EU consumer rights: Treaty level

If you want the short version of consumer protection aspirations in the EU, you can read the Charter of Fundamental Rights of the European Union, where the programme has been boiled down to one short sentence (in the latest consolidated = updated version on the Treaties and the Charter, OJEU 30.3.2010 C 83):

Article 38 Charter
Consumer protection

Union policies shall ensure a high level of consumer protection.

Shared competence

According to Article 4(2)(f) of the Treaty on the Functioning of the European Union (TFEU) consumer protection is generally a shared competence between the EU and member states. OJEU (30.3.2010 C 83).



General application

We find consumer protection under provisions having general, or horizontal application:

Article 12 TFEU
(ex Article 153(2) TEC)

Consumer protection requirements shall be taken into account in defining and implementing other Union policies and activities.

Approximation of laws

Approximation or harmonisation of laws for the establishment and functioning of the internal market concerns, among other areas, a high level consumer protection in Article 114(3) TFEU.



Title XV of Part Three TFEU

The main provision on consumer protection is Article 169 TFEU:

Article 169 TFEU
(ex Article 153 TEC)

1. In order to promote the interests of consumers and to ensure a high level of consumer protection, the Union shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organise themselves in order to safeguard their interests.

2. The Union shall contribute to the attainment of the objectives referred to in paragraph 1 through:

(a) measures adopted pursuant to Article 114 in the context of the completion of the internal market;

(b) measures which support, supplement and monitor the policy pursued by the Member States.

3. The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall adopt the measures referred to in paragraph 2(b).

4. Measures adopted pursuant to paragraph 3 shall not prevent any Member State from maintaining or introducing more stringent protective measures. Such measures must be compatible with the Treaties. The Commission shall be notified of them.

After this introduction we can turn to the proposed Directive on consumer rights.




Ralf Grahn

EU reading for metric martyrs

If you want to experience how the style of legal texts differs from the prose of tabloids and certain blogs, you can take a look at Directive 2009/3/EC of the European Parliament and of the Council of 11 March 2009 amending Council Directive 80/181/EEC on the approximation of the laws of the Member States relating to units of measurement.



Since the subject matter is the degree of harmonisation (approximation) of laws in the internal market, this text has EEA relevance.

The text may evoke nostalgic feelings among the heroic defenders of English milk bottles and other metric martyrs.

The amending Directive was published in the Official Journal of the European Union (OJEU) 7.5.2009 L 114/10.


Ralf Grahn

EU: Directive on protection of computer programs

Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (Codified version) has been published in the Official Journal of the European Union 5.5.2009 L 111/16.



As a harmonisation (approximation) measure in the internal market, this Directive has EEA relevance, and it replaces the amended Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs. The codified Directive 2009/24/EC enters into force on 6 May 2009.

How are computer programs protected?

Article 1 of Directive 2009/24/EC equals the legal protection of computer programs with copyright protection:

Article 1
Object of protection

1. In accordance with the provisions of this Directive, Member States shall protect computer programs, by copyright, as literary works within the meaning of the Berne Convention for the Protection of Literary and Artistic Works. For the purposes of this Directive, the term ‘computer programs’ shall include their preparatory design material.

2. Protection in accordance with this Directive shall apply to the expression in any form of a computer program. Ideas and principles which underlie any element of a computer program, including those which underlie its interfaces, are not protected by copyright under this Directive.

3. A computer program shall be protected if it is original in the sense that it is the author's own intellectual creation. No other criteria shall be applied to determine its eligibility for protection.

4. The provisions of this Directive shall apply also to programs created before 1 January 1993, without prejudice to any acts concluded and rights acquired before that date.



Ralf Grahn

EU Consumer interests (injunctions)

Directive 98/27/EC of the European Parliament and of the Council of 19 May 1998 on injunctions for the protection of consumers' interests has been substantially amended several times. In the interests of clarity and rationality the Directive has now been replaced by a new and codified Directive:

Directive 2009/22/EC of the European Parliament and of the Council of 23 April 2009 on injunctions for the protection of consumers' interests (Codified version).


This text with EEA relevance has now been published in the Official Journal of the European Union (OJEU) 1.5.2009 L 110/30.



The approximation (harmonisation) Directive 2009/22/EC enters into force on 29 December 2009:


Article 1
Scope

1. The purpose of this Directive is to approximate the laws, regulations and administrative provisions of the Member States relating to actions for an injunction referred to in Article 2 aimed at the protection of the collective interests of consumers included in the Directives listed in Annex I, with a view to ensuring the smooth functioning of the internal market.

2. For the purposes of this Directive, an infringement means any act contrary to the Directives listed in Annex I as transposed into the internal legal order of the Member States which harms the collective interests referred to in paragraph 1.


***

Annex I

The Directives listed in Annex I offer an overview of important Community legislation in the area of consumer protection:


ANNEX I
LIST OF DIRECTIVES REFERRED TO IN ARTICLE 1
[The Directives referred to in points 5, 6, 9 and 11 contain specific provisions concerning injunctions.]


1. Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises (OJ L 372, 31.12.1985, p. 31).

2. Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ L 42, 12.2.1987, p. 48) [The said Directive was repealed and replaced, with effect from 12 May 2010, by Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers (OJ L 133, 22.5.2008, p. 66)].

3. Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities: Articles 10 to 21 (OJ L 298, 17.10.1989, p. 23).

4. Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours (OJ L 158, 23.6.1990, p. 59).

5. Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L 95, 21.4.1993, p. 29).

6. Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts (OJ L 144, 4.6.1997, p. 19).

7. Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees (OJ L 171, 7.7.1999, p. 12).

8. Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects on information society services, in particular electronic commerce, in the internal market (Directive on electronic commerce) (OJ L 178, 17.7.2000, p. 1).

9. Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human use: Articles 86 to 100 (OJ L 311, 28.11.2001, p. 67).

10. Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services (OJ L 271, 9.10.2002, p. 16).

11. Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market (OJ L 149, 11.6.2005, p. 22).

12. Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market (OJ L 376, 27.12.2006, p. 36).

13. Directive 2008/122/EC of the European Parliament and of the Council of 14 January 2009 on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts (OJ L 33, 3.2.2009, p. 10).



Ralf Grahn

EU TFEU: Approximation of internal market laws in sensitive areas

Approximation or harmonisation of internal market laws in sensitive areas, such as company taxes, is subject to unanimous decision making by the EU Council. The Treaty of Lisbon does not change the unanimity rule, although the reform treaty tries to make the relationship between ordinary and special legislative procedures clearer.


***

Article 115 of the Treaty on the Functioning of the European Union (TFEU) is found in the consolidated version of the Treaty on European Union and the Treaty on the Functioning of the European Union, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/95:

Part Three Union policies and internal actions

Title VII Common rules on competition, taxation and approximation of laws

Chapter 3 Approximation of laws

Article 115 TFEU
(ex Article 94 TEC)

Without prejudice to Article 114, the Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, issue directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the internal market.

***

In Article 2, point 80 of the Treaty of Lisbon (ToL) the IGC 2007 renumbered and amended Article 94 of the Treaty establishing the European Community (TEC), and in point 82 it amended the new Article 95 TFEU (ToL) (OJ 17.12.2007 C 306/69):

APPROXIMATION OF LAWS

80) The order of Articles 94 and 95 shall be reversed. Article 94 shall be renumbered 95 and Article 95 shall be renumbered 94.

---

82) In Article 94, renumbered 95, the words ‘Without prejudice to Article 94,’ shall be inserted at
the beginning.

***

The TFEU table of equivalences confirms that Article 94 TEC first became Article 95 TFEU (ToL) in the original Treaty of Lisbon, and it tells us that it was later renumbered Article 115 TFEU in the consolidated version (OJ 17.12.2007 C 306/211).

***

The current Article 94 of the Treaty establishing the European Community (TEC) is found under Title VI ‘Common rules on competition, taxation and approximation of laws’, Chapter 3 ‘Approximation of laws’, in the latest consolidated version of the treaties in force (OJ 29.12.2006 C 321 E/79).

When the proposed TFEU Article 114 (the current Article 95 TEC) with the normal or ordinary procedures for approximation (harmonisation) of laws was lifted to the beginning of the Chapter 3, the sensitive areas, mentioned in the second paragraph, requiring unanimity, were left to be dealt with in Article 115 TFEU (the current Article 94 TEC) of the amending treaty.

The new order feels like an improvement, but in spite of the words added at the beginning of Article 115 TFEU, plain language to express the scope of the provision would not have been amiss.

The only specific amendment by the Treaty of Lisbon was to add the words ‘Without prejudice to Article 94,’ (renumbered Article 114 TFEU) at the beginning. The words ‘acting unanimously on a proposal from the Commission’ were replaced by ‘acting unanimously in accordance with a special legislative procedure’ according to horizontal amendment 3 of Article 2 of the Treaty of Lisbon (OJ 17.12.2007 C 306/42), and the words ‘common market’ at the end were replaced by ‘internal market’ in line with horizontal amendment 2(g) (OJ 17.12.2007 C 306/41).

Here is the current Article 94 TEC:

Article 94 TEC

The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, issue directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the common market.

***

We have seen the minor differences between Article 94 TEC in force and Article 115 TFEU.

For the sake of systematic comparison, we look at the Article during the intervening treaty reform stages.

First, we turn to the European Convention, the closest thing to a constituent assembly EU citizens have had. The Article in question is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 7 ‘Approximation of legislation’.

Article III-64 of the draft Treaty establishing a Constitution for Europe was still the first Article of Section 7. The terminology of the draft Constitution differed from the TEC and there were some changes in wording, including the words ‘Without prejudice to Article III-65’ added at the beginning. But the substance remained unchanged. See OJ 18.7.2003 C 169/38.

Article III-64 Draft Constitution

Without prejudice to Article III-65, a European framework law of the Council of Ministers shall establish measures for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the internal market. The Council of Ministers shall act unanimously after consulting the European Parliament and the Economic and Social Committee.

***

In the Treaty establishing a Constitution for Europe, approved by 18 member states, the provisions on approximation (harmonisation) were located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 7 ‘Common provisions’.

The IGC 2004 lifted Article III-172 (the current Article 95 TEC) as the new ‘high road’ to the top of Section 7, and Article III-173 (the current Article 94 TEC) sank to become the ‘low road’ for areas requiring unanimity.

Consequently, the referral at the beginning changed. The ‘Council of Ministers’ became the ‘Council’ in the Constitutional Treaty, but otherwise the IGC 2004 took over the wording of the draft Constitution.

Article III-173 is found in OJ 16.12.2004 C 310/75:

Article III-173 Constitution

Without prejudice to Article III-172, a European framework law of the Council shall establish measures for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the internal market. The Council shall act unanimously after consulting the European Parliament and the Economic and Social Committee.

***

What has been said about Article 115 TFEU, with the shifted position, but substantially unchanged from the current Article 94 TEC?


United Kingdom

Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.3: Revised text of Part Three, Titles I to VI of the Treaty establishing the European Community (TEC): Internal Market and competition’ (Version 2, 23 October 2007) includes the current Title VI Common rules on competition, taxation and approximation of laws.

Peers indicated the changing numbering of Article 94 TEC, 95 TFEU (ToL), to be renumbered Article 115 TFEU in the consolidated version, and highlighted the changes, and he added the following comment (pages 30–31):

“The draft Reform Treaty attempts to clarify the relationship between Articles 94 and 95.”

The analysis 3.3 and other useful Statewatch analyses are available through:

http://www.statewatch.org/euconstitution.htm


***

The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 115 TFEU, Article 95 TFEU (ToL) in the original Lisbon Treaty (page 12):

“In substance the same as Article 94 TEC.”

The FCO comparative table is available at:

http://www.official-documents.gov.uk/document/cm73/7311/7311.asp

***

The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed the approximation of internal market laws on page 60 (under the heading ‘2. Taxation’).

The Research Paper commented briefly on the harmonisation of internal market laws, before moving on to tax harmonisation:

“Articles 94–97 (Constitution Articles III-172 – III-176) are on the approximation of internal market laws. The general aims are unchanged and the Council will adopt measures for the approximation of laws, regulations or administrative provisions of the Member States that directly affect the internal market. The out-dated term “common market” is removed and replaced with “internal market”.”

The Reasearch Paper then proceeded to discuss the approximation (harmonisation) of tax law and the British official position (pages 60–61):

“Harmonisation in the sphere of direct taxes under Article 94 TEC is much more limited than in that of indirect taxes. Although directives introduced under Article 94 TEC may be approved under the co-decision procedure, this does not apply to fiscal provisions. The TFEU, like the Constitution, maintains the requirement for unanimity in Article 95 on any fiscal measure introduced under this Treaty base. The wording of Articles 94 and 95(2) (Constitution Articles III-173 and III-172) is fundamentally unchanged.

The possibility that all taxation measures might be subject to unanimity [sic] at some point in the future has been a controversial issue for some time. The Government’s position on the issue has been stated many times. In June 2003 the then Paymaster General, Dawn Primarolo, said the British Government would “not accept any changes that move away from unanimity on tax matters. When the then Prime Minister, Tony Blair, made a statement to the House following agreement on the Constitution in June 2004, he underlined the point that “this treaty … keeps unanimity for the most important decisions … in particular for tax, social security, foreign policy, defence and decisions on the financing of the Union affecting the British budget contribution.” Tony Blair told the Liaison Committee on 18 June 2007 shortly before the June European Council which agreed the IGC Mandate: “we will not agree to anything that moves to qualified majority voting, something that can have a big say in our own tax and benefit system”.”

(I have deleted the footnotes, but they can be found in the original document.)

The Library Research Paper 07/86 is available at:

http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf

***

The House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008) is a valuable resource on the Treaty of Lisbon, but I found no reference to Article 115 TFEU (Article 94 TEC or Article 95 ToL).

The report is accessible at:

http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf


***

Sweden

The consultation paper ’Lissabonfördraget’ is still valuable as a description of the Lisbon Treaty amendments, and it is available at:

http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf

But my standard reference is currently the Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, published 29 May 2008 and sent to the Council on Legislation (Lagrådet) for an expert opinion. The draft deals with the EU’s internal policy areas in Chapter 23 ‘Unionens interna åtgärder’, and section 23.1 presents the internal market (Inre marknaden), on pages 175 to 181.

The Swedish government presents a short background paragraph on the harmonisation of laws in the internal market (page 176):

”Artiklarna 94–97 i EG-fördraget återger möjligheten att harmonisera lagstiftningen på den inre marknaden. Det finns en stor volym sekundärrätt med utgångspunkt i artikel 95 i EG-fördraget samt en omfattande praxis på området. Möjligheten till harmonisering av medlemsstaternas lagar och författningar är en förutsättning för den inre marknadens bibehållande och fortsatta funktion.”

The government later remarks on the essentially unchanged nature of most internal market provisions (e.g. page 176), but on the following page it adds a comment on the changing position of Articles 94 and 95, with the remark that the purpose is to clarify the relationship between the Articles and it mentions the words added at the beginning of Article 95 TFEU (ToL):

“Vad avser tillnärmning av lagstiftning, byter artiklarna 94 och 95 plats. Syftet med omnumreringen är att klargöra förhållandet mellan de båda artiklarna. I inledningen till artikel 95 i EUF-fördraget görs ett tillägg om att artikeln inte ska påverka tillämpningen av artikel 94 i EUF-fördraget.”

The draft bill ‘Lagrådsremiss – Lissabonfördraget’ can be downloaded through:

http://www.regeringen.se/sb/d/5676/a/106277

***

Finland

The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), is the most systematic analysis of the Lisbon Treaty I have encountered.

Under the heading Approximation of laws (Lainsäädännön lähentäminen), the bill offers a description of Article 95 TFEU (ToL), renumbered Article 115 TFEU. The government explains the subsidiary nature of Article 95 TFEU (ToL) in relation to Article 94. The added words reflect the current interpretation of the relationship between the Articles (page 209):

”95 artiklassa (uusi 115 artikla) määrätään neuvoston mahdollisuudesta antaa komission ehdotuksesta yksimielisesti Euroopan parlamenttia kuultuaan direktiivejä sisämarkkinoiden vaatimaksi jäsenvaltioiden lainsäädäntöjen yhdenmukaistamiseksi. Artikla vastaa perustuslakisopimuksen III-173 artiklaa ja korvaa SEY 94 artiklan seuraavin muutoksin. SEUT 95 artiklassa on uusi määräys, jonka mukaan SEUT 95 artikla ei rajoita SEUT 94 artiklan soveltamista. Tämä tarkoittaa, että SEUT 94 artikla on ensisijainen SEUT 95 artiklaan nähden. Vastaavaa määräystä ei sisälly nykyiseen SEY 94 artiklaan, mutta määräys vastaa nykyistä oikeustilaa. Käytännössä SEY 95 artiklaa ja SEY 94 artiklaa on tulkittu siten, että SEY 95 artikla on ensisijainen SEY 94 artiklaan nähden.”

The Finnish ratification bill is available at:

http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf


The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), makes the same remarks under ’Tillnärmning av lagstiftning’ on Article 95 TFEU (ToL), the future Article 115 TFEU, on pages 211–212:

”I artikel 95 (blivande artikel 115) föreskrivs om rådets möjlighet att på förslag av kommissionen enhälligt och efter att ha hört Europaparlamentet utfärda direktiv om tillnärmning av sådan lagstiftning i medlemsstaterna som krävs för den inre marknaden. Artikeln motsvarar artikel III-173 i det konstitutionella fördraget och ersätter artikel 94 i EG-fördraget med följande ändringar. I artikel 95 i EUF-fördraget ingår en ny bestämmelse enligt vilken artikel 95 i EUFfördraget inte begränsar tillämpningen av artikel 94 i EUF-fördraget. Detta betyder att artikel 94 i EUF-fördraget är primär i förhållande till artikel 95 i EUF-fördraget. Någon motsvarande bestämmelse ingår inte i nuvarande artikel 94 i EG-fördraget, men bestämmelsen motsvarar rådande rättsläge. I praktiken har artiklarna 95 och 94 i EG fördraget tolkats så att artikel 95 är primär i förhållande till artikel 94.”

The ratification bill in Swedish can be accessed at:

http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf

***

Both Article 114 TFEU and Article 115 TFEU are general in the sense that they provide legal bases for harmonising measures, when the treaties have not catered for special grounds for internal market legislation.

In the absence of a special base, Article 114 TFEU applies, with the ordinary legislative procedure, for internal market objectives.

When fiscal (tax) provisions, those relating to the free movement of persons and those relating to the rights and interests of employed persons, expressly excluded by Article 114(2) TFEU, directly affect the establishment or functioning of the internal market, Article 115 TFEU enters the picture. These sensitive areas are subject to unanimous decision making by the Council, and the European Parliament is only consulted.




Ralf Grahn

EU TFEU: Approximation of laws

Article 26 of the Treaty on the Functioning of the European Union (TFEU) sets out the aim to establish and to ensure the functioning of the internal market. The approximation or harmonisation of member states’ laws is one of the methods used to achieve this aim.

We look at internal market approximation of laws in the light of the EU Treaty of Lisbon, by comparing Article 114 TFEU with the current provision and the previous treaty reform stages.


***

Article 114 of the Treaty on the Functioning of the European Union (TFEU) is found in the consolidated version of the Treaty on European Union and the Treaty on the Functioning of the European Union, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/94–95:

Part Three Union policies and internal actions

Title VII Common rules on competition, taxation and approximation of laws

Chapter 3 Approximation of laws

Article 114 TFEU
(ex Article 95 TEC)

1. Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Article 26. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.

2. Paragraph 1 shall not apply to fiscal provisions, to those relating to the free movement of persons nor to those relating to the rights and interests of employed persons.

3. The Commission, in its proposals envisaged in paragraph 1 concerning health, safety, environmental protection and consumer protection, will take as a base a high level of protection, taking account in particular of any new development based on scientific facts. Within their respective powers, the European Parliament and the Council will also seek to achieve this objective.

4. If, after the adoption of a harmonisation measure by the European Parliament and the Council, by the Council or by the Commission, a Member State deems it necessary to maintain national provisions on grounds of major needs referred to in Article 36, or relating to the protection of the environment or the working environment, it shall notify the Commission of these provisions as well as the grounds for maintaining them.

5. Moreover, without prejudice to paragraph 4, if, after the adoption of a harmonisation measure by the European Parliament and the Council, by the Council or by the Commission, a Member State deems it necessary to introduce national provisions based on new scientific evidence relating to the protection of the environment or the working environment on grounds of a problem specific to that Member State arising after the adoption of the harmonisation measure, it shall notify the Commission of the envisaged provisions as well as the grounds for introducing them.

6. The Commission shall, within six months of the notifications as referred to in paragraphs 4 and 5, approve or reject the national provisions involved after having verified whether or not they are a means of arbitrary discrimination or a disguised restriction on trade between Member States and whether or not they shall constitute an obstacle to the functioning of the internal market.

In the absence of a decision by the Commission within this period the national provisions referred to in paragraphs 4 and 5 shall be deemed to have been approved.

When justified by the complexity of the matter and in the absence of danger for human health, the Commission may notify the Member State concerned that the period referred to in this paragraph may be extended for a further period of up to six months.

7. When, pursuant to paragraph 6, a Member State is authorised to maintain or introduce national provisions derogating from a harmonisation measure, the Commission shall immediately examine whether to propose an adaptation to that measure.

8. When a Member State raises a specific problem on public health in a field which has been the subject of prior harmonisation measures, it shall bring it to the attention of the Commission which shall immediately examine whether to propose appropriate measures to the Council.

9. By way of derogation from the procedure laid down in Articles 258 and 259, the Commission and any Member State may bring the matter directly before the Court of Justice of the European Union if it considers that another Member State is making improper use of the powers provided for in this Article.

10. The harmonisation measures referred to above shall, in appropriate cases, include a safeguard clause authorising the Member States to take, for one or more of the non-economic reasons referred to in Article 36, provisional measures subject to a Union control procedure.

***

In Article 2, point 80 and point 81 of the Treaty of Lisbon (ToL) the IGC 2007 renumbered and amended Article 95 of the Treaty establishing the European Community (TEC). Here are the specific amendments (OJ 17.12.2007 C 306/69):

APPROXIMATION OF LAWS

80) The order of Articles 94 and 95 shall be reversed. Article 94 shall be renumbered 95 and Article 95 shall be renumbered 94.

81) Article 95, renumbered 94, shall be amended as follows:

(a) at the beginning of paragraph 1, the words ‘By way of derogation from Article 94 and’ shall be deleted;

(b) at the beginning of paragraph 4, the words ‘If, after the adoption by the Council or by the Commission of a harmonisation measure,’ shall be replaced by ‘If, after the adoption of a harmonisation measure by the European Parliament and the Council, by the Council or by the Commission,’;

(c) at the beginning of paragraph 5, the words ‘Moreover, without prejudice to paragraph 4, if, after the adoption by the Council or by the Commission of a harmonisation measure,’ shall be replaced by ‘Moreover, without prejudice to paragraph 4, if, after the adoption of a harmonisation measure by the European Parliament and the Council, by the Council or by the Commission,’;

d) in paragraph 10, the words ‘Community control procedure’ shall be replaced by ‘Union
control procedure’.

***

The TFEU table of equivalences confirms that Article 95 TEC first became Article 94 TFEU (ToL) in the original Treaty of Lisbon, and it tells us that it was later renumbered Article 114 TFEU in the consolidated version (OJ 17.12.2007 C 306/211).

***

The current Article 95 of the Treaty establishing the European Community (TEC) is found under Title VI ‘Common rules on competition, taxation and approximation of laws’, Chapter 3 ‘Approximation of laws’, in the latest consolidated version of the treaties in force (OJ 29.12.2006 C 321 E/79–81).

The main difference between the proposed TFEU Article 114 and the current Article 95 TEC is that the normal or ordinary procedures for approximation (harmonisation) of laws have been lifted on top, to stand at the beginning of Chapter 3. The sensitive areas, mentioned in the second paragraph, requiring unanimity, are dealt with in the following provision, Article 115 TFEU, of the amending treaty.

Although Article 114 is long-winded, the new order feels like an improvement.

The other differences, specific and horizontal, are technical or terminological. In addition, the monster size of the Article made me refrain from reproducing it here for comparison, but the interested reader can look up the current Article 95 TEC in the consolidated version.

***

We have seen that 95 TEC in force and 114 TFEU are the same, in substance, with minor differences in wording.

Still, for the sake of systematic comparison, we look at the arcana of the Article during the intervening treaty reform stages.

First, we turn to the European Convention, the closest thing to a constituent assembly EU citizens have had. The Article in question is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 7 ‘Approximation of legislation’.

Article III-65 of the draft Treaty establishing a Constitution for Europe was still the second Article of Section 7. The terminology of the draft Constitution differed from the TEC, the draft Article III-65 naturally referred to Articles differently numbered, and it was sprinkled with small changes in wording. But the substance remained unchanged. See OJ 18.7.2003 C 169/38–39.

***

In the Treaty establishing a Constitution for Europe the provisions on approximation (harmonisation) were located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 7 ‘Common provisions’.

The IGC 2004 lifted Article III-172 to the top of Section 7, renumbered the referrals to other provisions, and made some minimal adjustments to the draft text.

In the third paragraph the IGC 2004 showed concern for EU citizens by strengthening the wording on a high level of protection. ‘Will take’ and ‘will also seek’ became ‘shall take’ and ‘shall also seek’, but this potentially tougher standard and only substantial change lapsed when the Lisbon Treaty let the current TEC wording stand.

In the fourth and the fifth paragraph the IGC 2004 wanted to clarify the wording with regard to the legal instruments, so they were expressed with a few words added: ‘a European law or framework law or by means of a European regulation of the Commission’, but since the Treaty of Lisbon rejected the more developed terminology concerning legal acts as part of the ‘constitutional concept’, the IGC 2007 used its own, adapted wording.

Article III-172 is found in OJ 16.12.2004 C 310/73–75.

***

What has been said about Article 114 TFEU, with shifted position, but the wording practically unchanged from the current Article 95 TEC?


United Kingdom

Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.3: Revised text of Part Three, Titles I to VI of the Treaty establishing the European Community (TEC): Internal Market and competition’ (Version 2, 23 October 2007) includes the current Title VI Common rules on competition, taxation and approximation of laws.

Peers indicated the changing numbering of Article 95 TEC, 94 TFEU (ToL), to be renumbered Article 114 TFEU in the consolidated version, and highlighted the changes, but he added no comment (pages 29–30).

The analysis 3.3 and other useful Statewatch analyses are available through:

http://www.statewatch.org/euconstitution.htm


***

The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 114 TFEU, Article 94 TFEU (ToL) in the original Lisbon Treaty (page 12):

“In substance the same as Article 95 TEC.”

The FCO comparative table is available at:

http://www.official-documents.gov.uk/document/cm73/7311/7311.asp

***

The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed the approximation of internal market laws on page 60 (under the heading ‘2. Taxation’).

The Research Paper commented briefly on the harmonisation of internal market laws, before moving on to tax harmonisation:

“Articles 94–97 (Constitution Articles III-172 – III-176) are on the approximation of internal market laws. The general aims are unchanged and the Council will adopt measures for the approximation of laws, regulations or administrative provisions of the Member States that directly affect the internal market. The out-dated term “common market” is removed and replaced with “internal market”.”

The Library Research Paper 07/86 is available at:

http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf

***

The House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008) is a valuable resource on the Treaty of Lisbon, but I found no reference to Article 114 TFEU (Article 95 TEC or Article 94 ToL).

The report is accessible at:

http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf


***

Sweden

The consultation paper ’Lissabonfördraget’ is still valuable as a description of the Lisbon Treaty amendments, and it is available at:

http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf

The Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, was published 29 May 2008 and sent to the Council on Legislation (Lagrådet) for an expert opinion. The draft deals with the EU’s internal policy areas in Chapter 23 ‘Unionens interna åtgärder’, and section 23.1 presents the internal market (Inre marknaden), on pages 175 to 181.

The Swedish government presents a short background paragraph on the harmonisation of laws in the internal market (page 176):

”Artiklarna 94–97 i EG-fördraget återger möjligheten att harmonisera lagstiftningen på den inre marknaden. Det finns en stor volym sekundärrätt med utgångspunkt i artikel 95 i EG-fördraget samt en omfattande praxis på området. Möjligheten till harmonisering av medlemsstaternas lagar och författningar är en förutsättning för den inre marknadens bibehållande och fortsatta funktion.”

The government later remarks on the essentially unchanged nature of most internal market provisions.


The draft bill ‘Lagrådsremiss – Lissabonfördraget’ can be downloaded through:

http://www.regeringen.se/sb/d/5676/a/106277

***

Finland

The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), under the heading Approximation of laws (Lainsäädännön lähentäminen), offers a brief description of Chapter 3 and of Article 94 TFEU (ToL), renumbered Article 114 TFEU (page 208):

”Luku sisältää määräykset unionin toimivallasta sisämarkkinoita toteutettaessa sekä yhdenmukaistamistoimenpiteisiin sovellettavasta päätöksentekomenettelystä. Luvussa määrätään myös jäsenvaltioiden toimivallasta yhdenmukaistamistoimenpiteiden toteuttamisen jälkeen. Määräykset vastaavat pääpiirteissään nykyisen EY-sopimuksen kolmannen osan VI osaston 3 luvun määräyksiä. Määräyksiin on tehty eräitä muutoksia päätöksentekomenettelyiden osalta sekä eräitä
sanamuotoja koskevia ja teknisiä tarkistuksia.

94 artiklassa (uusi 114 artikla) määrätään sisämarkkinoiden toteuttamista ja toimintaa koskevista toimenpiteistä jäsenvaltioiden lainsäädäntöjen yhdenmukaistamiseksi. Artikla vastaa säädösinstrumenttien yksilöintiä lukuun ottamatta perustuslakisopimuksen III-172 artiklaa ja korvaa SEY 95 artiklan seuraavasti muutettuna. SEUT 94 artiklan 4 ja 5 kohtaan lisätään viittaukset Euroopan parlamenttiin yhtenä lainsäätäjänä.”

The Finnish ratification bill is available at:

http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf


The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), makes the same remarks under ’Tillnärmning av lagstiftning’ on Chapter 3 and Article 94 TFEU (ToL), the future Article 114 TFEU, on page 211:

”Kapitlet innehåller bestämmelser om unionens befogenheter när den inre marknaden upprättas samt om det beslutsförfarande som ska tillämpas på harmoniseringsåtgärder. I kapitlet anges också medlemsstaternas befogenheter efter vidtagandet av harmoniseringsåtgärder. Bestämmelserna motsvarar i stora drag avdelning VI kapitel 3 i det nuvarande EG-fördragets tredje del. I bestämmelserna har företagits vissa ändringar i fråga om beslutsförfarandena samt vissa tekniska ändringar som gäller ordalydelser.

I artikel 94 (blivande artikel 114) bestäms om åtgärder för upprättande av den inre marknaden och för dess funktion för att harmonisera lagstiftningen i medlemsstaterna. Artikeln motsvarar med undantag av individualiseringen av rättsaktsinstrumenten artikel III-172 i det konstitutionella fördraget och ersätter artikel 95 i EG-fördraget med följande ändringar. Till artikel 94.4 och 94.5 i EUF-fördraget fogas hänvisningar till Europaparlamentet som en lagstiftare.”

The ratification bill in Swedish can be accessed at:

http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf

***

Before I leave the reader to study the substance of Article 114 TFEU, to say nothing about the substantive harmonisation measures, I would like to point out the scope of the Article.

First, the objectives mentioned at the beginning of this article merit a glance at Article 26 TFEU (OJ 9.5.2008 C 115/59, the consolidated version):

TITLE I
THE INTERNAL MARKET

Article 26 TFEU
(ex Article 14 TEC)

1. The Union shall adopt measures with the aim of establishing or ensuring the functioning of the internal market, in accordance with the relevant provisions of the Treaties.

2. The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties.

3. The Council, on a proposal from the Commission, shall determine the guidelines and conditions necessary to ensure balanced progress in all the sectors concerned.

***

The second important feature is the delimitation of the scope, in paragraph 2. Fiscal (tax) provisions, those relating to the free movement of persons and those relating to the rights and interests of employed persons are expressly excluded.



Ralf Grahn

EU TFEU: Tax harmonisation III

On the face of it, this could look like a road less travelled, for legal historians mainly, but the Irish referendum debate has unearthed confusions all of its own.

What did the European Convention propose with regard to harmonising taxes, and what happened to these proposals during the intergovernmental conference (IGC 2004), which led to the Treaty establishing a Constitution for Europe?

This third question and post may shed some additional light on the tensions and the exertions in the field of European taxation.


***

The European Convention, the closest thing to a constituent assembly EU citizens have had, located the provisions on tax legislation in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 6 ‘Fiscal provisions’.

There are two Articles, III-62 and III-63, of relevance in the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/38):

Article III-62 Draft Constitution

1. A European law or framework law of the Council of Ministers shall lay down measures for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation provided that such harmonisation is necessary for the functioning of the internal market and to avoid distortion of competition. The Council of Ministers shall act unanimously after consulting the European Parliament and the Economic and Social Committee.

2. Where the Council of Ministers, acting unanimously on a proposal from the Commission, finds that the measures referred to in paragraph 1 relate to administrative cooperation or to combating tax fraud and tax evasion, it shall act, notwithstanding paragraph 1, by a qualified majority when adopting the European law or framework law adopting these measures.


Article III-63 Draft Constitution

Where the Council of Ministers, acting unanimously on a proposal from the Commission, finds that measures on company taxation relate to administrative cooperation or combating tax fraud and tax evasion, it shall adopt, by a qualified majority, a European law or framework law laying down these measures, provided that they are necessary for the functioning of the internal market and to avoid distortion of competition.

That law or framework law shall be adopted after consultation of the European Parliament and the Economic and Social Committee.

***

Two contributions illustrate the forces at work at the European Convention, which changed in tenor from a constituent assembly of parliamentarians and government representatives into a preliminary intergovernmental conference during the later stages.

The French-German contribution on Economic Governance (CONV 470/02) included a section ‘3) Finalising the internal market by achieving genuine convergence of taxation’. France and Germany did not propose the wholesale scrapping of veto powers, but they presented a selective, although fairly long, list of problem areas (page 4).

They reiterated their common position on a broader use of a qualified majority vote for the tax issues directly related to the internal market, such as for the elimination of direct obstacles to the free movement of goods, persons, services or capital and, in particular, the prevention of situations involving discrimination, double taxation or double remission, for certain provisions for the harmonisation of turnover taxes and excise duties and cooperation between tax authorities, for combating fraud and tax evasion and for elimination of harmful tax competition.

Joschka Fischer and Dominique de Villepin added that it seems necessary to finalize the internal market, i.e. to limit existing divergences between taxation in the member states and to eliminate harmful tax regimes. In addition, the concluded, the most pragmatic and the most efficient medium-term approach to the creation of a single Europe is to fix a policy convergence objective focusing efforts on a number of key tax issues.

***

Through Peter Hain, Lena Hjelm-Wallen and fourteen others, the opposing view was tabled. The contribution (CONV 782/03) recognised that there could be a case for appropriate and effective European Union action in the area of administrative cooperation and in the area of tax fraud. However, measures in these areas must be decided by unanimity (page 1).

The opposing group (of member states) was ready to accept the first paragraph of the then Article III.59 of the Praesidium’s proposal, but suggested the deletion of paragraph 2 and of Article III.60.

***

The compromise or consensus view of the European Convention (above), in essence, added the words ‘and to avoid distortion of competition’ to the grounds for legislation in Article 93 TEC, in what became Article III-62(1) of the draft Constitution concerning indirect taxation.

The new Article III-62(2) incorporated something of the French and German proposal in a novel two stage procedure. First, the Council would rule by unanimity that a legislative proposal related to administrative cooperation or to combating tax fraud and tax evasion. After that, the Council could act, notwithstanding paragraph 1, by a qualified majority when adopting the European law or framework law adopting these measures.

Certain aspects of company taxation were addressed in the following Article. The new Article III-63 proposed a similar procedure for measures on company taxation relating to administrative cooperation or combating tax fraud and tax evasion. The first finding had to be unanimous, but then the measures could be decided by qualified majority, provided that they are necessary for the functioning of the internal market and to avoid distortion of competition.

***

Étienne de Poncins commented on the forces for QMV and the meagre results of the European Convention in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003 ; pages 286–287):

« Commentaire : l’article 62 a été longuement débattu par la Convention. Une large majorité a plaidé pour l’application de la majorité à l’ensemble de l’article III-62. La Commission a notamment fait valoir que l’absence de règles minimales conduisait à une concurrence déloyale entre États membres en matière fiscale. De nombreux Conventionnels ont rappelé que l’unanimité conduisait à des accords minimaux à l’issue de débats et de procédures particulièrement longs se poursuivant sur de nombreuses années comme pour les directives TVA.

Aucune avancé n’a cependant été possible, les Britanniques, les Suédois et les Irlandais notamment ayant fait du statu quo un point majeur de leur position. Les tentatives et propositions de compromis pour élargir le champ d’application de la majorité qualifiée ont toutes été repoussées. À noter enfin au paragraphe 2 les mots « évasion fiscale illégale » et la procédure suivie, l’appréciation que la matière couverte entre dans le champ visé au paragraphe 2 se faisant à l’unanimité. »

***

Here are a few views on the results of the European Convention, ahead of the intergovernmental confrence (IGC 2003/2004), which led to the Constitutional Treaty.

United Kingdom

Prime Minister Tony Blair set out the UK position on the draft Constitution in the foreword to ‘A Constitutional Treaty for the EU – The British Approach to the European Union Intergovernmental Confrence 2003’ (Command Paper 5934, September), after welcoming the result (page 3):

“But the text is not perfect. Like many other Member States, there are some points in the Convention text which we will want to examine in more detail. And we could only accept a final text that made it clear that issues like tax, defence and foreign policy remain the province of the nation State.”

Point 66 on page 32 presented the view of the United Kingdom government on unanimity:

“66. But we will insist that unanimity remain for Treaty change; and in other areas of vital national interest such as tax, social security, defence, key areas of criminal procedural law and the system of own resources (the EU’s revenue-raising mechanism). Unanimity must remain the general rule for CFSP, as proposed in the final Convention text.”

***

Sweden

The government of Sweden stated that the Convention’s proposal is a good basis for the intergovernmental conference. In ‘Regeringens skrivelse 2003/04:13 Europeiska konventet om EU:s framtid’ (2 October 2003) the Swedish government added as an important point of departure that future decisions concerning taxes, defence policy and large areas of foreign policy are to be taken unanimously (page 7):

”En viktig utgångspunkt är att enhällighet i beslutsfattandet i rådet även i framtiden bör gälla beslut som rör skatter, försvarspolitik och stora delar av utrikespolitiken.”

The government later repeated the standpoint on levels of taxation, although it noted that the national tax authority (Riksskatteverket) favoured some flexibility concerning unanimity.

***

Finland

In ‘Valtioneuvoston selonteko eduskunnalle konventin tuloksista ja valmistautumisesta hallitusten väliseen konferenssiin’ (VNS 2/2003 vp), the Finnish government stated that the national participants in the Convention had proposed a move to qualified majority voting on issues regarding environment and energy taxes. The government noted that a substantial number of the delegates would have been ready to progress towards QMV in a limited way, but some member states had been totally opposed. The government found the end result acceptable (page 67):

” Sisämarkkinaluvussa on myös veroja ja maksuja koskeva jakso. Verotuksen osalta keskeisin kysymys konventissa oli siirtyminen määräenemmistöpäätöksentekoon. Suuri osa konventin jäsenistä olisi ollut valmis etenemään tässä rajatusti, esimerkiksi ympäristöverotuksen alalla, mutta muutamille jäsenvaltioille yksimielisyyden säilyttäminen verotuksessa oli täysin ehdoton vaatimus. Määräenemmistöpäätöksentekoa voidaan soveltaa ainoastaan hyväksyttäessä eurooppalakeja tai -puitelakeja jotka koskevat veronkiertoa ja veropetoksia koskevia hallinnollisia to imia. Suomen edustajat konventissa esittivät, että ympäristö- ja energiaverotuksen alalla tulisi siirtyä määräenemmistöpäätöksentekoon ministerineuvostossa.

Valtioneuvosto voi hyväksyä ehdotetut muutokset”.

***

IGC 2004

The intergovernmental conference 2003 failed, so it is more natural to speak about the IGC 2004. The Treaty establishing a Constitution for Europe was negotiated under Irish stewardship.

In essence, the Constitutional Treaty retained Article III-62(1) of the draft Constitution, but the second paragraph was deleted. Article III-171 closed the needle’s eye to QWV regarding TVA and other indirect taxes.

The IGC 2004 deleted Article III-63 on limited recourse to QWV regarding certain aspects of company tax, where the Council of Ministers, acting unanimously on a proposal from the Commission, could have found that measures on company taxation related to administrative cooperation or combating tax fraud and tax evasion, and it then could have adopted, by a qualified majority, a European law or framework law laying down these measures, provided that they were necessary for the functioning of the internal market and to avoid distortion of competition.

This left Article III-173 to cater to the needs of approximation (harmonisation) of fiscal provisions and rules relating to the free movement of persons or to those relating to the rights and interests of employed persons. These measures, including direct taxation such as company taxes, were subject to unanimous decisions by the Council.

Article III-171 Constitution

A European law or framework law of the Council shall establish measures for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation provided that such harmonisation is necessary to ensure the establishment and the functioning of the internal market and to avoid distortion of competition. The Council shall act unanimously after consulting the European Parliament and the Economic and Social Committee.

Article III-173 Constitution

Without prejudice to Article III-172, a European framework law of the Council shall establish measures for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the internal market. The Council shall act unanimously after consulting the European Parliament and the Economic and Social Committee.

***

Almost a clean sweep for the no or unanimity camp, one could say. The preservation of the words ‘and to avoid distortion of competition’, in what was to become Article 113 TFEU (ex Article 93 TEC) on indirect taxes, may look like a poor consolation prize for the supporters of change.

Perhaps this background picture goes some way towards putting the Coughlan furore into perspective.

Next time, I am going to take ‘legally accurate’ with fourscore and seven pinches of salt, if I come across opinions from that quarter.


Ralf Grahn

EU TFEU: Tax harmonisation II

Is Article 113 of the Treaty on the Functioning of the European Union (TFEU) concerned only with indirect taxation, not direct taxation like company tax or income tax?

Are the words added by the EU Treaty of Lisbon (ToL) – and to avoid distortion of competition – a fairly innocuous clarification or even an additional requirement for new tax legislation, or are the sappers at work, undermining the castle walls?

What did the European Convention propose with regard to harmonising taxes, and what happened to these proposals during the intergovernmental conference (IGC 2004), which led to the Treaty establishing a Constitution for Europe?

The first post, EU TFEU: Tax harmonisation I, mapped the road of the provisions on EU tax legislation from Article 93 on the Treaty establishing the European Community (TEC), through the draft Constitution and the Constitutional Treaty, to the Treaty of Lisbon and the consolidated version of the amended EU treaties.

We checked the Lisbon Treaty amendments against our usual sample of the best general comments on the new treaty. The selected documents gave little cause to become wrought up, but something seems to have been afoot, so there seemed to be cause to double-check.

The fate of the Convention’s proposals looked intriguing, but this may require a post of its own.

This left us with the first two questions above. Let us start on the first one.

***

Direct or indirect taxation?

My preliminary reading of Article 113 TFEU (Article 93 TEC) led me to believe that its scope was restricted to various forms of indirect taxes. That was my understanding of ‘turnover taxes, excise duties and other forms of indirect taxation’.

This was substantiated by the UK House of Commons Library Research Paper 07/86, which presented a number of examples of such indirect taxes. This was further corroborated by the draft ratification bill of the Swedish government ‘Lagrådsremiss – Lissabonfördraget’, which mentioned turnover taxes (VAT type taxes), selective purchase taxes and other indirect taxes or charges in the internal market.

The Finnish government’s ratification bill spoke of the harmonisation of indirect taxation, but had I not concluded in my 6 June 2008 post ‘EU TFEU: Prohibited remissions, repayments and countervailing charges’ that the drafters seemed to have confused direct and indirect taxes (the first direct mistake I have encountered)? Surely an additional reason to check again, in spite of the evidence at hand? So I did reread my sources.

***

In addition, flying in the face of these sober assessments, assertions to the contrary abound. Here are a few from Ireland, mainly emanating from or echoing Anthony Coughlan, and branded ‘legally accurate’:

Free Europe “Harmonizing Company taxes in the EU – The Lisbon Treaty amendment to Article 113: a significant and virtually ignored amendment affecting Ireland’s company tax”

The National Platform EU Research & Information Centre “EU Misinformation: Barroso, Bonde and Ireland’s company taxes”

The National Platform EU Research & Information Centre “Lisbon Treaty: Mandatory Tax Harmonisation”

Bruce Arnold “Yes vote would open way for Europe to outlaw our low tax” (Independent.ie)

Irish Issues . org “Treaty amendment on EU harmonized taxes”

Citizens’ European Movement Network “Tax & Investment”

***

These ‘legally accurate’ allegations, variations on the same theme, seem to require a logic of its own kind to concoct (and to follow).

Naturally, it is easy to assert that few EU leaders have been inventive enough to trumpet the consequences for company taxes (direct taxes) of an Article and an amendment concerning VAT and other indirect taxes. Because the Commission or the responsible national leaders have not discussed pears in the context of apples, it has been easy to brand this lack of communication as a conspiracy, misleading the public, not to mention the worst allegations.

Suddenly, an Article on harmonisation of indirect taxation would open the doors to force Ireland to scrap its low corporate tax (direct taxation).

This is nonsense.

***

What does the amendment mean?

The amendment – ‘and to avoid distortion of competition’ – was described by the Swedish government as a clarification and by the Finnish government as an additional requirement.

Neither sheds more light on the meaning of the added words, and I remain in some doubt about how they should be interpreted. On the face of it, joining ‘necessary to ensure’ with an additional ‘AND to avoid’ reads like an additional requirement, in other words one hurdle more.

If the drafters wanted to open up an alternative base for legislation, they should have said ‘OR to avoid distortion of competition’).

But the added words appear in the context of ‘the establishment and the functioning of the internal market’, of which undistorted competition is a fundamental aspect.

Therefore, it may be reasonable to understand the added words as an effort to underline one aspect of a functioning internal market, thereby giving it more visibility and some added weight.

In other words, this aspect may be brought to light when the Commission prepares proposals in the area of VAT, excise duties and other indirect taxes, and the Court of Justice may be called upon to interpret the provision.

But it has nothing to do with company tax or other direct taxes.

***

The texts of the detractors make for confusing reading. Shortly, the ‘truths’ first trumpeted are abandoned in favour of a new line. Even if the Article 113 TFEU is restricted to indirect taxation and the unanimity requirement is preserved, the European Commission and the Court of Justice of the European Union could possibly somehow circumvent the whole provision by applying the rules on undistorted competition in the internal market in order to erode Ireland’s low rate of corporate tax. The chain between the amendment and the allegations is broken, because all of a sudden a new set of rules is called into play.

How could the Court of Justice enter into this? Does Article 113 TFEU bear any of the hallmarks of a directly applicable treaty provision? Is the Article clear, precise and unconditional, in order to have direct effect?

The answer is no. It offers a base for secondary legislation on VAT and other indirect taxes, requiring unanimous decisions by the Council.

With or without the Lisbon Treaty, the Court of Justice will have to assess and to demarcate areas of competence described in general terms, and to find the predominant features in a specific case. Situations leading to future court cases are hard to predict, and the outcomes are going to be based on the facts of the individual cases.

***

An outside observer would expect the representative business interests of a member state threatened by erosion of its favourable company tax to be up in arms at the least hint. What does IBEC (Irish Business and Employers Confederation) say about the Lisbon Treaty?

In short, Irish business supports the Lisbon Treaty, vote yes. All EU member states remain free to determine their own policies regarding taxation and foreign direct investment. No change can be made in the area of taxation without the approval of all member states, including Ireland.

***

For reasonable people – but only for them – this should put the allegations concerning Article 113 TFEU to rest.

***

Direct taxation

Back to the difference between indirect and direct taxation. There is no explicit treaty provision on the harmonisation of legislation on direct taxes, but the current Article 94 TEC allows unanimous directives for the approximation (harmonisation) of laws, regulations and administrative practices which directly affect the establishment or functioning of the common market. With cosmetic change, this will become Article 115 TFEU, and it will continue to be the legal base for harmonising direct taxes.

Why were the allegations mentioned above based on the wrong Article?

***

Pressures

As far as I understand, the position of the member states, including Ireland, in matters of EU harmonisation of indirect taxes does not change at all or only marginally as a result of the Treaty of Lisbon.

There has been and will continue to be political pressure towards elimination of tax obstacles in the internal market and against harmful tax competition. The European Commission has tried to convince the member states to move from unanimity to qualified majority voting, at least in some fiscal matters, but it has failed to move them.

The Commission has presented reasons for a single consolidated tax base for companies with EU activities, and it may dream of future harmonised company tax rates, but very little will probably happen as long as the unanimity rule stands.

Critical voices, sometimes even strident ones, from some member states have shown the existing tensions between countries with different levels of taxes for companies and capital. Member states with high taxes tend to see low rates as unfair competition.

Harmonising taxes, especially direct taxes, has been a frustrating field of endeavour for the Commission. Little progress has been possible, but the Commission has been able to investigate and to define tax arrangements seen to be unfair or distorting. Here is an opportunity for those who want to dig deeper, preferably with a cool head.

***

The history of European integration shows how decisive the shift from unanimity rule to qualified majority voting has been in order to achieve results. To name just one example, without the Single European Act there would still be mainly the idea of a common market, not the reality of a working internal market, in spite of its shortcomings.

The general European interest would be better served by fewer areas hampered by veto powers, but the reality is that our common mansion continues to be a house of cards in the fields where unanimity rules, and the deepening of European integration is a long term project.

***

What did the European Convention propose with regard to harmonising taxes, and what happened to these proposals during the intergovernmental conference (IGC 2004), which led to the Treaty establishing a Constitution for Europe?

The third question and post may shed some additional light on the tensions and the exertions in the field of European taxation.


Ralf Grahn

EU TFEU: Cross-border crime

The EU Treaty of Lisbon clarifies the powers to establish minimum rules concerning the definition of criminal offences and sanctions in the areas of particularly serious crime with a cross-border dimension. Qualified majority voting in the Council and co-legislation by the European Parliament make for more effective, democratic and transparent law-making.

There is an emergency brake for laggards, and enhanced cooperation for member states willing to move forward.

Here are the ‘nuts and bolts’ of the drafting history of Article 83 TFEU, and some further reading on the substantive contents of the new provision.


***

Article 83 of the Treaty on the Functioning of the European Union (TFEU) deals with establishing minimum rules concerning criminal offences and sanctions for serious crime with cross-border dimensions. The Article is presented as it stands after the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL), then renumbered and provisionally consolidated by the Council of the European Union (document 6655/08; page 105–106), with the location of the provision added from the table of equivalences (page 460 to 463):

Part Three ‘Policies and internal actions of the Union’

Title V TFEU ‘Area of freedom, security and justice’

Chapter 4 ‘Judicial cooperation in criminal matters’

Article 83
(ex Article 31 TEU)

1. The European Parliament and the Council may, by means of directives adopted in accordance with the ordinary legislative procedure, establish minimum rules concerning the definition of criminal offences and sanctions in the areas of particularly serious crime with a cross-border dimension resulting from the nature or impact of such offences or from a special need to combat them on a common basis.

These areas of crime are the following: terrorism, trafficking in human beings and sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organised crime.

On the basis of developments in crime, the Council may adopt a decision identifying other areas of crime that meet the criteria specified in this paragraph. It shall act unanimously after obtaining the consent of the European Parliament.

2. If the approximation of criminal laws and regulations of the Member States proves essential to ensure the effective implementation of a Union policy in an area which has been subject to harmonisation measures, directives may establish minimum rules with regard to the definition of criminal offences and sanctions in the area concerned.

Such directives shall be adopted by the same ordinary or special legislative procedure as was followed for the adoption of the harmonisation measures in question, without prejudice to Article 76.

3. Where a member of the Council considers that a draft directive as referred to in paragraph 1 or 2 would affect fundamental aspects of its criminal justice system, it may request that the draft directive be referred to the European Council. In that case, the ordinary legislative procedure shall be suspended. After discussion, and in case of a consensus, the European Council shall, within four months of this suspension, refer the draft back to the Council, which shall terminate the suspension of the ordinary legislative procedure.

Within the same timeframe, in case of disagreement, and if at least nine Member States wish to establish enhanced cooperation on the basis of the draft directive concerned, they shall notify the European Parliament, the Council and the Commission accordingly. In such a case, the authorisation to proceed with enhanced cooperation referred to in Article 20(2) of the Treaty on European Union and Article 329(1) of this Treaty shall be deemed to be granted and the provisions on enhanced cooperation shall apply.

***

In Article 2, point 67, of the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) stated (OJ 17.12.2007 C 306/62):

“67) Article 66 shall be replaced by Article 61 G, as set out in point 64 above, and Articles 67 to 69 shall be repealed. The following Chapter 4 and Articles 69 A to 69 E shall be inserted. Articles 69 A, 69 B and 69 D shall replace the current Article 31 of the Treaty on European Union, as set out above in point 51 of Article 1 of this Treaty: …”

It then went on to present the agreed wording (as above, except the referrals later renumbered) of Article 69b TFEU (ToL), which became Article 83 TFEU after renumbering in the consolidated version of the treaty. Cf. TFEU table of equivalences, OJ 17.12.2007 C 306/210.

One minor difference was noted between the two versions of the second paragraph. In the ToL version there was only one paragraph 2 (OJ 17.12.2007 C 306/64), but in the Council’s consolidated version the second sentence ‘Such directives …’ had become a second subparagraph.

***

Article 31 of the current Treaty on European Union (TEU), to be replaced partly by Article 82 TFEU, is found in TEU Title VI ‘Provisions on police and judicial cooperation in criminal matters’, in the latest consolidated version of the current treaties (OJ 29.12.2006 C 321 E/25):

Article 31 TEU

1. Common action on judicial cooperation in criminal matters shall include:

(a) facilitating and accelerating cooperation between competent ministries and judicial or equivalent authorities of the Member States, including, where appropriate, cooperation through Eurojust, in relation to proceedings and the enforcement of decisions;

(b) facilitating extradition between Member States;

(c) ensuring compatibility in rules applicable in the Member States, as may be necessary to improve such cooperation;

(d) preventing conflicts of jurisdiction between Member States;

(e) progressively adopting measures establishing minimum rules relating to the constituent elements of criminal acts and to penalties in the fields of organised crime, terrorism and illicit drug trafficking.

2. The Council shall encourage cooperation through Eurojust by:

(a) enabling Eurojust to facilitate proper coordination between Member States' national prosecuting authorities;

(b) promoting support by Eurojust for criminal investigations in cases of serious cross-border crime, particularly in the case of organised crime, taking account, in particular, of analyses carried out by Europol;

(c) facilitating close cooperation between Eurojust and the European Judicial Network, particularly, in order to facilitate the execution of letters rogatory and the implementation of extradition requests.

***

We look at the previous stages of the treaty reform process.

The European Convention proposed the following Article III-172 of the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/60):

Article III-172 Draft Constitution

1. European framework laws may establish minimum rules concerning the definition of criminal offences and sanctions in the areas of particularly serious crime with cross-border dimensions resulting from the nature or impact of such offences or from a special need to combat them on a common basis.

These areas of crime are the following: terrorism, trafficking in human beings and sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organised crime.

On the basis of developments in crime, the Council of Ministers may adopt a European decision identifying other areas of crime that meet the criteria specified in this paragraph. It shall act unanimously after obtaining the consent of the European Parliament.

2. If the approximation of criminal legislation proves essential to ensure the effective implementation of a Union policy in an area which has been subject to harmonisation measures, European framework laws may establish minimum rules with regard to the definition of criminal offences and sanctions in the area concerned.

Without prejudice to Article III-165, such framework laws shall be adopted by the same procedure as was followed for the adoption of the harmonisation measures referred to in the preceding subparagraph.

***

The IGC 2004 agreed on the wording of the first two paragraphs of Article III-271 of the Treaty establishing a Constitution for Europe with a few stylistic changes, but added a third paragraph with the so called emergency brake and a fourth paragraph authorising enhanced cooperation among at least a third of member states willing and able (OJ 16.12.2004 C 310/119–120):

Article III-271 Constitution

1. European framework laws may establish minimum rules concerning the definition of criminal offences and sanctions in the areas of particularly serious crime with a cross-border dimension resulting from the nature or impact of such offences or from a special need to combat them on a common basis.

These areas of crime are the following: terrorism, trafficking in human beings and sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organised crime.

On the basis of developments in crime, the Council may adopt a European decision identifying other areas of crime that meet the criteria specified in this paragraph. It shall act unanimously after obtaining the consent of the European Parliament.

2. If the approximation of criminal laws and regulations of the Member States proves essential to ensure the effective implementation of a Union policy in an area which has been subject to harmonisation measures, European framework laws may establish minimum rules with regard to the definition of criminal offences and sanctions in the area concerned. Such framework laws shall be adopted by the same procedure as was followed for the adoption of the harmonisation measures in question, without prejudice to Article III-264.

3. Where a member of the Council considers that a draft European framework law as referred to in paragraph 1 or 2 would affect fundamental aspects of its criminal justice system, it may request that the draft framework law be referred to the European Council. In that case, where the procedure referred to in Article III-396 is applicable, it shall be suspended. After discussion, the European
Council shall, within four months of this suspension, either:

(a) refer the draft back to the Council, which shall terminate the suspension of the procedure referred to in Article III-396 where it is applicable, or

(b) request the Commission or the group of Member States from which the draft originates to submit a new draft; in that case, the act originally proposed shall be deemed not to have been adopted.

4. If, by the end of the period referred to in paragraph 3, either no action has been taken by the European Council or if, within 12 months from the submission of a new draft under paragraph 3(b), the European framework law has not been adopted, and at least one third of the Member States wish to establish enhanced cooperation on the basis of the draft framework law concerned, they shall notify the European Parliament, the Council and the Commission accordingly.

In such a case, the authorisation to proceed with enhanced cooperation referred to in Articles I-44(2) and III-419(1) shall be deemed to be granted and the provisions on enhanced cooperation shall apply.

***

The provision we are studying has changed at every stage of the treaty reform process. The current Article 31 TEU gives only vague indications of where the present intergovernmental cooperation might lead.

The European Convention gave the provision its essential contents, which survived two intergovernmental conferences.

The IGC 2004 inserted the ‘emergency brake’ for each member state worried that fundamental aspects of its criminal justice system might be affected. This was counterbalanced by the guarantee that at least a third of the member states would be able to advance if unanimity could not be found in the European Council.

The IGC 2007 took over the text of the Constitutional Treaty with the general terminological changes used in the Treaty of Lisbon, but the third and fourth paragraph were re-written according to the IGC 2007 Mandate (Council document 11218/07; point 19(l) on page 8 and Annex 2, point 2(c) on page 16).

Since unanimous decision-making easily leads to paralysis or acts based on the lowest common denominator, it is important that recalcitrant members do not stand in the way of progress, if a group of member states are willing and able to forge ahead. The unity of EU legislation is sacrificed (even more than today), but enhanced cooperation allows experiments within the EU structures instead of outside, which has been the case with the Schengen, Dublin and Prüm Conventions.

***

The United Kingdom, with its predilection for minimalism and its opt-outs and emergency brakes, is a fascinating object of study. We look at some British views.

The Foreign and Commonwealth Office (FCO) presents a short version of the Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008), offering the following summary of the results with regard to Article 83 TFEU, Article 69b TFEU (ToL) in the original Lisbon Treaty:

“Draws on Article 31(1)(e) TEU. Decision-making moves to co-decision. A new passerelle enables the Council, by unanimity and with EP consent, to identify additional areas of serious cross-border crime that might be the subject of minimum rules. The adoption of minimum rules is subject to a new emergency brake procedure.”

The FCO comparative table is available at:

http://www.official-documents.gov.uk/document/cm73/7311/7311.asp

***

The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) dealt with ‘Approximation of criminal law’ (page 41), where it quoted the European Scrutiny Committee:

“…, harmonisation of criminal law within the European Union should proceed by agreement of all Member States, or it should not proceed at all.”

The Research Paper 07/86 is available at:

http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf

***

In the Statewatch analysis ‘EU Reform Treaty: Analysis 1: Version 3 JHA provisions’ (22 October 2007), Steve Peers gave a thorough explanation of what was to become Article 69b TFEU (ToL), Article 83 TFEU. He remarked on the changes agreed in the IGC 2007 Mandate and remarked i.a. (pages 16–17):

“The voting procedures otherwise is QMV and co-decision, a change from the present unanimity and consultation.”

“The competence on these issues is far more precise than the current Article 31(1)(e) TEU …”

“Paragraph 2 would resolve a long-running dispute as to whether, and to what extent, under the current Treaties, the ‘first pillar’ can be used to adopt criminal law measeures …”

The JHA analysis and other Statewatch analyses are available through:

http://www.statewatch.org/euconstitution.htm

***

The House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008) discusses ‘Police and judicial cooperation in criminal matters’ at length, with the pages 143 to 149 dedicated to an interesting and enlightening treatment of Article 83 TFEU under ‘Approximation of substantive criminal law’.


The report is accessible at:

http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf



Ralf Grahn

EU TFEU: Judicial cooperation in criminal matters

Mutual recognition of judgments, approximation (harmonisation) of laws and minimum procedural rules in cross-border criminal cases form the nucleus of EU judicial cooperation in criminal matters according to the Treaty of Lisbon.

***

Article 82 of the Treaty on the Functioning of the European Union (TFEU) marks the beginning of a new Chapter 4 on judicial cooperation in criminal matters. The Article is presented as it stands after the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL), then renumbered and provisionally consolidated by the Council of the European Union (document 6655/08; page 104–105), with the location of the provision added from the table of equivalences (page 460 to 463):

Part Three ‘Policies and internal actions of the Union’

Title V TFEU ‘Area of freedom, security and justice’

Chapter 4 ‘Judicial cooperation in criminal matters’

Article 82 TFEU
(ex Article 31 TEU)

1. Judicial cooperation in criminal matters in the Union shall be based on the principle of mutual recognition of judgments and judicial decisions and shall include the approximation of the laws and regulations of the Member States in the areas referred to in paragraph 2 and in Article 83.

The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall adopt measures to:

(a) lay down rules and procedures for ensuring recognition throughout the Union of all forms of judgments and judicial decisions;

(b) prevent and settle conflicts of jurisdiction between Member States;

(c) support the training of the judiciary and judicial staff;

(d) facilitate cooperation between judicial or equivalent authorities of the Member States in relation to proceedings in criminal matters and the enforcement of decisions.

2. To the extent necessary to facilitate mutual recognition of judgments and judicial decisions and police and judicial cooperation in criminal matters having a cross-border dimension, the European Parliament and the Council may, by means of directives adopted in accordance with the ordinary legislative procedure, establish minimum rules. Such rules shall take into account the differences between the legal traditions and systems of the Member States.

They shall concern:

(a) mutual admissibility of evidence between Member States;

(b) the rights of individuals in criminal procedure;

(c) the rights of victims of crime;

(d) any other specific aspects of criminal procedure which the Council has identified in advance by a decision; for the adoption of such a decision, the Council shall act unanimously after obtaining the consent of the European Parliament.

Adoption of the minimum rules referred to in this paragraph shall not prevent Member States from maintaining or introducing a higher level of protection for individuals.

3. Where a member of the Council considers that a draft directive as referred to in paragraph 2 would affect fundamental aspects of its criminal justice system, it may request that the draft directive be referred to the European Council. In that case, the ordinary legislative procedure shall be suspended. After discussion, and in case of a consensus, the European Council shall, within four months of this suspension, refer the draft back to the Council, which shall terminate the suspension of the ordinary legislative procedure.

Within the same timeframe, in case of disagreement, and if at least nine Member States wish to establish enhanced cooperation on the basis of the draft directive concerned, they shall notify the European Parliament, the Council and the Commission accordingly. In such a case, the authorisation to proceed with enhanced cooperation referred to in Article 20(2) of the Treaty on European Union and Article 329(1) of this Treaty shall be deemed to be granted and the provisions on enhanced cooperation shall apply.

***

In Article 2, point 67, of the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) stated (OJ 17.12.2007 C 306/62):

“67) Article 66 shall be replaced by Article 61 G, as set out in point 64 above, and Articles 67 to 69 shall be repealed. The following Chapter 4 and Articles 69 A to 69 E shall be inserted. Articles 69 A, 69 B and 69 D shall replace the current Article 31 of the Treaty on European Union, as set out above in point 51 of Article 1 of this Treaty: …”

It then went on to present the agreed chapter heading and wording (as above, save for the referrals later renumbered) of Article 69a TFEU (ToL), which became Article 82 TFEU after renumbering in the consolidated version of the treaty. Cf. TFEU table of equivalences, OJ 17.12.2007 C 306/210.

***

Article 31 of the current Treaty on European Union (TEU), to be replaced partly by Article 82 TFEU, is found in TEU Title VI ‘Provisions on police and judicial cooperation in criminal matters’, in the latest consolidated version of the current treaties (OJ 29.12.2006 C 321 E/25):

Article 31 TEU

1. Common action on judicial cooperation in criminal matters shall include:

(a) facilitating and accelerating cooperation between competent ministries and judicial or equivalent authorities of the Member States, including, where appropriate, cooperation through Eurojust, in relation to proceedings and the enforcement of decisions;

(b) facilitating extradition between Member States;

(c) ensuring compatibility in rules applicable in the Member States, as may be necessary to improve such cooperation;

(d) preventing conflicts of jurisdiction between Member States;

(e) progressively adopting measures establishing minimum rules relating to the constituent elements of criminal acts and to penalties in the fields of organised crime, terrorism and illicit drug trafficking.

2. The Council shall encourage cooperation through Eurojust by:

(a) enabling Eurojust to facilitate proper coordination between Member States' national prosecuting authorities;

(b) promoting support by Eurojust for criminal investigations in cases of serious cross-border crime, particularly in the case of organised crime, taking account, in particular, of analyses carried out by Europol;

(c) facilitating close cooperation between Eurojust and the European Judicial Network, particularly, in order to facilitate the execution of letters rogatory and the implementation of extradition requests.

***

We look at the previous stages of the treaty reform process.

The European Convention proposed the following Article III-171 of the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/60):

Section 4
Judicial cooperation in criminal matters

Article III-171 Draft Constitution

1. Judicial cooperation in criminal matters in the Union shall be based on the principle of mutual recognition of judgments and judicial decisions and shall include the approximation of the laws and regulations of the Member States in the areas referred to in paragraph 2 and in Article III-172.

European laws or framework laws shall establish measures to:

(a) establish rules and procedures to ensure the recognition throughout the Union of all forms of judgments and judicial decisions;

(b) prevent and settle conflicts of jurisdiction between Member States;

(c) encourage the training of the judiciary and judicial staff;

(d) facilitate cooperation between judicial or equivalent authorities of the Member States in relation to proceedings in criminal matters and the enforcement of decisions.

2. In order to facilitate mutual recognition of judgments and judicial decisions and police and judicial cooperation in criminal matters having a cross-border dimension, European framework laws may establish minimum rules concerning:

(a) mutual admissibility of evidence between Member States;

(b) the rights of individuals in criminal procedure;

(c) the rights of victims of crime;

(d) any other specific aspects of criminal procedure which the Council of Ministers has identified in advance by a European decision. The Council of Ministers shall act unanimously after obtaining the consent of the European Parliament.

Adoption of such minimum rules shall not prevent Member States from maintaining or introducing a higher level of protection for the rights of individuals in criminal procedure.

***

The IGC 2004 took over, with modifications, the draft text in the first and second paragraph of Article III-270 of the Treaty establishing a Constitution for Europe, but the IGC 2004 added a third and fourth paragraph (OJ 16.12.2004 C 310/118–119):

Section 4
Judicial cooperation in criminal matters

Article III-270 Constitution

1. Judicial cooperation in criminal matters in the Union shall be based on the principle of mutual recognition of judgments and judicial decisions and shall include the approximation of the laws and regulations of the Member States in the areas referred to in paragraph 2 and in Article III-271.

European laws or framework laws shall establish measures to:

(a) lay down rules and procedures for ensuring recognition throughout the Union of all forms of judgments and judicial decisions;

(b) prevent and settle conflicts of jurisdiction between Member States;

(c) support the training of the judiciary and judicial staff;

(d) facilitate cooperation between judicial or equivalent authorities of the Member States in relation to proceedings in criminal matters and the enforcement of decisions.

2. To the extent necessary to facilitate mutual recognition of judgments and judicial decisions and police and judicial cooperation in criminal matters having a cross‑border dimension, European framework laws may establish minimum rules. Such rules shall take into account the differences between the legal traditions and systems of the Member States.

They shall concern:

(a) mutual admissibility of evidence between Member States;

(b) the rights of individuals in criminal procedure;

(c) the rights of victims of crime;

(d) any other specific aspects of criminal procedure which the Council has identified in advance by a European decision; for the adoption of such a decision, the Council shall act unanimously after obtaining the consent of the European Parliament.

Adoption of the minimum rules referred to in this paragraph shall not prevent Member States from maintaining or introducing a higher level of protection for individuals.

3. Where a member of the Council considers that a draft European framework law as referred to in paragraph 2 would affect fundamental aspects of its criminal justice system, it may request that the draft framework law be referred to the European Council. In that case, the procedure referred to in Article III-396 shall be suspended. After discussion, the European Council shall, within four months of this suspension, either:

(a) refer the draft back to the Council, which shall terminate the suspension of the procedure referred to in Article III-396, or

(b) request the Commission or the group of Member States from which the draft originates to submit a new draft; in that case, the act originally proposed shall be deemed not to have been adopted.

4. If, by the end of the period referred to in paragraph 3, either no action has been taken by the European Council or if, within 12 months from the submission of a new draft under paragraph 3(b), the European framework law has not been adopted, and at least one third of the Member States wish to establish enhanced cooperation on the basis of the draft framework law concerned, they shall notify the European Parliament, the Council and the Commission accordingly.

In such a case, the authorisation to proceed with enhanced cooperation referred to in Articles I-44(2) and III-419(1) shall be deemed to be granted and the provisions on enhanced cooperation shall apply.

***

The current Article 31 TEU is part of Title VI ‘Provisions on police and judicial cooperation in criminal matters’, which is based on intergovernmental cooperation and constitutes the so called third pillar.

The objective of the European Convention was to form a more unified area of freedom, security and justice, by abolishing the pillar structure and moving the remaining third pillar matters under the same heading with those justice and home affairs questions, where Community or first pillar procedures applied already.

The draft Constitution re-wrote the main provision on judicial cooperation in criminal matters by clearly endorsing the principle of mutual recognition and the practice of approximation (harmonisation) of laws.

When the governments met in the IGC 2004, they accepted the general approach of the European Convention, but added certain limitations. In the second paragraph, minimum rules were to be established only ‘to the extent necessary’ and these rules were to ‘take into account the differences between the legal traditions and systems of the Member States’.

The new third paragraph instituted the so called emergency brake for each member state which considered that a draft framework law (directive) would affect fundamental aspects of its criminal justice system, but on the other hand, if the proposed act came to nothing, a group of member states could establish enhanced cooperation on the basis of the proposed draft law, as stated in paragraph 4.

The Treaty of Lisbon used its own terminology, and it streamlined paragraphs 3 and 4 on the emergency brake and enhanced cooperation, but essentially it adopted the text agreed by the IGC 2004.

***

In addition to opting out, watering down proposals made by the European Convention was described as a victory for the United Kingdom government. The Foreign and Commonwealth Office (FCO) offered the following summary in the ‘White Paper on the Treaty establishing a Constitution for Europe’ (Command Paper 6309, September 2004; page 11):

“The UK’s negotiating success at the IGC

At the European Council on 18 June, amendments to the Convention’s draft EU Constitution were set out in two documents, CIG 81/04 and CIG 85/04.These two documents superseded all other proposals for amendments made by either Presidency during the IGC. In total, these documents cover amendments on 80 different areas in the Treaty.

The UK advocated the amendments in 39 of the 80 areas covered (see chart at Annex 2). Examples range from criminal law, tax and social security to the provisions on animal welfare and the solidarity clause. These amendments were either initiated by the UK, initiated jointly with other Member States, or pushed by other Member States and supported by the UK.

The UK remained neutral on 38 areas where others had pushed for amendments which were of no substantive concern to the UK.

In the remaining three areas, the UK originally opposed the amendments, but we secured changes at the European Council which made them acceptable (e.g. provisions for the Union’s accession to the European Convention on Human Rights).

In short, nearly half the final changes to the Treaty were secured at UK instigation: a measure of the influence the UK had on its final form.”

Against this background followed the description of the negotiations on justice and home affairs from the British government’s point of view (page 31):

“Justice and Home Affairs

67. The Maastricht Treaty (1992) introduced co-operation on Justice and Home Affairs issues as the third pillar in the EU’s pillar structure with its own separate intergovernmental arrangements. The Constitution introduces qualified majority voting as the norm for JHA issues – a welcome consequence of abolishing the pillar structure (as the Government made clear at paragraph 82 of the September 2003 White Paper).

68. This means that no single Member State will be able to block action on issues like cross-border crime, drug trafficking, illegal immigration and terrorism. These are international issues where it is in our interest to work within the EU. But because of the differences in Member States’ legal traditions and systems, the Government, in its September 2003 White Paper, said that QMV would not be the most appropriate way of proceeding where significant harmonisation of criminal procedural law was concerned (paragraph 83). This commitment has been delivered upon. The Convention’s proposals for blanket QMV in criminal law were replaced by an emergency brake mechanism. This means that a Member State which cannot accept a criminal procedural law proposal can ‘pull the brake’. This stops the discussion in the Council and automatically refers it to the European Council where decisions are made by consensus. If it is still impossible to agree, then the enhanced co-operation provisions can be applied, without all the preliminary procedures needing to be applied. This means that if a third of Member States want to, they can go ahead by themselves. This enhanced flexibility is one of the benefits of the new Treaty.”

The Command Paper 6309 is available at:

http://www.fco.gov.uk/resources/en/pdf/pdf15/fco_beu_euct_whitepaper_sept04

***

About three years later, the UK government reported in the same vein on the IGC 2007 in ‘The Reform Treaty: the British approach to the European Union intergovernmental conference, July 2007’ (Command Paper 7174, published 23 July 2007; page 10):

“The Mandate agreed at the June European Council stipulates that, as part of the IGC process, the UK's right not to participate in new measures in the JHA area can be made to apply even where those measures build upon earlier agreements.

The new Treaty will also enable certain proposals for laws in criminal matters to be referred to the European Council for decision if they would affect fundamental aspects of a Member State's legal system. This is the so-called ‘emergency brake’. If all the members of the European Council do not unanimously agree the proposal will fall, or will go ahead only in the Member States that want it – and then only if at least one third choose to go forward in that way. This additional safeguard will be available even where the UK had previously chosen to opt-in to a proposal in these areas.”

The FCO view is available at:

http://www.official-documents.gov.uk/document/cm71/7174/7174.pdf

***

Having looked at some historic positions concerning the “emergency brake”, we move on to a few more British views on matters relating to EU judicial cooperation in criminal matters, now with the Treaty of Lisbon in hand.

The FCO presents a short version of the Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008), offering the following summary of the results with regard to Article 82 TFEU, formerly Article 69a TFEU (ToL):

“Draws on Article 31(1) TEU. Mutual recognition, as well as approximation of laws, is to be the basis for criminal judicial co-operation. Lists the areas in which minimum rules on criminal procedural law may be adopted. Decision-making moves to co-decision. A new passerelle enables the Council, by unanimity and with EP consent, to extend the scope of minimum rules that may be adopted. The adoption of minimum rules on criminal procedure is also subject to a new emergency brake procedure.”

The FCO comparative table is available at:

http://www.official-documents.gov.uk/document/cm73/7311/7311.asp

The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community (published 6 December 2007; pages 38–39) commented on criminal procedures:

“On criminal procedures, Article 69A goes much further than the existing Article 31(1)(c) TEU, which merely includes in the list of common actions “ensuring compatibility in rules applicable in Member States as may be necessary to improve [judicial] cooperation”. --- This is a new and potentially controversial provision. It would permit the EU to establish minimum rules relating specifically to mutual admissibility of evidence, the rights of individuals in criminal procedure, and the rights of victims of crime.”


The Research Paper 07/86, with the discussion of judicial cooperation in criminal matters continuing to page 48, is available at:

http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf

Steve Peers commented in the Statewatch analysis ‘EU Reform Treaty: Analysis 1: Version 3 JHA provisions’ (22 October 2007) on what was to become Article 69a TFEU (ToL), Article 82 TFEU. He remarked on the changes agreed in the IGC 2007 Mandate and remarked (page 15):

“These changes clarify the prospect of applying an ‘emergency brake’ and the possibility of a
group of Member States applying a ‘flexibility’ procedure afterward. This is distinct from the
UK, Irish and Danish power to opt out of proposals at the outset. Note that the ‘emergency
brake’ does not apply to paragraph 1.

The voting procedure otherwise is QMV and co-decision, a change from the present unanimity
and consultation.”

The JHA analysis and other Statewatch analyses are available through:

http://www.statewatch.org/euconstitution.htm

The House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008) discusses ‘Police and judicial cooperation in criminal matters’ at length, with the pages 139 to 143 dedicated to mutual recognition, harmonisation and criminal procedure. Here are the conclusions of the Committee:

“6.152. The new Article 82(1) confers a more specifically defined power to adopt measures of judicial cooperation in criminal matters in a more extensive but exhaustive list of areas. In particular, the new Article makes specific reference for the first time to measures to settle as well as prevent conflicts of jurisdiction and to measures to support the training of national judiciaries and their staff. The new Article replaces an existing power under Article 31(1)(a) to (d) which is of uncertain and controversial width, not least because the list of areas of potential action given is both vague and non-exclusive. Overall, the clarification and definition of power in this field by the Lisbon Treaty is unlikely to involve any significant expansion of jurisdiction, although it may encourage a more active role for the EU in the listed areas.”

---

“6.160. The extent of the Union’s existing competence in the area of criminal procedure under the existing Article 31 with its nonexhaustive list of areas of potential action is one of the matters of uncertainty and controversy already mentioned. The new Article 82(2) contains a specific and exhaustive list of three areas of potential action (concerning evidence, procedure and victims’ rights). Other areas can only be added by unanimous Council decision after obtaining the European Parliament’s consent.

6.161. Action in any of these areas is for the first time expressly limited to the extent necessary to facilitate mutual recognition of judgments and decisions and police cooperation in criminal matters “having a crossborder dimension”. The three specific areas listed are all areas where in practice the Union has been seeking in recent years to promote measures.”

The report is accessible at:

http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf



Ralf Grahn