Institutional balance and the negotiation of international agreements

Andrés Delgado Casteleiro, Lecturer at Durham Law School

Introduction

In last Thursday’s judgment on the Case C-425/13, Commission v Council, the CJEU was asked to determine the scope of the Council’s powers to issue negotiating directives to the Commission and the role of the special committee overseeing the Commission during the negotiations with Australia concerning the linking of its emissions trading system with the EU.  The case concerns the division of powers between the Council and the Commission and the extent to which the former can exercise some kind of control over how the latter is conducting international negotiations.

Background

Between 2012 and 2013, the Commission negotiated an agreement with Switzerland to link their emissions trading scheme to the EU’s. To be better informed of the how the negotiations were being conducted, the Council set up a special committee pursuant to Article 218 (4) TFEU (the Treaty clause setting out rules on how the EU negotiates and concludes international treaties). However, the Council was not completely satisfied on how the Commission consulted this committee during the negotiations of the agreement. Certain Member States argued that the information provided by the Commission was scant. In fact, the Commission referred the Council to a website of the Swiss Federal Office for the Environment when asked to provide an update on how negotiations were going.

In light of what the Council regarded as the Commission’s failure to effectively consult the special committee, when the Council adopted the negotiating directives for the conclusion of a similar agreement with Australia, it envisaged a greater involvement of the Council during the negotiations through the special committee. The Decision of the Council of the European Union of 13 May 2013 authorizing the opening of negotiations on linking the EU emissions trading scheme with an emissions trading system in Australia (Council Decision) establishes in the second sentence of Article 2 that “the Commission shall report in writing to the Council on the outcome of the negotiations after each negotiating session and, in any event, at least quarterly.” Moreover, Article 1(2) of the Decision states that the Commission shall conduct the negotiations in accordance with the very detailed negotiating directives and procedures set out in the Annex to the Council Decision. The annex provides, among other things, that detailed negotiating positions of the Union shall be established within the special committee.

Inasmuch as the Council Decision restricted the Commission’s scope of maneuver when negotiating with Australia, the Commission brought an action against it. The Commission’s plea boils down to two claims. First, the obligation to report in writing after each negotiation session or at least quarterly constitutes a breach of Article 13(2) TEU (role of the institutions), Article 218(2) to (4) TFEU (Treaty negotiation process), Article 295 TFEU (possibility to conclude interinstitutional arrangements) and the principle of institutional balance. Secondly, in so far as it provides that ‘detailed negotiating positions of the Union shall be established’ by the special committee or the Council, the Commission alleges a breach of Article 13(2) TEU, Article 218 TFEU and the principle of institutional balance.

The Judgment of the CJEU

In relation to the Commission’s first claim, the Court began by recalling the constitutional significance of Article 218 TFEU insofar as it confers specific powers on the EU institutions with a view to establishing a balance between those institutions during the treaty-making procedure. In practice, Article 218 TFEU gives different roles to each institution. Even though the Treaties have decided that the Commission is to act as the negotiator and to ensure the EU’s external representation (in all those areas not covered by the CFSP, see article 17 (1) TEU), the Council is nonetheless entrusted with the power to sign and conclude the agreement. According to the Court, in the context of those functions, the Council and the Commission are required to comply with the second sentence of Article 13(2) TEU, which states, “the institutions shall practice mutual sincere cooperation.” Moreover, that cooperation becomes of crucial importance for EU action at international level, as such action triggers a closely circumscribed process of concerted action and consultation between the EU institutions (para 64).

It is in this context of concerted action and consultation that article 13 (2) TEU triggers that article 218 (4) TFEU comes in, as the consultation and cooperation between the Council and the Commission will be channeled through the special committee. Consequently, what do the obligations of cooperation and consultation amount to? For the Court, those obligations mean that the Commission must provide the special committee with all the information necessary for it to monitor the progress of the negotiations, such as, in particular, the general aims announced and the positions taken by the other parties throughout the negotiations. It is only in this way that the special committee is in a position to formulate opinions and advice relating to the negotiations (para 66).

In any event, the Court also reminds the Commission that regardless of whether there is a special committee in place, it can be required to provide that information to the Council as well. Given the role of the Council in the treaty-making procedure, it should possess all the necessary information to have clear knowledge of the ongoing negotiations concerning the preparation of an agreement that will be submitted for its approval. Consequently, the Court concludes that an obligation such as the one enshrined in Article 2 of the Council decision which sets out the Commission’s obligation to report in writing to the Council on the outcome of the negotiations after each negotiating session and, in any event, at least quarterly’, is in conformity with Article 218(2) and (4) TFEU (para 68).

Furthermore, the Court considers that an obligation of information as the one recognized in Article 2 of the Council decision does not violate Article 13 (2) TFEU, insofar as the Council’s powers to lay down such an obligation of information have been exercised with due regard to the Commission’s power to negotiate international agreements (para 70).

Finally, in relation to Article 295 TFEU concerning the obligation to consult each other and by common agreement make arrangements for their cooperation, the Court understands that this obligation to conclude interinstitutional arrangements does not prevent the Council from being able to set out, in a decision authorizing negotiation, arrangements relating to the information that the Commission must provide to it periodically throughout the negotiating process (para 72). Hence, the Court dismissed the Commission’s first claim.

In relation to the second claim, concerning the powers of the special committee to establish detailed negotiating positions of the Union; the Court conducts its analysis in two stages. First, it examines whether the Council has the power to set up procedures pursuant to the first part of Article 218 (4) TFEU, like the one enshrined in the annex of the Council decision. Secondly, it focuses on the specific procedure set out in the annex to the Council decision and more specifically the powers that were conferred upon the special committee.

In the analysis of whether the Council has the power to set up a procedure like the one drawn up in the annex of the Council Decision, the Court examines the mandate of the special committee. In this regard, it considers that the special committee designated by the Council has the mandate to follow the conduct of the negotiations and guide the negotiator (para 76). In addition, the Court argues that since the Council is empowered to designate a special committee and the Commission is required to conduct the negotiations “in consultation with” that committee, the Commission must inform the committee of all aspects of the negotiations in order that it may be properly consulted (para 77). Therefore, Article 218(4) TFEU generally allows the Council to set out procedural arrangements governing the process for the provision of information, for communication and for consultation between the special committee and the Commission, as such rules meet the objective of ensuring proper cooperation at the internal level (para 78).

However, when analyzing the minutiae of the annex to the Council Decision, the CJEU considered that certain parts of that annex were not designed to enhance the transfer of information and the consultation between the special committee and the Commission. Instead, it argued that the possibility for the special committee to establish detailed negotiating positions as envisaged in the second sentence of the first paragraph of the Annex seek to bind the Commission in contravention of article 218 (4) TFEU, Article 13 (2) TEU and the principle of institutional balance. For the Court, the power to establish detailed negotiating procedures goes beyond the consultative function assigned to the special committee. The annex has the effect of imposing negotiating positions on the negotiator, i.e. the Commission (para 90). Therefore, the Court accepted the Commission’ second claim and partially annulled the Council Decision.

Comment

To a certain extent, the EU’s treaty-making procedure constitutes an example of the Principal – Agent problem. The Council (Principal) authorizes the Commission (Agent) to negotiate on its behalf, yet it does not completely trust the Commission. The Court understands that it is the information asymmetry that fuels the Council’s lack of trust on the Commission’s role as a negotiator. Consequently, anything in the Council decision that might exceed the obligation to inform and consult would be a breach of the principle of institutional balance, regardless of how badly the Commission had previously complied with that obligation.

In this regard, a parallelism with Case C-658/12 European Parliament v Council (Mauritius, AKA Somali Pirates) (discussed here) could be drawn. In that case the Court understood that by not informing the European Parliament (EP) immediately and fully informed concerning the conclusion of an extradition agreement with Mauritius, the Council had breached Article 218 (10) TFEU. Inasmuch as that provision aimed as ensuring that the EP could effectively exercise its powers in relation to the conclusion of international agreements, the Council had breached the principle of institutional balance. In the present case, the Court understands that an obligation to inform the Council on on-going negotiations is an expression of that principle. The Council also needs to be immediately and fully informed throughout the negotiations of an agreement it will end up concluding.

Finally, in the last couple of years we have witnessed an increase in the litigation between the different EU institutions concerning the exercise of their powers and the delicate balance between them in the field of EU External Relations. It appears that the EU institutions are still learning how to live with each other after the Lisbon Reform. Yet within this learning process, it appears, that the EU institutions seem to be moving away from cooperation arrangements and are pushing for a rigid interpretation of their respective powers. This is clearly seen in how the principle of institutional balance figures prominently in the present case or in other cases such as Mauritius Island, Case C-409/13 (Council v Commission) concerning the Commission’s right to withdraw proposals (discussed here), or Case C-28/12, Commission v Council, (US Air Transport Agreement). While in principle this is not per se a problem, it could signal that an increasing institutional divide on the way the to conduct the EU’s external representation after the Lisbon Treaty is emerging.

Barnard & Peers: chapter 24

Photo credit: carbonsolutionsglobal.com

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The Domino Effect: how many EU treaties violate the rights to privacy and data protection?

 

Steve Peers

Earlier this year, the Court of Justice of the European Union (CJEU) ruled in the Digital Rights judgment against the validity of the EU’s data retention directive, on the grounds that it provided for mass surveillance without any effective safeguards. Subsequently it ruled against Google,in what has become known as the ‘right to be forgotten’ judgment.

What are the longer-term consequences of the Court’s ‘Privacy Spring’? An Irish court has already referred the ‘Europe v Facebook’ case (discussed here) to the CJEU, asking in effect whether the EU’s ‘Safe Harbour’ arrangement on data protection with the USA is compatible with the rights to privacy and data protection, in light of the Snowden revelations. Now the European Parliament (EP) has decided to refer the proposed EU/Canada agreement on passenger name record (PNR) data to the CJEU, asking if it is compatible with the rights to privacy and data protection in light of the Court’s recent case law. That judgment would implicitly determine whether the separate EU/USAand EU/Australia treaties on PNR data, and the proposed PNR Directive, violate those rights also. And if the PNR treaties breach the rights to privacy and data protection, it would then be more likely that the EU/USA treaty on banking data transfers also breaches those rights in turn.

So, are we at the start of a ‘domino effect’ of a series of EU laws and treaties being ruled in breach of the rights to privacy and data protection by the Court of Justice, all falling in sequence now that the data retention Directive has been overturned? Or are the features of the different measures different enough to avoid this?  

Background

There’s a little bit of déjà vu in today’s decision by the EP to ask the CJEU about the EU/Canada treaty on PNR. Back in 2004, it asked the Court to rule on the original EU/USA treaty on the same subject. The Advocate-General’s opinion in that case ruled against all of the EU’s arguments, including the right to privacy point. However, the Court’s 2006 judgment only ruled on one of the EP’s legal arguments – that the EU/USA treaty had the wrong ‘legal base’, and should have been approved by using a different procedure (relating to police cooperation, instead of the internal market). And that procedure meant that the EP had no role in the approval of the treaty, or any power to ask the Court of Justice about its compatibility with EU law.

Eight years later, the legal environment is quite different. Since the Treaty of Lisbon entered into force in 2009, the EP (or the Commission, Council or a Member State) can ask the CJEU for rulings on the compatibility with EU law of EU treaties with third States on police or criminal law cooperation. Indeed, this will be the first such ruling. And while waiting for the Court’s ruling, the EP can prevent the EU/Canada treaty from being concluded, since it now has the power of consent over such treaties (back in 2004, the Council circumvented a separate request by the EP for the CJEU to rule on the EU/USA PNR treaty by concluding that treaty without waiting for the Court’s opinion). Furthermore, the substantive legal environment has obviously been transformed by the Court’s ruling against mass surveillance earlier this year.

The CJEU had another chance to rule on the right to privacy in the international context when the Commission asked it to rule back in 2012 whether the international Anti-Counterfeiting Agreement (ACTA) violated EU law. However, the Commission left it too late to send its request to the Court, and the EP simply vetoed that proposed agreement before the Court could rule (the Commission then withdrew its case). So we should now get a long-awaited ruling from the Court on the compatibility of international data transfers with the EU rights to privacy and data protection – unless the EP can be talked into withdrawing its request to the Court.

The procedure which the EP has invoked today is a special process which allows the Court to rule on the compatibility with EU law of a draft treaty to be concluded by the EU (or by its Member States on behalf of the EU), before that treaty comes into force. (For Canadian readers: this process is broadly similar to sending a request to the Supreme Court to rule on the constitutionality of a draft law. The EU process only applies to treaties, though.) If the CJEU rules (probably in about 18 months’ time, unless the ruling is expedited) that the draft treaty is incompatible with EU law, either the draft treaty has to be amended to comply with the Court’s ruling, or (improbably) the EU Treaties themselves have to be amended to permit its ratification.

The EU/Canada PNR treaty is distinct from the EU/Canada treaty liberalising air transport (already in force), and the proposed EU/Canada free trade agreement (CETA) – although the latter treaty, along with the EU/USA free trade agreement now being negotiated, will be indirectly impacted by a pending case in which the EU Commission has asked the CJEU to rule on whether the EU/Singapore free trade agreement is compatible with EU law.

Comments

So does the EU/Canada PNR treaty violate the right to privacy? There’s a detailed analysis of the broader impact of the data retention judgment on other EU measures in a study by Boehm and Cole, published earlier this year. So this is only a short summary of the issues discussed further in that study. The starting point is how to interpret that judgment: does it rule out all mass surveillance, or just in cases where there are insufficient safeguards? In my view, it does indeed rule out all mass surveillance where it’s linked to EU law, and any draft treaty to which the EU is party would obviously be linked to EU law.

But there’s a prior question: when does a treaty with another State entail mass surveillance? The data retention case concerned collection of data on all phone and Internet use in the EU. This could be compared to the use of social media (in the pending Facebook case), or to international banking transfers, but it’s harder to argue that collection of data on all flights to a particular third country constitutes, by itself, mass surveillance. Having said that, the proposed PNR Directive, which would apply to all flights within the EU, would probably meet the criteria.

If (contrary to my interpretation) the Digital Rights judgment does permit mass surveillance, as long as there are sufficient safeguards, then what must these safeguards be? According to the judgment, there have to be: definitions of the ‘serious crimes’ or other purposes of the data exchange; rules on the subsequent access to the data; limits on the number of people who can access that data; independent control by a court or supervisory authority; strong rules on the data protection period; provisions on protecting data from unlawful access and use; and a requirement to retain the data within the EU only. Obviously, in the context of treaties with non-EU States, the latter requirement must be understood as an obligation to retain the data in the EU or that particular third country.

Do the EU’s treaties with third States meet these criteria? This has to be assessed on a case-by-case basis. At first sight, for example, the EU/Canada PNR treaty contains provisions addressing all of these safeguards issues except one: the transfer of PNR data to other countries, which is permitted (although subject to conditions). But it might be argued that in practice, the right to privacy and data protection is not protected as strongly under such treaties as it might first appear, due to inadequacies in national legislation or practice, such as NSA access to Facebook data or limitations on non-USA citizens claiming privacy rights in the courts.

Finally, there’s an important practical question here. Let’s imagine that the CJEU rules that the proposed EU/Canada treaty violates privacy and data protection rights; or that it approves that treaty, but its reasoning in that judgment casts doubt on the compatibility of other EU treaties with those rights. How can those other treaties be challenged, now that they are already in force?

Time has run out to bring annulment actions against those treaties, or to ask the CJEU for an advance ruling on their compatibility with EU law. But it is still possible for individuals to challenge the application of those treaties via the national courts (as in the Digital Rights and Facebook cases). Or the EP could argue that in order to secure effective protection of rights under the EU Charter of Fundamental Rights, the other EU institutions must take steps to denounce the treaties concerned. If they don’t do so, the EP can sue them for ‘failure to act’ as set out in the EU Treaties.

 

Barnard & Peers: chapter 9

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