P ART 3: J UDICIAL R EVIEW , U LTRA V IRES AND N ATURAL
13.12 Powers of Annulment in the European Court
The nature and sources of EU law have been dealt with previously in Part 2 where it was seen that the European Court of Justice has the task of overseeing the interpretation and application of the treaties governing the Union, the best- known of which is the Treaty of Rome. One facet of this task is the review of administrative action although there are other closely related tasks including the need to deal with preliminary references from courts in Member States requiring a conclusive interpretation of EU law, the adjudication of any alleged refusal to act by a Community institution, the adjudication of claims that regula- tions are illegal and the settlement of claims for damages against EU institu- tions. However, it is the power of review which occupies the place of importance for present purposes.
13.12.1 The power of review
The court’s power of review is found in Article 173 of the Treaty of Rome as amended by Article G (53) of the Treaty on European Union (Maastricht). This states that:
The Court of Justice shall review the legality of acts adopted jointly by the European Parliament and the Council, of acts of the Council, of the Commission and of the ECB [European Central Bank], other than recommen- dations and opinions, and acts of the European Parliament intended to pro- duce legal effects vis-à-vis third parties. It shall for this purpose have jurisdiction in actions brought by a Member State, the Council or the Commission on grounds of lack of competence, infringement of an essential procedural requirement, infringement of this Treaty or of any rule of law relating to its application, or misuse of powers. The court shall have jurisdic- tion under the same conditions in actions brought by the European Parliament and by the ECB for the purpose of protecting their prerogatives.
Any natural or legal person may, under the same conditions, institute pro- ceedings against a decision addressed to that person or against a decision which, although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the former. The pro- ceedings provided for in this Article shall be instituted within two months of the publication of the measure, or of its notification to the plaintiff, or, in the absence thereof, of the day on which it came to the knowledge of the latter, as the case may be.
INTRODUCTION TOADMINISTRATIVELAW
13.12.2 The scope of review
The first crucial point to notice is that Article 173 applies to directives, regula- tions and decisions in the case of Member States, the Council and the Commission whereas review is more limited in the case of proceedings insti- tuted by an individual or ‘legal person’, eg a company. Nevertheless, the court has attempted to widen its sphere of influence in relation to review by giving a generous interpretation of the concept of an EU ‘act’. In approaching its task in the present context of review, the court assumes that the act complained of is legally valid until annulled, that is, in effect a voidable act.
13.12.3 The grounds for annulment
The four grounds for annulment listed above are closely related to each other and in some respects similar to the categories of the doctrine of ultra vires in English administrative law set out in Part 3.
The first ground, lack of competence, frequently arises from questions con- cerning delegation of functions by the Council to the Commission or any other EU institution. The leading case is Meroni v Commission (1958) where it was decided that there had been an unlawful delegation by the Commission of its functions to private organisations, as a result of which various legal safeguards could not operate as they would where the functions stayed within their autho- rised framework.
The second ground, the infringement of an essential procedural requirement, frequently appears in relation to the legal requirement for reasons to be given in respect of any ‘binding’ act (Article 190 of the Treaty of Rome) and in relation to the requirement for consultation arising from a number of provisions in the Treaty of Rome. It will be noticed that any procedural requirement for the pur- pose of Article 173 must be an ‘essential’ procedural requirement. Failure to give sufficient reasons has been justification for the annulment of a number of Union acts over the years. In the same way that the court has developed a body of law on the sufficiency of reasons, so it has developed a body of law on the requirement for consultation, bearing in mind the need to consult the European Parliament, for example, before certain legislative acts become legally effective.
The third ground involving the infringement of the Treaty or of a rule of law relating to its application probably covers most situations which occur where the court is invited to annul administrative action in the EU. Most action which is subject to annulment is likely to be an infringement of the Treaty in one way or another. Rules of law relating to the application of the Treaty include regula- tions, certain rules of international law at the foundation of the treaties and rules of law which crystallise particular fundamental rights from the legal sys- tems of Member States and which provide guidance on the scope of EU law where it is silent on certain requirements.
Finally, there is the ground of misuse of powers which is particularly rele- vant on those occasions when it is alleged that administrative action in the EU is based on the unlawful abuse of discretionary powers.
13.12.4 Related functions of the European Court of Justice
Reference been made previously in this chapter and earlier in Part 2 to the func- tion of the court in dealing with preliminary references on the interpretation of EU law made by national courts in Member States. This facility is particularly important on those occasions when the exercise of statutory powers for admin- istrative purposes in a Member State may be subject to the constraints of EU law. In very general terms it may be said that any administrative activity which involves economic or associated regulation may come under the influence of constraints of EU law. Any doubts about the scope of that influence of those constraints can of course, be settled by a reference under Article 177. Another related function of the court occurs in Article 175 and deals with the alleged refusal of the Council or the Commission to act, in breach of the Treaty. Before the court can intervene, it is necessary to establish that a request was first made for the institution to act. In the face of a refusal to act, the institution has two months in which to define its position and any action that is then necessary may be brought within a further period of two months. As in Article 173, any indi- vidual or ‘legal person’ may take advantage of the facility in Article 175 where an institution has failed to address to that person any act other than a recom- mendation or opinion. A case of fundamental significance here is European Parliament v Council of the European Communities (1987). This case is the first action under Article 175 by one EU institution against another and the first admissible action under the Article brought before the European Court of Justice. The main issue was the Council’s failure to create a Common Transport Policy. It was held that although the Council had a considerable discretion in this connection, thereby making a specific case of failure to act difficult, there were some aspects of the policy that could be defined with precision for the purpose of framing a case of failure to act.
Article 173 is reinforced by the provisions of Article 184 which relates to the regulations of the Union. Article 184 states that even though the two-month time limit in Article 173 has expired, any party may challenge the legality of a regulation on any of the four grounds in Article 173. Finally, Article 215 states that the EU shall make good any damage caused by its institutions or by its ser- vants in the performance of their duties. However, provision is limited to non- contractual liability in conformity with the general principles common to the laws of the Member States. Potentially, therefore, this provision could open up very significant areas of legal liability whereby the individual could benefit from compensation for a wide variety of unlawful administrative action in the Union.
INTRODUCTION TOADMINISTRATIVELAW