Against the creeping transfer of powers: a subsidiarity test by the European Court of Justice

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The idea of a new treaty reform is out there – and it is time to talk about our priorities. In this loose series of guest articles, eurobloggers answer to the question: “If you could change one thing in the EU Treaties, which would it be?” Today: Martin Holterman. (Back to the start of the series.)

Under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.

Art. 5 (3) TEU

In theory, the ECJ is already competent to control the subsidiarity principle. But it doesn’t really fill this role yet.

If there is one thing that EU commentators from all over the political spectrum seem to agree on, it is that the Union has lost the trust of the people. Not only do voters feel generally unable to influence what happens in Brussels and Strasbourg, but more specifically they tend to think of the Union as a runaway bureaucracy that swallows more and more competences as it muddles along.

The mechanism that is supposed to stop that happening is the subsidiarity rule. This idea, which was introduced by the Treaty of Maastricht, says that the Union shouldn’t stick its nose in areas where the Member States can take care of themselves just as well. The tie goes to the Member States. Unfortunately, this tool hasn’t been as effective as Mrs. Thatcher had hoped.

Yellow Cards

We all know that the Treaty of Lisbon tried to solve this problem by introducing a system of yellow cards, whereby a third or more of the Member States’ national parliaments can force the Commission to reconsider a proposal if they think it offends against the principle of subsidiarity. This system has worked moderately well so far. Two yellow cards have been issued (one on a proposal about union regulation, and one on a proposal creating a European public prosecutor), and more importantly it has helped make national parliaments more engaged with the process of EU-level lawmaking.

However, given that voters tend not to have a lot of confidence in national parliamentarians either, this is not enough. In a perfect world, vertical balance of powers would make sure that the Member States protect their prerogatives against the Union in the same way that the Union protects its prerogatives against the Member States. In reality, voters know that national politicians often find it useful to let Brussels do something, because it allows politicians to do something and disclaim responsibility at the same time. For this reason, enforcement of the principle of subsidiarity cannot be left to political actors.

The Court

Of course, there is no legal reason why the European Court of Justice should not enforce subsidiarity. The Lisbon Treaty’s protocol on subsidiarity and proportionality reaffirmed what has been the law since Maastricht:

The Court of Justice of the European Union shall have jurisdiction in actions on grounds of infringement of the principle of subsidiarity by a legislative act, brought in accordance with the rules laid down in Article 230 of the Treaty on the Functioning of the European Union by Member States, or notified by them in accordance with their legal order on behalf of their national Parliament or a chamber thereof.

However, going back to the early 1990s the Court has politely but firmly declined to go there. The reason why is a bit unclear, but probably the best view is that the Court thinks subsidiarity is a political question that it shouldn’t touch unless the principle is violated in a particularly egregious manner. Unfortunately, unlike the US courts the EU courts do not have an explicit political question doctrine, whereby the court declines to answer a question better left to the political branches. Instead, what you see is that the test is stated in such a hand-waiving way that the Union legislator always ends up winning.

Early Case Law

The very first judgment to mention subsidiarity was the famous Bosman case in December 1995, the case that broke the old football transfer system. In that case, the German government argued that subsidiarity meant that intervention by the Community in a non-economic activity like sport should be confined to what is strictly necessary. The Court easily disposed of that argument by, essentially, pointing out that the free movement of workers is an exclusive EU competence, meaning that it is not subject to the principle of subsidiarity.

In another prominent case a year later, the November 1996 judgment in United Kingdom v. Council (the working time directive case), the Court did something really odd. It somehow conflated the question of whether there was an identifiable problem in need of a solution with the question of subsidiarity. But that is clearly wrong; even assuming that the need for Community action has been demonstrated, subsidiarity requires a further step: that Community action be shown to be more effective than action by the Member States.

If the Court had examined the case for EU action, it would have found that the recitals of the Directive say plenty about the need for action of some kind by some government, but exactly nothing about why it should be the EU that intervenes instead of the Member States. It doesn’t even contain a boilerplate reference to how harmonisation of just about everything reduces barriers to trade in the Common Market.

Making the Case

And how could the Union legislator have made the case for this directive? It would have had to show that Member States felt forced to curtail rules on working time due to some race-to-the-bottom effect. It is plausible that such a race to the bottom exists, but hardly self-evident. Unfortunately, at the moment no one has to prove it. All the Commission and the Union legislator have to do is make the claim. Of course, there is (at the moment) no requirement to make out the case for subsidiarity in the recitals of an act. Instead, the Commission writes a paragraph on the topic in its proposal document (see here for some greatest hits), and when called upon later the Community legislator is free to make whatever arguments in Court it likes.

Contrast this with the way the Court enforces the rule that every piece of legislation must be based on an explicit authority to act created by the Treaties. It has interpreted this so-called principle of conferred powers and the requirement to state reasons (art. 296 TFEU) to mean that every piece of legislation has to contain a reference to its legal basis. If the legal basis is challenged, as it was for the ban on tobacco advertising, the legislator has to defend its choice by referring to “objective factors which are amenable to judicial review”. In the tobacco advertising case, the Union legislator was harshly rebuked for trying to pass off a health measure as internal market legislation.

In an ideal world, both the principle of conferred powers and the principle of subsidiarity require the Court to constrain the integrationist enthusiasm of the other Institutions. They are even listed together in the Treaties, side by side in art. 5 TEU. The difference we observe in the real world suggests that this is not a problem of bias on the part of the Court. Instead, it seems like the difference between these two principles is that a subsidiarity test involves judicial review of factual claims made by the legislator, while the legal basis test requires only that the Court should somehow divine what the legislator’s objective was.

The Proposal

The problem is how the Treaties can be changed in order to force the Court to fact-check the Union legislator. Checking facts is already part and parcel of the Court’s daily work; it does so in every other context but this one. There is nothing in the current Treaties that forbids or dissuades the Court from checking the factual basis behind the Union legislator’s argument for subsidiarity.

I suppose the only option would be to add a new article after art. 263 TFEU to say:

In its review of the legality of the acts listed in art. 263(1), the Court of Justice of the European Union shall also review their compliance with the principle of subsidiarity, as defined in art. 5(3) TEU and Protocol 2. This review shall include an examination of the evidence relied on by the relevant Union bodies in concluding that the proposal was compliant with the principle of subsidiarity. Where the evidence is insufficient in order to establish that that principle has been complied with, the Court shall annul the act.

Martin Holterman is a UK government economist with a background in both European law and in economics. He previously worked as an academic studying the regulation of the railway sector, having obtained a Ph.D. in economics from the University of Twente (the Netherlands) in 2011. Martin Holterman blogs about European matters at martinned.ideasoneurope.eu and about all other things at martinned.blogspot.com. All views expressed in this article are strictly personal, and do not reflect the views of the UK government, the UK Government Economic Service or any other entity.

If you could change one thing in the EU Treaties, which would it be?

1: Wenn du eines an den EU-Verträgen ändern könntest, was wäre es?
2: Making the Commission truly Democratic ● Eurocentric
3: Against the creeping transfer of powers: a subsidiarity test by the European Court of Justice ● Martin Holterman
4: Political union – the butterfly effect of a single word ● Horațiu Ferchiu
5: People, not member states: A treaty change for a new era of political organisation ● Protesilaos Stavrou
6: Eine Klausel für sozialen Fortschritt ● Eric Bonse 

Pictures: By Cédric Puisney [CC BY-NC-ND 2.0], via Flickr; private photograph [all rights reserved].