Anastasia Karatzia, Law Lecturer, University of Essex

Introduction

Decisions from the Court of Justice of the European Union (CJEU) on the European and Monetary Union (EMU) are infrequent. Recent cases on this topic, including landmark judgments like Pringle and Gauweiler, have addressed measures enacted during the Eurozone crisis. Among these decisions is Anagnostakis v Commission, a case challenging the Commission’s refusal to register a proposed European Citizens’ Initiative (ECI) titled “One million signatures for solidarity.”

Mr. Anagnostakis presented his proposed Initiative to the Commission in July 2012. The Initiative aimed to establish a legal principle within the EU, referred to as the ‘state of necessity.’ This principle posits that if a Member State’s financial and political stability is jeopardized by overwhelming debt, refusal to repay that debt becomes a necessary and justifiable action. Articles 119-144 TFEU, the Treaty provisions concerning EMU, were cited as the legal foundation for the proposed ECI. The Commission, however, rejected Mr. Anagnostakis’s proposal in September 2012. They argued that the proposal failed to meet the criteria outlined in Article 4(2)(b) of the ECI Regulation, asserting that it clearly exceeded the Commission’s authority to present a proposal for enacting EU law to implement the Treaty.

The refusal letter to the organizer clarified that the Commission had reviewed the Treaty provisions mentioned in the proposed ECI, particularly Article 136(1) TFEU, and all other potential legal bases. This examination led them to conclude that the proposed Initiative should not be registered. On October 11, 2012, Mr. Anagnostakis contested the refusal of his Initiative, arguing that the Commission could have registered the ECI based on Article 122(1), Article 122(2), Article 136(1)(b) TFEU, and international law. The General Court decided in favor of the Commission, stating that they did not err in refusing to register the proposal and consequently dismissed the case. They also affirmed that the Commission had fulfilled its obligation to provide reasons, a procedural aspect they examined independently.

The applicant then appealed the General Court’s judgment, leading to the European Court of Justice (ECJ) delivering its judgment on September 12, 2017. This commentary, the third in a series on ECI cases in “EU Law Analysis” (following commentaries on the TTIP/CETA and Minority Safepack cases), will concentrate on the ECJ’s judgment - the first and, at present, the sole ECJ judgment concerning an ECI. Notably, the Grand Chamber delivered the judgment, possibly due to the case’s unprecedented subject matter or the political sensitivity surrounding the Initiative.

Coinciding with this first ECI judgment, the Commission recently released its Proposal for a new ECI Regulation, presented to the European Parliament by First Vice President Timmermans earlier in the week (November 28). This commentary will conclude by briefly examining a specific element of the Commission’s Proposal: the proposed formalization of partially registering an ECI.

The European Court of Justice’s Judgment in Anagnostakis

The appeal was structured around four grounds, categorized into two groups (following the Advocate General’s opinion). The first group challenged the procedure employed by the Commission in reaching its decision. The appellant argued that the General Court erred in concluding that the contested decision satisfied the Commission’s obligation to provide reasons under Article 296 TFEU. The second group addressed the substance of the Decision, with the appellant asserting that the General Court misinterpreted Article 122 TFEU, Article 136(1) TFEU, and international law when determining that the Commission’s assessment of Article 4(2)(b) of the ECI Regulation was accurate.

The Commission’s Obligation to Provide Reasons

The appellant contended that the General Court’s evaluation of the Commission’s duty to provide reasons was flawed. They argued the General Court incorrectly determined that merely referencing Article 4(2)(b) of the ECI Regulation in the Commission’s Communication constituted a sufficient reason for rejecting the proposed ECI. They claimed that simply citing this article as the basis for refusal did not adequately explain why the Commission lacked the competence to register the proposal.

The ECJ’s assessment on this ground of review is unambiguous and aligns with established case law on Article 296 TFEU, as articulated in Article 4(3) of the ECI Regulation. The Court initiated its analysis by referencing Article 11(4) TEU (the legal basis of the ECI in conjunction with Article 24 TFEU), classifying the ECI as an instrument pertaining to citizens’ right to engage in the EU’s democratic processes, as stipulated in Article 10(3) TFEU (para 24). The Court referenced well-established case law concerning Article 296 TFEU, which posits that an EU institution’s statement of reasons must be assessed contextually. This involves considering the specific circumstances of the case, the wording used in the statement, and the relevant legal framework (para 29). They emphasized that the obligation to provide reasons aims to enable the concerned party to comprehend the decision’s rationale and allow the competent court to exercise its power of review.

The Court proceeded to evaluate the General Court’s finding that the Commission had met its obligation to provide reasons (paras 31-43). The central message was that a more detailed explanation from the Commission would only be necessary if the ECI proposal itself was more comprehensive. The conciseness of the ECI proposal, its general reference to Articles 119-144 TFEU, and the absence of a clear link between these articles and the proposal’s content justified the succinct nature of the contested decision.

Considering the proposed Initiative’s format, the Commission was entitled to base its evaluation primarily on Article 136(1) TFEU – a general power to enact legislation related to EMU – as it was the most relevant article upon which the proposed ECI could be based. Furthermore, the Commission was not obligated to justify its assessment of all 26 proposed legal bases or explain the irrelevance of other TFEU provisions. The Court, in its assessment, considered that the General Court was ultimately able to review the substance of the Commission’s decision—a fundamental objective of the duty to give reasons imposed upon EU institutions (para 40).

Echoing the General Court’s ruling in Minority Safepack, the ECJ in Anagnostakis affirmed that the Commission would only be required to furnish a more detailed statement of reasons if the organizers had provided a more comprehensive explanation regarding the link between the suggested legal bases and the content of their proposed ECI (para 37). Future ECI organizers should note that the format of a proposed ECI – encompassing the details within the proposal text and the accompanying annexes – significantly influences the extent to which the Commission is obligated to provide reasons for rejecting it. This approach could reignite concerns about the capacity of grassroots organizers to create comprehensive explanations of suitable legal bases for their proposals, particularly when dealing with intricate matters such as EMU.

On the Substance of the Case

Regarding the substance of the case, the appellant asserted that the Commission should have registered the proposed Initiative based on Articles 122, 136(1) TFEU, and principles of international law. The Court swiftly rejected the latter argument, stating that an international law principle cannot serve as a legal foundation for a Commission initiative. According to Articles 5(1) and 5(2) TEU, the Commission’s actions are limited to the competences granted by the Treaties. Therefore, the existence of an international law principle “would not suffice as a basis for a legislative initiative” (see paras 95-103).

Interestingly, before examining the matter’s substance, the Court addressed the scope of its judicial review in this case. It clarified that reviewing the General Court’s decision could only be done based on the information available at the time of the Initiative registration request. Hence, the Court would not consider any clarifications offered by the appellant during the appeal. Following this preliminary observation, the ECJ examined the arguments concerning Articles 122 and 136(1) TFEU.

First, the Court examined if Article 122 TFEU could be an appropriate legal basis for the proposed ECI. It reiterated that Article 122(1) TFEU enables the Council, “in a spirit of solidarity between Member States,” to decide upon measures suitable for the economic situation, particularly if a Member State faces severe difficulties in supplying certain energy products. It affirmed the General Court’s initial finding, citing Pringle, stating that Article 122(1) TFEU “does not constitute an appropriate legal basis for possible financial assistance from the Union to Member States who are experiencing, or are threatened by severe financing issues” (para 69). The Court determined that although Pringle concerned the European Stability Mechanism—not the focus of the proposed ECI—it remained irrelevant, as Article 122(1) TFEU does not apply to measures designed to alleviate a Member State’s financial struggles (para 70).

Subsequently, the ECJ also rejected the appellant’s argument that, contrary to the General Court’s judgment, Article 122(2) TFEU could be an appropriate legal basis for the ECI. This provision allows the Council to authorize financial aid from the EU to a Member State grappling with severe difficulties, or facing the serious threat of such difficulties, caused by natural disasters or exceptional circumstances beyond its control. The ECJ once again cited Pringle, where it had ruled that Article 122(2) TFEU cannot be used as the basis for establishing a general, permanent mechanism for non-repayment of debt (para 75). Because the ECI proposal advocated for canceling debts owed by Member States to the EU, as well as to public and private entities (both natural and legal persons), it could not fall within the scope of Article 122(2) TFEU, which pertains solely to financial assistance provided by the EU and not by other involved parties (paras 76 and 77).

Finally, the ECJ upheld the General Court’s finding that Article 136(1) TFEU cannot serve as a legal basis for establishing the principle of state necessity in EU law. The Court determined that adopting a measure like the one proposed in the Initiative could not be considered “economic policy guidance” as envisioned by Article 136(1)(b) TFEU. Instead, the mechanism proposed by the ECI would supersede the free will of contracting parties by permitting the unilateral cancellation of sovereign debt (paras 90-91).

It is significant that the ECJ rejected several of the appellant’s arguments under each ground of appeal due to the limited scope of review applicable to this case. On appeal, the ECJ can only review the findings of law based on the arguments presented by the parties to the General Court. Consequently, several of the appellant’s arguments were not evaluated on their merits, leaving some questions unanswered by the Court in this instance. One such question is whether a Member State facing severe financial difficulties can invoke the “state of necessity” to obtain debt relief, not unilaterally, but under conditions set by the Commission (paras 71-73). Another question is whether the Initiative could be adopted based on Article 136(3) TFEU in conjunction with Article 352 TFEU (the “residual powers” clause). Apart from the procedural aspect limiting the ECJ’s ability to rule on these questions during the appeal, one might also ponder whether the Anagnostakis ECI case would have been an appropriate venue for the ECJ to make any substantial pronouncements on Member State debt relief.

A third unanswered question was whether the Commission should have partially registered the proposed Initiative, specifically the aspect suggesting relief for debt owed by a Member State to the Union. The ECJ did not examine whether the Commission should have registered this particular interpretation of the proposal. More broadly, the procedural question of whether the Commission can partially register an initiative is no longer relevant. Earlier this year, the Commission partially registered the Minority SafePack ECI. Additionally, as detailed below, the Commission’s Proposal for a New ECI Regulation explicitly mentions the possibility of the Commission allowing the partial registration of proposed Initiatives.

Partial Registration of an ECI Under the Commission’s Proposal for a New ECI Regulation

Five days after the ECJ’s judgment in Anagnostakis, the Commission published its “Proposal for a Regulation of the European Parliament and of the Council on the European Citizens’ Initiative,” which suggests replacing Regulation 211/2011 with a New ECI Regulation. In this New ECI Regulation, the legal admissibility test has been relocated from Article 4 to Article 6. The new provision retains the essence of the current process: organizers can only initiate signature collection for their ECI once they have submitted their request through the register (Article 6(2)), and after the Commission has confirmed that the proposal meets specific legal and procedural standards (Article 6(3) and (4)) and has registered the proposal (Article 6(1)).

Under the New ECI Regulation, Articles 6(3)(d) and (e) maintain the two legal criteria of the existing ECI Regulation: a proposed Initiative will not be registered if it is clearly abusive, frivolous, vexatious, or if it blatantly contradicts EU values (see Article 4(2)(c) and (d) of the current ECI Regulation). The most significant modifications are found in Articles 6(3)(c) and 6(4) of the New ECI Regulation when compared to Article 4(2)(b) of the current ECI Regulation. Article 6(3)(c) states that the Commission will register a proposed Initiative only if “none of the parts of the initiative manifestly falls outside the framework of the Commission’s powers to submit a proposal for a legal act of the Union for the purpose of implementing the Treaties.” This article is meant to be interpreted in conjunction with Article 6(4), which allows the Commission to partially register an ECI.

In simple terms (or as simply as possible), if the Commission believes that only certain aspects of a proposal fall within its purview to propose a legal act, it must return the proposal to the organizers within one month, providing a rationale for its assessment. The organizers then have the option—and responsibility—to modify and resubmit, retain, or withdraw their initial proposal. It is unclear why organizers might choose to maintain a rejected proposal, as it would likely face rejection again by the Commission. However, should the organizers decide to amend their proposal, they would then bear the responsibility of submitting the necessary revisions to the Commission. Upon receiving these modifications, the Commission has one month to assess the new information and either register, partially register, or reject the ECI (Article 6(4)).

Partially registering an ECI would thus be formalized, requiring the Commission to determine if “a substantial part of the initiative including its main objectives” falls outside its mandate to propose a legal act. However, the proposed Regulation does not define what constitutes “a substantial part” of a proposed Initiative. Furthermore, this proposal shifts the onus onto the organizers, compelling them to reconsider and resubmit their initiative, instead of requiring the Commission to specify which parts of the initial ECI proposal can be retained for registration purposes. It will be intriguing to observe the European Parliament’s response to this and other changes to the ECI legal framework proposed by the Commission, especially since MEPs have advocated for a more user-friendly ECI in their contributions to the review of the current ECI Regulation.

Photo credit: CNBC