Professor Daniel Sarmiento, Professor of EU Law at the University Complutense of Madrid*

Determining the European Union’s legal authority is a sensitive and increasingly complex area of EU law. This complexity is compounded by the intricate body of case law on legal bases, making it difficult to navigate even after decades of precedents. Since the Lisbon Treaty’s enactment, EU competency has become a significant area of focus for EU constitutional lawyers, requiring meticulous attention. The inclusion of a typology and enumeration of EU competencies in the Treaties suggests that future legal disputes within the EU will likely revolve around this domain.

Cases like Pringle, Gauweiler, and Vodafone highlight that questions of competence and legal bases are not limited to institutional disputes. Private parties can also bring these matters before the courts. The Court of Justice has consistently shown prudence in these instances, often addressing them in Grand Chamber formations.

An unexpected avenue for EU competence litigation emerged last week in the Anagnostakis case. The General Court addressed an annulment action brought by a private citizen against the European Commission’s decision to dismiss a European citizens’ initiative (ECI) due to a perceived lack of competence. Mr. Anagnostakis, with over a million supporters, submitted a proposal under Article 11.4 TEU (which establishes ECIs) and Regulation 211/2011 (detailing the ECI process). This proposal urged the Commission to incorporate into EU law “the principle of state of necessity.” This principle posits that when a state’s financial and political stability is threatened by an obligation to repay an unfair debt, refusal to pay is both necessary and justified. The proponents argued that Articles 119 TFEU and 144 TFEU provided the legal basis for this initiative.

The Commission, seemingly unconvinced, refused to register the proposal citing a lack of competence, in accordance with Articles 4(2)(b) and (3) of Regulation 211/2011.

Mr. Anagnostakis challenged the Commission’s decision by filing an annulment action with the General Court, alleging violations of Articles 122(1) and (2) TFEU, 136(1) TFEU, and international law.

The General Court dismissed the action but went beyond simply examining the Commission’s obligation to provide justification. It delved into whether government debt reductions fell under EU competence and aligned with EU law. In an unexpected turn of events, the General Court addressed the contentious topic of Greece’s unsustainable public debt within this procedural context.

While the judgment is concise in its reasoning, it repeatedly references Pringle and Gauweiler when interpreting Articles 122 and 136 TFEU. Despite its brevity, the judgment makes a statement likely to draw attention when Greece’s public debt becomes a pressing issue again. In paragraph 58, the General Court asserts that enacting legislation to authorize a Member State to default on its debt “would amount to replacing the free will of the contracting parties by a legislative instrument allowing for a unilateral abandonment of public debt, which is clearly not what the provision allows,” and therefore falls outside the scope of economic policy guidelines as defined by Article 136.1.(b) TFEU.

Although this assertion might be technically accurate considering the limited reach of Article 136(1)(b) TFEU, the language used carries significant political weight. Legally, it raises questions about whether Pringle categorically prohibits any form of government debt relief under any circumstances. The Anagnostakis ruling suggests that debt relief will be unfeasible in the future, regardless of the circumstances, consensus among Member States (including explicit support from the IMF), or the specifics of the debt relief itself.

However, this judgment could be a superficial assessment within a unique procedural context. One might argue that highly contested issues like the EU’s authority in the Economic and Monetary Union should be decided by the Court of Justice, not the General Court, especially given the circumstances of Anagnostakis. The General Court might be conscious of this, hence the concise and direct reasoning in the decision. Despite this, the judgment’s language seems increasingly impactful upon repeated readings.

*Reblogged from the Despite our Differences blog

Barnard & Peers: chapter 5, chapter 19

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