Andrés Delgado Casteleiro, Lecturer at Durham Law School

Introduction

In a ruling on Case C-425/13, Commission v Council, the Court of Justice of the European Union (CJEU) was tasked with clarifying the Council’s authority in providing directions to the Commission during international negotiations. This case, decided on Thursday, specifically concerned the linking of Australia’s emissions trading system with the EU’s and involved examining the balance of power between the Council and the Commission during such negotiations.

Background

Between 2012 and 2013, the Commission negotiated an agreement with Switzerland to connect their emissions trading scheme with the EU’s. To stay informed, the Council established a special committee under Article 218 (4) of the Treaty on the Functioning of the European Union (TFEU). However, the Council felt the Commission’s consultation with this committee during the negotiations was inadequate, with some Member States finding the information provided insufficient.

Learning from this experience, the Council, when adopting negotiating directives for a similar agreement with Australia, aimed for greater involvement through the special committee. The Council Decision, issued on May 13, 2013, authorizing the opening of negotiations with Australia, specifically mandated that the Commission provide written reports to the Council after each negotiating session or at least quarterly. Furthermore, it stipulated that the Commission adhere to detailed negotiating directives and procedures outlined in the Annex, which included the establishment of detailed negotiating positions within the special committee.

The Commission, seeing this as a limitation on its negotiating authority, challenged the Council Decision. The Commission’s argument rested on two claims. First, the mandatory written reports were seen as a violation of the Commission’s role as negotiator as defined by Article 13(2) TEU, Article 218(2) to (4) TFEU, Article 295 TFEU, and the principle of institutional balance. Secondly, the Commission argued that the establishment of detailed negotiating positions by the special committee infringed upon Article 13(2) TEU, Article 218 TFEU, and the principle of institutional balance.

The Judgment of the CJEU

Addressing the Commission’s first claim, the Court emphasized the importance of Article 218 TFEU in establishing a balance between EU institutions during treaty-making. While the Commission is designated as the negotiator and representative of the EU in external relations, the Council holds the power to sign and conclude agreements. The Court highlighted the importance of “mutual sincere cooperation” between these institutions, particularly in the realm of international action.

The Court viewed Article 218 (4) TFEU, which outlines the function of the special committee, through the lens of “concerted action and consultation” between the Council and the Commission. This implied that the Commission was obligated to provide the committee with comprehensive information, including objectives and the positions of other parties, enabling the committee to offer informed opinions and advice.

Furthermore, the Court stated that the Commission could be required to provide this information directly to the Council, regardless of the special committee, as the Council needs to be fully aware of negotiation proceedings for agreements it will ultimately approve. Consequently, the Court deemed the obligation for written reports, as stipulated in the Council Decision, consistent with Article 218(2) and (4) TFEU.

Additionally, the Court found that this obligation to provide information did not violate Article 13 (2) TFEU. It argued that the Council’s authority to establish such an obligation had been exercised without undermining the Commission’s negotiating power.

Regarding Article 295 TFEU, which pertains to interinstitutional arrangements for cooperation, the Court ruled that the Council’s ability to set out arrangements for periodic information during negotiations was not impeded by the obligation to conclude such arrangements. Therefore, the Court rejected the Commission’s first claim.

Concerning the second claim, the CJEU analyzed the Council Decision’s Annex in two stages. First, it examined whether the Council was authorized to establish procedures like the one in the Annex under Article 218 (4) TFEU. Secondly, it focused on the Annex’s specific procedure, particularly the authority given to the special committee.

When considering the special committee’s mandate, the Court determined that it was tasked with monitoring and guiding the Commission during negotiations. As the Council appoints this committee and the Commission is obligated to consult with it, the Commission must keep the committee informed on all negotiation aspects. Hence, the Court concluded that Article 218(4) TFEU generally permits the Council to establish procedures for information exchange, communication, and consultation between the committee and the Commission, ensuring internal cooperation.

However, upon closer examination of the Council Decision’s Annex, the CJEU found that certain elements did not solely aim to improve information flow and consultation. The Court argued that granting the special committee the power to establish detailed negotiating positions, as stated in the Annex, contravened Article 218 (4) TFEU, Article 13 (2) TEU, and the principle of institutional balance by effectively imposing negotiating positions on the Commission. Therefore, the Court upheld the Commission’s second claim and partially annulled the Council Decision.

Comment

The EU’s treaty-making process, to some degree, exemplifies the Principal-Agent dilemma. While the Council, acting as the Principal, empowers the Commission (Agent) to negotiate on its behalf, it does not fully trust the Commission, potentially due to information asymmetry. The Court recognized this and ruled that any provision exceeding the obligation to inform and consult, regardless of past compliance issues, constitutes a breach of the principle of institutional balance.

This case draws parallels to Case C-658/12, European Parliament v Council, where the Court found the Council in violation of Article 218 (10) TFEU for not keeping the Parliament adequately informed about an extradition agreement with Mauritius. In both cases, the Court affirmed the importance of immediate and complete information flow to ensure other institutions can exercise their powers effectively, upholding the principle of institutional balance.

In recent years, there has been a rise in litigation among EU institutions regarding their respective powers and the balance between them in EU External Relations, suggesting a shift from cooperative arrangements to a stricter interpretation of powers after the Lisbon Treaty. The prominence of the principle of institutional balance in this case and others, like Case C-409/13 (Council v Commission) and Case C-28/12, Commission v Council (US Air Transport Agreement), might indicate an increasing institutional divide on how to manage EU external representation.

Barnard & Peers: chapter 24

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