Chiara Sisler, University of Trento

In its judgment of 14 April 2015, the CJEU ruled, for the first time, on the scope and limits of the Commission power to withdraw a legislative proposal. In particular, it held that «where an amendment planned by the Parliament and the Council distorts the proposal for a legislative act in a manner which prevents achievement of the objectives pursued by the proposal and which, therefore, deprives it of its raison d’être, the Commission is entitled to withdraw it». The Court also stated that the exercise of such a power must be subject to certain conditions aimed at safeguarding the role of the legislator and other fundamental principles of the EU legal system.

The normative framework

Although European Treaties do not contain any explicit references to the power of the Commission to withdraw its legislative proposals, legal scholars generally regard such a power as an essential corollary of the Commission right of legislative initiative and its role of promoter of the Union interest. On the one hand, it is argued that the Commission possesses the power to withdraw legislative proposals when the legislator is planning to amend the act to the point that it would no longer express the spirit of the original proposal; otherwise, the adoption of the act would amount to a denial of the Commission right of initiative, since the Parliament and the Council would be practically allowed to proceed regardless of the proposal. On the other hand, the Commission is considered to have the power to withdraw legislative proposals that no longer match the Union interest, for example due to a change in the factual situation or the availability of new data.

In the practice, the existence of a withdrawal power is not controversial. Both the Parliament and the Council recognize it. Its existence emerges also from legal texts such as the Framework Agreement on relations between the European Parliament and the European Commission, according to which «[t]he Commission shall provide a detailed explanation in due time before withdrawing any proposals on which Parliament has already expressed a position at first reading». However, there is a conflict of views among the Commission and the Council on the scope and limits of such a power. While the Commission claims the right to withdraw its proposal when it has become obsolete or when it is being distorted by the legislator, the Council objects to the latter option, maintaining that such a power would clash with its right to amend a legislative proposal, enshrined in Article 293(1) TFEU.

The background of the case

The case originated from an action brought by the Council against the Commission decision to withdraw a proposal for a framework regulation laying down general provisions for macro-financial assistance to third countries.

Macro-financial assistance (MFA) is financial aid aimed at helping third countries to deal with short-term balance-of-payments difficulties. According to Article 212 TFEU, the decision to grant MFA is adopted by the Parliament and the Council in accordance with the ordinary legislative procedure. Noting that the decision-making process set out in the Treaty had resulted in significant delays in the disbursement of the assistance, while situations such as balance-of-payments difficulties would require a swifter response, in 2011, the Commission presented a proposal for a framework regulation meant to streamline the procedure for granting MFA in order to speed it up. More specifically, the proposal aimed at specifying the criteria for granting MFA and at conferring on the Commission the competence to adopt MFA decisions on the basis of the examination procedure established by the new comitology regulation.

Basically, the proposal aimed at replacing the ordinary legislative procedure with the attribution of an implementing power to the Commission. However, neither the Parliament nor the Council supported the Commission proposal. The Council was keen to maintain the ordinary legislative procedure, while the Parliament proposed the use of delegated acts. After a number of informal trilogues, the Parliament agreed with the Council on the maintenance of the ordinary legislative procedure. During the sixth trilogue, the Commission representative expressed his disagreement, based on the fact that such an approach might constitute an infringement of the Commission right of initiative, since it frustrated the very aim of the proposal, i.e. to accelerate the MFA decision-making process. Eventually, after the Parliament and the Council formalized their understanding in an agreement, the college of Commissioners decided to withdraw the proposal.

Following the Commission decision, the Council brought an annulment action before the CJEU, challenging such a decision on several grounds, namely an alleged violation of the principles of conferral and institutional balance, sincere cooperation and the obligation to state reasons. According to the Council, the power of the Commission to withdraw legislative proposals is limited to specific cases, such as the lack of progress in the procedure of adoption of the act or the obsolescence of the proposal. Such limits should be seen as safeguards aimed at protecting the legislative power of the Council and, in particular, its right to amend the Commission proposal.

The judgment of the Court

According to the Court, the power of the Commission to withdraw a legislative proposal is a corollary of its right of legislative initiative set out in Article 17(2) TEU. Such a provision, read in conjunction with Article 293(2) TFEU, that empowers the Commission to alter its proposal, and Article 293(1) TFEU, according to which the Council may amend the proposal only by acting unanimously, clarifies that the role of the Commission within the legislative procedure is not limited to its initiation. It consists in promoting the general interest of the EU and taking all appropriate initiatives to that end, including the withdrawal of the proposal, if need be.

According to the Court, «where an amendment planned by the Parliament and the Council distorts the proposal for a legislative act in a manner which prevents achievement of the objectives pursued by the proposal and which, therefore, deprives it of its raison d’être, the Commission is entitled to withdraw it». However, according to the Court, the exercise of the power of withdrawal must be subject to precise limits, meant to ensure that it does not amount to a Commission right of veto, which would be contrary to the principle of institutional balance and conferral of powers.First of all, the decision to withdraw a legislative proposal must state its grounds, that need to be supported by cogent evidence or arguments and can be subject to judicial review. However, according to the Court, the Commission is not required to explicitly state its reasons in the withdrawal decision, being it possible to derive them from the context in which the decision has been adopted. In particular, the obligation to state reasons is deemed to be respected if the Commission has disclosed the grounds for withdrawal during a Council working party or a trilogue committee meeting.

Furthermore, when exercising its power of withdrawal, the Commission must act in compliance with the principle of sincere cooperation. In particular, it «must take into account the concerns of the Parliament and the Council underlying their intention to amend that proposal» by trying to reach a compromise solution. In other words, the power of withdrawal must be conceived as a last resort instrument, to be used only when it is apparent that the co-legislators are willing to amend the proposal in a manner that would totally deprive it of its ratio.

In the case at issue, the Court considered that all the abovementioned conditions had been respected. As to the grounds for withdrawal, it concluded that the decision of the Parliament and the Council to replace implementing powers with the ordinary legislative procedure would have distorted an essential element of the proposal, by frustrating its aim of accelerating and improving the effectiveness of the MFA decision-making process. With regard to the obligation to state reasons, it noted that, although the grounds for withdrawal had not been explicitly stated by the Commission in its decision, they had been sufficiently brought to the attention of the other institutional actors, namely during Council working party and trilogue committee meetings. Finally, as far as the principle of sincere cooperation is concerned, it acknowledged that the Commission had striven to reach a compromise solution and that such a solution had been rejected by the other institutional actors. As a consequence, the Court dismissed the action for annulment.

Remarks

The judgment in comment represents the first case in which the Court rules on the scope and limits of the Commission power to withdraw a legislative proposal. In its decision, the Court recognized the link between the power of withdrawal and the Commission right of legislative initiative and has subjected its exercise to a number of guarantees aiming at preserving the role of the legislators.

As to the content of the judgment, it can be argued that the Court will be called upon to better specify the circumstances under which an amendment planned by the Parliament and the Council may distort the Commission proposal, thus enabling the institution to withdraw it. In fact, while in the case at issue the distortion of the proposal’s raison d’être was quite evident, there might be cases in which the assessment of such a distortion can be far more complex.

With regard to the obligation to state reasons, it is questionable whether it can be deemed to be respected, as stated by the Court, in a case where the grounds for withdrawal had been disclosed only during a Council working party or a trilogue committee meeting. In fact, as it has been noted, informing such bodies should not be sufficient, since there are many MEPs and Member States not represented there.

Furthermore, the part of the judgment devoted to the principle of sincere cooperation provides food for thought. According to the Court, the Commission is under a duty to take into account the concerns of the Parliament and the Council underlying their intention to amend that proposal. But what about the co-legislators? Are they under a duty to avoid a distortion of the Commission proposal and to try to reach a compromise solution? If so, to what extent?

Finally, it should be noted that the hypothesis of distortion of the Commission proposal does not represent the only case in which the power of withdrawal should be admitted. In particular, in line with a well-established practice, also the obsolescence of the proposal represents a suitable ground for withdrawal. Other cases of withdrawal, such as the ones performed by a newly-appointed Commission on the basis of a change in its legislative priorities, are still controversial, and it will be interesting to see if the Court will ever be called upon to rule on them.