Service concessions continue the long list of public contracts excluded from the application of the Procurement Directive 2004/18/EC.
But if concessions are exempted from the detailed procurement procedures, it does not mean that they are free from the general treaty principles governing the internal market.
As always, exceptions have to be justified and they are narrowly interpreted.
We start by looking at the seemingly simple exemption of service concessions before turning to the discussion on guiding principles.
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Article 17
The European Community (European Union) Procurement Directive 2004/18/EC is not applied to service concessions:
Article 17
Service concessions
Without prejudice to the application of Article 3, this Directive shall not apply to service concessions as defined in Article 1(4).
***
Definition of service concession
Article 17 of the Procurement Directive, or Classic Directive, refers to the definition of service concession in Article 1(4):
4. ‘Service concession’ is a contract of the same type as a public service contract except for the fact that the consideration for the provision of services consists either solely in the right to exploit the service or in this right together with payment.
***
Service contract
Except for the consideration, a service concession fulfils the same criteria as a public service contract, defined in Article 1(2)(d):
(d) ‘Public service contracts’ are public contracts other than public works or supply contracts having as their object the provision of services referred to in Annex II.
A public contract having as its object both products and services within the meaning of Annex II shall be considered to be a ‘public service contract’ if the value of the services in question exceeds that of the products covered by the contract.
A public contract having as its object services within the meaning of Annex II and including activities within the meaning of Annex I that are only incidental to the principal object of the contract shall be considered to be a public service contract.
***
Article 3
Article 3 of the Procurement Directive 2004/18/EC tells us that the service concession must comply with the basic treaty obligation of non-discrimination on the basis of nationality when it awards contracts to third parties.
The principle of non-discrimination is set out in Article 12 of the Treaty establishing the European Community and given more precise meaning in the rich jurisprudence of the European Court of Justice.
(If the Lisbon Treaty enters into force, the same obligation would be found in Article 18 of the Treaty on the Functioning of the European Union.)
The contracting authority (public body) granting the special or exclusive right (service concession) must make sure that the principle of non-discrimination is adhered to by providing for it in the granting act:
Article 3
Granting of special or exclusive rights: non-discrimination clause
Where a contracting authority grants special or exclusive rights to carry out a public service activity to an entity other than such a contracting authority, the act by which that right is granted shall provide that, in respect of the supply contracts which it awards to third parties as part of its activities, the entity concerned must comply with the principle of non-discrimination on the basis of nationality.
***
Commission Guide
The Commission’s Guide to the Community Rules on Public Procurement of Services explains the background of the old Directive 92/50/EEC, but since the new Procurement Directive 2004/18/EC has taken over the exclusion the text is still relevant for our understanding (page 5):
The Commission's original proposal12 contained provisions on public service concessions analogous to those existing in the Works Directive for public works concessions. However, the Member States in Council decided not to include this type of contract because of wide divergence of national practices in matters of public service concessions. Thus the Services Directive does not apply to public service concessions, which broadly means that the Directive does not apply to contracts whereby a public authority transfers the execution of a service to the public lying within its responsibility to an undertaking of its choice and the latter agrees to execute the activity in return for the right to exploit the service, or this right together with payment. Nevertheless, the award of such contracts is, of course, subject to the Treaty rules concerning the freedom to provide services and to the general principles of Community law such as non-discrimination, equality of treatment, transparency and mutual recognition.
***
Advertising exempted contracts
The national laws and regulations vary within the 30 states of the European Economic Area, but the treaty standards, the Procurement Directives and the problems facing officials and firms are shared.
Let us therefore mention a guide on the advertisement of contracts exempted from the scope of the detailed Directive rules.
Scottish Procurement Directorate: Scottish Procurement Policy Note SPPN 3/2006 (3 March 2006) is available here:
http://www.scotland.gov.uk/Resource/Doc/1265/0023351.pdf
Readers interested in procurement policy generally may want to peruse the new Scottish Procurement Policy Handbook (published 23 December 2008):
http://www.scotland.gov.uk/Resource/Doc/256155/0076031.pdf
The Scottish Government’s Procurement web pages offer well organised and timely information on procurement issues, many of them of interest outside Scotland as well:
http://www.scotland.gov.uk/Topics/Government/Procurement
***
Institutionalised Public-Private Partnerships (IPPP)
One area where concessions are granted is in the context of Public-Private Partnerships (PPP), for the long term in the form of Institutionalised Public-Private Partnerships (IPPP).
After consultation, the Commission published its interpretation of the principles applicable to these partnerships, in Commission Interpretative Communication on the application of Community law on Public Procurement and Concessions to Institutionalised Public-Private Partnerships (IPPP), Brussels 5.2.2008 C(2007)6661.
This guidance may be of some assistance to readers faced with questions relating to service concessions and it offers a picture of how the Commission as guardian of the treaties views the treaty obligations in the light of ECJ jurisprudence.
Here are the introductory remarks by the Commission on the context of the Communication (page 2):
In recent years, Public-Private Partnerships (PPP) have developed in many fields. The hallmark of this form of cooperation, which is generally geared to the longer term, is the role of the private partner, who is involved in the various phases of the project (planning, implementation and operation), who is intended to bear risks that are traditionally borne by the public sector and who often contributes to financing the project.
Under Community law, public authorities are free to pursue economic activities themselves or to assign them to third parties, such as mixed capital entities founded in the context of a PPP. However, if public bodies decide to involve third parties in economic activities and if this involvement qualifies as a public contract or a concession, the Community provisions for public procurement and concessions must be complied with. The aim of these provisions is to enable all interested economic operators to tender for public contracts and concessions on a fair and transparent basis in the spirit of the European internal market, thereby enhancing the quality of such projects and cutting their costs by means of increased competition.
***
Future service concessions
What does the future hold in store with regard to service concessions?
Charlie McCreevy, the European Commissioner for Internal Market and Services, outlined future activities in a speech on 11 December 2008 for the Business Services Association (BSA), in London:
By concessions, we mean procurements in which the consideration from contracting authorities consists in the award to the contractor of the right to exploit a work or service, or where this right is accompanied by some sort of payment. A well-known example of these is toll roads, where the contractor builds and operates a motorway and charges tolls on users. Another example is contracts for the management of public services, where contractors set up and/or operate the service and receive fees from users. Concessions are very prominent in the field of PPPs. A study carried out by Price Waterhouse Coopers concluded that approximately 60% of all PPPs take the legal form of concessions.
Following a broad public consultation with the Green Paper on PPP in 2004, we realised that we needed further data on how this worked in practice before considering any further action. This is what we are currently doing. We are studying carefully the concessions market in the EU. After consultations with Member States and stakeholders on this initiative, we are working, therefore, to gather more practical data on the award of concessions in the EU, including in strategic sectors. I also personally see the benefits of service concessions for expanding markets to many new EU Member States where service concessions and other forms of PPPs are infrequently used. Whether or not EU action is needed to facilitate this opening up of new markets is still a more open question.
Ralf Grahn
Showing posts with label exception. Show all posts
Showing posts with label exception. Show all posts
Tuesday, 3 February 2009
Tuesday, 13 January 2009
EU Procurement Directive: Secret contracts and security measures
The aim of the European Community (European Union) Procurement Directive to achieve open, fair and taxpayer-friendly procedures in the internal market can collide with governments’ concerns for secrecy, special security measures or other essential state interests.
We look at how the Procurement Directive caters for governments’ security concerns. This leads us to the treaty rules governing the internal market and the scope for derogations. Finally, we point to proposed legislation concerning defence and security procurement.
***
Procurement Directive Article 14
Article 14 of the Procurement Directive 2004/18/EC sets out exceptions to the application of the Directive on grounds of secrecy, security and other essential interests of an EU member state:
Article 14
Secret contracts and contracts requiring special security measures
This Directive shall not apply to public contracts when they are declared to be secret, when their performance must be accompanied by special security measures in accordance with the laws, regulations or administrative provisions in force in the Member State concerned, or when the protection of the essential interests of that Member State so requires.
***
Three grounds for exceptions
Article 14 set out three grounds for exempting public contracts from the scope of the Directive:
1) Declared secret
2) Special security measures in accordance with the laws, regulations or administrative provisions in force in the member state
3) Protection of essential interests of the member state
As always, exceptions are interpreted narrowly. If challenged, the exception has to be justified.
***
Defence procurement
Given the grounds above, we naturally think about military procurement, but we are reminded of special rules pertaining to procurement of weapons and the like.
In an earlier post, we looked at the application of the Procurement Directive to defence procurement, but subject to the exceptions made under Article 296 of the Treaty establishing the European Community (TEC). We also discussed ongoing efforts to create a legal regime for defence procurement in the internal market. As a reminder, here is the basic provision of the Procurement Directive:
Article 10
Defence procurement
This Directive shall apply to public contracts awarded by contracting authorities in the field of defence, subject to Article 296 of the Treaty.
***
More than defence procurement
We saw that the Procurement Directive applies to defence procurement, unless a justified exception is made under Article 296 TEC.
The existence of Article 10 leads us to conclude that Article 14 of the Procurement Directive 2004/18/EC is meant to have reasons of its own.
Cf. ECJ C-252/01 Commission v. Belgium.
***
Public security exemption explained
Recital 6 of the Procurement Directive mentions public security among grounds for exceptions to the application of the Directive, if the measures are necessary and taken in conformity with the treaty:
(6) Nothing in this Directive should prevent the imposition or enforcement of measures necessary to protect public policy, public morality, public security, health, human and animal life or the preservation of plant life, in particular with a view to sustainable development, provided that these measures are in conformity with the Treaty.
***
State security or secrecy
Recital 22 of the Procurement Directive explains the intention to exempt procurement procedures from the application of the Directive on grounds relating to state security or secrecy:
(22) Provision should be made for cases in which it is possible to refrain from applying the measures for coordinating procedures on grounds relating to State security or secrecy, or because specific rules on the awarding of contracts which derive from international agreements, relating to the stationing of troops, or which are specific to international organisations are applicable.
***
Commission Guide: Derogations
The Commission’s Guide to the Community Rules on public supply contracts presented the secrecy and security exceptions according to the old Directive 93/36/EEC and added its interpretation of the scope of these exceptions (page 20). Note that the TEC Articles mentioned have been renumbered:
Lastly, the Directive excludes public supply contracts from its scope:
· where the supplies are declared secret; or
· where their performance must be accompanied by special security measures in accordance with the provisions laid down by law, regulation or administrative action in force in the Member State concerned; or
· where the protection of the basic interests of that State’s security so requires.
These last three exclusions from the Directive give concrete expression, in the public procurement field, to the powers already reserved for the Member States by Article 36 of the EC Treaty, which allows them in certain cases to derogate from the prohibitions on import and export restrictions enshrined in Articles 30 and 34 respectively. These three exclusions from the Directive must be interpreted as strictly and according to the same criteria as exceptions under Article 36.
***
Free movement of goods and derogations
In the case of supply contracts, we have now reconnected with the treaty framework for the free movement of goods. The current Articles 28 and 29 set out the basic prohibitions against restrictions on imports/exports and all measures having equivalent effect:
Article 28 TEC (ex Article 30)
Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.
Article 29 TEC (ex Article 34)
Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States.
The current Article 30 TEC lays down the grounds for derogations and their limits. These restrictions shall not constitute a means of arbitrary discrimination or a disguised restriction on trade between member states.
Article 30 as published in the latest consolidated version of the treaties, OJEU 29.12.2006 C321 E/53:
Article 30 TEC (ex Article 36)
The provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports,
exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.
***
Conclusion
Since secrecy, security and essential state interests apply to all types of contracts covered by the Procurement Directive, we may infer that parallel reasoning applies to derogations from all four internal market freedoms.
***
De lege ferenda
For more information on and discussion about security issues related to procurement as well as proposed legislation, you can turn to the Commission’s Defence package, which includes both military and other security issues. The Communication and the preparatory acts are available here:
http://ec.europa.eu/enterprise/defence/eu_defence_policy.htm
The main three documents are:
The Communication: A Strategy for a Stronger and more Competitive European Defence Industry
The proposed Directive on intra-EU transfers of Defence Products
The proposed Directive on Defence Procurement
Some comments on the proposals are included in the earlier blog post on defence procurement.
Ralf Grahn
We look at how the Procurement Directive caters for governments’ security concerns. This leads us to the treaty rules governing the internal market and the scope for derogations. Finally, we point to proposed legislation concerning defence and security procurement.
***
Procurement Directive Article 14
Article 14 of the Procurement Directive 2004/18/EC sets out exceptions to the application of the Directive on grounds of secrecy, security and other essential interests of an EU member state:
Article 14
Secret contracts and contracts requiring special security measures
This Directive shall not apply to public contracts when they are declared to be secret, when their performance must be accompanied by special security measures in accordance with the laws, regulations or administrative provisions in force in the Member State concerned, or when the protection of the essential interests of that Member State so requires.
***
Three grounds for exceptions
Article 14 set out three grounds for exempting public contracts from the scope of the Directive:
1) Declared secret
2) Special security measures in accordance with the laws, regulations or administrative provisions in force in the member state
3) Protection of essential interests of the member state
As always, exceptions are interpreted narrowly. If challenged, the exception has to be justified.
***
Defence procurement
Given the grounds above, we naturally think about military procurement, but we are reminded of special rules pertaining to procurement of weapons and the like.
In an earlier post, we looked at the application of the Procurement Directive to defence procurement, but subject to the exceptions made under Article 296 of the Treaty establishing the European Community (TEC). We also discussed ongoing efforts to create a legal regime for defence procurement in the internal market. As a reminder, here is the basic provision of the Procurement Directive:
Article 10
Defence procurement
This Directive shall apply to public contracts awarded by contracting authorities in the field of defence, subject to Article 296 of the Treaty.
***
More than defence procurement
We saw that the Procurement Directive applies to defence procurement, unless a justified exception is made under Article 296 TEC.
The existence of Article 10 leads us to conclude that Article 14 of the Procurement Directive 2004/18/EC is meant to have reasons of its own.
Cf. ECJ C-252/01 Commission v. Belgium.
***
Public security exemption explained
Recital 6 of the Procurement Directive mentions public security among grounds for exceptions to the application of the Directive, if the measures are necessary and taken in conformity with the treaty:
(6) Nothing in this Directive should prevent the imposition or enforcement of measures necessary to protect public policy, public morality, public security, health, human and animal life or the preservation of plant life, in particular with a view to sustainable development, provided that these measures are in conformity with the Treaty.
***
State security or secrecy
Recital 22 of the Procurement Directive explains the intention to exempt procurement procedures from the application of the Directive on grounds relating to state security or secrecy:
(22) Provision should be made for cases in which it is possible to refrain from applying the measures for coordinating procedures on grounds relating to State security or secrecy, or because specific rules on the awarding of contracts which derive from international agreements, relating to the stationing of troops, or which are specific to international organisations are applicable.
***
Commission Guide: Derogations
The Commission’s Guide to the Community Rules on public supply contracts presented the secrecy and security exceptions according to the old Directive 93/36/EEC and added its interpretation of the scope of these exceptions (page 20). Note that the TEC Articles mentioned have been renumbered:
Lastly, the Directive excludes public supply contracts from its scope:
· where the supplies are declared secret; or
· where their performance must be accompanied by special security measures in accordance with the provisions laid down by law, regulation or administrative action in force in the Member State concerned; or
· where the protection of the basic interests of that State’s security so requires.
These last three exclusions from the Directive give concrete expression, in the public procurement field, to the powers already reserved for the Member States by Article 36 of the EC Treaty, which allows them in certain cases to derogate from the prohibitions on import and export restrictions enshrined in Articles 30 and 34 respectively. These three exclusions from the Directive must be interpreted as strictly and according to the same criteria as exceptions under Article 36.
***
Free movement of goods and derogations
In the case of supply contracts, we have now reconnected with the treaty framework for the free movement of goods. The current Articles 28 and 29 set out the basic prohibitions against restrictions on imports/exports and all measures having equivalent effect:
Article 28 TEC (ex Article 30)
Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.
Article 29 TEC (ex Article 34)
Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States.
The current Article 30 TEC lays down the grounds for derogations and their limits. These restrictions shall not constitute a means of arbitrary discrimination or a disguised restriction on trade between member states.
Article 30 as published in the latest consolidated version of the treaties, OJEU 29.12.2006 C321 E/53:
Article 30 TEC (ex Article 36)
The provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports,
exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.
***
Conclusion
Since secrecy, security and essential state interests apply to all types of contracts covered by the Procurement Directive, we may infer that parallel reasoning applies to derogations from all four internal market freedoms.
***
De lege ferenda
For more information on and discussion about security issues related to procurement as well as proposed legislation, you can turn to the Commission’s Defence package, which includes both military and other security issues. The Communication and the preparatory acts are available here:
http://ec.europa.eu/enterprise/defence/eu_defence_policy.htm
The main three documents are:
The Communication: A Strategy for a Stronger and more Competitive European Defence Industry
The proposed Directive on intra-EU transfers of Defence Products
The proposed Directive on Defence Procurement
Some comments on the proposals are included in the earlier blog post on defence procurement.
Ralf Grahn
Friday, 16 May 2008
EU TFEU: Transport standstill clause and derogation
According to the Treaty of Lisbon, the member states can legislate in areas of shared competence if the European Union has not legislated or if it has decided to cease exercising its competence. But already the Treaty establishing the European Economic Community included a special standstill clause to prevent national legislation against the aims of the common transport policy, before Community acts were in place. The same principle applies to countries which accede later.
Article 92 of the Treaty on the Functioning of the European Union offers a (slim) chance of derogations (exceptions) to the rule.
***
Article 92 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 115/85:
Part Three ‘Policies and internal actions of the Union’
Title VI TFEU ‘Transport’
Article 92 TFEU
(ex Article 72 TEC)
Until the provisions referred to in Article 91(1) have been laid down, no Member State may, unless the Council has unanimously adopted a measure granting a derogation, make the various provisions governing the subject on 1 January 1958 or, for acceding States, the date of their accession less favourable in their direct or indirect effect on carriers of other Member States as compared with carriers who are nationals of that State.
***
In Article 2, point 71 of the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) stated (OJ 17.12.2007 C 306/68):
71) At the beginning of Article 72, the words ‘, without the unanimous approval of the Council,’ shall be replaced by ‘, unless the Council has unanimously adopted a measure granting a derogation,’.
***
The provision to be amended, Article 72 of the Treaty establishing the European Community (TEC) is found under Title V ‘Transport’ in the latest consolidated version of the current treaties (OJ 29.12.2006 C 321 E/71):
Article 72 TEC
Until the provisions referred to in Article 71(1) have been laid down, no Member State may, without the unanimous approval of the Council, make the various provisions governing the subject on 1 January 1958 or, for acceding States, the date of their accession less favourable in their direct or indirect effect on carriers of other Member States as compared with carriers who are nationals of that State.
***
Article III-135 of the draft Treaty establishing a Constitution for Europe substantially took over the text of the current Article 72 TEC, but a small mistake remained in the text of the European Convention. Because the draft Constitution deleted the second paragraph of the preceding provision, there was no need to make a reference to the first and only paragraph of Article III-134 (OJ 18.7.2003 C 169/54):
Article III-135 Draft Constitution
Until the European laws or framework laws referred to in the first paragraph of Article III-134 have been adopted, no Member State may, unless the Council of Ministers has unanimously adopted a European decision granting a derogation, make the various provisions governing the subject on 1 January 1958 or, for acceding States, the date of their accession less favourable in their direct or indirect effect on carriers of other Member States as compared with carriers who are nationals of that State.
***
The IGC 2004 had merged the European Convention’s Article III-133 on the common transport policy (paragraph 1) and Article III-134 on legislation (paragraph 2) and brought back Article 71(2) TEC in an attenuated form (paragraph 3).
Therefore, the resulting Article III-237 looked like this, without altering the substance of the provision (OJ 16.12.2004 C 310/106):
Article III-237 Constitution
Until the European laws or framework laws referred to in Article III-236(2) have been adopted, no Member State may, unless the Council has unanimously adopted a European decision granting a derogation, make the various provisions governing the subject on 1 January 1958 or, for acceding States, the date of their accession less favourable in their direct or indirect effect on carriers of other Member States as compared with carriers who are nationals of that State.
***
We have followed the treaty reform process from the current TEC to the Treaty of Lisbon (TFEU), now in various stages of ratification, and we have seen that the essence of the provision has remained the same throughout, despite differences in terminology.
***
We now check our conclusions against how others who have scrutinised the Lisbon Treaty have informed ratifying parliaments and the public.
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 V Transport.
Peers highlighted the differences between the current Article 72 TEC, the Constitutional Treaty and the Lisbon Treaty. His comment on Article 72 TFEU (ToL), to be renumbered Article 92 TFEU in the consolidated version, concerned only an earlier draft (page 21):
“The technical error in the July draft of the Reform Treaty (which referred to such acts as legislative) has been corrected.”
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). The comment on Article 92 TFEU, Article 72 TFEU (ToL) in the original Lisbon Treaty, is short and to the point (page 11):
“In substance the same as Article 72 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) wrapped up Transport in a brief comment on page 56:
“F. Transport
Title V, Articles 70-80 (Constitution Articles III-236 – 245) are on transport and are based largely on Articles 70 – 75 TEC, but with a change in the voting procedure to the OLP with QMV, except for Article 72, which replaces unanimity in the Constitution Article III-237 with a “special legislative procedure”. Other, minor, changes are Article 75(c), which adds the EP to those bodies to be consulted, and Article 78 (Constitution Article III-243), allowing the Article concerning German unification to be repealed after 5 years.
Present Articles 154 – 156 on Trans-European Networks (TENS) have been moved to Title VII and contain only minor amendments.”
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
My comment: The comment on the ‘special legislative procedure’ in Article 72 may have been based on an earlier text (but I leave it to the reader interested enough to check). Cf. the comment of Steve Peers above.
***
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) may not have found a substantially unchanged provision like Article 92 TFEU worthy of special mention, but for the reader who wants to understand the framework, the Committee’s discussion about ‘The competences of the European Union’ from page 23 to page 30 may be helpful, especially the text on shared competence.
The report is accessible at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
***
Sweden
The consultation paper of the government of Sweden, ‘Lissabonfördraget; Statsrådsberedningen, Departementsserien (Ds), Ds 2007:48’ published 20 December 2007, bundled together transport and trans-European networks under the headline ‘Transporter och transeuropeiska nät’ (page 280 to 282).
The text offers an overview of the coming Title VI ‘Transport’ and mentions the fairly small amendments, but understandably has nothing specific to say about Article 72 TFEU (ToL), the future Article 92 TFEU.
The consultation paper ’Lissabonfördraget’ is available at:
http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf
***
Finland
Even the methodical 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 content to give only a short explanation of Article 72 TFEU (ToL), renumbered Article 92 TFEU (page 206).
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 rp), offers the same brief explanation on page 208.
The ratification bill in Swedish can be accessed at:
http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf
***
Undramatic as it looks, the role of Article 92 TFEU merits some discussion, if we want to understand EU law as a system.
Article 4(2)(g) TFEU mentions transport as one of the principal areas of shared competence between the EU and the member states (OJ 9.5.2008 C 115/51).
Article 2(2) TFEU explains the main meaning of shared competence (OJ 9.5.2008 C 115/50):
“2. When the Treaties confer on the Union a competence shared with the Member States in a specific area, the Union and the Member States may legislate and adopt legally binding acts in that area. The Member States shall exercise their competence to the extent that the Union has not exercised its competence. The Member States shall again exercise their competence to the extent that the Union has decided to cease exercising its competence.”
For the sake of clarity, Protocol (No 25) on the exercise of shared competence should be mentioned although, in my humble opinion, it only states the obvious (OJ 9.5.2008 C 115/307):
“PROTOCOL (No 25)
ON THE EXERCISE OF SHARED COMPETENCE
THE HIGH CONTRACTING PARTIES,
HAVE AGREED UPON the following provisions, which shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union:
Sole Article
With reference to Article 2 of the Treaty on the Functioning of the European Union on shared competence, when the Union has taken action in a certain area, the scope of this exercise of competence only covers those elements governed by the Union act in question and therefore does not cover the whole area.”
***
The function of the predecessors of Article 92 TFEU was, in spite of the general rule, to safeguard the objectives of the common transport market, before the European Union (still today the European Community) had had time to legislate. Even absent Community legislation, the member states were prohibited from frustrating the common aim by legislating in the meantime. The standstill clause became effective for the original six members from the entry into force of the EEC Treaty (Treaty of Rome).
For members who join later, the cut-off date is the date of accession.
At the same time, Article 92 TFEU offers an ‘eye of the needle’ type basis for a measure granting a derogation (exception). The measure has to be unanimously adopted by the Council.
Ralf Grahn
Article 92 of the Treaty on the Functioning of the European Union offers a (slim) chance of derogations (exceptions) to the rule.
***
Article 92 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 115/85:
Part Three ‘Policies and internal actions of the Union’
Title VI TFEU ‘Transport’
Article 92 TFEU
(ex Article 72 TEC)
Until the provisions referred to in Article 91(1) have been laid down, no Member State may, unless the Council has unanimously adopted a measure granting a derogation, make the various provisions governing the subject on 1 January 1958 or, for acceding States, the date of their accession less favourable in their direct or indirect effect on carriers of other Member States as compared with carriers who are nationals of that State.
***
In Article 2, point 71 of the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) stated (OJ 17.12.2007 C 306/68):
71) At the beginning of Article 72, the words ‘, without the unanimous approval of the Council,’ shall be replaced by ‘, unless the Council has unanimously adopted a measure granting a derogation,’.
***
The provision to be amended, Article 72 of the Treaty establishing the European Community (TEC) is found under Title V ‘Transport’ in the latest consolidated version of the current treaties (OJ 29.12.2006 C 321 E/71):
Article 72 TEC
Until the provisions referred to in Article 71(1) have been laid down, no Member State may, without the unanimous approval of the Council, make the various provisions governing the subject on 1 January 1958 or, for acceding States, the date of their accession less favourable in their direct or indirect effect on carriers of other Member States as compared with carriers who are nationals of that State.
***
Article III-135 of the draft Treaty establishing a Constitution for Europe substantially took over the text of the current Article 72 TEC, but a small mistake remained in the text of the European Convention. Because the draft Constitution deleted the second paragraph of the preceding provision, there was no need to make a reference to the first and only paragraph of Article III-134 (OJ 18.7.2003 C 169/54):
Article III-135 Draft Constitution
Until the European laws or framework laws referred to in the first paragraph of Article III-134 have been adopted, no Member State may, unless the Council of Ministers has unanimously adopted a European decision granting a derogation, make the various provisions governing the subject on 1 January 1958 or, for acceding States, the date of their accession less favourable in their direct or indirect effect on carriers of other Member States as compared with carriers who are nationals of that State.
***
The IGC 2004 had merged the European Convention’s Article III-133 on the common transport policy (paragraph 1) and Article III-134 on legislation (paragraph 2) and brought back Article 71(2) TEC in an attenuated form (paragraph 3).
Therefore, the resulting Article III-237 looked like this, without altering the substance of the provision (OJ 16.12.2004 C 310/106):
Article III-237 Constitution
Until the European laws or framework laws referred to in Article III-236(2) have been adopted, no Member State may, unless the Council has unanimously adopted a European decision granting a derogation, make the various provisions governing the subject on 1 January 1958 or, for acceding States, the date of their accession less favourable in their direct or indirect effect on carriers of other Member States as compared with carriers who are nationals of that State.
***
We have followed the treaty reform process from the current TEC to the Treaty of Lisbon (TFEU), now in various stages of ratification, and we have seen that the essence of the provision has remained the same throughout, despite differences in terminology.
***
We now check our conclusions against how others who have scrutinised the Lisbon Treaty have informed ratifying parliaments and the public.
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 V Transport.
Peers highlighted the differences between the current Article 72 TEC, the Constitutional Treaty and the Lisbon Treaty. His comment on Article 72 TFEU (ToL), to be renumbered Article 92 TFEU in the consolidated version, concerned only an earlier draft (page 21):
“The technical error in the July draft of the Reform Treaty (which referred to such acts as legislative) has been corrected.”
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). The comment on Article 92 TFEU, Article 72 TFEU (ToL) in the original Lisbon Treaty, is short and to the point (page 11):
“In substance the same as Article 72 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) wrapped up Transport in a brief comment on page 56:
“F. Transport
Title V, Articles 70-80 (Constitution Articles III-236 – 245) are on transport and are based largely on Articles 70 – 75 TEC, but with a change in the voting procedure to the OLP with QMV, except for Article 72, which replaces unanimity in the Constitution Article III-237 with a “special legislative procedure”. Other, minor, changes are Article 75(c), which adds the EP to those bodies to be consulted, and Article 78 (Constitution Article III-243), allowing the Article concerning German unification to be repealed after 5 years.
Present Articles 154 – 156 on Trans-European Networks (TENS) have been moved to Title VII and contain only minor amendments.”
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
My comment: The comment on the ‘special legislative procedure’ in Article 72 may have been based on an earlier text (but I leave it to the reader interested enough to check). Cf. the comment of Steve Peers above.
***
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) may not have found a substantially unchanged provision like Article 92 TFEU worthy of special mention, but for the reader who wants to understand the framework, the Committee’s discussion about ‘The competences of the European Union’ from page 23 to page 30 may be helpful, especially the text on shared competence.
The report is accessible at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
***
Sweden
The consultation paper of the government of Sweden, ‘Lissabonfördraget; Statsrådsberedningen, Departementsserien (Ds), Ds 2007:48’ published 20 December 2007, bundled together transport and trans-European networks under the headline ‘Transporter och transeuropeiska nät’ (page 280 to 282).
The text offers an overview of the coming Title VI ‘Transport’ and mentions the fairly small amendments, but understandably has nothing specific to say about Article 72 TFEU (ToL), the future Article 92 TFEU.
The consultation paper ’Lissabonfördraget’ is available at:
http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf
***
Finland
Even the methodical 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 content to give only a short explanation of Article 72 TFEU (ToL), renumbered Article 92 TFEU (page 206).
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 rp), offers the same brief explanation on page 208.
The ratification bill in Swedish can be accessed at:
http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf
***
Undramatic as it looks, the role of Article 92 TFEU merits some discussion, if we want to understand EU law as a system.
Article 4(2)(g) TFEU mentions transport as one of the principal areas of shared competence between the EU and the member states (OJ 9.5.2008 C 115/51).
Article 2(2) TFEU explains the main meaning of shared competence (OJ 9.5.2008 C 115/50):
“2. When the Treaties confer on the Union a competence shared with the Member States in a specific area, the Union and the Member States may legislate and adopt legally binding acts in that area. The Member States shall exercise their competence to the extent that the Union has not exercised its competence. The Member States shall again exercise their competence to the extent that the Union has decided to cease exercising its competence.”
For the sake of clarity, Protocol (No 25) on the exercise of shared competence should be mentioned although, in my humble opinion, it only states the obvious (OJ 9.5.2008 C 115/307):
“PROTOCOL (No 25)
ON THE EXERCISE OF SHARED COMPETENCE
THE HIGH CONTRACTING PARTIES,
HAVE AGREED UPON the following provisions, which shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union:
Sole Article
With reference to Article 2 of the Treaty on the Functioning of the European Union on shared competence, when the Union has taken action in a certain area, the scope of this exercise of competence only covers those elements governed by the Union act in question and therefore does not cover the whole area.”
***
The function of the predecessors of Article 92 TFEU was, in spite of the general rule, to safeguard the objectives of the common transport market, before the European Union (still today the European Community) had had time to legislate. Even absent Community legislation, the member states were prohibited from frustrating the common aim by legislating in the meantime. The standstill clause became effective for the original six members from the entry into force of the EEC Treaty (Treaty of Rome).
For members who join later, the cut-off date is the date of accession.
At the same time, Article 92 TFEU offers an ‘eye of the needle’ type basis for a measure granting a derogation (exception). The measure has to be unanimously adopted by the Council.
Ralf Grahn
Monday, 7 April 2008
EU TFEU: Public policy, public security and public health exceptions
‘Public policy, public security or public health’ form a potent formula for exceptions concerning the fundamental principles of free movement, citizenship rights, freedom to provide services and freedom of establishment within the European Community (European Union).
Here we look at the exemptions in the light of the present Treaty establishing the European Community and the coming Treaty on the Functioning of the European Union (Treaty of Lisbon), with a glance towards the draft Constitution and the Constitutional Treaty along the route.
The concrete provision we deal with concerns these exceptions in the context of the freedom of establishment, but often more than one of the rights and freedoms occur in the same case.
A few hints on further reading follow, meant to facilitate understanding of the system and strict interpretation of derogations.
***
In the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) made no specific amendments to Article 46 of the Treaty establishing the European Community (TEC). Cf. Official Journal, OJ, 17.12.2007 C 306/54-55.
***
The latest consolidated version of the existing treaties, TEU and TEC, presents Article 46 TEC as it now stands (OJ 29.12.2006 C 321 E/61):
Article 46 TEC
1. The provisions of this Chapter and measures taken in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action providing for special treatment for foreign nationals on grounds of public policy, public security or public health.
2. The Council shall, acting in accordance with the procedure referred to in Article 251, issue directives for the coordination of the abovementioned provisions.
***
To arrive at a consolidated Lisbon Treaty version of an Article requires that we check if one or more of the following apply: express amendments (here none), horizontal amendments (here one), renumbering of the provision (yes) and renumbering of possible referrals (here none).
The location of the Article is thrown in as a matter of reading convenience in a post read in isolation.
Thus, we should end up with the following Article, consolidated according to the Treaty of Lisbon:
Part Three ‘Policies and internal actions of the Union’
Title III (renumbered Title IV) ‘Free movement of persons, services and capital’
Chapter 2 ‘Right of establishment’
Article 46 TFEU (ToL), renumbered Article 52 TFEU
1. The provisions of this Chapter and measures taken in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action providing for special treatment for foreign nationals on grounds of public policy, public security or public health.
2. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, issue directives for the coordination of the abovementioned provisions.
***
The European Convention changed just enough of the wording in Article III-25 of the draft Treaty establishing a Constitution for Europe to merit repeating, but without changing anything of substance (OJ 18.7.2003 C 169/32):
Article III-25 Draft Constitution
1. This Subsection and measures adopted in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action in Member States providing for special treatment for foreign nationals on grounds of public policy, public security or public health.
2. European framework laws shall coordinate the national provisions referred to in paragraph 1.
***
The IGC 2004 adopted the draft text unchanged in Article III-140 of the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/62).
***
The IGC 2007 followed the adage ‘If it ain’t broke, don’t fix it’, thus preserving the current wording (with the one technical or horizontal amendment concerning the ordinary legislative procedure).
***
The Commission’s internal market web pages on services offer an introductory page ‘General principles: Freedom to provide services / Freedom of establishment’ (last update 28 January 2008):
http://ec.europa.eu/internal_market/services/principles_en.htm
There is a link to a 112 page ‘Guide to the Case Law of the European Court of Justice on Articles 43 et seq. EC Treaty: Freedom of Establishment’, from 1 January 2001, but with an update promised shortly:
http://ec.europa.eu/internal_market/services/docs/infringements/art43_en.pdf
Available on the web you can find the following:
J.H.H. Weiler and Martina Kocjan: The Law of the European Union, Teaching Material, The Internal Market: Freedom to Provide Services, Freedom of Establishment (NYU School of Law 2004/2005; 72 pages):
http://ec.europa.eu/internal_market/services/docs/infringements/art43_en.pdf
A detailed study is:
Markku Kiikeri: The Freedom of Establishment in the European Union, Report to the Finnish Ministry of Trade and Industry, 2002 (133 pages + Annexes XIX pages):
http://www.helsinki.fi/publaw/opiskelu/Eurooppaoikeus/Sijoittautumistutkimus.englanti.Kiikeri.pdf
These materials offer a fair grounding in the fundamental questions regarding the freedom of establishment, leaving only the latest developments of secondary legislation and case law to be unearthed by the reader.
Ralf Grahn
P.S. Both the draft Constitution and the Constitutional Treaty were published quickly, and they were already 'consolidated versions'. We have to go back to the ill-fated Treaty of Nice to find a treaty published in a consolidated version only after entering into force.
Some would argue that a few things have happened in net publishing since 2001.
Anyway, a long wait seems to draw to a close, when the consolidated Lisbon Treaty is published 15 April 2008, and in book form 9 May 2008 (Europe day).
Here we look at the exemptions in the light of the present Treaty establishing the European Community and the coming Treaty on the Functioning of the European Union (Treaty of Lisbon), with a glance towards the draft Constitution and the Constitutional Treaty along the route.
The concrete provision we deal with concerns these exceptions in the context of the freedom of establishment, but often more than one of the rights and freedoms occur in the same case.
A few hints on further reading follow, meant to facilitate understanding of the system and strict interpretation of derogations.
***
In the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) made no specific amendments to Article 46 of the Treaty establishing the European Community (TEC). Cf. Official Journal, OJ, 17.12.2007 C 306/54-55.
***
The latest consolidated version of the existing treaties, TEU and TEC, presents Article 46 TEC as it now stands (OJ 29.12.2006 C 321 E/61):
Article 46 TEC
1. The provisions of this Chapter and measures taken in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action providing for special treatment for foreign nationals on grounds of public policy, public security or public health.
2. The Council shall, acting in accordance with the procedure referred to in Article 251, issue directives for the coordination of the abovementioned provisions.
***
To arrive at a consolidated Lisbon Treaty version of an Article requires that we check if one or more of the following apply: express amendments (here none), horizontal amendments (here one), renumbering of the provision (yes) and renumbering of possible referrals (here none).
The location of the Article is thrown in as a matter of reading convenience in a post read in isolation.
Thus, we should end up with the following Article, consolidated according to the Treaty of Lisbon:
Part Three ‘Policies and internal actions of the Union’
Title III (renumbered Title IV) ‘Free movement of persons, services and capital’
Chapter 2 ‘Right of establishment’
Article 46 TFEU (ToL), renumbered Article 52 TFEU
1. The provisions of this Chapter and measures taken in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action providing for special treatment for foreign nationals on grounds of public policy, public security or public health.
2. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, issue directives for the coordination of the abovementioned provisions.
***
The European Convention changed just enough of the wording in Article III-25 of the draft Treaty establishing a Constitution for Europe to merit repeating, but without changing anything of substance (OJ 18.7.2003 C 169/32):
Article III-25 Draft Constitution
1. This Subsection and measures adopted in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action in Member States providing for special treatment for foreign nationals on grounds of public policy, public security or public health.
2. European framework laws shall coordinate the national provisions referred to in paragraph 1.
***
The IGC 2004 adopted the draft text unchanged in Article III-140 of the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/62).
***
The IGC 2007 followed the adage ‘If it ain’t broke, don’t fix it’, thus preserving the current wording (with the one technical or horizontal amendment concerning the ordinary legislative procedure).
***
The Commission’s internal market web pages on services offer an introductory page ‘General principles: Freedom to provide services / Freedom of establishment’ (last update 28 January 2008):
http://ec.europa.eu/internal_market/services/principles_en.htm
There is a link to a 112 page ‘Guide to the Case Law of the European Court of Justice on Articles 43 et seq. EC Treaty: Freedom of Establishment’, from 1 January 2001, but with an update promised shortly:
http://ec.europa.eu/internal_market/services/docs/infringements/art43_en.pdf
Available on the web you can find the following:
J.H.H. Weiler and Martina Kocjan: The Law of the European Union, Teaching Material, The Internal Market: Freedom to Provide Services, Freedom of Establishment (NYU School of Law 2004/2005; 72 pages):
http://ec.europa.eu/internal_market/services/docs/infringements/art43_en.pdf
A detailed study is:
Markku Kiikeri: The Freedom of Establishment in the European Union, Report to the Finnish Ministry of Trade and Industry, 2002 (133 pages + Annexes XIX pages):
http://www.helsinki.fi/publaw/opiskelu/Eurooppaoikeus/Sijoittautumistutkimus.englanti.Kiikeri.pdf
These materials offer a fair grounding in the fundamental questions regarding the freedom of establishment, leaving only the latest developments of secondary legislation and case law to be unearthed by the reader.
Ralf Grahn
P.S. Both the draft Constitution and the Constitutional Treaty were published quickly, and they were already 'consolidated versions'. We have to go back to the ill-fated Treaty of Nice to find a treaty published in a consolidated version only after entering into force.
Some would argue that a few things have happened in net publishing since 2001.
Anyway, a long wait seems to draw to a close, when the consolidated Lisbon Treaty is published 15 April 2008, and in book form 9 May 2008 (Europe day).
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