term, ‘European Union’, was also introduced as a collective name for the European Communities and the intergovernmental areas of CFSP and JHA.

26.19  The changes made by the following treaties—the Amsterdam Treaty, signed in 1997, and the Nice Treaty, signed in 2001—were less ambitious. The Amsterdam Treaty brought into the Treaty of Rome both civil justice and immigration— leaving police and criminal justice cooperation in the intergovernmental area of JHA—and the Schengen arrangements⁷ which had developed outside the (p. 377) EU framework. It also provided for some new EC activities in areas such as energy and tourism, and made some further institutional changes including enhancing the role of the Commission President and reinforcing CFSP decision-making. The Nice Treaty was largely confined to relatively small institutional changes in anticipation of the admission of a significant number of new members from Central and Eastern Europe. It also marked a milestone by winding up the affairs of the ECSC, which had been established for a fixed period of 50 years, and transferring them to the EC.

26.20  These changes fell far short of the reforms which many considered were needed both to ensure the effective operation of a much-expanded European Union and to make the Union more accessible to its citizens and better able to address twenty-first century challenges such as globalization, terrorism, and migration. A ‘Convention’ of representatives of Member States, national parliaments, and the EU institutions was therefore set up and drew up a draft ‘Constitution for Europe’, signed in 2004, repealing the existing treaties in their entirety and replacing them with a single text. Following rejection of this Constitutional Treaty in referendums in 2005 in France and the Netherlands many of its innovations were taken up in a new amending treaty, the Treaty of Lisbon, signed in 2007.

26.21  The Lisbon Treaty keeps the existing Treaties but simplifies the existing arrangements by merging the current structures into a single European Union. It brings the remainder of the intergovernmental JHA provisions into the Treaty of Rome, gives legal status to the Charter of Fundamental Rights, a text reaffirming the fundamental rights applicable under Community law, and makes a number of other changes. But its main focus is on institutional reform—including providing for a single individual to exercise external relations functions across the European Communities and CFSP, creating an elected President of the European Council, introducing new voting rules in the Council, and extending the areas of majority voting. However following its rejection in a referendum in Ireland in 2008 its future remains uncertain.⁸

26.22  The Lisbon Treaty has been presented as completing, for the present, the process of treaty and institutional change. Certainly after only limited changes to the Communities’ framework during the first 30 years of their existence, the period since the Single European Act has seen an ever-accelerating process of treaty change. This has been driven in part by enlargement and the need to reform (p. 378) decision-making to deal with an enlarged Union. It has also been driven by the European Union’s internal dynamics as the elaboration and implementation of its policies, and closer cooperation between Member States, have led to work in new areas which are then formally recognized in subsequent treaties. Many apparently new responsibilities conferred by amending treaties—such as the environment, development aid, and cooperation on justice and home affairs— simply reflect activities previously done under existing powers⁹ or on the basis of ad hoc cooperation between governments.

26.23  The original core concept of a common market has itself provided a catalyst for the extension of the Communities’ activities. While the EC’s original remit was clearly economic in character, the creation of a single market in which goods and people can travel freely has brought with it the need both to ensure the removal of all barriers to free movement and to avoid a ‘race to the bottom’ in which those with the lowest standards gain an economic advantage. This has led to the establishment of Community-wide rules in such diverse areas as manufacturing standards, environmental protection, professional qualifications, and working conditions.

26.24  External factors have also clearly played a key role in the development of the Union. Increased concerns about international migration, transnational crime, and terrorism have been an important catalyst in the rapid development of Justice and Home Affairs. Increasing sensitivity to issues such as protection of the environment, protection of fundamental rights, and combating discrimination have all been reflected in the EU’s work. Concerns to ensure greater transparency and democratic accountability have also prompted internal institutional changes and, in part at least, the increase of the European Parliament’s powers in each successive treaty.

26.25  The EU’s development has equally been influenced by the divergent views of its Member States both on key issues such as balancing free market principles and social and economic protection and on the fundamental question, extending back to the establishment of the ECSC, of the appropriate level of integration and the balance between Member States’ powers and those of the EU institutions. The latter has been an explicit, or implicit, issue in every stage of the Union’s development and the compromises which it has engendered account for much of the complexity of the EU’s structure.

26.26  The European Union is the overarching term for the arrangements resulting from the Treaty on European Union. The latter describes the European Union as being ‘founded on’ the European Communities supplemented by the policies set out in the TEU itself.¹⁰ As such the European Union is often described as being based on three pillars.

26.27  The First Pillar comprises the original European Communities each established by its own treaty: the European Community, the European Atomic Energy Community, and the now-defunct European Coal and Steel Community. Each of these Communities is (or was) a separate international organization with its own legal personality and areas of responsibility but sharing the same institutions and similar, albeit not identical, decision-making procedures and legal powers. The European Communities are however far from being typical international organizations and their special character is discussed below. The Second and Third Pillars refer to the separate intergovernmental areas of the Common Foreign and Security Policy (CFSP) and Justice and Home Affairs (JHA) created by, and set out in, the TEU (see also above at paragraph 26.17 and below at paragraph 26.36).

26.28  Unlike the Communities, legal personality was not expressly conferred on the European Union when it was established and there has been considerable debate as to how it is to be characterized and whether it constitutes an international organization. The TEU does provide for international agreements to be concluded with third States and organizations in the areas of CFSP and JHA. On this basis the European Union is now regarded as having the functional capacity necessary to conclude such agreements in its own name and has done so on over a hundred occasions. In doing so however the European Union does not replace the European Communities which continue to exercise their own powers.

26.29  These arrangements were characterized by Commission President Jacques Delors as ‘organised schizophrenia’.¹¹ To simplify the confusing situation, in which third countries and organizations may find themselves having to deal with (p. 380) both the EU and EC, the Lisbon Treaty¹² would abolish the distinction between the European Union and the European Community. The European Union would be given express legal personality and take over the responsibilities of the European Community which would cease to exist.

26.30  While the European Communities may be classified as international organizations the nature of their powers and procedures means that they are usually regarded as sui generis entities. Focusing on the European Community—by far the most significant of the two Communities—there are a number of elements which taken together distinguish it from other organizations.

26.31  Under the Treaty of Rome, Member States have conferred on the European Community legal powers or ‘competences’ to act both within the EC (‘internal competence’) and in relation to third countries and organizations (‘external competence’) across a wide range of areas. This includes the power to adopt detailed legislation and legal instruments which can in many cases apply directly as part of the laws of each Member State (‘direct effect/applicability’) and prevail over any conflicting national laws (‘primacy’). Moreover where the Community has acted (or in some cases simply has the power to act), Member States are generally precluded from acting themselves.

26.32  As early as 1963, the European Court of Justice concluded that these characteristics meant that the ‘Community constitutes a new legal order of international law for the benefit of which the States have limited their sovereign rights, albeit within limited fields, and the subjects of which comprise not only Member States but also their nationals’ (emphasis added).¹³ Like other international organizations, it remains open to Member States, as the parties to the Treaty of Rome, to modify the Community’s powers or indeed to withdraw from the Community altogether. But subject to these limits, and within its areas of responsibility, the Community exercises extensive powers which closely circumscribe those of its Member States.

26.33  The Community’s powers are reinforced by the supranational characteristics of its institutions. As discussed below, significant powers are vested in a number (p. 381) of institutions—the Commission, European Parliament, and European Court of Justice—which operate independently of the constituent Member States. In addition, the development of the Community has seen a considerable increase in majority voting among States’ representatives in the Council reducing their ability to block the adoption of legislation.

26.34  These elements are often referred to collectively as the ‘Community (or supranational) method’. They have undoubtedly played a key role in the Community’s success in establishing, and enforcing, a common market and other policies which might otherwise have become bogged down in competing national interests and conflicting national laws. However by the same token they represent a significant constraint on the powers of Member States. For this reason many governments have been wary about extending the Community’s powers, and the Community method, to new areas of activity.

26.35  This was dramatically demonstrated in the early years of the Communities by the ‘empty chair’ crisis of 1965. For several months France boycotted the Council of Ministers in a dispute focusing on President de Gaulle’s opposition to the introduction of majority voting for agricultural matters. De Gaulle, an outspoken critic of the Communities’ arrangements, declared : ‘On peut faire des discours sur l’Europe supranationale. Ce n’est pas difficile: il est facile d’être un Jean-foutre.’¹⁴ The dispute was only resolved by a political understanding, the ‘Luxembourg Compromise’, that a State would not be outvoted where very important national interests were at stake.

26.36  In the negotiations leading to the conclusion of the Maastricht Treaty in 1992, there was particular reluctance to subject the sensitive areas of CFSP and JHA to the Community’s powers. For this reason, these areas were kept outside the remit of the European Community and made subject to ‘intergovernmental’ decision-making. This does not mean traditional government to government diplomacy—decision-making still takes place within an institutional framework laid down by the TEU—but rather maintaining governments’ control through the Council of Ministers and curtailing many of the elements of the Community method: a predominance of unanimity voting, a smaller role for the Commission, no joint decision-making with the European Parliament, and the exclusion or limitation of the jurisdiction of the European Court of Justice and with it the application of legal principles and concepts developed in relation to the European Community.

(p. 382) 26.37  Intergovernmental decision-making continues to apply to CFSP and (following the transfer of civil JHA matters to the European Community) Police and Criminal Judicial Cooperation. Under the Lisbon Treaty criminal justice matters would also become subject to the Community method, while CFSP would still remain a distinct area of intergovernmental decision-making.

26.38  A further complexity in the EU’s structure has arisen from the variations in the ways in which its arrangements apply to different Member States. The general presumption is that the same rules and procedures apply across all States. That is inherent in the notion of creating a common market and common policies. While it was largely possible to maintain this approach in the early years of the Communities, with the increase in membership and the extension of the Communities’ (and Union’s) activities into new and more sensitive areas, it has been necessary to find ways of accommodating the divergent circumstances of different States.

26.39  States acceding to the EU are frequently given transitional periods during which the application of rules in certain sectors is suspended to allow them time to adjust. States may occasionally secure permanent derogations to address specific areas of sensitivity. Thus, for example, Ireland’s constitutional provisions on abortion and Danish national rules on second homes are excluded from the application of the EU Treaties. Special provision may also be needed for a State’s particular circumstances—such as the suspension of the application of Community law to northern Cyprus—or for territories having a particular relationship with a Member State—such as the United Kingdom’s Crown Dependencies and Sovereign Base Areas (which are outside the European Community but subject to some Community laws) and Gibraltar (which is part of the Community but outside its common customs area).

26.40  However, beginning with the Treaty of European Union’s extension into areas of particular sensitivity, it has also been necessary to find ways of accommodating States’ divergent views. At the time of the TEU, both Denmark and the United Kingdom secured exemptions from the obligation to adopt the single currency. The United Kingdom also remained outside new provisions on social policy (the ‘Social Protocol’) although this was later reversed. Under the Amsterdam Treaty, the United Kingdom and Ireland secured a series of special arrangements to protect their national positions in relation to frontier controls, the Schengen arrangements (see n 7 above), and JHA. These include the right to choose whether to opt into civil justice and immigration matters (which would be extended to criminal matters under the Lisbon Treaty). Denmark also secured opt outs in relation to both JHA and defence matters.

(p. 383) 26.41  The recognition of the need for greater flexibility also led at the time of the Amsterdam Treaty to the introduction of an ‘enhanced cooperation’ procedure allowing smaller groups of Member States to take forward legislative proposals. While there has been little appetite for using this procedure, debates about ‘variable geometry’ and a ‘two-speed’ Europe frequently recur in discussions on the future of the Union.

26.42  As outlined above, there are now three key Treaties underlying the European Union: the Treaty establishing the European Community (ie the Treaty of Rome), the Treaty establishing the European Atomic Energy Community, and the Treaty on European Union.¹⁶ All the other treaties providing for institutional changes, new powers, or enlargement have largely operated by amending these founding Treaties.

26.43  These Treaties are fundamental. They are the basis for the Communities’ and Union’s powers, they set out their tasks and objectives, and they establish their institutional structures and decision-making procedures. For those working within the European Union, the Treaties are an everyday reference tool relied upon and cited in negotiations and meetings. All activities of the Communities and Union must be grounded, expressly or implicitly, in the Treaties and all legal instruments must cite the Treaty provision (‘the legal base’) authorizing their adoption. For the European Court of Justice, the Treaties, or ‘primary law’, are the ultimate source of authority against which legislation and executive action must be judged.

26.44  While the objectives and policy areas specific to the EU and EC are set out in their respective Treaties, the Union’s complex structure means that provisions of (p. 384) general application are found in both Treaties. Thus most of the provisions on institutional arrangements are in the Treaty of Rome, while general provisions on eg fundamental rights and enlargement are in the Treaty on European Union. Some key provisions, particularly those providing for special arrangements applicable to particular States, are also set out in Protocols which form an integral part of the Treaties themselves.

26.45  Amendment of the Treaties is subject to procedures set out in Article 48 of the Treaty on European Union and in particular requires the convening of an Intergovernmental Conference (IGC) of representatives of Member States who must unanimously agree any changes which are then subject to ratification ‘in accordance with national constitutional requirements’. For most States this involves some form of approval or legislation by national parliaments and for some the holding of a referendum. IGCs frequently adopt declarations clarifying or commenting on Treaty provisions which are not binding but might in principle serve as aids to interpretation of the Treaty provisions themselves.

26.46  The Treaties give the Communities and Union powers to adopt legislation and other legal instruments across a wide range of policy areas. The negotiation, adoption, and implementation of these instruments is the main focus of much of the work of the EU’s institutions as well as being a key vehicle for the delivery of many EU and Community policies. All these legal instruments are binding on those to whom they apply—whether States, companies, or individuals. Save where jurisdiction is excluded (for example in relation to CFSP instruments) they are subject to application and interpretation by the European Court of Justice and, where they take effect in national law, by Member States’ own courts.

26.47  The Treaty of Rome provides for three main types of legislation—Regulations, Directives, and Decisions. Regulations and Directives are the principal instruments used to implement policies across all Member States. Regulations automatically apply as part of Member States’ national laws. Directives require Member States to implement their provisions through their own legislation (but where States fail to do so may take effect directly in national law). Decisions are used for matters addressed to a particular company or person (for example in relation to a competition or State aid matter). Decisions are also used for internal matters which have legal effect—for example to authorize the opening of the negotiation of an agreement with a third country and subsequently to approve its conclusion.

26.48  Different instruments are used in the intergovernmental areas of CFSP and Police and Criminal Justice Cooperation reflecting their distinct character. Three instruments are commonly used in CFSP: Common Positions (used to set out general (p. 385) policy positions in relation to a particular region or issue, for example, the adoption of sanctions); Joint Actions (used for operational action such as the launch of crisis management operation); and Decisions for other matters. In the area of Police and Criminal Justice Cooperation, the main instruments are Common Positions (for defining a general approach to an issue); Framework Decisions which require implementation by Member States; and similarly Decisions for other matters. All these instruments are binding on Member States but do not take effect directly in national law.

26.49  These legal acts, together with the treaties and a diverse range of other instruments, principles, and practices established within the framework of the Union, collectively constitute what is termed the acquis communautaire which all new Member States must accept on acceding to the Union.

26.50  Article 7 of the Treaty of Rome provides for five institutions to carry out the Community’s (and where applicable, the Union’s) tasks: the European Parliament, the Council of Ministers, the European Commission, the European Court of Justice, and the Court of Auditors. Of these the Parliament, Council, Commission, and Court of Justice are the most significant and are discussed in detail below.

26.51  The Court of Auditors, based in Luxembourg and composed of one member appointed from each Member State, is responsible for auditing of all revenue and expenditure accounts of the Community. In addition, while not classified as institutions, there are a number of other bodies created under the Treaties. The European Central Bank is endowed with extensive powers in relation to the operation of the single currency and would also acquire the status of an institution under the Lisbon Treaty. The Economic and Social Committee, comprising representatives of ‘economic and social components of organised civil society’, and the Committee of the Regions, comprising representatives of regional and local authorities, are both consultative bodies, have the right to be consulted on some issues, but have no legislative powers.

26.52  Other bodies established by the Treaties include the European Investment Bank and the Ombudsman. An increasing number of separate agencies have also been created by legislation exercising executive functions across a range of important areas such as food safety, medicines, fundamental rights, chemicals, and the environment. By 2009 some 30 such agencies had been established.¹⁷

26.53  The Council, composed of ministers from each Member State, has a pivotal role in the Union’s legislative and decision-making procedures. Its agreement is required for all legislation (except where it has delegated this role to the Commission), CFSP measures, and the conclusion of international agreements. From the time of the ECSC it has represented the governments’ counterbalance to the role of the other supranational institutions.

26.54  The Council meets in nine sectoral configurations each composed of ministers with responsibility for that particular area—General Affairs and External Relations (GAERC); Economic and Financial Affairs; Justice and Home Affairs; Employment, Social Policy, Health and Consumer Affairs; Competitiveness; Transport, Telecommunications, and Energy; Agriculture and Fisheries; Environment; and Education, Youth, and Culture. Councils meet regularly throughout the year to agree both policy and legal measures, with debate often focusing on the text of Conclusions published after each meeting. Meetings are held in Brussels and Luxembourg (but may exceptionally take place elsewhere, eg for trade negotiations) and may be supplemented by ‘informal’ Councils hosted by the State holding the Council Presidency.

26.55  Heads of State and Government, and the President of the Commission, also meet at least twice a year (and in practice at least four times a year) in the configuration known as the European Council (not to be confused with the Council of Europe described in Chapter 28 below). This body is charged under the EU Treaty with providing ‘the Union with the necessary impetus for its development’ and defining ‘its general political guidelines’. Its focus is necessarily on high-level issues although under the Lisbon Treaty it would also acquire extra formal decision-making responsibilities and be defined as a separate institution alongside the Council of Ministers.

26.56  All the Councils are chaired by the Member State holding the Presidency. This rotates on a six-monthly basis among all Member States and gives the incumbent a powerful role in setting the agenda of the Council and more generally the Union as a whole. In order to address concerns about the lack of continuity that this creates, the Lisbon Treaty provides for the European Council to elect a President for a period of two and a half years with the Foreign Affairs Council being chaired by the High Representative (see paragraph 26.59 and Chapter 27 below) and other sectoral Councils still being chaired by rotating Presidencies (p. 387) but organized on the basis of teams of three Member States changing every 18 months.

26.57  The work of the Council is prepared by two Committees (Corepers I and II)¹⁹ composed of Member States’ Permanent Representatives, ie ambassadors, to the European Union. The Permanent Representatives themselves, generally appointed from States’ foreign ministries, constitute Coreper II which deals with general affairs, external relations, financial matters, and justice and home affairs. The Deputy Permanent Representatives, often appointed from other ministries, meet in Coreper I which deals with the other sectors and in contrast to Coreper II can often be highly technical in its work. Where, as often occurs, agreement is reached on a proposal within either Coreper it is referred to the Council as an ‘A’ point for formal approval by ministers without debate.

26.58  The work of Coreper is itself prepared by an extensive network of working groups—covering everything from fruit juices to military operations—meeting at varying intervals and staffed by officials coming from capitals or based in the States’ missions to the European Union, the Permanent Representations. The latter are themselves composed of officials drawn from across each Member States’ ministries with each State’s internal arrangements determining both the size of the mission and the degree of autonomy that it is allowed in responding to often fast-moving negotiations. As well as supporting the work of ministers, ambassadors, and officials in the various Council bodies, the Representations also act as the principal conduit for Member States’ relations with the Commission, Parliament, and other EU bodies.

26.59  The work of the Council is also supported by a permanent Secretariat whose size and influence have grown with that of the Union—particularly in relation to CFSP where the Council is not only the sole decision-maker but largely responsible for implementation. Under the Amsterdam Treaty, the Secretary-General of the Council was combined with the new role of High Representative for CFSP charged with assisting the Presidency in this field and often taking a prominent representational role. (For the institutional arrangements applicable to CFSP, including the changes which would be introduced by the Lisbon Treaty, see Chapter 27 below.)

26.60  The dynamic of negotiations within the Council is heavily influenced by the relevant voting procedure. While there is always strong pressure to reach consensus, and formal voting is therefore relatively rare, whether or not opponents to a (p. 388) proposal can ultimately block it is always an implicit factor in the conduct of discussions. The Treaties stipulate which measures require unanimity and those which are subject to qualified majority voting (qmv). Under the rules as amended by the Nice Treaty (and the Accession Treaty for Bulgaria and Romania) qmv requires: (a) support of a majority (or in some cases two-thirds) of States and (b) 255 votes out of a total of 345 votes allocated to States on the basis of size (the largest having 29, the smallest 3). In addition a Member State may insist that a proposal has the support of States representing at least 62 per cent of the population of the EU. This can make the arithmetic complicated but means, for example, that opposition by three of the largest States (Germany, France, United Kingdom, Italy, Spain) and one medium-sized State or by two large plus four medium-sized States is sufficient to block a proposal. The Lisbon Treaty would overhaul this system introducing ‘double-majority voting’ simply requiring 55 per cent (or in some cases 72 per cent) of States whose combined populations constitute at least 65 per cent of the population of the Union.

26.61  For simple procedural matters, the Council can act by simple majority. Conversely where it is not acting formally under Treaty procedures, for example in drawing up general political Conclusions, it operates by consensus. In addition, as described at paragraph 26.35, a political understanding, the ‘Luxembourg Compromise’, was reached in the 1960s that a State would not be outvoted where very important national interests are at stake.

26.62  Arguably one of the Council’s, and EU’s, great strengths, and one of the great challenges and opportunities for those working within the Council at all levels, is the absence of fixed voting blocs and coalitions which so often characterize other organizations. States will align themselves differently depending on whether they tend to be more or less integrationist, liberal, or protectionist in their approach to trade; a large or a small State; more or less in favour of social protection and of free markets; a centralized or federal State; a net contributor to or recipient from the EU budget; Atlanticist or Euro-centric in their approach to defence; socially conservative or liberal; and so on. The picture is further complicated by the various opt outs and derogations described above (at paragraphs 26.38–26.41). While some States generally find themselves always in the same (or opposing) camps, coalitions can shift rapidly meaning that ministers and officials may themselves be opposed and allied on different issues in the course of the same meeting.

26.63  Another distinctive feature of Council business is the frequency with which it brings ministers, and in the European Council, heads of state and government, together face-to-face. While much ground-clearing work is done in working groups and Coreper, there are still a wide range of substantive discussions and negotiations—often on technical and detailed issues—which are conducted in (p. 389) person by ministers, prime ministers, and presidents. Such negotiations can often be prolonged and fatiguing—and tempers can occasionally fray²⁰—but they provide a far greater degree of direct contact between government members than is found in traditional diplomatic fora.

26.64  The European Commission is sometimes described as the Union’s civil service but its powers are much more extensive. It is the ‘guardian of the Treaties’ charged with ensuring that Treaty provisions, and measures adopted under the Treaties, are respected. In this capacity it regularly brings infringement²¹ actions against Member States. It also has the power to adopt legally binding decisions in key areas such as competition and state aids and has had delegated to it by the Council extensive powers to adopt technical regulations—subject to supervision by committees of Member State experts (a system known as ‘comitology’).

26.65  In most areas under the Community Treaties, the Commission has the sole right to bring forward proposals for legislation—the so-called ‘right of initiative’. While the enactment of such legislation is a matter for the Council and European Parliament, the Commission’s control over which proposals are brought forward gives it significant powers in shaping the legislative agenda. This is reinforced both by the Commission’s ability to withdraw a proposal once it has been tabled and submit a revised alternative which is more likely to secure approval in the Council and by the requirement that, even in areas where majority voting applies, the Council can only amend Commission proposals by unanimity. In addition, the Commission is represented at all Council meetings, from working group to ministerial level, and thus also has an on-going input into the Council’s own deliberations.

26.66  It is only in the intergovernmental areas of CFSP, and to a lesser extent Police and Criminal Judicial Cooperation, that the Commission’s role is curtailed. As regards CFSP, the Commission is ‘fully associated’²² with work in this area and has the right to make proposals, but it is Member States, in particular the Presidency, supported by the Council Secretariat who have the principal role in bringing (p. 390) forward and implementing proposals. Equally while the Commission has the important responsibility of representing the interests of the Communities in relations with third countries and organizations, this role does not extend to CFSP.

26.67  The Commission, appointed for five years, is composed of nationals from each Member State ‘chosen on grounds of their general competence’ and whose independence is ‘beyond doubt’.²³ The Council initially appoints the President of the Commission by qualified majority and with the agreement of the European Parliament. This appointment is of key importance in setting the direction of the in-coming Commission. The proposed list of the Commission as a whole is then adopted by the Council, again by qualified majority and in agreement with the nominee for President, and submitted for approval by the European Parliament.

26.68  In practice the initial choice of Commissioner from each Member State is largely a matter for the government concerned and appointees are usually experienced national politicians. However the Commission President has an important role in the process—reinforced by his responsibility for allocating portfolios amongst the Commission appointees—and, as outlined below at paragraph 26.80, the European Parliament can also assert significant influence in relation to both the appointment and dismissal of a Commission.

26.69  Formal decision-making is done by the body of Commissioners as a whole— known as the College of Commissioners—acting by majority. The Treaties stress that Commissioners ‘shall neither seek nor take instruction from any government or any other body’²⁴ and Commission members do not act as representatives of their respective governments. At the same time they can provide an informal conduit both to enable the Commission to understand the perspective and circumstances of a particular government and for a government to appreciate the approach of the Commission. However enlargement has made the size of the Commission unwieldy and proposals under both the Nice and Lisbon Treaties provide for the reduction of the number of Commissioners—although this remains a point of sensitivity for some States and the Lisbon Treaty equally allows this requirement to be reversed.

26.70  In its wider sense, the Commission also refers to the officials—some 23,000 in 2008—responsible for carrying out the institution’s functions under the direction of the College of Commissioners. These staff are organized in some (p. 391) 25 Directorates General each responsible for a particular subject area, headed by a Director General and answerable to the Commissioner with the relevant portfolio.²⁵ In addition there are a series of Services with horizontal responsibilities including the Secretariat General, ensuring overall coordination, and an influential Commission Legal Service.

26.71  The Commission’s supranational structure and its range of powers and prerogatives—including in relation to the initiation of legislation and the enforcement of the treaties—have made it emblematic of the Union’s distinctive character and a key element in the latter’s development. Many would argue that the role of the Commission over the past three decades has decreased relative to both the Council and the European Parliament. Nevertheless it still maintains a central position in the Union’s institutional machinery.

26.72  During the development of the European Union, the role and powers of the European Parliament have changed more significantly than those of any other institution. It also remains the first and only directly elected international body.

26.73  Established as the ECSC’s Common Assembly, it was originally composed of representatives nominated by the national parliaments of Member States and had only limited ‘supervisory’ powers. Its name was subsequently changed to the European Parliament but the critical stage in its development was the first direct election held in 1979. This marked the start of the period in which the Parliament increasingly asserted its role beginning the same year with the use for the first time of its power to block the EC budget. From the Single European Act, which introduced the assent and cooperation procedures giving the European Parliament important new powers, successive amending Treaties have significantly increased both the Parliament’s decision-making and legislative powers and the range of issues to which they apply. The European Parliament’s principal legislative powers are now exercised through the co-decision procedure, introduced by the Maastricht Treaty.

26.74  As from the 2009 elections, the European Parliament is composed of 736 members allocated among the Member States roughly in relation to population size (ranging from 99 MEPs for Germany to five for Malta) but with proportionately (p. 392) greater representation for the smaller States. (These numbers would be amended by the Lisbon Treaty.) MEPs are elected for a period of five years by direct universal suffrage on the basis of proportional representation (using the list system or single transferable vote). Within Parliament they sit by political grouping, rather than Member State, the largest groups including the European People’s Party and European Democrats, the Socialists, and the Alliance of Liberals and Democrats for Europe—each grouping comprising MEPs from national political parties sharing broadly similar principles.

26.75  The size of each grouping determines in particular the allocation (by the d’Hondt system)²⁷ of the influential chairs of the committees. There are 20 Standing Committees covering the full range of the European Union’s work including for example the budget, foreign affairs, agriculture, industry, internal market, legal affairs, women’s rights, and the environment. The committees—which meet, usually in Brussels, once or twice a month—prepare the work for the European Parliament’s plenary sessions, considering and proposing amendments to legislation which has been referred to the Parliament and preparing detailed reports on issues within their remit.

26.76  The relative size of the political groupings also determines the selection of the President of the European Parliament who is elected by absolute majority for a two-and-a-half year period. Amongst other tasks, he or she is responsible for chairing the plenary sessions and addresses the opening session of each European Council. Plenary sessions are held monthly in Strasbourg. The diverse location of the EU institutions, important symbols of reconciliation in the early years of the Communities, has been an increasing focus of debate—above all in relation to the cost created by the split between the Parliament’s plenary seat in Strasbourg and its committee work in Brussels.

26.77  It is the plenary sessions which exercise the European Parliament’s formal decision-making powers usually by a simple majority of votes cast—or in some cases by a vote of two-thirds or an absolute majority of its component members. There are four main aspects to the Parliament’s powers and influence: as a legislator, as a budgetary authority, in exercising oversight of the Commission, and in the adoption of resolutions.

26.78  On some matters, such as the conclusion of some international agreements or the admission of new Member States, the European Parliament has a veto under the assent procedure. Other areas are still subject to the consultation procedure under (p. 393) which the Parliament has the right to give its opinion but the Council is not bound by its position. However, as noted above, the Parliament’s principal legislative powers are now exercised through the co-decision procedure under which it adopts legislation jointly with the Council.²⁸ The areas which the EC Treaty stipulates are subject to co-decision have steadily increased (and under the Lisbon Treaty it would become the default ‘ordinary legislative procedure’). Co-decision entails a three-stage procedure. The Parliament and the Council can seek to agree a legislative proposal, and each others’ amendments, at a first or second reading. However if agreement cannot be reached the proposal is referred for intensive (and often late-night) negotiation by a conciliation committee comprised of representatives of the Parliament and Council.

26.79  The budget and oversight of the Commission are the other areas in relation to which the European Parliament enjoys important powers. The Parliament and the Council together constitute the joint budgetary authority with the latter having the last word on ‘compulsory expenditure’, matters on which the Union is legally obliged to incur expenditure, and the Parliament having the ultimate decision on discretionary or ‘non-compulsory expenditure’ (see also paragraph 26.90 below). The Parliament may also for ‘important reasons’ decide to reject the budget as a whole and ask for a new revised budget to be submitted²⁹—a power which it exercised in 1980, 1982, and 1985.

26.80  In relation to the Commission, the European Parliament must approve the nomination of the President of the Commission as well as the appointment of the Commission as a whole; it can also require the Commission to resign by adopting a motion of censure: powers which influenced the resignation of the entire Santer Commission in 1999 and delayed the appointment of the Barroso Commission in 2004. The former in particular was seen as the Parliament’s ‘coming of age’³⁰ in asserting its place in the EU’s institutional framework. The episode arose from accusations of financial mismanagement and fraud against one Commissioner, Edith Cresson. To avoid a motion of censure, the Commission agreed to the appointment of a committee of experts and resigned en bloc in response to the committee’s criticism of the Commission as a whole.³¹

(p. 394) 26.81  Commissioners regularly appear before the European Parliament and the Commission must submit an annual report to, and answer questions from, the Parliament. Council Presidencies have similarly developed the practice of appearing before the Parliament during their term in office reflecting the Parliament’s increasing influence.

26.82  The European Parliament regularly adopts resolutions and reports setting out its position across the whole range of issues of interest to the European Union. These are reinforced by the Parliament’s authority as the only directly elected EU body (although Council members are themselves democratically accountable at the national level).³² At the same time, there remain many areas under the Community Treaties where the Parliament’s decision-making role is limited and its participation in the areas of intergovernmental decision-making is even more restricted. While the European Parliament’s role has grown significantly over the past 60 years it still remains in many ways less powerful than either the Council or Commission.

26.83  The Court of Justice of the European Communities (known as the European Court of Justice or ECJ) has played a significant role in shaping the character and development of the Communities and, as the final arbiter on the interpretation and application of the Community Treaties, is one of the most powerful elements of the institutional framework.

26.84  Under Article 220 of the Treaty of Rome, the Court’s function is to ‘ensure that in the interpretation and application of this Treaty the law is observed’. It was set up at the time of the establishment of the ECSC and its workload has continued to grow significantly throughout the development of the Union. To address this, a second court, the Court of First Instance (CFI), was established in 1989 while the Nice Treaty provided for the creation of specialist judicial Panels. On this basis a Civil Service Tribunal, to deal with cases brought by staff of the institutions, was constituted in 2005. The term European Court of Justice is still used to refer to both the three-tier judicial institution as a whole and to what is now the highest court (although the Lisbon Treaty would distinguish the former by referring to the Court of Justice of the European Union).³⁴ Its workload continues (p. 395) to grow: in 2008 there were 592, 605, and 111 cases before the ECJ, CFI, and Staff Tribunal respectively.³⁵

26.85  Both the ECJ and CFI are constituted of one judge per Member State appointed, by the common accord of all Member States, from persons ‘whose independence is beyond doubt and who possess the ability required for appointment to the highest (or high) judicial office’. The ECJ itself also comprises eight Advocates General, shared amongst the larger Member States and by rotation amongst the smaller States, whose role it is to prepare opinions to aid the Court’s deliberations. In practice each Member State proposes the judges of its own nationality—usually drawn from the judiciary, academia, or public service—who are then endorsed by the other States. The Civil Service Tribunal marked an important change from this practice with only seven judges, appointed by the Council on the basis of recommendations made by an advisory Panel of experts.

26.86  Cases can reach the Courts by two principal routes: by direct actions against the EU institutions and Member States and by preliminary references. Direct actions can be brought challenging the decisions or legislation of EU institutions on various grounds including acting outside their powers, failing to comply with procedural requirements or principles of EC law, and misuse of powers. Such challenges are frequently brought both by Member States, and by EU institutions against each other, and form an important part of the process of defining the parameters of their respective powers. They can also be brought, under strictly defined limits,³⁶ by companies and individuals who may be particularly affected by a decision or legislative act.

26.87  The Commission frequently brings infringement (or ‘infraction’) cases against Member States for failure to comply with the Treaties and in particular for failure to implement Community legislation. This has proven to be one of the most important elements in enforcing the common market and Community law generally and was reinforced by the power, introduced by the Maastricht Treaty, to fine Member States which failed to comply with Court judgments.³⁷ Member States may also launch enforcement actions against each other but this is rarely done. As Community legislation forms part of Member States’ own domestic law, national courts also play a key role in its application but can (and sometimes must) refer to the ECJ for definitive interpretative rulings. (p. 396) These preliminary references make an important contribution in ensuring the uniform application of Community law across all Member States.

26.88  While the Court is based in Luxembourg away from the EU’s centres of political and legislative activity, it has played a key role in developing many of the concepts which have been fundamental in the development of the European Union—primacy, direct effect, fundamental rights, exclusive competence for external action, and many of the key principles regulating the common market were all established by Court judgments. Concerns have been expressed by some, and rejected by others, both about an ‘activist’ court relying extensively on purposive (or teleological) interpretation and about its powerful position as the ultimate judicial authority on matters within its jurisdiction.³⁸ Sensitivities about the Court’s role meant that its jurisdiction has been excluded from CFSP and limited in relation to Justice and Home Affairs—although the limitations in respect of the latter would be phased out under the Lisbon Treaty.

26.89  Finally, separate mention should be made of the EU’s budgetary arrangements which straddle the responsibilities of a number of institutions and can be the focus of some of the most intensive and politically charged negotiations within the Union.

26.90  The budget—some €133.8 billion for 2009³⁹—funds expenditure across nearly all areas⁴⁰ of the Union’s work including agricultural subsidies, funds for less advantaged regions, development aid, and the EU’s own running costs. A detailed draft annual budget is prepared by the Commission and submitted for joint agreement by the Council (acting by qmv) and European Parliament in accordance with procedures laid down in the EC Treaty.⁴¹ As noted above, the Council has the ultimate decision on ‘compulsory expenditure’, which the Union is legally obliged to incur, while the Parliament has the ultimate decision on discretionary or ‘non-compulsory expenditure’ and may also, in certain circumstances, reject (p. 397) the budget as a whole. With very limited exceptions, expenditure can only be incurred by the Union where provision has been made in the budget and the frequent disagreements over the budget usually reflect broader differences between the institutions regarding the EU’s work and the priorities.

26.91  The EC Treaty stipulates that expenditure must be balanced by revenue in each budgetary year.⁴² Revenue originally came from Member States’ direct contributions but was later replaced by financing from the Communities’ ‘own resources’. These are determined by a Council decision⁴³ and currently comprise revenue from agricultural levies and customs duties, a fixed percentage of Member States’ national revenue from value-added tax, and contributions from each Member State based on their own gross national income.

26.92  The Decision on Own Resources is now re-negotiated every seven years as part of a wider package of measures, ‘the financial perspective’, intended to allow longer term planning of expenditure in line with the Union’s revenue. These perspectives are enshrined in an ‘inter-institutional agreement’ between the Council, Commission, and European Parliament which places annual ceilings on various general categories of expenditure. While this has helped facilitate agreement on the annual budgets it also means that the periodic negotiation of the financial perspective is one of the most significant exercises undertaken within the Union—for Member States and the institutions alike.

26.93  The negotiation of Member States’ financial contributions can prove particularly contentious given not only divergent views about how much the Union should itself do (and thus spend) but the often important differences in the extent to which States contribute to and benefit from the EU budget. The United Kingdom’s concerns about what it regarded as significant imbalances in its budget contributions and distortions in EU expenditure led to one of the most difficult negotiations within the EU with UK Prime Minister Margaret Thatcher finally securing a budget abatement (the ‘rebate’) in 1984. The British Permanent Representative during this episode concluded: ‘You can only get your way in the Community by sustained will-power, careful planning and skilled negotiation; … if you have these things and a good case, the Community has in the end to take account of it’.⁴⁴(p. 398)