Written by Eva Poptcheva
On 14 April 2015, the Court of Justice of the EU (CJEU) delivered a judgment on the power of the Commission to withdraw a legislative proposal during the legislative procedure. The Court confirmed, for the first time, that the right of the Commission to withdraw legislative proposals is inseparable from its right of initiative.
The power of the Commission to withdraw proposals is not expressly established in the Treaties and is controversial. However, Article 293(2) TFEU stipulates the right of the Commission to alter its proposal at any time during the procedure as long as the Council has not yet acted. In fact, the Commission often implicitly amends its proposals when it accepts amendments proposed by Parliament in first reading. In this context, the EP-Commission Framework Agreement stipulates that ‘The Commission shall provide a detailed explanation in due time before withdrawing any proposals on which Parliament has already expressed a position at first reading’ (Article 39(1)).
The European Commission and the majority in academia regard the power of withdrawal of proposals as a mirror image of the Commission’s monopoly of the right of initiative (Article 17(2) TEU) and its role as a guardian of the common interest of the Union (Article 17(1) TEU). This is why the Commission has the power to withdraw legislative proposals that have been changed in their substance by Council and/or Parliament so that they no longer match the Commission’s original goals. Otherwise the legislators would be able to adopt a legislative act without a proposal. This has now been confirmed, for the first time, by the Court of Justice.
However, the power to amend or withdraw legislative proposals is widely seen to become more and more limited as the legislative process advances, in order to ensure respect for the institutional balance during the ordinary legislative procedure. This is reflected in Article 293(2) TFEU, giving the Commission the power to amend its proposal only as long as the Council has not acted. A withdrawal by the Commission after the Council has approved Parliament’s first-reading position would prevent the legal consequence foreseen by the Treaties (Article 294(1)4 TFEU), which is the adoption of the act (in first reading). The same applies to subsequent stages in the ordinary legislative procedure, where in the second and third reading, the adoption of the act is based on the positions of the Council and of the Parliament and, formally, no longer on the Commission’s proposal, so that the latter cannot at that stage amend it or withdraw it.
Ruling of the Court
Facts of the case
The case concerned macro-financial assistance (MFA) to third countries experiencing short-term balance of payments difficulties. Since the entry into force of the Lisbon Treaty, Parliament and Council have adopted decisions on such financial assistance on the base of Article 212 TFEU, which provides for the ordinary legislative procedure, on an ad hoc basis, for each and every case of financial assistance to third countries. Pointing to the reduced efficiency and effectiveness of this decision-making process, preventing the expeditious delivery of MFA, the Commission presented a proposal for a regulation on the general provisions for MFA, including provisions on the conditions for awarding such financial assistance and its form (loan, grant). The decision to award financial assistance to a third country under the regulation would be taken by the Commission under implementing powers (Article 291 TFEU). Both Parliament and Council expressed concerns over the insufficient political and democratic scrutiny of such decisions taken by the Commission. However, while the Council argued for keeping ad hoc decision-making under the ordinary legislative
procedure, Parliament proposed a solution based on the use of delegated (Article 290 TFEU) instead of implementing acts (Committee on International Trade; rapporteur Metin Kazak, ALDE, Bulgaria). Parliament and Council agreed in trilogue to replace the implementing powers claimed by the Commission with the ordinary legislative procedure for the adoption of each decision granting MFA, and delegating to the Commission the power to adopt certain acts connected with the financial assistance granted.
Procedure before the Court
After the Commission’s decision to withdraw the proposal in May 2013, the Council lodged an application for annulment of this decision with the Court of Justice (Article 263 TFEU) arguing that by withdrawing the proposal without such a competence in the Treaties, the Commission infringed upon the principle of institutional balance reflected in the principle of conferral of powers (Article 13(2) TEU) as well as upon the principles of sincere cooperation between the institutions and of the obligation to state reasons (Article 296 TFEU). The Council argued that the Commission has no general power to withdraw legislative proposals and rejected the proposition that its right of initiative implies a symmetrical right to withdraw proposals. According to the Council, the right to withdraw proposals needs to be limited to objective circumstances such as passage of time, and obsolescence of the proposal, emergence of new data or the lack of progress in the legislative procedure, in order not to render ineffective the right of the Council to amend Commission proposals as foreseen in Article 293(1) TFEU.
The CJEU held that the right of initiative includes decisions on the subject matter, objective and content of a proposal. According to the Court, the Commission’s role within the ordinary legislative procedure is not limited to the role of honest broker, but it has no veto right within the legislative process either. A decision to withdraw a proposal needs to be duly reasoned, but the reasons do not necessarily need to be stated in the formal notification of withdrawal, with it being sufficient that the Commission has brought its reasons to the attention of Parliament and Council in the run-up to the formal decision. The Court held that ‘where an amendment planned by the Parliament and the Council distorts the proposal for a legislative act in a manner which prevents achievement of the objectives pursued by the proposal and which, therefore, deprives it of its raison d’être, the Commission is entitled to withdraw it’. It may however do so only after having had due regard to Parliament’s and Council’s concerns behind their wish to amend the proposal.
According to the Court, in the present case, the objective of the Commission proposal to accelerate the decision-making process for the grant of MFA to third countries was no longer met in the amendment agreed by Parliament and Council, since it would keep case-by-case decisions under the ordinary legislative procedure and therefore distort an essential element of the proposal in a manner irreconcilable with this objective. In this context the Court acknowledged that the Commission had striven to reconcile the different positions by proposing a compromise solution, which was not however taken up by the co-legislators.
|The Court did not expressly address the question of whether the Council had already ‘acted’ in the sense of Article 293(2) TFEU, taking into account that Parliament and Council had achieved a political agreement. Since there was no formal decision by the Council in terms of a first-reading position, the Court seems to have assumed that the Council had not yet acted and that the Commission was therefore free to withdraw the ‘distorted’ proposal. The withdrawal of a proposal at a stage where a political agreement had already been reached led the Council and some Member States to raise the question of the democratic legitimacy of such a withdrawal decision.|
Other occasions for withdrawal of Commission proposals
In an earlier decision from 1989, the Court of Justice ruled that the Commission is free to amend or withdraw its proposals if, as a result of a new assessment of the interests of the Union, it considers the adoption of the measures concerned superfluous.
Furthermore, at the beginning of its mandate, the Commission may withdraw legislative proposals made by the previous Commission, in virtue of the principle of ‘political discontinuity’ enshrined in the EP-Commission Framework Agreement (Article 39(2)). Whilst in many Member States, pending proposals fall at the end of the parliamentary term, there is no such ‘legislative discontinuity’ in the EU Treaties. However, the European executive has repeatedly claimed for itself, and applied, the concept of ‘political discontinuity’, to review pending proposals at the beginning of each mandate, including prior to the 2010 Framework Agreement.
A further possible case for withdrawal of a proposal follows the subsidiarity check by national parliaments (Article 7(2) & (3) of Protocol No 2 on the application of subsidiarity and proportionality).