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IS THE REFORM PACKAGE
“LEGALLY BINDING AND IRREVERSIBLE”

Sir Alan Dashwood QC, Henderson Chambers

 
Introduction
The agreement on the reform package is contained in a Decision of the Heads of State or Government of the Member States, meeting within the European Council, complemented by 5 Statement, one of the Heads of State or Government, one of the European Council and three of the Commission.  
As you know, the Prime Minister’s declared aim was to achieve a negotiating outcome that would be “legally binding and irreversible”. Even before the European Council of 18 and 19 February, it became clear that denial of its binding and irreversible character would loom large in criticism of any package of reforms that might be achieved, and so it has proved. Perhaps the most surprising intervention was that of Lord Chancellor Gove, who referred to the HSG Decision as “an international declaration” and indicated that it was liable to be struck down, or at best ignored, by the Court of Justice of the EU. So it’s important to the credibility of the reform package that the question posed in the title of my talk receive a clear and convincing answer, which I’ll do my best to provide.
I’m going to consider, first, the legal nature and effect of the Decision of the Heads of State or Government, and then go on to consider the specific legal arrangements for implementing different elements of the reform package.     
The Decision of Heads of State or Government
So what’s the legal nature and effect of the Decision of Heads of State or Government?
It’s worth recalling that Decisions of Representatives of the Governments of the Member States at a less exalted level are a familiar feature of the EU system. They provide a way for Member States to exercise national powers collectively, rather than acting through EU institutions, e.g. within the framework of a mixed agreement.
Decisions of this kind are not, as Mr Gove seems to believe, merely “international declarations” but treaties in simplified form, concluded by consensus between, and binding in international law upon, the States parties to them. They have been used at Heads of State or Government level on two previous occasions, to address concerns raised by Denmark regarding the Maastricht Treaty, and concerns raised by Ireland regarding the Treaty of Lisbon. Both of those earlier Decisions were registered with the UN Secretariat as treaties in accordance with Article 102 of the UN Charter; and each of them was followed up by a Protocol, added to the Treaties on the conclusion of, respectively, the Amsterdam Treaty and the Accession Treaty with Croatia.
Though it’s somewhat more elaborate, the new Decision conforms to those precedents. Like the Decisions on Denmark and Ireland, it contains only provisions that explain or complement, but are compatible with, the existing Treaties. Its legal nature and effect, like theirs, is that of a binding international agreement. Like them, it will be registered as a treaty with the UN Secretariat. And some parts of it will, in due course, like them, be incorporated into the Treaties. What is more, as an international agreement reached by consensus, the Decision can only be amended or rescinded by consensus – in other words, with the agreement of the UK. In that sense, it is irreversible.
To those inclined to pooh-pooh international agreements as pieces of paper, I would say this. States recognise the legally binding character of treaties, and there is strong peer group pressure to honour them. That is especially the case between close international partners, like the Member States of the EU. The Decisions on Denmark and Ireland have been upheld by the Member States to the letter; and there’s every reason to believe that it will be the same with the new Decision on the UK, as I suppose we have to call it.  
Nor is that all. Mr Gove was wrong to suggest that, unless and until the EU Treaties are amended, the Decision will have no relevance to EU law. According to Article 31 (3) (a) of the Vienna Convention on the Law of Treaties, there shall be taken into account, as part of the context for the interpretation of a treaty, “any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions”. The Decision on the UK is such an agreement and, by adopting it, the Member States have bound themselves to interpret and apply the EU Treaties in accordance with its terms.
Moreover, the CJEU has acknowledged that it was bound to take the Decision on Denmark into consideration when interpreting relevant provisions of the Treaties, and it will have to treat the new Decision in the same way. It would not, of course, be so bound, in respect of any elements of the Decision that were incompatible with the Treaties; but it’s my contention that none of them are.    
So, from the date of its entry into force, in addition to imposing on the Member States an obligation to take all necessary steps for the delivery of the reform package, the Decision on the UK will become a binding instrument for the interpretation of the EU Treaties and acts based on them. The purpose of eventually introducing certain of the principles laid down by the Decision into the Treaties themselves would be to enhance their status, from interpretative tools to provisions of primary EU law in their own right.
A final point on the legal nature and effect of the Decision overall is that, as a text concerning the interpretation and application of the EU Treaties, any dispute between Member States in relation to it would appear to fall within the CJEU’s exclusive jurisdiction under Article 344 TFEU. The appropriate procedure for bringing the dispute before the Court would, presumably, be Article 273 TFEU, even though this possibility is not spelled out in the Decision itself.
Arrangements for implementing the reform package
How does all of this play out in relation to individual elements of the reform package? I shall deal in turn, but in varying degrees of detail, with the implementing arrangements under each of the four Sections of the Decision.
A.      Economic Governance
Section A of the Decision, with the heading “Economic Governance”, is about the better ordering of the relationship between the Eurozone and the Member States outside it. This is an important constitutional issue – hitherto neglected – and it’s to the Prime Minister’s credit that he has forced the EU to take it seriously.
The relevant arrangements are found in Section A of the Decision, together with the Statement of the Heads of State or Government on Section A and the Draft Council Decision attached to it. They consist of a set of interpretative principles and a safeguard mechanism to help ensure that the principles are respected.
The principles are designed, notably, to prevent discrimination between individuals and businesses based on the currency of the Member State to which they belong, to preserve the integrity of the single market and to protect non-members of the Eurozone against the financial costs of ensuring its stability. The principles are compatible with the existing EU Treaties: they simply spell out in express language what is already implicit in various texts, such as Article 4 (2) TEU on the equality of Member States before the Treaties.  They will become a legally binding instrument of interpretation as soon as the Decision enters into force; and their substance is destined to become primary EU law at the time of the next Treaty revision.
The proposed safeguard mechanism employs the technique of what may be termed a “Council conduct agreement”, binding the Member States as to how they will behave in certain circumstances, when acting in their capacity as members of the Council.
The mechanism envisaged in Part A of the Decision allows the Council process to be interrupted by a single Member State making a reasoned case that the legislative proposal under consideration infringes one or more of the Economic Governance principles. The Council would then be obliged to do all in its power, within a reasonable time and without infringing obligatory time limits, to accommodate the concerns of the Member State concerned, which may entail referring the issue to the European Council.
A clever trick for implementing the safeguard mechanism is that it will be added as a new provision to an existing EU measure, Council Decision 2009/857. This Decision lays down a similar procedure to protect Member States in the minority, under the rules on qualified majority voting that came into force in November 2014, where the QMV threshold is achieved by a relatively narrow margin. The Council is required to adopt the Draft Decision supplementing Decision 2009/857, which is annexed to the Heads of State or Government Statement, on the date of the entry into force of the Decision.    
The amendment, like Decision 2009/857 itself, will fall to be adopted under the Council’s power of self-organisation pursuant to Article 240 TFEU and, therefore, requires no Commission proposal. Once adoption has taken place, the operation of the safeguard mechanism will be ensured as a matter of binding EU law, under a formal Council measure the validity of which has never been questioned.
While the Council acts for the purposes of Article 240 TFEU by a simple majority, Decision 2009/857, of which the safeguard mechanism would form part, is protected by Protocol (9), which provides that, before examination by the Council of any draft that would aim at amending or abrogating the Decision or any of its provisions, “the European Council shall hold a deliberation on the said draft, acting by consensus...”. This means that the UK, or any other interested Member State, would be able to block an attempt to abolish or water down the safeguard mechanism.
The combination of binding principles of interpretation with a safeguard mechanism incorporated into an existing Council Decision meets the legally binding and irreversible test, you might say, in spades. I would add that, if the operation of the mechanism led to a result regarded by the UK (or any other Member State) as unsatisfactory, it might still be possible to challenge the validity of the measure in question in proceedings under Article 263 TFEU – especially once the substance of the Economic Governance principles has become primary EU law.     
B.      Competitiveness
Moving on to Section B of the Decision, headed “Competitiveness”, this is concerned essentially with reinvigorating EU policies of particular interest to the UK, namely strengthening the internal market, improving legislation, reducing regulatory burdens on business and promoting an active trade policy. The commitment by the Member States to further those objectives is complemented by two Declarations: one by the European Council, exercising its function of setting policy priorities for the EU and the other by the Commission, expressing its intention to build on existing processes, in order to develop mechanisms for the implementation of the principle of subsidiarity and for the reduction of the regulatory burden. The Commission undertakes further to propose a programme of work by the end of 2016.
This part of the reform package shows why the question I’m addressing calls for a nuanced answer. Given the broad nature of the UK’s aims under the “Competitiveness” heading, a negotiated outcome capable of being legally guaranteed in a similar way to Economic Governance wasn’t to be expected. The combination of a binding legal commitment by the Member States with clear expressions of intention by the European Council and the Commission should be enough to ensure that the momentum sought to be given to developments in the relevant policy areas will be sustained.
C.      Sovereignty
Under the heading “Sovereignty”, Section C of the Decision covers a number of matters. Since time is pressing, I shall limit myself to the two that have attracted most attention, the notion of “ever closer union” and the new “red card” procedure to strengthen the role of national parliaments in the legislative process of the Union.
The Decision provides detailed clarification of the meaning of references to “ever closer union” in various Treaty preambles and in Article 1, second paragraph TEU. It states, among other things: that the references “do not offer a basis for extending the scope of any provision of the Treaties or of EU secondary legislation” and “should not be used either to support an extensive interpretation of the competences of the Union or of the powers of its institutions”; that they are “compatible with different paths of integration being available for different Member States and do not compel all Member States to aim for a common destination”; and that the UK “is not committed to further political integration into the [EU]”. The substance of the clarification provided is to be incorporated into the Treaties at the time of their next revision, “so as to make it clear that the references to ever closer union do not apply to the [UK]”. A more comprehensive response to the reassurance sought by the UK on this issue could scarcely be imagined.
Like the Economic Governance principles, the text on the meaning of “ever closer union” provides an interpretation perfectly in accord with the Treaties, that will become legally binding, upon the entry into force of the Decision, in the sense of Article 31 (3) (a) of the Vienna Convention; and, on its eventual incorporation into the Treaties, it will acquire the character of primary EU law.  
As for the “red card” procedure, where reasoned opinions adopted by national Parliaments on the non-compliance of draft legislation with the principle of subsidiarity represent more than 55 per cent of the available votes, the item will be included on the Council agenda for a comprehensive discussion; following which “the representatives of the Member States acting in their capacity as members of the Council will discontinue their consideration of the draft legislative act in question unless the draft is amended to accommodate the concerns expressed in the reasoned opinions”.  
Here we have another instance of a Council conduct agreement. The envisaged obligation appears to me to be compatible with EU law, and hence legally binding, since there’s nothing in the Treaties that requires the Council to proceed to the adoption of a given proposal, supposing that the requisite majority is available. Indeed, it may be arguable that once the Decision is in force, the adoption of a legislative measure in defiance of the red card procedure will constitute an infringement of an essential procedural requirement, and hence grounds for the annulment of the measure under Article 263 TFEU.   
D.      Social benefits and free movement
That brings me to Section D of the Decision relating to “Social Benefits and Free Movement”. The solution it provides to the issues raised by the UK combines agreed interpretations of existing legislation with the introduction of two significant rule changes. No amendment of the Union’s primary law was considered necessary.
The Decision offers robust interpretations of the possibilities that exist under current EU rules for limiting access by migrant workers to social benefits, in the light of recent developments in the case law of the CJEU. These are reinforced by a Declaration of the Commission on issues related to the abuse of free movement rights. The Commission announces its intention to adopt a proposal that would complement Directive 2004/38/EC by excluding from the scope of free movement rights third country nationals who had no prior lawful residence in a Member State before marrying an EU citizen or who marry an EU citizen only after the EU citizen has established residence in the host Member State. This would effectively reverse case law based on the present wording of the Directive, notably Metock. In addition, clarification will be provided, by way of a future Commission Communication, regarding Member States’ rights to address cases of abuse by EU citizens returning to their Member State of nationality accompanied by a non-EU family member; and on the circumstances in which free movement rights may be restricted on grounds of public policy or public security.
As I’m sure you know, the main rule changes that are promised relate to child benefits and to in-work benefits.
The Commission will propose an amendment to Regulation 883/2004 on the coordination of social security systems giving Member States an option, where child benefits are exported to a Member State other than the one in which the worker resides, to index the benefits to the standard of living in that Member State. This will initially apply only to new claims but, from 2020, will be extended to existing ones.  
The Commission will also propose the amendment of Regulation 492/2011 on freedom of movement for workers within the Union, to introduce the so-called “emergency brake” mechanism that will apply where a Member State can show that an inflow of workers from other Member States of an exceptional magnitude over an extended period is putting an excessive strain on its social security system and public services. On a proposal from the Commission, the Council would have power to authorise the Member State concerned to limit the access to in-work benefits of EU workers newly entering the labour market, for up to four years. The limitation is to be graduated, to take account of the worker’s increasing connection with the labour market of that Member State. The authorisation would have a duration limited to 7 years. A Declaration by the Commission expresses its understanding that the type of exceptional situation the emergency brake mechanism is intended to cover already exists in the UK and that the UK “would be justified in triggering the mechanism in the full expectation of obtaining approval”.
As you can see, implementation of this vital part of the reform package depends on two things: that the necessary amendments to legislation are actually adopted; and that the validity of the agreed interpretations of existing rules and of the new legislation isn’t questioned by the CJEU.     
As to the adoption of the legislation, only the Member States are under a legal obligation; there’s an express commitment in the Decision that their representatives, acting as Council members, will proceed with work on the legislative proposals as a matter of priority, and do all in their power to ensure their rapid adoption – another instance of a Council conduct agreement. However, it cannot seriously be doubted that the Commission will live up to its declared intention to bring proposals forward. It’s true that the European Parliament will also be involved, as co-legislator under the ordinary legislative procedure; but, in spite of huffing and puffing by Mr Schulz, I don’t consider it plausible, in a situation where the UK has voted to remain within the EU and the Decision has entered into force, that the Parliament would see any political advantage in putting the new constitutional settlement in jeopardy. So I believe we can be confident that the amending legislation will be enacted reasonably swiftly.
As to the CJEU, the interpretations in the Decision follow the trend of its recent case law. The surprising tolerance of abuses of free movement rights shown in cases like Chen and Metock was due to lax interpretation of the existing rules. The Commission’s promise to tighten up the rules of Directive 2004/38 should provide a cure for this.
Nor, in my opinion, is there any serious risk that the Court may strike down the promised amendments to Regulations 883/2004 and 492/2011, because it would have no grounds for doing so. Indexing child benefits is a policy option manifestly open to the EU legislator in the field of social security harmonisation. Similarly, as a reasonable and proportionate response to an exceptional situation threatening important public interests of a Member State, an emergency brake mechanism of the kind contemplated must surely lie within the scope of the power of the institutions to regulate the exercise of free movement rights. So, even though disappointed claimants may well challenge the legislation, I rate their chances of success vanishingly low.
Conclusion
That brings me to my overall conclusion, which is the same as in the little piece I wrote for the Guardian a couple of weeks ago. A fair assessment would be that the reform package achieved by the Prime Minister is legally binding to the extent that it needs to be, and irreversible in practice. That may not be enough to satisfy hardened sceptics, but I don’t suppose anything would be.
 

 

 

 

 

 

 

 

 

 

 


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