The community legal order

AuthorDr. Klaus-Dieter Borchardt

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The constitution of the EU described above, and particularly the fundamental values it embodies, can be brought to life and given substance only through Community law. This makes the EU a legal reality in two different senses: it is created by law and it is a community based on law.

The EU as a creation of law and a community based on law

The European Union is an entirely new creation which is distinguished from earlier efforts to unite Europe in that it works, not by means of force or domination, but simply by means of law. Law is intended to succeed where "blood and iron" have for centuries failed. For only unity based on a freely made decision can be expected to last: unity founded on fundamental values such as freedom and equality, and protected and translated into reality by law. That is the insight underlying the Treaties that created the European Communities and the European Union.

The EU is not merely a creation of law; it also pursues its objectives purely by means of law. It is a Community based on law. The common economic and social life of the peoples of the Member States is governed not by the threat of force but by the law of the Community. This is the basis of the institutional system. It lays down the procedure for decision-making by the Community institutions and regulates their relationship to each other. It provides the institutions with the means - in the shape of regulations, general ECSC decisions, directives, ECSC recommendations and individual decisions - of enacting legal instruments binding on the Member States and their citizens. Thus the individual himself becomes a main focus of the Community. Its legal order directly affects his daily life to an ever-increasing extent. It accords him rights and imposes duties on him, so that as a citizen both of his State and of the Community he is governed by a hierarchy of legal orders - a phenomenon familiar from federal constitutions. Like any legal order, that of the Community provides a self-contained system of legal protection for the purpose of recourse to and the enforcement of Community law. Community law also defines the relationship between the Community and the Member States. The Member States must take all appropriate measures to ensure fulfilment of the obligations arising from the Treaties or resulting from action taken by the institutions of the Community. They must facilitate the achievement of the Community's tasks and abstain from any measure that could jeopardise the attainment of the objectives of the Treaties. The Member States are answerable to the citizens of the EU for any harm caused by violations of Community law.

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The legal sources of community law

The term "legal source" is ambiguous: in its original meaning, it refers to the reason for the emergence of a legal provision, i.e. the motivation behind the creation of a legal construct. According to this definition, the "legal source" of Community law is the will to preserve peace and create a better Europe through closer economic ties - the two cornerstones of the EC. In legal parlance, on the other hand, "legal source" refers to the origin and embodiment of the law.

Sources of Community law

1. Primary legislation:

- Treaties establishing the Communities

- General principles of law

2. The EC's international agreements

3. Secondary legislation:

- (Implementing) regulations

- Directives/ECSC recommendations

- General and individual decisions

4. General principles of administrative law

5. Conventions between the Member States

The founding Treaties as the primary source of Community law

The first source of Community law in this sense is the three Treaties, with the various annexes and protocols attached to them, and later additions and amendments, i.e. the founding legal acts of the EC and EU. The founding Treaties and instruments amending and supplementing them - chiefly the Single European Act, the various accession treaties and the Treaties on European Union - contain the basic provisions on the EC's objectives, organisation and modus operandi, and the bulk of its economic law. They thus set the constitutional framework for the life of the EC, which is then fleshed out in the Community interest by legislative and administrative action by the Community institutions. The Treaties, being legal instruments created directly by the Member States, are known in legal circles as primary legislation.

The Community legal instruments as the secondary source of Community law

Law made by the Community institutions in exercising the powers conferred on them by the Treaties is referred to as secondary legislation, the second great source of Community law.

It consists primarily of the legal acts listed and defined in Article 249 of the EC Treaty, Article 161 of the Euratom Treaty and Article 14 of the ECSC Treaty. As binding legal acts, these include both Page 59 general and abstract legal provisions on the one hand and specific, individual measures on the other. They also provide for the Community institutions to issue non-binding statements.

These lists are not exhaustive, however. Secondary legislation also encompasses other legal acts which do not fit into categories. Foremost among these are legal acts regulating the internal workings of the Community or its institutions, such as agreements or arrangements between Community institutions or bodies, or internal rules of procedure. The preparation and public announcement of Community action programmes should also be mentioned here. There are considerable differences between legal acts under secondary Community legislation in terms of the procedures involved, their legal effect and those to whom they are addressed; these differences will be dealt with in more detail in the section on the Community's range of tools.

The creation of secondary Community legislation is a gradual process. The emergence of secondary legislation lends vitality to the Community's "constitution" deriving from primary legislation, and progressively generates and enhances the European legal order.

International agreements

A third source of Community law has to do with the EC's role at international level. As one of the focal points of the world, Europe cannot confine itself to managing its own internal affairs; it has to concern itself with economic, social and political relations with the world outside. The Community therefore concludes agreements in international law with non- member countries and with other international organisations; these range from treaties providing for extensive cooperation in trade or in the industrial, technical and social fields, to agreements on trade in particular products.

Three kinds of agreement between the Community and non-member countries are particularly worth mentioning.

Association agreements

Association goes far beyond the mere regulation of trade and involves close economic cooperation and wide-ranging financial assistance from the EC for the country concerned (Article 310 (ex Article 238) EC). A distinction may be drawn between three different types of association agreement.

Agreements that maintain special links between certain Member States and non-member countries

One particular reason for the creation of the association agreement was the existence of overseas countries and territories with which some of the founding Member States maintained particularly close ties as a legacy of their colonial past. The introduction of a common external tariff in the Community would have seriously disrupted trade with these countries, Page 60 which meant that special arrangements were needed so that the system of unrestricted Community trade could be extended to them. At the same time, tariffs on goods originating in these countries were progressively dismantled. Financial and technical assistance from the Community was channelled through the European Development Fund.

Agreements as preparation for accession to the Community or for the establishment of a customs union

Association arrangements are also used in the preparation of countries for possible membership of the Community. The arrangement serves as a preliminary stage towards accession during which the applicant country can work on converging its economy with that of the Community. This proved successful in the case of Greece, which was associated with the Community from 1962. Another association agreement with a view to future accession was concluded with Turkey in 1964. The "Europe Agreements" with Poland, Hungary, the Czech Republic, Slovakia, Bulgaria, Romania, Slovenia and the three Baltic States (Lithuania, Estonia and Latvia) make it clear that Community membership is the ultimate goal for these countries making the transition to a market economy. The purpose of the association with them is to help them meet the conditions required for membership within the foreseeable future. The EC has established customs unions with Malta (1971), Cyprus (1973) and Turkey (1996).

Agreement on the European Economic Area (EEA)

The EEA Agreement brings the (remaining) EFTA States (Norway, Iceland, Switzerland and Liechtenstein) into the internal market and, by requiring them to incorporate nearly two thirds of the EC's legislation, lays a firm basis for subsequent accession. In the EEA, on the basis of the acquis communautaire (the body of primary and secondary Community legislation), there is to be free movement of goods, persons, services and capital, uniform rules on competition and State aid, and closer cooperation on horizontal and flanking policies (environment, research and development, education).

Cooperation agreements

Cooperation agreements are not as far- reaching as association agreements, being aimed solely at intensive economic cooperation. The Community has such agreements with the Maghreb States (Morocco, Algeria and Tunisia), the Mashreq States (Egypt, Jordan, Lebanon and Syria) and Israel, for instance (Article 300 EC).

Trade agreements

The Community also has a considerable number of trade agreements with individual non-member countries, groupings of such countries or with international trade organisations relating to tariffs and trade policy. The most important trade agreements are: the Agreement establishing the World Trade Organisation (WTO Agreement) and the multilateral Page 61 trade agreements deriving from it, including in particular the General Agreement on Tariffs and Trade (GATT 1994), the Antidumping and Subsidies Code, the General Agreement on Trade in Services (GATS), the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the Understanding on Rules and Procedures Governing the Settlement of Disputes.

Sources of unwritten law

The sources of Community law described so far share a common feature in that they all produce written law. Like all systems of law, however, the Community legal order cannot consist entirely of written rules: there will always be gaps which have to be filled by unwritten law.

General principles of law

The sources of unwritten Community law are the general principles of law. These are rules reflecting the elementary concepts of law and justice that must be respected by any legal system. Written Community law for the most part deals only with economic and social matters, and is only to a limited extent capable of laying down rules of this kind, which means that the general principles of law form one of the most important sources of law in the Community. They allow gaps to be filled and questions of the interpretation of existing laws to be settled in the fairest way.

These principles are given effect when the law is applied, particularly in the judgments of the Court of Justice, which is responsible for ensuring that "in the interpretation and application of this Treaty the law is observed". The main points of reference for determining the general principles of law are the principles common to the legal orders of the Member States. They provide the background against which Community rules can be developed.

Alongside the principles of autonomy, direct applicability and the primacy of Community law, other legal principles include the guarantee of basic rights, the principle of proportionality, the protection of legitimate expectations, the right to a proper hearing and the principle that the Member States are liable for infringements of Community law.

Legal custom

Unwritten Community law also encompasses legal custom. This is understood to mean a practice which has been followed and accepted and thus become legally established, and which adds to or modifies primary or secondary legislation. The possible establishment of legal custom in Community law is acknowledged in principle. There are considerable limitations on its becoming established in the context of Community law, however. The first hurdle is the existence of a special procedure for the amendment of the Treaties (Article 48 EU). This does not rule out the possible emergence of legal custom, but it does make the criteria according to which a practice is deemed to have been Page 62 followed and accepted for a substantial period much harder to meet. Another hurdle to the establishment of legal custom in the Community institutions is the fact that any action by an institution may derive its validity only from the Treaties, and not from that institution's actual conduct or any intention on its part Page 63 to create legal relations. This means that, at the level of the Treaties, legal custom can under no circumstances be established by the Community institutions; at most, only the Member States can do this - and then only subject to the stringent conditions mentioned above. Practices followed and accepted as part of the law by Community institutions may, however, be drawn on when interpreting the legal rules laid down by them, which might alter the legal implications and scope of the legal act concerned. However, the conditions and limitations arising from primary Community legislation must also be borne in mind here.

Agreements between the Member States

The final source of Community law comprises agreements between the Member States. Agreements of this kind may be concluded for the settlement of issues closely linked to the Community's activities, but no powers have been transferred to the Community institutions; there are also full-scale international agreements (treaties and conventions) between the Member States aimed especially at overcoming the drawbacks of territorially limited arrangements and creating law that applies uniformly throughout the Community (Article 293 EC). This is important primarily in the field of private international law. These agreements include: the convention on jurisdiction and the enforcement of judgments in civil and commercial matters (1968), the convention on the mutual recognition of companies and legal persons (1968), the convention on the elimination of double taxation in connection with the adjustment of transfers of profits between associated enterprises (1990), the convention on the law applicable to contractual obligations (1980) and the convention on the Community patent (1989).

The community's range of tools

The system of legislative acts had to be devised afresh when the Community was set up. It had to be decided first and foremost what forms Community legislation should take and what effects these should have. The institutions had to be able to align the disparate economic, social and not least environmental conditions in the various Member States, and do so effectively, i.e. without depending on the goodwill of the Member States, so that the best possible living conditions could be created for all the citizens of the Community. On the other hand, they were not to interfere in the domestic systems of law any more than necessary. The Community legislative system is therefore based on the principle that where the same arrangement, even on points of detail, must apply in all Member States, national arrangements must be replaced by Community legislation, but where this is not necessary due account must be taken of the existing legal orders in the Member States.

Against this background a range of tools was developed that allowed the Community Page 64 institutions to impact on the national legal systems to varying degrees. The most drastic action is the replacement of national rules by Community ones. There are also Community rules by which the Community institutions act on the Member States" legal systems only indirectly. Measures may also be taken that affect only a defined or identifiable addressee, in order to deal with a particular case. Lastly, provision was also made for legal acts that have no binding force, either on the Member States or on the citizens of the Community. These basic categories of legal act are to be found in all three Community Treaties. There are differences in the actual form they take, and in their titles, between the ECSC Treaty on the one hand and the EC and the Euratom Treaties on the other. The ECSC Treaty makes provision for only three types of legal act: decisions, recommendations and opinions (Article 14 ECSC); the EC and Euratom Treaties provide for five forms: regulations, directives, decisions, recommendations and opinions (Article 249 EC and Article 161 Euratom). The changes in the pattern arose because it was recognised that the forms developed for the ECSC would not adequately meet the needs of the EC and Euratom. The new titles were intended to avoid the conceptual shortcomings in the legal acts provided for in the earlier Treaty. It was felt that the distinctions between the two sets of concepts would simply have to be tolerated until the merger of the three Communities, which was to take place at a later date.

If we look at the range of Community legal instruments in terms of the person to whom they are addressed and their practical effects in the Member States, they can be broken down as follows:

ECSC Treaty

Article 14

Decisions (general)


Decision (individual)


EC Treaty

Article 249






Euratom Treaty

Article 161






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Regulations and ECSC general decisions

The legal acts that enable the Community institutions to encroach furthest on the domestic legal systems are regulations in the EC and Euratom Treaties, and general decisions in the ECSC Treaty. Two features very unusual in international law mark them out.

* Their Community character, which means that they lay down the same law throughout the Community, regardless of international borders, and apply in full in all Member States. A Member State has no power to apply a regulation incompletely or to select only those provisions of which it approves as a means of ensuring that an instrument which it opposed at the time of its adoption or which runs counter to its perceived national interest is not given effect. Nor can it set up provisions or practices of domestic law to preclude the mandatory application of a regulation.

* Direct applicability, which means that the legal acts do not have to be transposed into national law but confer rights or impose duties on the Community citizen in the same way as national law. The Member States and their governing institutions and courts are bound directly by Community law and have to comply with it in the same way as with national law.

The similarities between these legal acts and statute law passed in individual Member States are unmistakable. If they are enacted with the involvement of Parliament (as part of the co-decision procedure - see next section), they may be described as "European legislation". Parliament has no responsibility for regulations and general decisions, which are only enacted by the Council or the Commission and thus, from a procedural point of view at least, they lack the essential characteristics of legislation of this kind.

Directives and ECSC recommendations

The EC/Euratom directive, which has the ECSC recommendation as its equivalent, is the most important legislative instrument alongside the regulation. Its purpose is to reconcile the dual objectives of both securing the necessary uniformity of Community law and respecting the diversity of national traditions and structures. What the directive aims for, then, is not the unification of the law, which is the regulation's purpose, but its harmonisation. The idea is to remove contradictions and conflicts between national laws and regulations or gradually iron out inconsistencies so that, as far as possible, the same material conditions obtain in all the Member States. The directive is one of the primary means deployed in building the single market.

A directive is binding on the Member States as regards the objective to be achieved but leaves it to the national authorities to decide on how the agreed Community objective is to be incorporated into their domestic legal systems. The reasoning behind this form of legislation Page 66 is that it allows intervention in domestic economic and legal structures to take a milder form. In particular, Member States can take account of special domestic circumstances when implementing Community rules. What happens is that the directive does not supersede the laws of the Member States but places the Member States under an obligation to adapt their national law in line with Community rules. The result is a two-stage law-making process.

First, at the Community stage, the directive lays down the objective that is to be achieved by any or all Member State(s) - or even by an individual Member State in the case of ECSC recommendations - to which it is addressed within a specified time-frame. The Community institutions can actually spell out the objective in such detailed terms as to leave the Member States with scant room for manoeuvre, and this has in fact been done in directives on technical standards and environmental protection.

Second, at the national stage, the objective set at Community level is translated into actual legal or administrative provisions in the Member States. Even if the Member States are in principle free to determine the form and methods used to transpose their Community obligations into domestic law, Community criteria are used to assess whether they have done so in accordance with Community law. The general principle is that a legal situation must be generated in which the rights and obligations arising from the directive can be recognised with sufficient clarity and certainty to enable the Community citizen to rely on or, if appropriate, challenge them in the national courts. This normally involves enacting mandatory provisions of national law or repealing or amending existing rules. Administrative custom on its own is not enough since it can, by its very nature, be changed at will by the authorities concerned; nor does it have a sufficiently high profile.

Apart from cases where ECSC recommendations are specifically addressed to a firm, directives and ECSC recommendations addressed to one or more Member States do not as a rule directly confer rights or impose obligations on the Community citizen. They are expressly addressed to the Member States alone. Rights and obligations for the citizen flow only from the measures enacted by the authorities of the Member States to implement the directive or recommendation. This point is of no importance to the citizen as long as the Member States actually comply with their Community obligations. But there are disadvantages for the Community citizen where a Member State does not take the requisite implementing measures to achieve an objective set in a directive or recommendation that would benefit him, or where the measures taken are inadequate. The Court of Justice has refused to tolerate such disadvantages, and a long line of cases has determined that in such circumstances the Community citizen can plead that the directive or recommendation has direct effect in actions in the national courts to secure the Page 67 rights conferred by it. Direct effect is defined by the Court as follows:

* the provisions of the directive or ECSC recommendation must lay down the rights of the EU citizen/firm with sufficient clarity and precision;

* the alleged rights are not conditional;

* the national authorities may not be given any room for manoeuvre regarding the content of the rules to be enacted;

* the time allowed for implementation of the directive/ECSC recommendation has expired.

The decisions of the Court of Justice concerning direct effect are based on the general view that the Member State is acting equivocally and unlawfully if it applies its old law without adapting it to the requirements of the directive or recommendation. This is an abuse of rights by the State and the recognition of direct effect of the directive seeks to combat it by ensuring that the State derives no benefit from its violation of Community law. Direct effect thus has the effect of penalising the offending Member State. In that context it is significant that the Court of Justice has applied the principle solely in cases between a citizen and a Member State, and then only when the directive was for the citizen's benefit and not to his detriment - in other words when the citizen's position under the law as amended under the directive was more favourable than under the old law (known as "vertical direct effect"). The direct effect of directives/ECSC recommendations in relations between citizens themselves ("horizontal direct effect") has not been accepted by the Court of Justice. The Court concludes from the punitive nature of the principle that it is not applicable to relations between private individuals since they cannot be held liable for the consequences of the State's failure to act. What the citizen needs to rely on is certainty in the law and the protection of legitimate expectations. The citizen must be able to count on the effect of a directive being achieved by national implementation measures.

Nevertheless, once the period allowed for transposition has expired, the directives acquire full legal force and effect in that all State bodies are obliged to interpret and apply national law in accordance with the directives ("interpretation in line with Community law").

In its judgments in Francovich and Bonifaci in 1991, the European Court of Justice went further, holding that Member States are liable to pay damages where loss is sustained by reason of failure to transpose a directive in whole or in part. Both cases were brought against Italy for failure to transpose Directive 80/987/EEC on the protection of employees in the event of the employer's insolvency, which sought to protect the employee's rights to remuneration in the period preceding insolvency and dismissal on grounds of insolvency. To that end, guarantee funds were to be established with protection from creditors; they were to be funded by employers, the public authorities, or both.

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The problem facing the Court was that, although the aim of the directive was to confer on employed workers a personal right to continued payment of remuneration from the guarantee funds, this right could not be given direct effect by the national courts, meaning that they could not enforce it against the national authorities, since in the absence of measures transposing the directive the guarantee fund had not been established and it was not possible to ascertain who was the debtor in connection with the insolvency. The Court finally held that, by failing to implement the directive, Italy had deprived the employed workers in question of their rights and was accordingly liable to damages. Even if the duty to Page 69 compensate is not written into Community law, the Court of Justice sees it as an integral part of the Community legal order since its full effect would not be secured and the rights conferred by it would not be protected if Community citizens did not have the possibility of seeking and obtaining compensation for invasion of their rights by Member States acting in contravention of Community law.

Individual decisions

A third category of Community legal acts consists of EC or Euratom decisions and individual ECSC decisions. In some cases the Community institutions may themselves be responsible for implementing the Treaties, or regulations and general ECSC decisions, and this will be possible only if they are in a position to take measures binding on particular individuals, firms or Member States. The situation in the Member States" own systems is more or less the same; legislation will be applied by the authorities in an individual case by means of an administrative decision.

In the Community legal order this function is fulfilled by the individual decision, which is the means normally available to the Community institutions to order that a measure be taken in an individual case. The Community institutions can thus require a Member State or an individual to perform or refrain from an action, or can confer rights or impose obligations on them.

The basic characteristics of a decision can be summed up as follows.

* It is distinguished from the regulation by being of individual application: the persons to whom it is addressed must be named in it and are the only ones bound by it. This requirement is met if, at the time the decision is issued, the category of addressees can be identified and can thereafter not be extended. Reference is made to the actual content of the decision, which must be such as to have a direct, individual impact on the citizen's situation. Even a third party may fall within the definition if, by reason of personal qualities or circumstances that distinguish him from others, he is individually affected and is identifiable as such in the same way as the addressee.

* It is distinguished from the directive in that it is binding in its entirety (whereas the directive simply sets out objectives to be attained).

* It is directly applicable to those to whom it is addressed. A decision addressed to a Member State may, incidentally, have the same direct effect in relation to the citizen as a directive.

Instances in which decisions are used include, for example, the granting or refusal of State aid (Articles 87 and 88 EC), the annulment of agreements or arrangements contrary to fair competition (Article 81 EC) and the imposition of fines or coercive measures.

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Non-binding measures by Community institutions

Non-binding measures consist of opinions and EC and Euratom recommendations. This category of legal measures is the last one explicitly provided for in the Treaties; they enable the Community institutions to express a view to Member States, and in some cases to individual citizens, which is not binding and does not place any legal obligation on the addressees.

In the EC and Euratom Treaties these non- binding legal measures are called recommendations or opinions, but under the ECSC Treaty only the term opinions is used. Unhappily, in the ECSC system, a "recommendation" is a binding legal act, corresponding to the directive in the EC and Euratom Treaties. In any event, while EC and Euratom recommendations urge the addressees to adopt a particular form of behaviour, opinions are used where the Community institutions are called upon to state a view on a current situation or particular event in the Community or the Member States.

In recommendations, the party to whom they are addressed is called on, but not placed under any legal obligation, to behave in a particular way. For example, in cases where the adoption or amendment of a legal or administrative provision in a Member State causes a distortion of competition within the Community, the Commission may recommend to the State concerned such measures as are appropriate to avoid this distortion (Article 97(1), second sentence, EC).

Opinions, on the other hand, are issued by the Community institutions when giving an assessment of a given situation or development in the Community or individual Member States. In some cases, they prepare the way for subsequent, legally binding acts, or are a prerequisite for the institution of proceedings before the Court of Justice (Articles 226 and 227 EC).

The real significance of these recommendations and opinions is political and moral. In providing for legal acts of this kind, the draftsmen of the Treaties anticipated that, given the prestige of the Community institutions and their broader view and wide knowledge of conditions beyond the narrower national framework, those concerned would voluntarily comply with recommendations addressed to them and would react appropriately to the Community institutions" assessment of a particular situation. Recommendations and opinions can have indirect legal effect where they are a preliminary to subsequent mandatory instruments or where the issuing institution has committed itself, thus generating legitimate expectations that must be met.

Resolutions, declarations and action programmes

Alongside the legal acts provided for in the Treaties, the Community institutions also have available a variety of other forms of action for forming and shaping the Community legal order. The most important of these are resolutions, declarations and action programmes.

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Resolutions. These may be adopted by the European Council, the Council of the EU and the European Parliament. They set out jointly held views and intentions regarding the overall process of integration and specific tasks within and outside the Community. Resolutions relating to the internal working of the Community are concerned, for example, with basic questions regarding political union, regional policy, energy policy, economic and monetary union (particularly the European Monetary System). The primary significance of these resolutions is that they help to give the Council's future work a political direction. As manifestations of a commonly held political will, resolutions make it considerably easier to achieve a consensus in the Council, in addition to which they guarantee at least a minimum degree of correlation between decision- making hierarchies in the Community and the Member States. Any assessment of their legal significance must also take account of these functions, i.e. they should remain a flexible tool and not be tied down by too many legal requirements and obligations.

Declarations. There are two different kinds of declaration: if a declaration is concerned with the further development of the Community, such as the Declaration on the EU, the Declaration on Democracy and the Declaration on Fundamental Rights and Freedom, it is more or less equivalent to a resolution. Declarations of this type are mainly used to reach a wide audience or a specific group of addressees. The other type of declaration is issued in the context of the Council's decision-making process and sets out the views of all or individual Council members regarding the interpretation of the Council's decisions. Interpretive declarations of this kind are standard practice in the Council and are an essential means of finding compromises. Their legal significance should be assessed under the basic principles of interpretation, according to which the key factor when interpreting the meaning of a legal provision should in all cases be the underlying intention of its originator. This principle is only valid, however, if the declaration receives the necessary public attention; this is because, for example, secondary Community legislation granting direct rights to individuals cannot be restricted by secondary agreements that have not been made public.

Action programmes. These programmes are drawn up by the Council and the Commission on their own initiative and serve to put into practice the legislative programmes and general objectives laid down in the Treaties. If a programme is specifically provided for in the Treaties, the Community institutions are bound by those provisions when planning it. Other programmes are in practice merely regarded as general guidelines with no legally binding effect. They are, however, an indication of the Community institutions" intended actions.

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The legislative process

Whereas in a State the will of the people will usually be expressed in parliament, it was for a long time the representatives of the Member States" governments meeting in the Council who played the decisive role in expressing the will of the EC. This was simply because the Community does not consist of a "European nation" but owes its existence and form to the combined input of its Member States. These did not simply transfer part of their sovereignty to the EC, but pooled it on the understanding that they would retain the joint power to exercise it. But as the process of Community integration has developed and deepened, this division of powers in the Community decision- making process, originally geared towards the defence of national interests by the Member States, has evolved into something much more balanced, with regular enhancements of the status of the European Parliament. The original procedure whereby Parliament was merely consulted was first of all broadened to include cooperation with the Council, and Parliament was eventually given powers of co-decision in the EC's legislative process. The Treaty of Amsterdam made these co-decision powers "the general rule", thereby further enhancing the EC's democratic credentials. The long-established principle of division of powers used in the Member States has not, however, been applied to the EC's legislative system, which is instead based on the "principle of institutional balance", which ensures that all the Community institutions involved in expressing the will of the EC participate in the legislative process to an equal degree.

The EC legislative process operates on four main levels, with different procedures applying at each of them:

  1. for instruments of general validity (regulations and directives), there is the consultation procedure, the cooperation procedure, the co-decision procedure and the approval procedure;

  2. implementing measures are adopted by specific procedures;

  3. there is a simplified procedure for binding individual decisions and non- mandatory instruments;

  4. ECSC instruments are subject to their own specific procedures.

Consultation procedure

The consultation procedure was the earliest legislative process within the Community. It has become less and less important since the cooperation and co- decisions procedures came into being, and is now only used in instances where neither of the other two procedures are specifically required, including the adoption of provisions to combat discrimination on the grounds of gender, race, ethnic origin, religion or belief, disability, age or sexual orientation (Article 13 EC); strengthening and adding to the rights deriving from EU citizenship (Article 22(2) Page 73 EC); implementing the common agricultural policy (Article 37(2) EC); liberalising certain services (Article 52(2) EC); applying for a transitional period of five years in relation to visas, asylum and immigration (Article 67(1) EC); relating to competition (Articles 83 and 89 EC) and taxation (Article 93 EC); laying down guidelines for employment policies (Article 128(2) EC); extending foreign trade policy to include services and intellectual property rights (Article 133 EC); relating to social security, protection of workers" interests and the improvement of working conditions (Article 137(3) EC); on the establishment of joint undertakings for the execution of research, technological development and demonstration programmes (Article 172 EC); and provisions in the environmental field relating to fiscal matters, town and country planning, land use or water management, as well as measures concerning a Member State's choice between different energy sources and the general structure of its energy supply (Article 175(2) EC).

The work involved in the consultation procedure is shared between the Commission and the Council: the Commission submits proposals and the Council makes the decisions. Before any decision is taken by the Council, however, various stages must be completed which, depending on the field concerned, also involve the European Parliament, the Economic and Social Committee and the Committee of the Regions in addition to the Commission and the Council.

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Formulation stage

The machinery is set in motion by the Commission, which draws up a proposal for the measure in question (known as the "right of initiative"). A proposal is prepared on the responsibility of a Member of the Commission by the Commission department dealing with the particular field; frequently the department will also consult national experts at this stage. This sometimes takes the form of deliberations in specially convened committees; alternatively, experts may have questions put to them by the relevant departments of the Commission. In practice, this consultation is particularly important in that it enables the Commission, while it is still in the process of drawing up a proposal, to assess its chances of being approved by Page 75 the Council and, if necessary, seek compromises at this early stage. However, the Commission is not obliged to accept the advice of national experts when drawing up its proposals. The draft drawn up by the Commission, setting out the content and form of the measure to the last detail, goes before the Commission as a whole, when a simple majority is enough to have it adopted. It is now a "Commission proposal", and is sent to the Council with detailed explanatory remarks.

Consultation stage

The Council has to check whether it must consult other Community bodies before deciding on the proposal. The Treaties give the European Parliament the right to be consulted on all politically important measures (compulsory consultation). Failure to consult Parliament in such cases is a serious irregularity for which proceedings for cancellation may be instituted (Article 230 EC), which may result in the proposal being annulled. Apart from compulsory consultation of this kind, Parliament is in practice also consulted on the (now rare) draft legislation which may be passed by the Council alone on the basis of a proposal from the Commission (optional consultation). Examples of this type of proposal include harmonisation of the national systems for granting aid for exports to non-member countries (Article 132(1) EC) and fixing of Common Customs Tariff duties (Article 26 EC). By way of consultation, the Council officially forwards the Commission's proposal to the President of the European Parliament and formally requests Parliament to set out its position. The President passes the proposal on to a Parliamentary coordination committee for further consideration. The outcome of the committee's deliberations is then discussed at a plenary session of Parliament, and is set out in a report which may accept or reject the proposal or propose amendments. The Council is not legally obliged to take account of the opinions or amendments emanating from Parliament. These opinions are nevertheless of considerable political importance in that they enable Parliament to point out any legal shortcomings or call for further Community measures, thereby giving new impetus to the policy of European integration.

As well as the European Parliament, the Treaties in some cases oblige the Council to consult the Economic and Social Committee and the Committee of the Regions. As with Parliament, the opinions of the Economic and Social Committee and the Committee of the Regions regarding the proposal are sent to the Council and the Commission, and this ends their part in the process. However, the Committees" opinions, like that of Parliament, are not binding on the Council.

Enactment stage

After Parliament, the Economic and Social Committee and the Committee of the Regions have been consulted, the Page 76 Commission proposal is once more put before the Council, perhaps amended by the Commission in the light of the opinions of Parliament and the committees, where it is discussed by the Permanent Representatives Committee (Coreper). In the Coreper, all the technical details of decisions to be taken by the Council are worked out in advance by specialised working groups. As soon as a measure is "ready for adoption", it is entered as an "A item" on the agenda of the next Council meeting and is adopted without further debate. If, however, there are irreconcilable differences of opinion within the Coreper about the actual provisions of the measure concerned, the outstanding issues are entered on the agenda as "B items" for further discussion by the Council in order to find a solution. Adoption of the proposal by the Council is the final stage in the legislative process.


The final text, in all 11 official languages of the Community (Spanish, Danish, German, Greek, English, French, Italian, Dutch, Portuguese, Finnish and Swedish), is adopted by the Council, signed by the President of the Council, and then published or notified to the person to whom it is addressed (Article 254(1) and (3) EC).

Cooperation procedure (Article 252 EC)

The cooperation procedure largely follows the same lines as the proposal procedure described above, but involves a much stronger role for Parliament in the decision-making process and operates rather more quickly. In practice, this procedure is only relevant in relation to economic and monetary union (Articles 99(5) and 106(2) EC); in all other scenarios in which it used to be used, it has now been replaced by the co-decision procedure.

The cooperation procedure basically introduces a second reading by Parliament and the Council into the legislative process.

First reading. The procedure begins with a Commission proposal, which is sent not just to the Council, but also to Parliament. The idea behind Parliament's involvement at this early stage is to give it an opportunity, in the interests of effective participation in the legislative process, to give the Council its views on the Commission proposal before the "common position" is drawn up. The Economic and Social Committee and the Committee of the Regions may also be consulted at this stage.

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On the basis of the opinions submitted, the Council then adopts, by qualified majority, a common position. This sets out the Council's position in the light of the Commission's proposal and the opinions. It is therefore not a compromise document but rather a reflection of the Council's view arrived at independently.

Second reading. The common position is then sent to Parliament for its second reading. Parliament has three months to take one of the following courses of action.

If Parliament accepts the common position or gives no response within the deadline, the Council then adopts the common position.

Parliament may, however, reject the common position or propose amendments. In either instance, the Council may proceed with its adoption, albeit in two different ways.

* If the common position is rejected, unanimity is required for adoption by the Council. Given the difficulty of achieving unanimity in the Council, the proposal is effectively blocked. Only rarely will Parliament block legislation in this way.

* Parliament usually proposes amendments. The question is then whether the Commission accepts its amendments. If it does, the Council may adopt the instrument in the usual way, by a qualified majority or (if it is departing from the Commission's proposal) unanimously. If the Commission does not accept Parliament's amendments, their adoption by the Council requires a unanimous vote. Parliament has to get the Commission on its side in order to lend weight to its arguments. In any event, the Council may still exercise a veto by not taking any decision on the amendments proposed by Parliament or on the amended Commission proposal, thereby blocking the legislation in question.

Co-decision procedure (Article 251 EC)

The concept of the co-decision procedure is one step further on from the cooperation procedure. Whilst the Council may unanimously override Parliament's views under the cooperation procedure, the Treaty of Amsterdam designed the co-decision procedure to create "equality of arms" between Council and Parliament. The co-decision procedure denies the Council the right to adopt its common position if efforts to reach agreement with Parliament fail. This increases the incentive to reach a compromise as the entire legislative process must otherwise be abandoned.

The co-decision procedure has become by far the most important element in the legislative process. It is used in connection with the ban on discrimination on grounds of nationality (Article 12 EC), provisions facilitating the exercise of the right of residence (Article 18(2) EC), measures to bring about freedom of movement (Article 40 EC), measures to ensure social security when exercising the right to move freely (Article 42 EC), directives on freedom of establishment (Articles 44(2) and 47(1) EC), freedom to provide services (Article 55 EC), transport policy (Articles 71(1) and 80 EC), creation of a single market (Article 95 EC), social policy, including measures to bring about equality of the sexes (Articles 137, 141 and 148 EC), measures to promote education and vocational training (Article 149 EC), culture (Article 151 EC), public health (Article 152 EC), specific measures to protect consumers (Article 153 EC), guidelines and projects of common interest relating to trans- European networks (Article 156 EC), regional funds (Article 162(1) EC), research programmes (Article 172(2) EC), pursuit of the environmental protection objectives referred to in Article 174 EC (Article 175(1) EC) and implementation of environmental protection programmes (Article 175(3) EC), development cooperation measures (Article 179 EC), formulation of general principles on access to documentation (general principles of transparency, Article 280 EC), the production of statistics (Article 285 EC) and the establishment of an independent supervisory body to monitor data protection (Article 286 EC).

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The following is a simplified description of the co-decision procedure.

First reading. Here again, the starting point is a Commission proposal that is sent to the Council, Parliament and any committees to be consulted. Parliament takes its first reading and sends its opinion to the Council. The Economic and Social Committee and the Committee of the Regions are also given an opportunity to set out their position at this stage.

If Parliament does not make any amendments to the Commission's proposal, or the Commission accepts all amendments proposed by Parliament, the instrument may be adopted at this stage of the procedure. Otherwise, a second reading before Parliament is required.

Second reading. On the basis of the Commission's proposal and Parliament's and the committees" opinions and its own deliberations, the Council adopts a common position by a qualified majority. The common position is then sent to Parliament for its second reading. Parliament now has three months in which to do one of three things.

  1. If it accepts the Council's common position or gives no response within three months, the instrument is deemed to have been adopted as set out in the common position.

  2. If it rejects the common position outright (for which an absolute majority of MEPs would be required), the legislative process is at an end. The Council no longer has the option of convening the Conciliation Committee.

  3. If it makes amendments to the Council's common position the following procedure is then used. The Council first of all Page 81 has the opportunity to adopt the common position as amended by Parliament, in which case all the proposed changes must be accepted. If, however, the Council rejects certain amendments or the majority needed for their adoption cannot be obtained (e.g. unanimity in the event that the Commission rejects Parliament's proposed amendments), then the President of the Council, acting in consultation with the President of the Parliament, must within six weeks convene a Conciliation Committee consisting of 15 representatives each from the Council and Parliament to consider the Council's common position in the light of Parliament's proposed amendments. The aim is to achieve a workable compromise which can be adopted by the required majorities in the Council and Parliament.

Third reading. If the Conciliation Committee accepts a joint draft of the legal instrument, the Council and Parliament must confirm its acceptance in a third reading within six weeks. Irrespective of the Commission's position regarding the draft compromise, a qualified majority in the Council is sufficient for its adoption (unless unanimity is required under the Treaties). Adoption by Parliament requires an absolute majority of the votes cast. The instrument is then deemed accepted by Parliament and the Council, which is also clearly indicated in its title (e.g. Parliament and Council regulation).

If the conciliation procedure fails, the instrument is deemed not to have been accepted. The legislative process is then at an end. Failure of the procedure thus leads the same result as rejection of the common position by the Council and Parliament at the third reading. This arrangement does away with the procedure applying prior to the Treaty of Amsterdam whereby the Council was able to adopt its common position if the conciliation procedure ended in failure and Parliament could only prevent this by means of a blocking resolution which required an absolute majority of its members.

The co-decision procedure represents both a challenge and an opportunity for Parliament. If the procedure is to operate successfully, there must be an agreement in the Conciliation Committee, but there are the beginnings of a radically new relationship between Parliament and the Council. For the first time, the two institutions are placed on an equal footing in the legislative process. It will now be up to Parliament and the Council to demonstrate their capacity for compromise and to direct their energies in the Conciliation Committee towards coming to an agreement.

Approval procedure

The principal form of Parliamentary involvement in the legislative process is the approval procedure, whereby a legal instrument can only be adopted with the prior approval of Parliament. This procedure does not, however, give Parliament any scope for directly influencing the Page 82 nature of the legal provisions. For example, it cannot propose any amendments or secure their acceptance during the approval procedure; its role is restricted to accepting or rejecting the legal instrument submitted to it.

Provision is made for this procedure in connection with the accession of new Member States (Article 49 EU), the conclusion of association agreements and other cornerstone agreements with non-member countries (Article 300(3), second paragraph, EC), the transfer of further specific tasks to the ECB (Article 105(6) EC), amendments to the Statute of ESCB (Article 107(5) EC) and the appointment of the President of the Commission and the members of the Commission as a body (Article 214(2) EC).

Simplified procedure

Under the simplified procedure, no Commission proposal is needed to initiate the legislative process.

* This procedure applies to measures within the Commission's own powers (such as approval of State aid).

* The simplified procedure is also used for the adoption of non-mandatory instruments, especially recommendations and opinions issued by the Commission or the Council. The Commission is not restricted to what is expressly provided for in the Treaties, but can also formulate recommendations and deliver opinions where it considers it necessary (Article 211, second, indent, EC; Article 124 subpara. 2 Euratom). In the ECSC, on the other hand, only the Commission may deliver opinions.

Procedure for implementing measures

The general rule is that the Council confers on the Commission the power to issue measures implementing its instrument. Only in special cases may the Council reserve implementing powers for itself (Article 202, third indent, EC). When exercising its implementing powers the Commission may neither amend nor supplement the Council instrument; compliance with the framework conditions laid down by the Council is ensured through committees. In 1999, the decision-making procedure was redesigned to make for greater simplicity and transparency, and not least greater Parliamentary involvement. The number of decision- making procedures was reduced from five to three. Parliament was brought into the procedures concerning the adoption of implementing measures with which it had been involved as part of the co-decision procedure. Parliament may, in these instances, deliver a reasoned opinion stating that the planned measure exceeds the scope of the legal instrument to be implemented, and may require the Commission to modify the implementing measure accordingly. In addition, the Commission is subject to wide-ranging obligations to keep Parliament informed and properly notified. The three committee procedures, whose application Page 83 is specified in the enabling instrument, are used as follows.

Advisory Committee procedure. This procedure applies chiefly to the implementation of Council instruments for the single market.

The Advisory Committee is made up of representatives of the Member States and chaired by a Commission representative.

The Commission representative presents a draft of the measures to be taken, and the Committee gives its opinion on them within a time limit set by the Commission according to the urgency of the matter. The Commission is expected, though not obliged, to take the fullest possible account of the opinion; it informs the Committee of the action taken on its suggestions and proposed amendments.

Management Committee procedure. This procedure has been used for measures implementing the common agricultural policy or the common fisheries policy, or programmes with serious budgetary implications.

Before adopting its planned measures, the Commission must first consult a Management Committee composed of representatives of the Member States, which gives an opinion by qualified majority (Article 205(2) EC). If the instrument was adopted by Parliament and the Council during the co-decision procedure, the Commission must also involve Parliament in the draft implementing measure. Parliament examines whether the planned measure falls within the scope of the Commission's dispositive powers. If this is not the case, Parliament must set out its position in a reasoned resolution. The Commission may then, while taking account of the points raised in the resolution, submit a new draft to the Committee, continue with the procedure, or transfer to Parliament and the Council the responsibility for passing the measure by means of a proposal to that effect. The Commission must notify Parliament and the Committee of the measures it intends to take in the light of Parliament's resolution. If it decides to continue with the procedure or if no resolution is passed by Parliament, it may adopt its planned measures with immediate effect. If these measure are not in line with the Committee's position, however, the Commission must notify the Council without delay about the measures taken and suspend their implementation for a maximum of three months. The Council has three months within which to take a different decision by a qualified majority.

Legislation Committee procedure. This procedure is used for measures of a general nature which are intended to implement basic provisions of the legal instrument concerned, e.g. measures to protect the health and safety of humans, animals or plants.

The Legislation Committee, like the Management Committee, consists of representatives of the Member States and gives its opinion on the Commission's Page 84 proposed implementing measures by qualified majority.

The difference between the Legislation Committee procedure and the Management Committee procedure lies in the Commission's much weaker position where the Legislation Committee rejects the proposed measures or fails to give an opinion. The Commission cannot put its measures immediately into effect but must propose them for a Council decision and notify Parliament accordingly. Parliament then looks at whether the proposed measure is within the scope of the instrument to be implemented, and notifies the Council of its position. The Council must decide on the Commission's proposal by qualified majority within three months while taking account of Parliament's position. If the Council rejects the proposal, the Commission must re-examine it, following which it may submit an amended proposal, resubmit the original proposal or present a proposal transferring responsibility for the measure to Parliament and the Council. If, after three months, the Council has neither adopted the proposed implementing measure nor rejected the proposal for it, the Commission may put the proposed measure into effect.

The system of legal protection

At the heart of the system of legal protection are the European Court of Justice and the Court of First Instance attached to it. The Court of Justice is the highest judicial authority on all questions of Community law and, together with the Court of First Instance, the only such authority. The system of legal protection in the EC offers the following possibilities of recourse to the law.

Treaty infringement proceedings (Article 226 EC)

Treaty infringement proceedings are procedures for establishing whether a Member State has failed to fulfil an obligation imposed on it by Community law. It is conducted exclusively before the European Court of Justice. Given the seriousness of the accusation, the referral of the Court of Justice must be preceded by a preliminary procedure in which the Member State is given the opportunity to submit its observations. If the dispute is not settled at that stage, either the Commission or another Member State (Article 227 EC) may institute an action in the Court. In practice the initiative is usually taken by the Commission. The Court investigates the complaint and decides whether the Treaty has been infringed. If so, the offending Member State is then required to take the measures needed to conform. If a Member State fails to comply with a judgment given against it, the Treaty on Page 85 European Union offers the possibility of a second court ruling ordering it to pay a lump-sum fine or a penalty (Article 228 EC).

Actions for annulment (Article 230 EC)

The purpose of actions for annulment is to have binding legal instruments of the Council, Commission, Parliament or the European Central Bank annulled. If EU citizens or firms are involved in such an action as plaintiff or defendant, the action must be brought before the Court of First Instance (CFI). Disputes between institutions, however, must be conducted before the European Court of Justice.

The actions may be based on allegations of ultra vires, violation of essential procedural requirements, infringement of the Treaties or secondary legislation, or abuse of discretionary powers. They may be brought by a Member State, the Council or the Commission, but also by Parliament, the Court of Auditors or the European Central Bank in order to safeguard the rights invested in them. However, citizens and firms can only proceed against decisions that are personally addressed to them or, though addressed to others, have a direct individual effect on them. This is deemed by the Court of Justice to be the case if a person is affected in so specific a way that a clear distinction exists between them and other individuals or firms. This criterion of "immediacy" is intended to ensure that a matter is only referred to the Court of Justice or the CFI if the fact of the plaintiff's legal position being adversely affected is clearly established along with the nature of those adverse effects; this may present problems in cases where Community legal acts still have to be implemented by the Member States. The "immediacy" requirement is also intended to prevent "relator suits" from being filed.

If the action succeeds, the Court of Justice or CFI may declare the instrument void with retroactive effect. In certain circumstances, it may declare it void solely from the date of the judgment. However, in order to safeguard the rights and interests of those bringing legal actions, the declaration of nullity may be exempted from any such restriction.

Complaints for failure to act (Article 232 EC)

Complaints for failure to act supplement the legal protection available against the Council, Commission, Parliament and the European Central Bank. There is a preliminary procedure whereby the complainant must first put the institution on notice to perform its duty. The order sought in an action by the institutions is a declaration that the body concerned has infringed the Treaty by neglecting to take a decision required of it. Where the action is brought by a citizen or a firm, it is for a declaration that the institution has infringed the Treaty by neglecting to address an individual decision to them. The judgment simply finds that the neglect was unlawful. The Court of Page 86 Justice/CFI has no jurisdiction to order that a decision be taken: the party against whom judgment is given is merely required in the usual way to take measures to comply with the judgment (Article 233 EC).

Actions for damages (Articles 235 and 288(2) EC)

Citizens and firms - and also Member States - that sustain damage by reason of fault committed by EC staff can file actions for damages at the CFI (individuals and firms) or the Court of Justice (Member States). The basis for Community liability is not fully set out by the Treaties and is governed by the general principles common to the laws of the Member States. The Court has fleshed this out, holding that the following conditions must be satisfied before an award of damages can be made.

There must be an unlawful act by a Community institution or by a member of its staff in the exercise of his functions. Where the case turns on liability for a legislative instrument (regulation or directive) unlawfully made by the institution, it is not enough that the instrument be unlawful: it must be in substantial and manifest conflict with a superior rule of law having the purpose of protecting individual rights. It is no easy matter to determine when there is a serious enough violation of Community law. The Court tends to gear its findings to the narrowness of the category of persons affected by the offending measure and the scale of the damage sustained, which must be in excess of the commercial risk that can be reasonably expected in the business sector concerned.

Actual harm must have been suffered.

There must be a causal link between the act of the Community institution and the damage sustained.

Intent or negligence do not have to be proved.

Actions by Community staff (Article 236 EC)

The CFI has jurisdiction in disputes between staff members or their surviving family members and their employing institution arising from the employment relationship.

Appeals procedure (Article 225(1) EC, Art 110 ff. of the rules of procedure of the Court of Justice)

The relationship between the Court of Justice and the CFI is designed in such a way that judgments of the CFI are subject to a right of appeal to the Court of Justice on points of law only. The appeal may be on the grounds of lack of competence of the CFI, a breach of procedure which adversely affects the interests of the appellant or the infringement of Community law by the CFI. If the appeal is justified and procedurally admissible, the CFI's judgment is rescinded by the Court Page 87 Page 88 of Justice. If the matter is ripe for a court ruling, the Court of Justice may issue its own judgment; otherwise, it must refer the matter back to the CFI, which is bound by the Court of Justice's legal assessment.

Provisional legal protection (Articles 242 and 243 EC)

Actions filed with the Court of Justice or the CFI, or appeals lodged against their judgments, do not have suspensive effect. It is, however, possible to apply to the Court of Justice or the CFI for an order to suspend the application of the contested act (Article 242 EC) or for an interim court order (Article 243 EC).

The merits of any application for interim measures are assessed by the courts on the basis of the following three criteria.

Prospect of success on the main issue (fumus boni juris): this is assessed by the court in a preliminary summary examination of the arguments submitted by the appellant.

Urgency of the order: this is assessed on the basis of whether the order applied for by the appellant is necessary in order to ward off serious and irreparable harm. The criteria used for making this assessment include the nature and seriousness of the infringement, and its specific and irreversibly adverse effects on the appellant's property and other objects of legal protection. Financial loss is deemed to be of a serious and irreparable nature only if it cannot be made good even if the appellant is successful in the main proceedings.

Weighing of interests: the adverse effects likely to be suffered by the appellant if the application for an interim order is refused are weighed against the EC's interest in immediate implementation of the measure, and against the detrimental effects on third parties if the interim order were to be issued.

Preliminary rulings (Article 234 EC)

This is the procedure whereby the national courts can seek guidance on Community law from the European Court of Justice. Where a national court is required to apply provisions of Community law in a case before it, it may stay the proceedings and ask the Court of Justice for clarification as to the validity of the Community instrument at issue and/or the interpretation of the instrument and of the Treaties. The Court of Justice responds in the form of a judgment rather than an advisory opinion; this highlights the mandatory nature of its ruling. The preliminary ruling procedure, unlike the other procedures under consideration here, is not a contentious procedure but simple one stage in the proceedings that begin and end in the national courts.

The object of a preliminary ruling is to secure a uniform interpretation of Community law and, with it, the unity of the Community legal order. Alongside this Page 89 latter function, the procedure is also of importance in protecting individual rights. The national courts can only assess the compatibility of national and Community law and, in the event of any incompatibility, enforce Community law - which takes precedence and is directly applicable - if the content and scope of Community provisions are clearly set out. This clarity can normally only be brought about by a preliminary ruling from the Court of Justice, which means that proceedings for such a ruling offer Community citizens an opportunity to challenge actions of their own Member State which are in contravention of Community law and ensure enforcement of Community law before the national courts. This dual function of preliminary ruling proceedings compensates to a certain extent for the restrictions on individuals directly filing actions before the Court of Justice and is thus crucial for the legal protection of the individual. However, success in these proceedings depends ultimately on how "keen" national Judges and courts are on referring cases to a higher authority.

Subject-matter. The European Court of Justice rules on the interpretation of instruments of Community law and examines the validity of the Community institutions" and the European Central Bank's acts of legal significance. Provisions of national law may not be the subject of a preliminary ruling. In proceedings for a preliminary ruling, the Court of Justice is not empowered to interpret national law or assess its compatibility with Community law. This fact is often overlooked in the questions referred to the Court of Justice, which is called on to look at many questions specifically concerned with the compatibility of provisions of national and Community law, or to decide on the applicability of a specific provision of Community law in proceedings pending before a national court. Although these questions are in fact procedurally inadmissible, the Court of Justice does not simply refer them back to the national court; instead, it reinterprets the question referred to it as a request by the referring court for basic or essential criteria for interpreting the Community legal provisions concerned, thus enabling it to then give its own assessment of compatibility between national and Community law. The procedure adopted by the Court of Justice is to extract from the documentation submitted - particularly the grounds for referral - those elements of Community law which need to be interpreted for the purpose of the underlying legal dispute.

Capacity to proceed. The procedure is available to all "courts of the Member States". This expression should be understood within the meaning of Community law and focuses not on the name but rather on the function and position occupied by a judicial body within the systems of legal protection in the Member States. On this basis, "courts" are understood to mean all independent institutions (i.e. not subject to instructions) empowered to settle disputes in a constitutional State under due process of law. According to this definition, the constitutional courts in the Member States and dispute-settling Page 90 authorities outside the State judicial system - but not private arbitration tribunals - are also entitled to refer cases. The national court's decision whether or not to make a reference will depend on the relevance of the point of Community law at issue for the settlement of the dispute before it, which is a matter for the national court to assess. The parties can only request, not require, it to refer a case. The Court of Justice considers the relevance of the point solely in terms of whether the question concerned is amenable to referral (i.e. whether it actually concerns the interpretation of the EC Treaty or the legal validity of an act by a Community institution) or whether a genuine legal dispute is involved (i.e. whether the questions on which the Court of Justice is to give its legal opinion in a preliminary ruling are merely hypothetical or relate to a point of law that has already been settled). It is exceptional for the Court to decline to consider a matter for these reasons because, given the special importance of cooperation between judicial authorities as provided for in the EC Treaty, the Court exercises restraint when applying these criteria. Nevertheless, recent judgments of the Court show that it has become more stringent as regards eligibility for referral in that it is very particular about the already established requirement that the order for referral contain a sufficiently clear and detailed explanation of the factual and legal background to the original proceedings, and that if this information is not provided it declares itself unable to give a proper interpretation of Community law and rejects the application for a preliminary ruling as inadmissible.

Obligation to refer. A national court or tribunal against whose decision there is no judicial remedy in national law is obliged to refer. The concept of right of appeal encompasses all forms of legal redress by which a court ruling may be reviewed in fact and in law (appeal) or only in law (appeal on points of law). The concept does not, however, encompass ordinary legal remedies with limited and specific effects (e.g. new proceedings, constitutional complaint). A court obliged to refer a case may only avoid such referral if the question is of no material importance for the outcome of the case before it, or has already been answered by the European Court of Justice, or the interpretation of Community law is not open to reasonable doubt. However, the obligation to refer is unconditional where the validity of a Community instrument is at issue. The Court of Justice made it quite clear in this respect that it alone has the power to reject illegal provisions of Community law. The national courts must therefore apply and comply with Community law until it is declared invalid by the Court of Justice. A special arrangement applies to courts in proceedings for the granting of provisional legal protection. According to recent judgments of the Court of Justice, these courts are empowered, subject to certain conditions, to suspend enforcement of a national administrative act deriving from a Community regulation, or to issue interim orders in order to provisionally determine the arrangements of Page 91 legal relations while disregarding an existing provision of Community law.

Failure to discharge the obligation to refer constitutes an infringement of the EC Treaty, possibly making the Member State concerned liable to infringement proceedings. In practice, however, the effects of such a course of action are very limited given that the government of the Member State concerned cannot comply with any order issued by the European Court of Justice because the independence of its judiciary and the principle of separation of powers mean that it is unable to give instructions to national courts. Now that the principle of Member States" liability under Community law for failure to comply with it has been recognised (see next section), the possibility of individuals filing for damages, which may have arisen from the Member State concerned failing to meet its obligation to refer, offers better prospects of success.

Effect. The preliminary ruling, issued in the form of a court order, is directly binding on the referring court and all other courts hearing the same case. In practice it also has a very high status as a precedent for subsequent cases of like nature.

Liability of the member states for infringements of community law

The liability of a Member State for harm suffered by individuals as a result of an infringement of Community law attributable to that State was established in principle by the Court of Justice in its judgment of 5 March 1996 in the joined cases C-46/93 "Brasserie du pcheur" and C- 48/93 "Factortame". This was a precedent- setting judgment on a par with earlier Court judgments on the primacy of Community law, the direct applicability of provisions of Community law and recognition of the Community's own set of fundamental rights. The judgment is even referred to by the Court itself as "the necessary corollary of the direct effect of the Community provisions whose breach caused the damage sustained", and considerably enhances the possibilities for an individual to force State bodies of all three centres of power (i.e. legislative, executive and judiciary) to comply with and implement Community law. The judgment is a further development of its rulings in "Francovich" and "Bonifaci". Whilst the earlier judgments restricted the liability of the Member States to instances where individuals suffered harm as a result of failure to transpose in good time a directive granting them personal rights but not directly addressed to them, the latest judgment established the principle of general liability encompassing any infringement of Community law attributable to a Member State.

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Member States" liability for legal acts or failure to act

This form of liability is defined by three criteria which are largely the same as those applying to the Community in a similar situation.

  1. The aim of the Community provision which has been infringed must be to grant rights to the individual.

  2. The infringement must be sufficiently serious, i.e. a Member State must clearly have exceeded the limits of its discretionary powers to a considerable degree. This must be decided by the national courts, which have sole responsibility for ascertaining the facts and assessing the seriousness of the infringements of Community law. The Court of Justice's judgment nevertheless offers the national courts a number of basic guidelines.

    The factors which the competent court may take into consideration include the clarity and precision of the rule breached, the measure of discretion left by that rule to the national or Community authorities, whether the infringement and the damage caused was intentional or involuntary, whether any error of law was excusable or inexcusable, the fact that the position taken by a Community institution may have contributed towards the omission, and the adoption or retention of national measures or practices contrary to Community law. On any view, a breach of Community law will clearly be sufficiently serious if it has persisted despite a judgment finding the infringement in question to be established, or a preliminary ruling or settled case-law of the Court on the matter from which it is clear that the conduct in question constituted an infringement.

  3. A direct causal link must exist between the infringement of the obligation of the Member State and the harm suffered by the injured party. It is not necessary to demonstrate fault (intent or negligence) in addition to establishing that a sufficiently serious infringement of Community law has occurred.

Liability for infringement of Community law by the courts

The European Court of Justice makes it quite clear that the principles established by it for determining liability also apply to the last of the three central powers, namely the judiciary. Its judgments are now not only subject to review at successive stages of appeal; if they were delivered in disregard or infringement of Community law, they may also be the subject of an action for damages before the competent courts in the Member States. When ascertaining the facts surrounding a judgment's infringement of Community law, proceedings of this kind must also reconsider the questions relating to the substance of Community law, in the process of which the court concerned may not merely invoke the binding effects of Page 93 the judgment of the specialised court dealing with the case. The court to which the competent national courts have to refer questions of interpretation and/or the validity of Community provisions, and also the compatibility of national liability regimes with Community law, is the Court of Justice, to which questions may be referred under the preliminary ruling procedure (Article 234 EC).

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