Sunday, 26 October 2008

European Central Bank Id: Legal personality

With legal personality the European Central Bank the capacity to act, subject to the EC Treaty and the ESCB Statute. We look at both authority and limits, within the member states and internationally.

We take a peek at the ECB’s privileges and immunities.

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Legal personality

We remember that the European Central Bank is not mentioned among the European Community institutions in Article 7 of the Treaty establishing the European Community (TEC), but according to Article 8 TEC a European System of Central Banks (ESCB) and a European Central Bank (ECB) are established. They shall act within the limits of the powers conferred upon them by the TEC and by the treaty level Statute of the ESCB and the ECB.


Legal personality is one crucial aspect of these powers. Pursuant to Article 107(2) TEC, in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/88:

2. The ECB shall have legal personality.

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Internally

We notice that legal personality is accorded to the European Central Bank, not the European System of Central Banks.
Protocol (No 18) on the Statute of the European System of Central Banks and of the European Central Bank (1992) repeats, but also elaborates on the treaty provisions. Article 9.1 of the Statute adds the following, OJ 29.12.2006 C 321 E/259:

Article 9 ESCB Statute
The European Central Bank

9.1. The ECB which, in accordance with Article 107(2) of this Treaty, shall have legal personality, shall enjoy in each of the Member States the most extensive legal capacity accorded to legal persons under its law; it may, in particular, acquire or dispose of movable and immovable property and may be a party to legal proceedings.

9.2. The ECB shall ensure that the tasks conferred upon the ESCB under Article 105(2), (3) and (5) of this Treaty are implemented either by its own activities pursuant to this Statute or through the national central banks pursuant to Articles 12.1 and 14.

9.3. In accordance with Article 107(3) of this Treaty, the decision making bodies of the ECB shall be the Governing Council and the Executive Board.

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Within the European Community (EC), or more exactly “in each of the Member States” the ECB shall have “the most extensive legal capacity accorded to legal persons under its law”. In other words, the exact scope is determined by and it varies according to the law of the member state.

The Satute mentions two examples, which means that the powers of the ECB to act are not necessarily restricted to them. Internally, the ECB’s legal capacity (to act) includes the following in every member state:

The ECB has the right to acquire and to dispose of property, both movable and immovable.

The other important example is that the ECB may be a party to legal proceedings.

Naturally, the European Central Bank exercises its powers within the limits conferred by the TEC and by the Statute of the ESCB and the ECB (objectives, tasks, substantial and procedural limitations).

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Internationally

The International Court of Justice has given the following definition of the legal personality of an international organisation “That it is a subject of international law and capable of possessing international rights and duties, and that it has capacity to maintain its rights by bringing international claims” (as quoted in Ian Brownlie: Public International Law; Oxford University Press, 6th Edition, 2003; page 649).

Undoubtedly, the European Central Bank has capacity to act internationally, but subject to limitations. Naturally, the scope of the ECB’s activities is defined by its tasks (functionally). In addition, the ECB’s powers are limited by the competences accorded to the European Community, and in particular the EU Council.

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International agreements

According to Article 111(1) TEC, formal agreements on an exchange-rate system for the euro in relation to non-Community currencies are concluded by the Council. The Council adopts, adjusts or abandons the central rates of the euro within the exchange-rate system.

The Council may formulate general orientations for exchange-rate policy in relation to non-Community currencies; Article 111(2) TEC.

Pursuant to Article 111(3) TEC, agreements concerning monetary or foreign exchange regime matters are negotiated and concluded by the Council on behalf of the Community. These agreements are binding on the EC, the ECB and the member states. (Both the first and the third paragraph are exceptions to Article 300 on the normal procedures for international agreements.)

The Council decides the international position of the European Community on issues of particular relevance to economic and monetary union (EMU), as well as on EC representation. (Article 111(4) TEC, with references to Articles 99 and 105).

But, in matters directly pertaining to its powers, the European Central Bank has concluded agreements with international organisations. The anti-counterfeiting agreements with Europol and Interpol can be mentioned as examples.

Another example is the Headquarters Agreement between the Government of the Federal Republic of Germany and the ECB concerning the seat of the ECB (29.12.1998):

http://www.ecb.europa.eu/ecb/legal/pdf/en_headquarters_agreement_final.pdf

The Headquarters Agreement in German (original):

http://www.ecb.europa.eu/ecb/legal/pdf/de_headquarters_agreement_f_published.pdf

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Article 6.2 of the ESCB Statute foresees an international role for the ECB, in the form of participation in international monetary institutions, but subject to the EC positions defined by the Council, as indicated by Article 6.3 (OJ 29.12.2006 C 321 E/258):


Article 6 ESCB Statute
International cooperation

6.1. In the field of international cooperation involving the tasks entrusted to the ESCB, the ECB shall decide how the ESCB shall be represented.

6.2. The ECB and, subject to its approval, the national central banks may participate in international monetary institutions.

6.3. Articles 6.1 and 6.2 shall be without prejudice to Article 111(4) of this Treaty.

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Clearing and payment systems

ESCB Statute Article 22 confers powers with an international dimension on the European Central Bank:

Article 22 ESCB Statute
Clearing and payment systems

The ECB and national central banks may provide facilities, and the ECB may make regulations, to ensure efficient and sound clearing and payment systems within the Community and with other countries.

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International relations and transactions

Article 23 of the ESCB Statute authorises the ECB to establish relations with central banks and international (monetary) organisations (first indent) and conduct all types of banking transactions with third countries and international organisations (fourth indent).

Article 23 ESCB Statute
External operations

The ECB and national central banks may:

— establish relations with central banks and financial institutions in other countries and, where
appropriate, with international organisations;

— acquire and sell spot and forward all types of foreign exchange assets and precious metals; the
term ‘foreign exchange asset’ shall include securities and all other assets in the currency of any
country or units of account and in whatever form held;

— hold and manage the assets referred to in this Article;

— conduct all types of banking transactions in relations with third countries and international
organisations, including borrowing and lending operations.


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Privileges and immunities

Article 40 of the ESCB Statute refers to the Privileges and immunities of the ECB, a reminder of the intergovernmental (international law) roots of the European Central Bank (as part of the framework of the European Union and the European Communities).

Article 40 ESCB Statute
Privileges and immunities

The ECB shall enjoy in the territories of the Member States such privileges and immunities as are necessary for the performance of its tasks, under the conditions laid down in the Protocol on the privileges and immunities of the European Communities.


Annexed to the Treaties establishing the European Community and the European Atomic Energy Community, Protocol (No 36) on the privileges and immunities of the European Communities (1965), accords to the Communities and to the European Investment Bank in the territories of the Member States such privileges and immunities as are necessary for the performance of their tasks;
OJ 29.12.2006 C 321 E/318


Article 23 of Protocol No 36 extends the application to the European Central Bank:

Article 23 Protocol on privileges and immunities

This Protocol shall also apply to the European Central Bank, to the members of its organs and to its staff, without prejudice to the provisions of the Protocol on the Statute of the European System of Central Banks and the European Central Bank.

The European Central Bank shall, in addition, be exempt from any form of taxation or imposition of a like nature on the occasion of any increase in its capital and from the various formalities which may be connected therewith in the State where the bank has its seat. The activities of the Bank and of its organs carried on in accordance with the Statute of the European System of Central Banks and of the European Central Bank shall not be subject to any turnover tax.

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The privileges and immunities granted to the European Communities and the European Central Bank are largely comparable with privileges and immunities customary in diplomatic relations, as codified under the aegis of the United Nations in the Vienna Convention on Diplomatic Relations (1961; in force since 1964).

The Vienna Convention can be accessed at:

http://untreaty.un.org/ilc/texts/instruments/english/conventions/9_1_1961.pdf

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Liability

The principles regarding the European Community’s non-contractual liability apply to damage caused by the European Central Bank or its servants in the performance of their duties; Article 288 TEC. Pursuant to Article 235 TEC, the Court of Justice has jurisdiction.



Ralf Grahn