Reforming the Union: EU enlargement and the Franco-German report on Treaty reform

Edited by:

Guillermo Íñiguez

Reforming the Union: EU enlargement and the Franco-German report on Treaty

Table of Contents

1. Introduction

Guillermo Íñiguez

2. The Franco-German Report on EU institutional Reform: Origins, Recommendations and the Role of Lawyers

Franz Mayer and Thu Nguyen

3. Reforming the Treaties

Gavin Barrett

4. The Quagmire of EU Rule of Law Enforcement: Limits to jurisdictional Enforcement, limited Deterrence Capacity and Asymmetry

Carlos Closa

5. EU Enlargement and the Future of fiscal and economic Governance

Menelaos Markakis

6. Article 122 TFEU and the Future of the Union’s Emergency Powers

Paul Dermine

7. The joint Chamber of the highest Courts and Tribunals of the EU: an Appraisal

Ana Bobić

8. Europe’s Search for a democratic Dividend between Enlargement and Treaty Reform

Alberto Alemanno

Reforming the Union: EU enlargement and the Franco-German report on Treaty

Introduction

Guillermo Íñiguez

On October 6, 2023, the European Council issued its ‘Granada Declaration’. Among others, the declaration called for ‘a further enlarged Union’. Enlargement, the Council added, ‘is a geo-strategic investment in peace, security, stability and prosperity’; ‘a driver for improving the economic and social conditions of European citizens’, which ‘will make the EU stronger and will enhance European sovereignty’. A few weeks earlier, the Franco-German working group on EU institutional reform published a report titled ‘Sailing on High Seas: Reforming and Enlarging the EU for the 21st Century’ (‘the Franco-German Report’). The report noted that ‘for geopolitical reasons, EU enlargement is high on the political agenda, but the EU is not ready yet to welcome new members’. Building on this, it made a set of recommendations aimed at improving the EU’s institutional architecture, thereby streamlining the enlargement process and facilitating the smooth operation of a 37-member European Union.

This symposium builds on both the Granada Declaration and the Franco-German report to consider the prospect and implications of Treaty reform in light of the Union’s looming enlargement. The symposium’s contributions are authored by leading academic voices in the study of the European Union. They make a compelling case for Treaty reform, highlighting how the latter can contribute to a more effective Union and suggesting possible ways forward in their respective areas. While they engage in detail with the Franco-German Report, they do not provide a section-bysection commentary. Instead, they use the report as a blank canvas, building on its recommendations to advance their own proposals. In doing so, they illustrate many of the legal and political difficulties posed both by enlargement and by Treaty reform, but also highlight its opportunities to build a Union fit for the 21st century.

In the symposium’s first contribution, Franz Mayer and Thu Ngyuen, both of whom were members of the Group of Twelve that authored the Franco-German Report, trace the report’s origins and set out its key findings. In doing so, they also engage in a broader reflection about the role of lawyers in the process of Treaty reform.

Their piece is followed by Gavin Barrett’s, who makes the legal and political case for Treaty reform and highlights how this process cannot be dissociated from the Union’s enlargement. Reforming the Treaties, he argues, is not a mere thought experiment. Instead, it is essential for the Union’s very survival in an increasingly complex global scene.

Carlos Closa focuses on rule of law enforcement, one of the Franco-German Report’s central areas of concern. Closa examines what he labels the ‘quagmire’ of rule of law enforcement in the European Union, exploring the limits to jurisdictional enforcement, the Union’s limited capacity for deterrence, and the power asymmetries within the Council.

The Report’s proposals on fiscal and economic governance are analysed by Menelaos Markakis, who finds himself in agreement with many of the Report’s findings. Indeed, Markakis argues that ‘most of those reforms are necessary and should be implemented regardless of the demands associated with a future EU enlargement.’ Conversely, Paul Dermaine traces the origins, evolution, and recent rebirth of Article 122 TFEU. As he convincingly argues, ‘any reflection about future treaty revision should include Article 122 and the EU’s crisis powers.’

Turning to institutional reform, Ana Bobić explores the thorny issue of judicial dialogue, and situates it within the broader debate on Treaty reform. Building on previous proposals, she calls for the creation of a ‘joint chamber of the highest courts and tribunals of the EU’. In light of recent standoffs between national courts and the Court of Justice, she

Reforming the Union: EU enlargement and the Franco-German report on Treaty

argues, a joint chamber would promote greater dialogue between the Union’s legal systems, thereby helping to mitigate some of these constitutional tensions.

Finally, Alberto Alemanno’s contribution makes the case for a ‘democratic renewal’ within the Union. The accession process, he argues, provides an invaluable opportunity to rethink democracy within the European Union, paving the way for a bottom-up democracy which gives added legitimacy to the Union. Only by doing this, he concludes, can citizens’ trust in the Union be regained.

The European Union is an organic, ever-changing creature. Twenty years after its 2004 enlargement, following two decades of near-permanent ‘polycrisis’, and with the prospect of another major expansion, the time is ripe to consider whether its Treaties are fit for purpose. The present symposium seeks to contribute to this debate by suggesting possible ways forward for the Union. Far from prescribing uncompromising solutions, however, it hopes to pose the right questions. It will then be for Europe’s agora to chart a way forward.

The Franco-German Report on EU institutional Reform: Origins, Recommendations and the Role of Lawyers

Franz Mayer and Thu Nguyen

Fundamental questions are back on Europe’s agenda: the European Union is reconsidering its geography, institutions, competencies, and funding. For geopolitical reasons, EU enlargement is high on the political agenda, but the EU is not ready yet to welcome new members, neither institutionally nor policy-wise. Its institutions and decision-making mechanisms were not designed for a group of up to 37 countries and, as they are currently constituted, make it difficult even for the EU27 to manage crises effectively.

The mandate

Against this backdrop, the French and the German Ministers of State for Europe, Laurence Boone and Anna Lührmann, invited 12 independent experts to form a ‘working group on EU institutional reforms’. Our task was to develop reform proposals that would help to increase the EU’s capacity to act, protect its fundamental values, strengthen its resilience, and bring it closer to European citizens in preparation for potential future enlargement and as a followup to the Conference on the Future of Europe. Our group’s mandate was set as the following: How can the EU be made enlargement ready while also improving its capacity to act, protecting the rule of law, enhancing democracy and preserving fundamental European values?

The Group of Twelve, as we call ourselves, met at least biweekly in digital two-hour sessions and as well as in several inperson meetings over almost eight months. While our composition was Franco-German, we approached the questions from a trans-European perspective. During our work, we invited experts, decision-makers – both former and active – as well as advisors from other EU and candidate countries to numerous confidential exchanges, during which we received valuable input. Notably, while we had many intense discussions on the content of the questions, we never experienced a division line between the French and German experts in the group.

The report

The recommendations in our report are divided into three chapters: 1) protecting the rule of law as a fundamental principle underlying the EU’s functioning; 2) addressing institutional challenges in five key areas of reform; and 3) managing the process of widening and deepening the European Union.

It was not clear from the beginning that the protection of the rule of law would receive a chapter separate from the other reform areas, but something that only emerged during our discussions as we discussed the centrality of rule of law principles for the EU’s functioning. After all, the rule of law is not only one of the fundamental values on which the EU is based. Most of the EU’s policies, including the single market, rely on the assumption that member states have functioning justice systems. To strengthen EU rule of law instruments, we make recommendations in two areas: First, to make the rule of law conditionality mechanism an instrument to sanction breaches of the rule of law and, more generally, systematic breaches of the European values enshrined in Article 2 TEU and to introduce conditionality, similar to the model of NextGenerationEU, for all future funds. Second, to refine Article 7 TEU by removing the possibility of one member state blocking the whole procedure and by introducing more automaticity into the decision-making process.

Reforming the Union: EU enlargement and the Franco-German report on Treaty

In the main reform chapter, we address five areas of reform, which we consider to be the most crucial for the EU’s future. Two aspects should be noted here: First, not every idea which we discussed in the group is included in the final report. We neither propose reforms which would radically change current institutional balance of the EU, nor do we recommend ideas which we consider to be politically too difficult to implement at this moment in time, even if they are good ideas. Second, while the premise of the report is the question of how the EU should prepare for enlargement, we believe that some of the reforms proposed in the report should be implemented even if enlargement was substantially delayed.

The first key area of institutional reform is making the EU institutions enlargement-ready. This relates to practical questions such as the size and organization of the EU institutions in an enlarged EU. Recommendations include not to increase the number of seats in the European Parliament beyond 751 MEPs as well as to extend the trio format of the Council presidencies to a quintet of presidencies, each spanning half of an institutional cycle. We also propose two options on how to avoid a too big and ineffective Commission with more than 35 Commissioners.

The second key area of reform is the issue of decision-making in the Council and in particular the danger of blockages in areas where unanimity still prevails. We recommend that, before the next enlargement, all remaining  policy decisions should be transferred from unanimity to QMV. To make this transition more acceptable for sceptical and smaller member states, we also propose the creation of a ‘sovereignty safety net’ as well as a re-calculation of QMV voting shares and an opt-out option for policy areas transferred to QMV.

In the third area, to improve EU-level democracy, we make recommendations relating to the EP elections as well as the appointment of the next Commission President after the 2024 European elections. We also recommend making use of existing participatory instruments to prepare for enlargement by including citizens from candidate countries. In addition, we propose the establishment of a new independent Office for Transparency and Probity (OTP) in charge of monitoring the activities of all the actors working in or for the EU institutions.

In the fourth area of reform, which concerns the EU’s powers and competences, we  inter alia recommend strengthening provisions on how to deal with unforeseen developments, competency-wise, and a better inclusion of the EP in Article 122 TFEU. We also propose to create a ‘Joint Chamber of the Highest Courts and Tribunals of the EU’ to foster nonbinding dialogue between European and Member States’ courts.

Lastly, we consider the question of EU resources to be the fifth vital area of reform for enlargement. A reform of the policies of the budget itself would have exceeded our mandate, which is why we limit ourselves to the recommendation of establishing a thorough spending review to reduce the size of some spending areas and to increase others. In addition, we make proposals on how to make the EU budget more flexible and apt for the future. In particular, we recommend increasing the EU budget in the coming budgetary period both in nominal size and in relation to GDP as well as the introduction of new own resources to limit tax optimisation, avoidance and competition within the EU. We also propose to move decisions on the multiannual framework towards QMV for spending and to align its length to the institutional cycle of the EU. Lastly, we think the EU should be enabled to issue common debt in the future.

Our third chapter deals with the question of how manage the process of widening and deepening the EU. We lay out six different options for Treaty change and explain their advantages and disadvantages. At the same time, we believe that an enlarged EU will require a degree of flexibility to function. For this, we lay out different principles for differentiation within the EU, with the most fundamental ones being the respect for the  acquis communautaire and the integrity of the EU’s policies and actions, and the use of the EU institutions to avoid an intergovernmental Europe à la carte. In a simplified manner, we envision the future of European integration as four distinct tiers: the inner circle, the EU; associate members, and the EPC, with a rule of law frontier around the third tier.

The enlargement process itself also fell outside our mandate. Nonetheless, we felt that the report would not be complete without at least some general principles on how to manage the enlargement process. We also believe that there should be a mutual commitment goal for the EU to try and become ready for enlargement by 2030; candidate countries should work to fulfil all accession criteria by then. The accessions themselves should be broken down into smaller groups of countries (‘regatta’) with a set of principles to guide future enlargement strategies.

The role of lawyers

There were three lawyers in the group. Why lawyers? Lawyers do not normally concern themselves with the future. Even in the present, they look to the past. The law we apply today is the political wrangling of yesterday, the passionate debates and battles that have coagulated into law. As lawyers, we spend most of our time looking in the rear-view mirror. So it is probably not the best idea to ask us about the road ahead.

At the same time, lawyers are needed at some point. They have to put the political choices into coherent legal language, consistent terminology. They can say what the framework of the political choices is, what is possible and what is not possible. They are the gatekeepers. But normally, the hierarchy is clear: the political decision comes first. This may lead to results that do not correspond to legal textbook solutions or established conventional legal doctrinal wisdom. Famously, Deirdre Curtin considered the result of the 1993 Maastricht Treaty ‘a Europe of bits and pieces.’ Nevertheless, the role of law and lawyers is to process political choices even if they lack coherence: law can transform complexity into coherence, avoiding constitutional chaos. Consider the example of differentiated integration that we discuss in the report. If principles for differentiated integration are not agreed upon beforehand, then lawyers and courts will develop them. Or take the example of Treaty change, which is another topic we cover in the report: if standard approaches do not work, untested options may lead further.

Conclusion

Although many things have changed profoundly in the past two decades, we see a lasting value in the EU legal framework, its institutional system, and its procedures, which have allowed for joint progress and inclusive decision-making that serve EU citizens’ and countries’ interests. This is why our report does not rethink European integration ‘from scratch’ but proposes adjustments to fit the new realities, both in terms of deepening and in terms of flexibility. Arguably the most crucial insight is that we highly recommend thinking in terms of ‘the cost of non-action’. Given that neither global changes nor internal challenges will become lighter, time and decisiveness is of the essence. Choosing to not reform the EU or not to integrate candidate countries with a strong commitment to the EU and its principles and values would come at an even higher price for the EU, its Member States and its citizens.

The EU could be in very real danger if not enough is done to prepare it for the future.

Franz Mayer is professor at the Faculty of Law at the University of Bielefeld. He holds the chair of Public Law, European Law, Public International Law, Comparative Law and Law & Politics.

Thu Nguyen is Deputy Director of the Jacques Delors Centre, Hertie School.

Reforming the Union: EU enlargement and the Franco-German report on Treaty

SUGGESTED CITATION: Mayer, F., and Thu Nguyen: ‘The Franco-German report on EU institutional reform: Origins, recommendations and the role of lawyers’, EU Law Live, 13/12/2023, https://eulawlive.com/op-ed-the-franco…r-and-thu-nguyen/

Reforming the Union: EU enlargement and the Franco-German report on Treaty

Reforming the Treaties

Gavin Barrett

A spectre is haunting European capitals – the spectre of Treaty reform. Across Europe, debate is quietly ongoing regarding whether, when and how the EU’s basic Treaties can be revised. This debate has surfaced a few times – for example, in a September expert report advanced (although not endorsed) by France and Germany; in an October 25th report of the European Parliament’s Constitutional Affairs Committee; and earlier (at least implicitly) in the 2022 proposals of the Conference on the Future of Europe.

Why now? First, change is overdue: the foundational Treaties have not been overhauled since the entry into force of the 2007 Lisbon Treaty (which itself largely reflected compromises arrived at in the failed 2004 Constitutional Treaty). Remarkably, the Treaty provisions on EMU have stayed largely unchanged since the Maastricht Treaty was agreed in 1992 (an omission which has necessitated their being supplemented by non-EU Treaties, secondary legislation and soft law).

Secondly, crises have abounded since Lisbon, revealing weaknesses. Most recently, the Ukraine war, which exposed the EU’s inadequacies in foreign, defence and energy policy. The consequent shock has added a sense of urgency to the drive for EU reform.

Most importantly though (and also linked with the Ukraine situation) is the need for the EU to enlarge. By now, eight central and eastern countries on the Eastern borders have been granted candidate status – Türkiye, North Macedonia, Montenegro, Serbia, Albania, Ukraine, Moldova and Bosnia-Herzegovina (with Georgia and Kosovo still seeking candidate status). Admittedly, some candidatures lack reality. Türkiye’s relapse into autocracy has meant its admission process has been frozen indefinitely. Serbia’s approach to Kosovo and, latterly, its ambiguous stance towards Ukraine has caused problems, and until recently, political turmoil in Montenegro has led to its admission process stalling too. Nevertheless, enlargement is coming – and requires preparation  Otherwise, the EU could glide into the fatal trap of expanding without an adequate strategy to ensure its continued efficient functioning.

Preparations for enlargement will require far more than treaty reform. Hence, enlargement will require major financial preparations – and sacrifices. An internal paper by the Council secretariat leaked to the press in October noted that the accession of nine new states (excluding Türkiye) under current rules would add €256.8bn to the cost of the multiannual financial framework, increasing the EU’s budget by 21 per cent to €1.47 trillion and concluded ‘all member states will have to pay more and receive less from the EU budget; many member states who are currently net receivers will become net contributors’. The budgetary implications of enlargement will thus need to be agreed by 2027 which is when the next MFF cycle begins.

Yet Treaty change will also have to be part of the enlargement dynamic. We have been here before. The same phenomenon drove agreement on the 1997 Amsterdam Treaty and the 2001 Nice Treaty, allowing the enlargement of the EU by ten states in 2004 and two more in 2007.

In her September State of the Union speech to the European Parliament, Commission President Von der Leyen explicitly anticipated the possibility of a European Convention and Treaty change in the context of enlargement. Nonetheless,

Reforming the Union: EU enlargement and the Franco-German report on Treaty

there still tends to be hesitancy about promising Treaty change. Von der Leyen carefully hedged her bets by saying the EU should not wait for Treaty change to move ahead with enlargement. The October Granada declaration by the European Council merely declared ambiguously of enlargement that ‘the Union needs to lay the necessary internal groundwork and reforms. We will set our long-term ambitions  and the ways to achieve them. We will address key questions related to our priorities and policies as well as our capacity to act.’ Ultimately however German Europe Minister Lührmann –brandishing a paper advocating Treaty changes – is correct in asserting that enlargement and reform ‘go hand in hand.

And we need to begin this now’.

What Treaty amendments await? So far, there have been three prominent generators of ideas. The May 2022 report of the Convention on the Future of Europe issued 49 recommendations and 200 individual proposals to improve the EU on areas as varied as education, digital transformation, European democracy, the rule of law, climate change, health and migration. Some would require Treaty change. Thirteen Member States (Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Latvia, Lithuania, Malta, Poland, Romania, Slovenia and Sweden) attempted to strangle at birth any idea that the Convention’s ideas should lead to treaty reform, by immediately publishing a non-paper recalling that ‘Treaty change has never been a purpose of the Conference we do not support unconsidered and premature attempts to launch a process towards Treaty change’ and asserting that ‘we already have a Europe that works. We do not need to rush into institutional reforms in order to deliver results’. The Conference’s proposals live on as ideas (burnished by their advocacy by ordinary citizens) however, and have influenced European Parliament calls for Treaty change.

Secondly, the September 2023  Report of the Franco-German Working Group on EU Institutional Reform  advanced jointly by France and Germany advocated several ideas for change. These include a widespread end to unanimity voting (with smaller Member States compensated by increased voting power), strengthening rule of law requirements; facilitating the issuance of common debt and shortening of the budget cycle; and a budget more commensurate with the size of the EU’s tasks. Most eye-catchingly, the Report  also revived the idea of concentric circles of integration – an inner circle of Members who would freely integrate further; then EU members; then associate members; then (outermost) the European Political Community. The attractiveness of the model to candidate or existing Member States remains unclear.

Thirdly, an October report of the European Parliament’s Constitutional Affairs Committee advocated extensive Treaty change. Alongside proposals on foreign, security and defence policy (including more QMV), the single market, education, trade and investment, non-discrimination (including using the language of gender equality in the Treaties), climate and environment, energy policy, security and justice (including enhanced Europol powers) and migration (including common minimum citizenship requirements), it advocates shared competences e.g., in health and education and makes (unlikely-sounding) calls for exclusive EU competence for the environment and biodiversity, for EU-wide referendums (both in the EU legislative process and the treaty amendment process). It advocates more decision-making by QMV and the ordinary legislative procedure and a more politically-flavoured Commission. More self-interestedly, it also demands a right of legislative initiative for Parliament, co-legislative budgetary power and the reversal of the current roles of Council and Parliament in electing the Commission President.

Such ideas represent only the first shots fired in a Treaty reform debate. Various Member States have been working on their own proposals on Treaty reform. Moreover, issues such as enhancing EU level democracy, adjusting the EU’s crisis response framework and updating provisions in areas such as EMU will doubtless appear on the agenda. A CFSP dominated by unanimity voting has proved problematic, as the Ukraine crisis has shown, although changing voting rules is no cure-all, since the problem is sometimes widespread disunity, witnessed over Iraq and, more recently, Gaza.

No discussion of Treaty reform can avoid discussion of the stone in the midst of all: the  Article 48 TEU Treaty amendment process, arguably utterly unfit for purpose. Its giving each State a veto over Treaty change for all Member States seems an

Reforming the Union: EU enlargement and the Franco-German report on Treaty

overhang from when European integration involved fewer States, and democratically unnecessary. The US Constitution needed only nine of thirteen states to ratify it (a wise precaution since Rhode Island initially rejected it). Amendment of the UN Charter requires inter aliaratification by just two thirds of UN Members. NATO’s Constitution entered into force between the States which had ratified it as soon as the ratifications of the majority of the signatories had been deposited. In 2013, the Fiscal Stability Treaty could enter into force when a mere twelve Contracting Parties whose currency was the euro had deposited their instrument of ratification.

The ESM Treaty could enter into force when instruments of ratification had been deposited by signatories whose initial subscriptions represent only 90% of the total. A similar approach of allowing arrangements to enter into force only for those States which have ratified them once this reaches a certain minimum number seems vital for the success of future constitutional change. This seems to be anticipated in the Franco-German paper, which advocates, in case of negotiation deadlock, the fallback option of ‘a supplementary reform treaty (such as the ESM Treaty) between the Member States willing to move forward’. The ESM reference may (and should) be taken to imply the approach of permitting entry into force for ratifying states of such supplementary reform treaties once a certain minimum number of ratifications is reached.

Without such an approach, a new Treaty may not be agreed in the first place, or once agreed may not be ratified –especially given the unpredictability of national referendums in an age of internet disinformation. That would risk Treaty reform negotiations becoming a tale full of sound and fury, signifying nothing – a fate Europe can do without.

Gavin Barrett is a Professor at UCD Sutherland School of Law and the sometime Jean Monnet Professor of European Constitutional and Economic Law there.

SUGGESTED CITATION: Barrett, G.: ‘Op-Ed: “Reforming the Treaties’, EU Law Live, 15/12/2023,  https:// eulawlive.com/op-ed-reforming-…by-gavin-barrett/

The Quagmire of EU Rule of Law Enforcement: Limits to jurisdictional Enforcement, limited Deterrence Capacity and Asymmetry

Carlos Closa

The experience of the last decade shows that any meaningful treaty revision concerning enforcement of rule of law compliance by Member States must satisfy three requirements. First, it must rely on a solid institutional procedure that secures results and prevents regressions. Second, it must possess enough deterrence power so as to prevent deviations from rule of law compliance without necessarily activating enforcement mechanisms. Third, it must be workable despite EU asymmetries. Hence, the challenge that governments face is how to create an enforcement mechanism that carries enough deterrence power regardless of EU imbalances.

Jurisdictional enforcement … and its limits

Scholars have been critical of the capacity and/or willingness of EU institutions (Commission and Council) to effectively implement enforcement against rule of law breaches. Evidence shows multiple instances of ill performance. The Commission does not present a glamorous record as an enforcer because of  its calculus of the positions of national governments and the required support for its actions in this and other areas. The Council, in turn, depends on a logic of collective action where the cost of action for any government largely outweighs any benefits. This has naturally led to calls for an enhanced role for the Court of Justice within the enforcement system, for instance via the so-called systemic infringement procedure (Scheppele; 2016). Certainly, the Court’s record as enforcer looks brighter, particularly in those cases in which it has been able to set financial penalties. But even in these cases, governments in Hungary and Poland have remained defiant of enforcers’ authority, engaging in ‘creative compliance’ (i.e.  formal adoption of norms that does not lead to substantive changes; Batory, 2016). This raises a non-irrelevant question: how can the EU secure compliance with Court rulings by governments that, precisely, challenge the Court’s authority and the authority of the very law that legitimizes that institution? The real dilemma behind rule of law enforcement is whether enforcement can be secured in the absence, in the last instance, of coercion instruments (i.e. law enforcement authorities such as ‘police’ and similar). Coercion is required as part of enforcement mechanism to ensure that ‘violations of the law’ are deterred.

Deterrence

As a proxy to understand enforcement of rule of law violations, Dan Kelemen has put on the spotlight the economic theory of crime and punishment (Becker; 1968). This theory revolves around the notion of deterrence (which scholars of security studies had also developed earlier): the threat of punishment will be enough to prevent crime precisely because of the fear of being effectively punished. The fear of being punished plays a central role for effective compliance and this fear (after all, a belief of actors) derives from a calculus (accurate or not) of: (a) the possibility of actually being punished; i.e. the existence of real punishment capacities; (b) the will of enforcers to activate punishment. This creates a ‘self-enforcing’ equilibrium that constitutes the political foundation of democracy and the rule of law (Weingast; 2014).

How do those two elements of the fear of punishment as the basis of deterrence work in the case of EU rule of law violations by rogue governments? We cannot really know what rogue governments infringing rule of law mandates think about the EU’s will to punish them. But an undisputable fact is that they have adopted a deeply defiant attitude that differs radically from other cases of non-compliance with EU law, and even of no-compliance with ECJ enforcement measures. Without precising too much, these governments have ignored, attacked and not complied with EU Commission measures; they have plainly disregarded EP authority; and they have openly challenged the authority of the ECJ and its rulings.  Defiant non-compliance characterizes rule of law systemic breaches by rogue governments. This attitude reveals a belief on the lack of EU capability to punish them.

As for the existence of real EU punishment capacities that can reinforce the credibility of its deterrence, the ‘toolkit of EU enforcement mechanisms’ has proved its limited capacity. This comprises also infringement procedures even when they reached the ECJ stage. The exceptions are, naturally, the cases in which the ECJ could impose fines. More importantly, the recently developed rule of law spending conditionality, constructed around the Recovery and Resilience Facility (RRF) and the ‘Rule of Law Conditionality Mechanism’ have proved comparatively more powerful instruments.[1] So, one could be tempted to conclude that the EU could construct its deterrence capacity around financial sanctions and the withholding of funds relying on proactive EU institutions. Whether institutions are more proactive or this is rather a momentary situation remains to be seen. More importantly, financial sanctions may be related to the relative conditions (e.g. budgetary position or voting weight in the Council, inter alia) of different member states.

Asymmetry

Considering size and power, the EU is a highly asymmetric system of states. Size matters (as translated, for instance, under the vote distribution in qualified majority voting) as does power (however difficult this is to define or even grasp) and the financial position of states (i.e. net contributor vs. net beneficiary). Asymmetry may be hypothetically irrelevant as regards to compliance and, in fact, research on the topic has not identified a pattern that relates compliance to size (even though larger states are occasionally more lenient that smaller ones). Hypothetically at least, enforcement is also blind towards size and power considerations and, more importantly, enforcement tools (such as infringement actions) seem to have similar force regardless those two attributes.

However, as discussed above, experience shows that so far financially related enforcement mechanisms (such as sanctions or withholding money) have been the most efficient. But, of course, if funds/money is the efficient enforcement mechanism, much will depend on how much a member state depends upon them (in the case of structural funds, conditionality) or, again, the will of a state to pay, or of the Union to collect the money. The relative success of money-based enforcement may be because funds are particularly important in the case of Hungary and Poland (also to maintain the so-called authoritarian equilibrium;  Kelemen; 2020), which have a higher reliance on EU cash and/ or smaller economies. But how credible is this mechanism in the case of larger or less financially dependent member states?

Can the quagmire be resolved? Institutionally adjusting enforcement by adding coercion powers could do the trick, but this implies a deep turn towards a real federation (on the US model) in which federal powers may overrule national decisions. Whether this is desirable and/or feasible is a different question and one may anticipate a negative response. Given that this would require a significant reform of the treaties under unanimity conditions, the safe conclusion is that this may not happen at all. Hence, an enhanced enforcement capacity may work on the other two components of the dilemma. Increased deterrence could work around an instrument that sounds like “real” punishment: expulsion There are sound reasons to propose this remedy in extreme situations; for instance, one may wonder whether the EU could/should tolerate authoritarian/totalitarian governments. Naturally, expulsion would depend on treaty reform,

Reforming the Union: EU enlargement and the Franco-German report on Treaty

again, under unanimity: given the limits posed to real treaty reform, expulsion could only be possible as a ‘re-foundation without rogue states’. And of course, the will to activate this sort of punishment will depend very much on realpolitik considerations. Expulsion may become a strong tool against backsliding small and/or less wealthy member states but not for others. Lately, what is in question are the limits of a community (the EU) that has defined itself as essentially a ‘community of law’. When respect for the law fails, little seems to remain to keep the community.

Carlos Closa is Vice-President of the Spanish National Research Council (CSIC) where he is also professor at the Institute for Public Goods and Policies (IPP).

[1] Rule of law spending conditionality can be found in three instruments applicable in relation to the 2021-2027 budgetary cycle: the mechanism set up by Regulation 2021/241, the framework contained in Regulation 2020/2092, and the CFR-related “horizontal enabling condition” found in Regulation 2021/1060.

SUGGESTED CITATION: Closa, C; “The quagmire of EU rule of law enforcement: Limits to jurisdictional enforcement, limited deterrence capacity and asymmetry”, EU Law Live, 15/01/2024, https://eulawlive.com/op-ed-the-quagmire-ofeu-rule-of-law-enforcement-limits-to-jurisdictional-enforcement-limited-deterrence-capacity-and-asymmetry/

Reforming the Union: EU enlargement and the Franco-German report on Treaty

EU Enlargement and the Future of fiscal and economic Governance

Menelaos Markakis

The European Council recently  underlined that enlargement is ‘a geo-strategic investment in peace, security, stability and prosperity’ and ‘a driver for improving the economic and social conditions of European citizens’. However, it ‘must foster the values on which the Union is founded’, and ‘both future Member States and the EU need to be ready at the time of accession’ (para 13).

The prospect of an enlarged Union provides an opportunity, and perhaps necessitates, rethinking the workings of the EU in a more fundamental manner. In this regard, the recent Franco-German report that forms the subject matter of this Symposium on EU Enlargement is particularly important. The background to the report has been discussed extensively, such that it will not be repeated here. Suffice it to say for present purposes that the report notes that, for geopolitical reasons, EU enlargement is high on the political agenda, but that the EU is not yet ready to welcome new members, neither institutionally nor policy-wise. Against this backdrop, a ‘working group on EU institutional reforms’ was formed by the French and German Ministers of State for Europe with the following mandate: ‘How can the EU be made enlargement ready while also improving its capacity to act, protecting the rule of law, enhancing democracy and preserving fundamental European values?’ (p. 11). ‘The basic assumption of this report, in line with the group’s mandate, is that while EU enlargement has become a top priority, it needs to go hand in hand with reforms that increase its efficiency, its capacity to act and its democratic legitimacy, as well as empowering the rule of law. Concrete steps should be adopted before or when new countries join the EU’ (pp. 12-13).

There is much that is of interest in this thoughtful report. This contribution will focus specifically on those elements of the report that concern various aspects of EU fiscal and economic governance, notably the long and arduous process towards further fiscal integration, understood as the pooling of more resources and decision-making powers at the EU level. (fn 1) With that said, the proposed reforms adumbrated in the report would clearly affect  all areas of EU law. Changing the composition or workings of the EU institutions, or improving democracy at EU level, would also affect the area of Economic and Monetary Union, although not specifically aimed at it. The opposite is also true: any progress made towards a fiscal union, or any further fiscal integration, would inevitably affect the EU as a whole and condition future developments in the EU. Furthermore, while the goal of making the EU ‘enlargement ready’ is central to this report, the current author, much like the authors of this report, believes that reforms aiming to strengthen the EU’s capacity to act, as well as the rule of law, fundamental values and democratic legitimacy, should be pursued even if enlargement were substantially delayed (p. 14).

The report’s recommendations are structured intro three main sections, dealing with the rule of law, institutional reforms, and the process to reform, deepen and enlarge the EU.  All of these aspects are also relevant to EU fiscal and economic governance, such that the structure of this contribution will mirror the structure of the report.

Protecting the rule of law

As regards budgetary conditionality, the authors make two main suggestions: extending the scope of application of  the Rule of Law Conditionality Regulation, which establishes the rules necessary for the protection of the Union budget in case of breaches of the principles of the rule of law in the Member States (fn 2); and introducing conditionality similar to the one in the EU’s recovery plan, NextGenerationEU (NGEU), for all future funds. More specifically, they recommend making the Rule of Law Conditionality Regulation, which also applies in the context of the Recovery and Resilience Facility (RRF Regulation, Article 8), ‘…an instrument to sanction breaches of the rule of law and, more generally, systematic breaches of the European values enshrined in Article 2 TEU…’ (p. 16). They take issue with the requirement that ‘breaches of the principles of the rule of law in a Member State affect or seriously risk affecting the sound financial management of the Union budget or the protection of the financial interests of the Union in a sufficiently direct way’ (Article 4(1) of  the Rule of Law Conditionality Regulation). The inclusion of such a requirement was seen as necessary in light of the competence basis used for the adoption of the Regulation (Article 322(1)(a) TFEU). (fn 3) They propose relying on Article 352 TFEU instead or amending Article 7 TEU so as to add a new competence basis (p. 16). If the Treaties were not amended, one should be careful not to establish ‘a procedure parallel to that laid down by [Article 7 TEU], having, in essence, the same subject matter, pursuing the same objective and allowing the adoption of identical measures, while providing for the involvement of different institutions or for different material and procedural conditions from those laid down by that provision’, which would infringe Article 7 TEU (C-156/21, para 167; C-157/21, para 206). ‘However, it is permissible for the EU legislature, where it has a legal basis for doing so, to establish, in an act of secondary legislation, other procedures relating to the values contained in Article 2 TEU, which include the rule of law, provided that those procedures are different, in terms of both their aim and their subject matter, from the procedure laid down in Article 7 TEU’ (C-156/21, para 168; C-157/21, para 207). In my view, another important aspect with regards to the Rule of Law Conditionality Regulation would be extending the fairly limited role accorded to the European Parliament in its implementation. (fn 4)

Addressing institutional challenges

The authors note that ‘[i]institutional reforms to make the EU enlargement ready will have to find a delicate balance between the increased capacity to act, the power and influence of small, medium, and large Member States, the democratic legitimacy of decision-making, and the protection of legitimate national interests’ (p. 18). Insofar as concerns the subject matter of this contribution, the authors propose that qualified majority voting (QMV) in the Council be generalised, such that all remaining policy decisions should be subject to QMV before the next enlargement. This should be accompanied by full co-decision with the European Parliament, through the ordinary legislative procedure, with the exception of Common Foreign and Security Policy and what the authors refer to as constitutional decisions, such as changing the EU Treaties (p. 21). It is hard to imagine anything akin to this for norm production in the area of Economic and Monetary Union, where various competence bases either require unanimity in the Council and/or grant a reduced (or even no) role to the European Parliament in the adoption of acts. This is so, in the current author’s view, notwithstanding the measures proposed in the report so as to render QMV more acceptable to the Member States (p. 22). As regards fiscal and tax policy, the authors argue that: ‘The current treaty gives Member States veto rights for both policy decisions on tax harmonisation and EU fiscal decisions. This contributes to the inflexibility of the EU budget as well as difficulties in reaching any decision on tax policy. The EU should create the basis for both greater tax policy harmonisation for Member States but also a greater pool of common EU resources, which would be required to finance an enlarged EU and can only be achieved by matching decision-making on resources and spending’ (pp. 21-22). Although there is no mention

Reforming the Union: EU enlargement and the Franco-German report on Treaty

of specific Treaty provisions, the emphasis seems to lie on EU budget law as well as provisions such as Articles 113 or 115 TFEU.

The authors further rightly note that ‘[t]he democratic legitimacy of EU decision-making is crucial’ and that ‘the question of the EU’s democratic quality remains at the heart of the debate’ (p. 23). They make a wealth of recommendations on how to improve democratic legitimacy in the EU. Suffice it to say for present purposes that democratic legitimacy in the Economic and Monetary Union also needs to be bolstered, in the manner explained in more detail in various writings in this area. (fn 5) The authors further propose clarifying certain provisions related to the EU’s powers and competences on the occasion of a future Treaty revision. ‘This ranges from a clearer [broader?] legal basis for the ECB in the context of the banking union [Article 127(6) TFEU], […] or the integration of crisis response instruments that […] were created outside the formal treaty framework (such as the European Stability Mechanism (ESM))’ (p. 28). As regards the former proposal, it has previously been argued that a greater role should be accorded to the European Parliament in adopting or amending legislation on the basis of Article 127(6) TFEU by switching to an ordinary legislative procedure, on the basis of the second subparagraph of Article 48(7) TEU. (fn 6) As regards the latter proposal, although clearly in favour, the current author does not hold much hope for bringing the ESM within the fabric of EU law, as even the more limited reform of the ESM Treaty that was opted for is currently stalled. (fn 7)

The authors further propose that the EU ‘strengthen provisions on how to deal with unforeseen developments, competency-wise, and including the EP’ (p. 28). In their view, Article 122 TFEU, which was most recently used as the basis for  the SURE instrument and  the EU recovery instrument that underpins the NGEU, should be amended to include the European Parliament in the decision-making process (p. 28). In this connection, it will be recalled that during the negotiations for the Multiannual Financial Framework (MFF), own resources, and the recovery plan, the European Parliament managed to secure the adoption of a  Joint Declaration on budgetary scrutiny of new proposals based on Article 122 TFEU with potential appreciable implications for the Union budget. The authors further touch upon the debate on ‘who is the ultimate arbiter of the reach and limits of EU competence’ (p. 28), which has also plagued the EMU. (fn 8) They propose an additional forum for dialogue between courts at different levels, without the authority to take binding decisions.

Furthermore, the report looks at the potential impact of enlargement as well as of governance and competence reforms on the EU budget. In the authors’ view, ‘[e]quipping the EU with the financial means to have the capacity to react quickly and substantively to changing economic circumstances requires profoundly modifying the governance and the negotiation process of the EU budget and the MFF’ (p. 28). ‘First and foremost, the EU budget must grow over the coming budgetary period in nominal size as well as in terms of a proportion of GDP’ (p. 28). The authors mention inter alia that the EU will need to raise enough revenue to repay the principal and the interest for the funds borrowed for its recovery fund, NGEU (p. 29). It will be recalled that a roadmap for the introduction of new own resources was set out in  the budgetary interinstitutional agreement. Absent meaningful progress on that front (see  here and  here), it would be the Member States themselves that would have to pick up the slack through direct contributions from their national budgets. This would inevitably shift the focus to national net budgetary balances or a ‘juste retour’ logic. The authors’ preferred option is that the EU ‘create truly new own resources for the EU budget that would limit tax optimisation, avoidance, and competition within the EU’ (p. 29).

They further call for ‘a profound reform of how the EU budget is adopted, which should move towards QMV for spending. The own resources decision, or any transfer of taxation power to the EU, would still be voted for under unanimity’ (p. 29). The EU’s long-term budget, laid down in the MFF Regulation, is currently adopted by the Council acting unanimously after obtaining the consent of the European Parliament, but the Treaties provide for the possibility of switching to QMV in Council (Article 312(2) TFEU). In practice, an overall compromise is reached between the

Reforming the Union: EU enlargement and the Franco-German report on Treaty

leaders in the European Council, and the subsequent negotiations between the Council and the European Parliament on the MFF take place in the shadow of detailed European Council Conclusions. The authors further argue that: ‘In the absence of a full move to QMV, there should be more enhanced cooperation or other forms of cooperation between even smaller groups of Member States to agree to finance policies together’ (p. 29). This has proven notoriously difficult in the past, as evidenced by the tumultuous history of the Financial Transaction Tax.

The authors further propose ‘establishing a thorough spending review to reduce the size of some spending areas and increase others’ (p. 29) They also recommend ‘draw[ing] on the positive experience of NextGenerationEU by enabling the EU to issue common debt in the future’ (p. 29). Centralised debt issuing was of course not foreign to the EU prior to the COVID-19 crisis. (fn 9) The current author gathers that this should continue into the future, also to fund other policies, presumably under different rules or a different procedure (otherwise it is unclear why a Treaty change would be required – see p. 48). Could the Union perhaps finance itself through borrowing on a more permanent basis? The RRF could be turned into a common fiscal capacity or fiscal insurance device to deal with shocks and/or to achieve other objectives, possibly complemented by the issuance of common debt to finance its operations. Other, more permanent ‘inter-governmental financing agreements’ could be brought into the fabric of EU law (p. 29). Last but definitely not least, the authors propose that ‘each institutional cycle should set a new MFF based on its strategic agenda and popular mandate’ (p. 29). (fn 10) Any changes to the long-term budget would be particularly important, as the annual budget must comply with the long-term budget (third paragraph of Article 312(1) TFEU). In practice, the room for manoeuvre in the annual budgetary procedure is limited, hence the need for innovative solutions in the context of NGEU. (fn 11)

The process to reform and enlarge the EU

The authors of the report explore various options to implement their proposed reforms, such as a Treaty revision, an ordinary one being their preferred option (see Article 48 TEU), as well as various options short of Treaty change (pp. 30 et seq. and Annex II). Space precludes a detailed exegesis of the various options considered by the authors and of the principles that should govern this process (see also the Op-Ed by Gavin Barrett on ‘Reforming the Treaties’). As regards the possibilities for differentiation in an EU of 30+ States, the authors argue inter aliathat: ‘Member States should be more ready to make use of existing flexibility instruments. However, differentiation is not without risk for European integration, for the coherence of the EU’s actions and the integrity of the principles that govern it’ (p. 33). ‘In budgetary matters, it should be possible to develop fiscal capacities through enhanced cooperation, in the form of new own resources, budgets based on Member States’ contributions and/or borrowing capacities…’ (p. 34). In my view, much that is discussed in this contribution could be achieved within the framework of the existing Treaties and could involve all Member States. This would also serve to safeguard the unity of the Union’s public finances. The authors also argue that ‘[i]n the future, the euro should be considered as part of the non-negotiable elements of European integration’ (p. 34). As previously argued, I do not however believe that this requirement should stand in the way of, e.g., the UK rejoining the EU and having back its opt-out in this area.

Conclusions

A future EU enlargement would necessitate changes in the workings of the EU, including perhaps a Treaty revision. The Franco-German report contains a wealth of valuable proposals in that regard. It is relatively easy to point out flaws when someone puts something concrete on the table, or to argue that something is not feasible, and we, lawyers, are particularly good at that. This contribution sought to provide a legal analysis of various proposals contained in the Franco-German report, insofar as they pertain to EU fiscal and economic governance, broadly defined. Arguably, most of those reforms are

Reforming the Union: EU enlargement and the Franco-German report on Treaty

necessary and should be implemented regardless of the demands associated with a future EU enlargement. Such reforms would also serve to increase the Union’s ‘absorption capacity ’. The ball is now firmly with the EU institutions and Member States to achieve meaningful progress on all relevant fronts, prior to or in parallel with a potential EU enlargement. The lofty ambitions set out in the Granada Declaration demand as much.

Menelaos Markakis is Assistant Professor at Erasmus University Rotterdam and Scientific Coordinator of the Erasmus Center for Economic and Financial Governance.

(fn 1) See further Fabian Amtenbrink and Menelaos Markakis, ‘Never Waste a Good Crisis: On the Emergence of an EU Fiscal Capacity’ in Alicia Hinarejos and Robert Schütze (eds), EU Fiscal Federalism: Past, Present, Future (OUP 2023) 171-204.

(fn 2) The reader should pay particular attention to Articles 2 and 3 of  Regulation 2020/2092, which define the rule of law and provide an indicative list of breaches of the principles of rule of law, respectively, as well as to Article 4(2), which lists the situations or conduct of the national authorities that breaches of the principles of rule of law must concern, as interpreted by the Court in the cases cited in fn 3.

(fn 3) The Court held in Hungary v European Parliament and Council of the European Union (C-156/21), paras 97-154 and Republic of Poland v European Parliament and Council of the European Union (C-157/21), paras 111-190 that this was an appropriate legal basis for the adoption of the Regulation.

(fn 4) See further  Diane Fromage and Menelaos Markakis, ‘The European Parliament in the Economic and Monetary Union after COVID: Towards a Slow Empowerment?’ (2022) 28(3) The Journal of Legislative Studies 385-401, esp. 394.

(fn 5) Menelaos Markakis, Accountability in the Economic and Monetary Union: Foundations, Policy, and Governance (OUP 2020); Menelaos Markakis, Charikleia Kafka and Lina Papadopoulou, ‘Accountability and Democratic Legitimacy in European Union Economic Governance: From the Euro Crisis to the Pandemic and Beyond’ (2023) 70 Irish Jurist 68-110, with further references.

(fn 6) See e.g. Fabian Amtenbrink and Menelaos Markakis, ‘The Legitimacy and Accountability of the European Central Bank at the Age of Twenty’ in Thomas Beukers, Diane Fromage and Giorgio Monti (eds), The New European Central Bank: Taking Stock and Looking Ahead (OUP 2022) 265-291, 283.

(fn 7) Menelaos Markakis, ‘The Reform of the European Stability Mechanism: Process, Substance, and the Pandemic’ (2020) 47 Legal Issues of Economic Integration 359-384; Giovanni Zaccaroni, ‘The Reform of the ESM within a Hybrid EMU Law’ (2022) 28 European Public Law 373-396.

(fn 8) See further Ana Bobić, The Jurisprudence of Constitutional Conflict in the European Union (OUP 2022); Nik de Boer, Judging European Democracy: The Role and Legitimacy of National Constitutional Courts in the EU (OUP 2023).

(fn 9) See the chapter in fn 1.

(fn 10) For a similar proposal, see Richard Crowe, ‘An EU Budget of States and Citizens’ (2020) 26 ELJ 331, 342-43.

(fn 11) See Bruno de Witte, ‘The European Union’s COVID-19 Recovery Plan: The Legal Engineering of an Economic Policy Shift’ (2021) 58 CML Rev. 635-682.

SUGGESTED CITATION: Markakis, M; “EU enlargement and the future of fiscal and economic governance”, EU Law Live, 19/01/2024, https://eulawlive.com/op-ed-eu-enlargement-and-the-future-of-fiscal-and-economic-governance-by-menelaos-markakis/

Reforming the Union: EU enlargement and the Franco-German report on Treaty

Article 122 TFEU and the Future of the Union’s Emergency Powers

Paul Dermine

European Union (EU) law does not include a  régime d’exception. Unlike most national constitutions, EU Treaties do not foresee the possibility that a state of emergency be declared, and that ordinary power structures and institutional procedures be suspended. Instead, primary law contains a number of provisions which enable the Union to react to specific categories of emergencies, a corpus which  De Witte has coined as ‘EU emergency law’. Article 122 TFEU occupies a prominent position in this regime. In an age of polycrisis, the provision has become a cornerstone of Union action, and moved to the centre of EU politics. As this Op-Ed will show, this phenomenon raises a number of concerns, and any reflection about future treaty revision should include Article 122 and the EU’s crisis powers.

The recent ‘rediscovery’ of Article 122 TFEU

In simple words, Article 122 TFEU organizes the Union’s prerogatives in case of economic emergencies (broadly understood). Its first paragraph provides for a general solidarity clause and enables the adoption of measures appropriate to a crisis situation, such as supply problems in the energy sector. Its second paragraph is more specific (both in terms of measures and beneficiaries) and enables the granting of financial assistance to Member States facing or threatened by severe difficulties ‘caused by natural disasters or exceptional occurrences beyond [their] control’.

Article 122 has a long history, and its origins go back to the Treaty of Rome. As documented in a study for the European Parliament by  Chamon, its legislative history shows a steady mobilisation of the provision. Despite being initially confined to punctual, conjectural (and rather anecdotical) economic measures, Article 122 has, over the past decade, been mobilized to pass major, structural policy initiatives, thereby signalling a more confident and offensive approach from the EU institutions, a change of magnitude and dimension for the provision, and a qualitative leap for the EU polity. The sequence is well-known by EU lawyers. Article 122 first served to establish, in the context of the Eurozone crisis, an assistance mechanism to financially distressed Member States, the European financial stabilisation mechanism The trend accelerated with the COVID-19 pandemic. Article 122 was used to activate the  Emergency Support Instrument, through which, among others, collective vaccine purchases were carried out. On the economic front, it was first mobilized to establish  SURE, the Union’s dedicated unemployment support scheme, and later the  European Union Recovery Instrument (EURI), a major component of the Union’s recovery plan NextGenerationEU. The war in Ukraine, and the energy shock it triggered, confirmed the rise of Article 122. Most notably, the provision provided a legal basis for the  Gas Demand-Reduction Regulation and the  Emergency Intervention Regulation which, among other things, foresees caps on revenues of electricity producers and a ‘temporary solidarity contribution’ due by fossil fuel companies.

Article 122 and its critiques

This ‘rediscovery’ of Article 122 proved instrumental to the Union’s overall swift and efficient response to these recent existential tests. The phenomenon inevitably triggered lively discussions in political and academic circles, sparking two main lines of discussion.

Reforming the Union: EU enlargement and the Franco-German report on Treaty

The first is substantive and relates to the nature of the measures enabled by Article 122. Some commentators have questioned whether the initiatives based on this emergency clause truly constitute emergency measures, strictly limited to address the crisis situation which prompted their adoption. According to this view, Article 122 has been instrumentalized, diverted from its initial purpose to establish permanent mechanisms, bring about structural changes and create, as the  Franco-German Report puts it (p. 14), new  de facto Union powers. As some sort of new  ‘super-competence’, Article 122 would be the latest manifestation of ‘competence creep’. Such view appears quite clearly in the  NGEU ruling of the German  Bundesverfassungsgericht from December 2022, which, while not declaring the recovery package  ultra vires, expressed some serious doubts as to the legality of Article 122’s mobilisation. As I have tried to show  elsewhere with regard to EURI, there is a strong case to be made in favour of the compatibility of the Union’s recent actions with both the letter and spirit of Article 122. However, the EU has, admittedly, provided grist to its critics’ mill. On the one hand, its use of the provision has been consciously ambiguous and opportunistic. This is most obvious in the case of the EURI Regulation which is based on Article 122 tout court, without any explicit mention to its first or second paragraph. On the other hand, as argued by  Chamon, the motivation supporting the mobilization of the clause has been rather poor. This is particularly so with regard to Article 122(1), which can only be mobilized ‘without prejudice to any other procedures provided for in the Treaties’. Against this background, the relationship between the Gas Demand-Reduction and the Emergency Intervention Regulations, both based on Article 122(1), and neighbouring EU competences for tax and energy policy have been deemed problematic. Lastly, the scarcity of caselaw devoted to Article 122 – except for a few obiter dicta in Pringle (C-370/12) and in Anagnostakis (C-589/15 P), there is not much… – only increases such ambiguity.

The second line of criticism is institutional and deplores the type of legitimacy which Article 122 embodies. Under the provision, decision-making is controlled by the Council, with the European Parliament completely absent under paragraph 1, and only informed under paragraph 2. The clause would thus epitomize the executive dominance and parliamentary side-lining which have plagued European governance since the Eurocrisis. Against this background, some commentators have spoken of a ‘European 49.3’, drawing a not entirely unfounded parallel with the infamous provision of the French Constitution of 1958, enabling Matignon and the Élysée to bypass a vote in Parliament on divisive texts by engaging it responsibility. It is certain that Article 122 stands for an intergovernmental, technocratic and output-based vision of EU politics, which only provides for limited, indirect democratic legitimacy, widely deemed unsatisfactory, especially in view of the transformative, structural impact the clause now has on the EU polity.

How to reform Article 122?

There is growing discontent with Article 122. The clause generates perceptible malaise in institutional and academic circles. There is a widespread feeling that the EU has reached the limits of what was both feasible and acceptable under the current version of Article 122, and that something needs to be done to challenge the  status quo. It is therefore not surprising that the Franco-German Report devotes some of its main recommendations on powers and competences to the revision of Article 122 TFEU and of the Union’s emergency powers. In a more radical fashion, the Committee on Constitutional Affairs (AFCO) of the European Parliament has endorsed last August a  report prepared by influential members (including Guy Verhofstadt, Sven Simon and Daniel Freund), proposing the pure suppression of Article 122, and its replacement by a new emergency clause. Where should we go from here?

One possible way forward would be, against the background of past experience, to scale down the degree of institutional ambition Article 122 has come to embody by circumscribing more clearly the type of initiatives it enables and the conditions they should fulfil. Beyond the actual feasibility of such endeavour, one can question its desirability. Article 122 undeniably helped the EU navigate through difficult times, and preserved solidarity, cohesion and unity among its Member States. In the times we live in, the priority should be, as the Franco-German Report puts it, to increase the

Reforming the Union: EU enlargement and the Franco-German report on Treaty

Union’s ‘capacity to act’. From this perspective, tightening the scope of Article 122 would equate shooting ourselves in the foot.

A more constructive way forward might be to try preserving the operational potential of Article 122 while correcting the excesses past experience has revealed. On the one hand, the substantive scope of the provision could be expanded, to reflect past practice and, most importantly to embrace the wide variety of crises the EU has been, is or is likely to be confronted to, and turn it into a general emergency clause, not strictly associated to the ‘economic policy’ chapter. The formulation proposed by the AFCO Committee might be an interesting starting point. On the other hand, the procedural and institutional underpinnings of Article 122 should be revisited to ensure wider institutional participation and stronger (democratic) legitimacy. The power of initiative of the Commission and decision-making at the Council through qualified majority voting (in place since the Nice Treaty) are elements worth keeping. The latter specifically ensures swift and agile action in times of crisis. As to the Parliament, it is urgent to step up its involvement under Article 122. The modalities of such involvement are open to debate. The Franco-German Report remains quite vague, emphasizing the need ‘to include the EP in the decision-making’. The  ECON Committee, the  BUDG Committee and the AFCO Committee have all called, under slightly different modalities, for equal decision-making rights and a move to ordinary legislative procedure and codecision. This would not be our favoured option. We fear that codecision could, because of the inherent constraints of parliamentary deliberation, slow down emergency action and harm the Union’s reactivity. A special legislative procedure requiring the EP’s final consent, as for the adoption of anti-discrimination legislation (Article 19 TFEU), the mobilisation of the flexibility clause (Article 352 TFEU), or the conclusion of international agreements (Article 218 TFEU) would appear more appropriate, and in line with national practice on states of emergency.

Last but not least, the position of the European Council should not be overlooked. The crucial role played by this institution in every emergency the EU has experienced since the Eurocrisis, is well-documented and widely acknowledged. One could wonder if this  de factorole should not be formalized in the Union’s emergency procedures, for example by granting it the right to declare an emergency, enabling the adoption of crisis measures under Article 122. The question is worth debating. Such new prerogative would not fit squarely with the tradition of the Community method and would stretch the European Council’s constitutional role as ‘impetus provider’ (Article 15 TEU). But after all, which other EU institution has the sufficient legitimacy to call for a break from normalcy, and the adoption of the exceptional measures extraordinary times require?

Conclusion

The challenging times we live in call for a strong EU capacity to act and solid supranational emergency powers. At the same time, it is crucial that those powers are backed by widespread institutional support and sound legitimacy structures. It is a delicate equilibrium to find, but a central issue which any discussion on the future of the EU should address.

Paul Dermine is professor of European Union Law at the Université libre de Bruxelles (Belgium).

SUGGESTED CITATION: Dermine, P.; “Article 122 TFEU and the future of the Union’s emergency powers”, EU Law Live, 23/01/2024, https://eulawlive.com/op-ed-article-122-tfeu-and-the-future-of-the-unions-emergency-powers-by-paul-dermine/

The joint Chamber of the highest Courts and Tribunals of the EU: an Appraisal

Ana Bobić

‘Almost as old as the debate on European powers and competences is the one on who is the ultimate arbiter of the reach and the limits of EU competence. The CJEU is the court of competence, but its ultimate legal authority has been challenged on multiple causes, the most trivial being discontent with an actual or anticipated ruling. An additional forum for judicial dialogue between courts at different levels, but without the authority to take binding decisions, could accommodate institutional concerns of not being heard without endangering the CJEU’s authority.’ (the Franco-German report)

National courts have, at least since 1974, disputed the primacy of EU law as it was envisaged by the Court of Justice under the Simmenthal mandate. This contestation is on the rise, the Weiss judgment of the German Federal Constitutional Court being the epitome of this problematic trend. There are  three arenas in which these conflicts pan out: (1) competence control (ultra vires review); (2) constitutional identity review; and (3) fundamental rights review.

The first – who has the final say on what falls within EU competence – seems the most difficult one to resolve. The Court of Justice, under its Article 19(1) TEU mandate, claims the power to say what EU law is. That includes the power to decide on the limits of EU competence. National courts, conversely, see the conflict through the principle of conferral, and therefore see competence control as a matter of national constitutional law. Is this a problem and does it need a solution?

My view is that because the Court of Justice and apex national courts are not under the control of an appellate jurisdiction, but instead claim the parallel power of the final say, constitutional conflict acts as a check and balance between them. That is, of course, the classic constitutional pluralism narrative. Before 2020, this narrative was, albeit not universally accepted, tolerated. After  Weiss, but also after the Polish Constitutional Tribunal’s outright war with EU law (a destructive conflict without a doubt), the argument put forward in academia is that a new dynamic is at play, one where the Court of Justice more explicitly acts as a federal supreme court. In this context, the Franco-German report proposes a ‘Joint Chamber of the Highest Courts and Tribunals of the EU’ as follows:

‘We recommend the creation of a ‘Joint Chamber of the Highest Courts and Tribunals of the EU’, structuring the dialogue between European and Member States’ courts. It would place the numerous existing informal contacts between the courts into a more formal setting, but without the authority to take binding decisions, nor the authority to strengthen mutual understanding, cultivate a joint European outlook, and provide for more transparency.’

From a mixed…

The proposal in the report is not the first time that and idea of a mixed chamber came up. Famously,  Sarmiento and Weiler suggested a mixed chamber in the aftermath of the Weiss judgment. Acknowledging the conundrum of competence control described above, they propose, based on a Treaty amendment:

‘a new appeal jurisdiction within the Court of Justice, strictly and narrowly confined to Weiss type cases, where at issue is the delineation of the jurisdictional line between the Member States and their EU. (…) It is to be composed by sitting Members of

Reforming the Union: EU enlargement and the Franco-German report on Treaty

the Court of Justice alongside sitting Members of the constitutional or equivalent supreme courts of the Member States. It is this composition, above anything else, which will give its decisions an authority and legitimacy which, if enshrined in the Treaties, it will be a lot more difficult to contest.’

They accept that their proposal does not do away with the possibility that stubborn or rogue constitutional courts reject a judgment of the mixed chamber in the same way they did one of the Court of Justice. Yet, they argue (particularly in  their response to critics), the participation of national judges should tip the legitimacy balance and reduce the likelihood of that taking place.

I do not see the mixed chamber resolving the concerns of national constitutional courts, mainly because it would form part of the Court of Justice. In the eyes of national constitutional courts, this would still mean it is the EU level that decides on the extent of its competence. In other words, competence control would undoubtedly remain a matter of EU law. Such a chamber would not thus prevent national constitutional courts deciding on the extent of their competence.

Second, Sarmiento and Weiler take the view that competence conflicts are ‘most acute’ for the integrity of the EU’s legal order and the rule of law. However, competence control is, as I explained, only one type of conflict over primacy that EU and national courts engage in. A specialised chamber would not be able to address identity review issues (as this would raise serious issues of legitimacy for an EU body to determine/interpret national constitutional values) or fundamental rights review (at best, national courts conduct fundamental rights review by applying the Charter standard, but without submitting a preliminary reference, as was the case in the much celebrated Right to be Forgotten II decision of the German court). In fact, it seems to me that increasingly it is identity review which allows national constitutional courts to reject the primacy of EU law by resorting to an area where they are the undisputed final authority. Importantly, if EU action goes against constitutional identity, as the German court in  Weiss claims risk-sharing would, for such a transgression there is no remedy.

…to a joint chamber

Sarmiento and Weiler specified their proposal further after the Franco-German report was published, most importantly, criticising the lack of a binding decision that such a mixed chamber could make. They are right in claiming that without binding power, a jurisdiction cannot take itself seriously. Yet, I consider that the joint chamber’s main strength is precisely in its dialogue-oriented, rather than binding rule-setting character.

I think one of the main reasons why constitutional conflict arises is the frustration, on the part of national courts, that they are not being heard. Recent research shows that the Court of Justice does not engage with the arguments raised by the national court in the preliminary reference in a manner that is conducive to judicial cooperation. If national courts do not feel that their concerns are acknowledged, they are more likely to prefer their own reading of EU law, either by not submitting a preliminary reference, or by reserving the right to disagree with the response of the Court of Justice. Although the preliminary reference ‘is the keystone of the judicial system established by the Treaties, sets up a dialogue between one court and another ’, several of its features are less ‘dialogue-friendly’ than the proposed chamber. This is not to diminish the centrality of the preliminary reference procedure, but rather to highlight some of the benefits of the joined chamber specifically in relation to the resolution of constitutional conflict. First, the preliminary reference procedure results in a judgment from the Court of Justice, binding on the referring court as well as all national courts in the EU. It is therefore a form of a somewhat asymmetrical dialogue that does not guarantee to the national court that its concerns will be heard and taken into account. Second, the procedure itself, once set in motion, does not provide

Reforming the Union: EU enlargement and the Franco-German report on Treaty

any role for the referring court. We all know of  the story of the Czech Constitutional Court sending a sort of an  amicus curiae brief to the Court of Justice (albeit not as the referring court). The Court of Justice had no procedural basis to receive it and accordingly sent it back. I do not think the preliminary reference should be changed – it is in my opinion truly the jewel in EU law’s crown. But it does not always provide the best arena for constitutional conflict.

At the same time, there is no doubt that dialogue, formal or informal, contributes to mutual understanding and learning. For example, the  Conference of European Constitutional Courts offers a rich knowledge base, but also a platform for discussing issues shared by constitutional courts across the continent. This is in my opinion the main advantage of the joint chamber. It does not presuppose a hierarchy between EU and national courts and does not impose binding solutions that may risk misunderstanding the national constitutional setting.

It instead offers the possibility of a platform, if taken seriously by its participants, for advancing issues common to the Court of Justice and to national constitutional courts. For example, national constitutional courts will be able to discuss the variety of their constitutional identities, how they should be understood in relation to EU law, and what space exists for compromise. In the interviews I conducted with members of the Court of Justice in 2015, my interlocutors consistently underlined their openness to accommodating national constitutional specificities. This would provide the Court of Justice with a formal platform to listen.

The next benefit of such a platform is one of more publicity. EU and national courts involved could undertake a genuine commitment to streamline the collection and publication of EU-relevant case law, national and EU, that at the moment does not really exist. The academic world, practitioners, ordinary national courts, and the broader public, could strongly benefit from direct access to such a database, or from regular joint reports of the joint chamber. Finally, the European Union is almost set to accede to the ECHR. National constitutional courts are, arguably, rather the experts when it comes to the ECHR and fundamental rights protection, and once the accession takes place, it will be of utmost use for the Court of Justice to learn from their engagement with the ECHR.

Of course, it may be that I have ascribed too many functions and roles to a chamber that is as of yet explained in not more than a paragraph. Commenting on the Weiss conflict, Mark Dawson and I described it as one where the two courts involved were ‘not so much meaningfully talking to, but rather past each other’. If nothing else, a joint chamber as proposed by the Franco-German report may be seen as a space for courts in the EU to start properly talking to each other.

Ana Bobić is référendaire at the Court of Justice of the European Union in the Cabinet of Advocate General Ćapeta and Adjunct Faculty at the Hertie School, Berlin. The views expressed here are personal to the author and do not represent the official position of the Court of Justice of the European Union.

SUGGESTED CITATION: Bobić, A.; “The Joint Chamber of the Highest Courts and Tribunals of the EU: an appraisal”, EU Law Live, 09/02/2024, https://eulawlive.com/op-ed-the-joint-chamber-of-the-highest-courts-and-tribunals-of-the-eu-an-appraisal-by-ana-bobic/

Europe’s Search for a democratic Dividend between Enlargement and Treaty Reform

Alberto Alemanno

Russia’s invasion of Ukraine has had a profound effect on the European Union, to the point of potentially redesigning both its geographical and constitutional contours. What a better opportunity for Europe’s democratic renewal?

The Russian invasion of Ukraine has produced many unintended consequences, among which the embarrassing unveiling of the absence of an EU defense and a largely incomplete energy policy.

Yet the most profound impact of the war was the smashing of the ultimate taboos of EU integration. That is the need for enlargement and corresponding institutional reform of the Union. If the pandemic led the European Union to couple its post-pandemic economic recovery with a repowered European green agenda, the Russian invasion of Ukraine is set to couple the EU inescapable expansion in the east with an inevitable profound treaty revision. In other words, the EU is once again set to reform internally to be able to expand externally.

Yet neither the reform nor the enlargement process can this time mechanically follow previous blueprints, be it the Treaty revision process leading to the Lisbon Treaty in 2009 or the previous expansion to the East in 2004 and 2007.

Let’s focus on the enlargement process. Over the past decade, the EU has been pretending to negotiate accession with candidate countries, such as the West Balkans – which have in turn pretended to carry out the reforms required to join. Maintaining this fiction has damaged the credibility of the admissions process which has in turn confirmed the sceptics’ belief that candidate countries will never be ready.

This offers a unique chance to acknowledge the limitations of an EU enlargement system and membership structures that have historically marginalized people’s input, in order to eventually address the legitimacy deficiency in EU integration.

Absence of popular input has been the case not only for citizens of member states but also for those from candidate countries. The last big accession waves of 2004 and 2007 fully revealed the original, unresolved ‘democratic sin’ of EU integration. By not foreseeing that citizens from candidate countries may have a say on the prospect of joining the union, the EU has deprived itself from earning a crucial legitimating opportunity. A look at ‘illiberal’ Hungary suffices to gauge the costs of that omission. As shown by Ivan Krastev and Steven Holmes, behind today’s Central and East European illiberal revolution, there is a cultural, political, and democratic rejection of a top-down model imposed under a logic of imitation on countries emerging from communism (fn 1).

In sum, due to its historical neglect of any expression of popular sovereignty, at accession and in membership, the EU has given up on the most powerful legitimating source at its disposal. Seen from this perspective, the Brexit referendum may be read as a revenge story (‘take back control’) against the EU’s atavistic scepticism toward every expression of popular input.

The next enlargement will offer a unique opportunity not only to remedy that original sin but also to replace it with a ‘European democratic dividend.’ By that I refer to the benefits, advantages, and positive outcomes that may result from a people-led choice for—and control of—European integration in each individual country.

Reforming the Union: EU enlargement and the Franco-German report on Treaty

Hence the need to radically rethink not only the EU accession process by giving voice to the candidate countries’ citizens, but also the very membership status.

To be part of the EU can no longer be all-or-nothing affair. To restore its credibility at home and abroad, the EU must move away from the dominant yet illusory paradigm of a monolithic membership imposed from above to a more diversified approach in which each country decides to commit, from the bottom-up, to a menu of possible manifestations and spaces of EU integration. Under this new heterogenous, multispeed, and citizen-led construct, some countries would be free to integrate more deeply in certain areas without being prevented by others from doing so, or not to without feeling pressured to do so.

By eventually surrendering some political autonomy to citizens, this new collective understanding of EU accession and membership would entail a reset of the EU project. Candidate countries would be able to choose the degree of integration best suited to their needs and political realities while existing member states would be asked to reconsider their degree of engagement with the EU—and to do that based on their respective citizens’ wishes. One may consider, along the lines of the recent proposal by the ‘Group of 12’ — a Franco-German expert initiative — four tiers of ‘membership’, the last two falling outside the EU altogether, could coexist. These ‘concentric circles’ would include an inner circle whose members could have even closer ties than those that bind the EU already, the EU as we know it, associate membership (that is, of the internal market only), and the looser, less demanding new European Political Community.

This multispeed construct would however not create different levels of worth or standing among countries. Instead, it would unleash an alternative geopolitical imagination capable of accommodating different levels of commitment toward EU integration that for the first time would be driven by popular choice.

While new and existing members would be free to choose which circle to join, respect for the rule of law and commitment to human rights should remain non-negotiable. As a result, the exclusion of noncompliant members from any given circle could, unlike now, be foreseen and be accepted as legitimate since under the proposed model all members would have their relationships with the EU determined by the participation of citizens.

This fresh and pragmatic approach to EU democratic expansion appears more attuned to today’s political realities than the original EU formula that still applies.

Under this regenerative dynamic, it would be a self-aware citizenry, not the individual states nor the EU institutions, to choose whether and the extent to which their country should engage in supranational decision-making and under what rules.

Alberto Alemanno is Jean Monnet Professor of European Law at HEC Paris and a Europe’s Futures Fellow at IWM (2023-24). (fn 1) Ivan Krastev and Steven Holmes, The Light that Failed, Pegasus, 2020.

SUGGESTED CITATION: Alemanno, A.; “Op-Ed: “Europe’s Search for a Democratic Dividend between Enlargement and Treaty Reform”, by Alberto Alemanno, EU Law Live, 12/02/2024, https://eulawlive.com/op-ed-europes-search-for-a-democratic-dividend-betweenenlargement-and-treaty-reform-by-alberto-alemanno/