European Regulatory Alert
9 November 2009
Authors:
Vanessa C. Edwards
vanessa.edwards@klgates.com
+44.(0)20.7360.8293
Neil A. Baylis
neil.baylis@klgates.com
+44.(0)20.7360.8140
K&L Gates is a global law firm with
lawyers in 33 offices located in North
America, Europe, Asia and the Middle
East, and represents numerous
GLOBAL 500, FORTUNE 100, and
FTSE 100 corporations, in addition to
growth and middle market companies,
entrepreneurs, capital market
participants and public sector entities.
For more information, visit
www.klgates.com.
New Treaty Makes it Easier to Challenge
EU Law
The Lisbon Treaty, nine years in the making, received its last ratification on
Tuesday 3 November 2009 with the signature of the Czech President. It will come
into force on 1 December 2009.
While having no immediate effect on the laws applying to companies doing
business in Europe, it is intended to facilitate a more efficient law-making process
and also to put in place constitutional changes which may enable the EU
(comprising 27 Member States with a population of 500 million) to play a more
significant role in commercial and political developments on the global stage.
Specifically, the Lisbon Treaty makes a number of technical changes to the EU
Treaty structure and some minor changes to the structure and functioning of the
European Parliament, the European Commission and the European Court of
Justice. In terms of substance the principal significant changes it makes are as
follows.
New Roles
The Lisbon Treaty provides for a “permanent” President of the European Council.
The President will be appointed for a two and a half year term and may be reappointed for one further term. To date, the Presidency of the European Council,
which comprises the Heads of State or Government of the Member States and the
President of the European Commission, has rotated between the Member States on
a six-monthly basis. The European Council defines the general political direction
of the EU. Its decisions are normally taken by consensus.
The Treaty is vague about the exact nature of the role of President so that the first
person in the role is likely to define its contours. Some Member States are keen to
have a “big name” on the international stage (such as Tony Blair, the former UK
Prime Minister) who would be comfortable representing the EU at international
gatherings at the highest level, others prefer the idea of a lower-profile President
who will focus more on moving forward the work of the EU with all that that
entails in terms of chairing meetings, achieving consensus and the like (a number
of names have been mentioned, including Jan Peter Balkenende, Dutch prime
minister, Jean-Claude Juncker, Luxembourg’s premier, Paavo Liponnen, former
Finnish prime minister and Herman von Rompuy, Belgian prime minister). The
President will be elected by the European Council by what is known as “qualified
majority voting” (“QVM”), essentially 55% of Member States representing 65% of
the EU population.
The Lisbon Treaty also provides for the appointment of a High Representative for
Foreign Affairs and Security Policy, who will also be the Vice President of the
European Commission. The High Representative will be appointed by the
European Council by QVM with the agreement of the President of the
Commission. He will replace two current posts, the Commissioner for External
Relations (Benita Ferrero-Waldner) and the High Representative for the Common
Foreign and Security Policy (Javier Solana). The new High Representative will
conduct the EU’s common foreign and security policy and common security and
defence policy, both which are decided unanimously at intergovernmental level.
European Regulatory Alert
The allocation of these posts will probably be
decided at a special summit to be convened later
this month, possibly next week. The various
posts of Commissioner will also be decided at the
same time. The President, the High
Representative and the other members of the
Commission must then be approved as a body by
the European Parliament.
These new roles could result in a greater
consistency and coherency of EU policies,
especially in the field of international politics.
Enhanced Right to Challenge EU
Legislation
The right of individuals to seek judicial review of
Community legislation is significantly
broadened. Currently a person or company may
challenge an EU measure before the EU courts
only if he can show that it is of “direct and
individual concern” to him. In most areas the
European Court of Justice has interpreted the
requirement of individual concern very narrowly
so that legislation of general application (as
opposed to a decision with specific addressees)
cannot be challenged before the EU courts by
persons or companies. The only course available
to a party seeking review is to bring an action
before a national court if that is permissible under
national law and procedure and hope that the
national court refers the matter to the EU courts,
which can take a considerable time. The Lisbon
Treaty will enable a person or company to bring a
direct challenge before the European General
Court (formerly the Court of First Instance) to a
regulatory act of direct concern to him/it,
provided that the act does not require further
implementing legislation.
This new avenue will provide a welcome and
long-awaited opportunity for individual
applicants to bring their concerns about the
validity of an EU regulation in any of the
numerous areas covered by EU law before the
General Court.
EU Replaces EC
Currently the Treaty Establishing the European
Community (1957), as its name suggests,
established the European Community while the
Treaty on the European Union (1992) established
the European Union.
personality (the EC has had legal personality
since it was founded). The acquisition by an
organisation of legal personality is a matter of
international law, however, and most EC and
international lawyers agree that the EU already
has legal personality.
Provision for a Member State to
Withdraw
The Lisbon Treaty lays down a procedure for a
Member State to withdraw from the EU.
Currently this is a matter for international treaty
law requiring the consent of all other parties.
EU Legislation
Currently, most but not all EU legislation is
passed by a procedure called “co-decision”, with
the Council and the European Parliament being
co-legislators. Certain areas, however, remain
in the sole domain of the Council, often requiring
unanimity. The Lisbon Treaty makes codecision with QMV in the Council the “ordinary
legislative procedure” applying to all areas
except foreign, security and defence policies, tax,
certain social security matters affecting persons
who have worked in more than one Member
State and matters concerning the rights and
interests of employed persons. Legislation in
these areas will still require unanimity in the
Council with the EP having a merely
consultative role. However, nine or more
Member States wishing to develop a policy
which is not endorsed by unanimity may do so as
a smaller group (without binding the other
Member States) under the so-called “enhanced
cooperation” procedure.
The effect of the extension of the ordinary
legislative procedure is that legislation in many
areas which previously required unanimity in the
Council may now be passed by QMV. These
include certain social security matters, mutual
recognition of criminal judgments, minimum
rules concerning certain procedural safeguards
and the definition of criminal offences and
sanctions in certain particularly serious crossborder crimes. In all these fields other than
mutual recognition, the Lisbon Treaty provides
for a so-called “emergency brake” which can be
invoked by a Member State which considers that
a proposed measure will affect important aspects
of its social security system or fundamental
aspects of its criminal justice system.
The Lisbon Treaty replaces the EC with the EU
for all purposes. Controversially in some
quarters it states that the EU has a legal
9 November 2009
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European Regulatory Alert
The legislative procedure will then be suspended
so that an attempt may be made to resolve the
differences in the Council.
The politically sensitive areas of judicial
cooperation in civil matters (essentially
recognition and enforcement of judgments),
border checks, asylum and immigration,
originally subject to unanimity in the Council,
had already largely moved to QMV in the
Council before the Lisbon Treaty, sometimes
with consultation of the European Parliament,
sometimes with co-decision. The Lisbon Treaty
confirms that measures in all these areas will be
subject to the ordinary legislative procedure. The
UK, however, has retained its previous
derogations in these areas: it is entitled to
exercise border controls as it sees fit and is not
bound by EU measures in the field of border
checks, asylum, immigration, judicial cooperation
in civil and criminal matters or police cooperation
unless it expressly opts in to a specific legislative
instrument.
National Parliaments
The Lisbon Treaty gives an enhanced role to
national parliaments. EU legislation normally
originates with a proposal submitted by the
Commission to the EU legislature, namely the
European Parliament and the Council. The
Lisbon Treaty requires the Commission to
submit the draft at the same time to parliaments
of the Member States. National parliaments
may submit a “reasoned opinion” on whether the
proposed legislation infringes the principle of
subsidiarity, according to which the EU may act
only if the objectives cannot be better achieved
at Member State level. If more than one third (or
one quarter if the proposed legislation is in the
area of criminal law or police cooperation) of
national parliaments object, the Commission
must review the proposal. In addition, national
parliaments have a separate right to bring an
action before the ECJ to challenge legislation on
the ground that it infringes the principle
of subsidiarity.
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This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied
upon in regard to any particular facts or circumstances without first consulting a lawyer.
©2009 K&L Gates LLP. All Rights Reserved.
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