Opinion of Mr Advocate General Mancini
Mr President,
Members of the Court,
1. On 18 December 1985 the President of the Parliament declared the final adoption of the general budget of the European Communities for the financial year 1986 (Official Journal L 358, p. 1) and in the course of the next two months the Court Registry received no less than six applications for the annulment of that act and/or of the document which promulgated it. Those actions were brought, in chronological order, by the Grand Duchy of Luxembourg (Case 15/86), the Kingdom of the Netherlands (Case 17/86), the French Republic (Case 18/86), the Federal Republic of Germany (Case 19/86), the United Kingdom of Great Britain and Northern Ireland (Case 23/86) and the Council of the European Communities (Case 34/86).
2. As we all know, this is not the first time that the Community budget has given rise to an action. I would recall to mind Cases 48/81 Federal Republic of Germany v Commission, 72/82 Council v Parliament and 73/82, Council v Commission, the first relating to supplementary budget No 2 for 1980 and to the 1981 budget, the others to the 1982 budget. However, the cases were prevented from proceeding beyond the written stage of the procedure by timely political compromises and they were removed from the Register by orders of 20 January and 14 July 1982. It has also happened that a protagonist in the budgetary procedure has threatened to have recourse to the Court in order to obtain the condemnation of the allegedly unlawful conduct of another institution or Member State. Thus, to give but one of a number of possible examples, the Commission raised an issue on the basis of Article 175 of the EEC Treaty in order to force the Council to cover the Community's needs by appropriate financial measures and to determine the agricultural reference prices.
3. In my opinion this presentation is fully borne out by the facts of the case and the arguments of the parties. Before examining them, however, it is appropriate to set out the legislative background lato sensu to the dispute before us and this means first and foremost analysing the phases in which the preparation and approval of the budget takes place in the light of Articles 203 of the EEC Treaty, 78 of the ECSC Treaty and 177 of the Euratom Treaty (in the texts resulting from the amending Treaties of 22 April 1970 and 22 July 1975). These phases or stages are seven in number.
4. As may be seen from this brief account Article 203 contains two groups of rules which correspond to different objectives and pursue them by different means. The aim of paragraphs (3) to (7) is to organize as rationally as possible the shuttle between the Council and the Parliament. The principle from which they take their inspiration is that of the equality of the two institutions upon both of which the right to the last word is conferred (as regards CE in the Council's case and as regards NCE in the Parliament's case) and the technique employed consists in requiring specified majorities and in fixing mandatory time-limits (once a given number of days has passed and if a certain majority is not acquired, the text submitted by the opposite party is deemed to be accepted). Paragraph (9) presents quite a different situation. Its object is to regulate the growth in Community expenditure in relation to a maximum percentage which is binding on all the institutions and the rule to which it adheres is that of agreement between the parties. In other words, it is possible to venture beyond that rate only if the diarchy of the Community finances agrees on the feasibility and the amount of of the excess.
5. There lies, in my view, the technical (or at any rate not strictly political) reason for the obstacles encountered by the attempts to apply the provision which falls for our consideration. The following three sections of this Opinion are devoted to those attempts and should not be without value if it is true, as Oliver Wendell Holmes has written, that a page of history is worth a volume of logic (NY Trust Co. v Eisner, 1921, 256 US 345, 349).
6. The gentleman's agreement had, however, to be presented so as to appear compatible with paragraph (9); otherwise the lip service to which I have referred would have soon disclosed how fragile was the material of which it was made. The Council bowed to this requirement in 1976 by construing the meeting of wills between the two institutions on the total amount of the appropriations for NCE as an implied agreement on the new rate; but the expedient, clever in itself, was to cost it dear. In 1978 the Parliament adopted, on first reading, two amendments which increased the funding of the Regional Fund from 620 million to 1000 million UA; and, since on its second reading the Council acquired neither the requisite majority to reject or modify them (paragraph (5)) nor the majority necessary to fix the new maximum rate (paragraph (9)), the amendments became accepted. The Parliament confined itself to noting the procedural trap into which the other party had fallen and its President declared the final adoption of the budget, pointing out that the Council's consent emerged by implication from the absence of rejection — and hence from the acceptance — of the Parliament's amendments.
7. As we know, yet another accommodation prevented the two cases from taking their normal course. However, the inadequacy of that compromise and of the new manipulative readings of the provision which would surely follow at once became manifest. After so much experimenting and fighting, the time was ripe for a solution no longer designed as a stopgap and thus to be of brief duration but conceived in binding and, so far as humanly possible, permanent terms. An attempt inspired by these ambitions had, moreover, already been made by the Council after the shock of 1978. The problems besetting us, the Council had thought, would be resolved not by interpreting or amending the Treaty, but by defining with the greatest possible degree of precision how the crucial paragraphs (5) and (9) are to be applied. In other words, by establishing how far, in terms of substance, the vote on the Parliamentary amendments and on the fixing of the new rate could go.
8. The time has now come to summarize the facts of the case. However, before touching on the heart of the matter and in order to avoid the ambiguities to which the discrepancy between the figures supplied by the parties might give rise, it is appropriate to recall that, according to the Council (note from its President dated 9 July 1985), the Parliament had, in adopting the 1985 budget, approved supplementary NCE in the sum of 94.3 million ECU (hereinafter referred to as m ECU) in respect of commitment appropriations and in the sum of 29.6 m ECU in respect of payment appropriations. During the procedure relating to the 1986 budget and unlike the Commission and the Parliament, the Council took as the basis for calculation for the purposes of determining the application of the maximum rate not the amount of NCE finally entered in the new budget but the sum corresponding to the total less the supplementary appropriations I have mentioned. For my part, I will use the figures which appear in the Commission's and the Parliament's documents; notwithstanding the Council's reservations, neither the Council nor any of the Member States has asked the Court to verify whether there were any unlawful acts on the part of the Parliament in the course of the 1985 procedure.
9. As I said in the first section of this Opinion, the Court decided to give priority to the examination of Case 34/86, thus freezing similar applications by five Member States even though these were lodged sooner. At this point it is appropriate to recall that on 28 January 1986 (Case 23/86 R) the United Kingdom submitted an application pursuant to Articles 185 and 186 of the Treaty which was lodged at the Court Registry on 13 February. The object of that application was to obtain, before the Court's judgment in the main proceedings, an interim order which would authorize the United Kingdom Government to pay for the 1986 financial year by way of VAT own resources sums not exceeding those resulting from the Council's second reading. According to the application the increase in NCE to which the Parliament's last reading gave rise might lead the Commission, as the authority which implements the budget, to call on the Member States for contributions higher than the sums which the Community is entitled to demand.
10. The applicant requests the Court: (a) to annul the budget for 1986 to the extent that, as a result of the amendments adopted by the Parliament on its second reading, the commitment appropriations and the payment appropriations for NCE exceeded by 293828185 ECU and 527383692 ECU, or by such other amounts as may be determined by the Court, the new rate of increase proposed by the Council; (b) to annul that budget to the extent that the Parliament amended, at its second reading, certain budgetary lines which constituted CE (see Annex XVIII to the application); to declare that in declaring the budget finally adopted the President of the Parliament infringed Articles 78 (7) and (9) of the ECSC Treaty, 203 (7) and (9) of the EEC Treaty and 177 (7) and (9) of the EAEC Treaty; (d) alternatively, annul the budget for 1986 in its entirety; and, as a consequence, annul, the act of the President of the Parliament and indicate which of the effects of the budget are to be regarded as definitive.
11. The examination of the problems thus posed will occupy us for a considerable time. However, it must be preceded by an examination of the arguments which, although they do not raise a formal objection, the Parliament has put forward in support of its contention that the Council's application is inadmissible. The grounds on which they are based relate to: (a) the rules of the Treaty on the jurisdiction of the Court in actions for annulment; (b) the rules which govern the budgetary procedure; (c) the effects which an annulment by the Court would have on the subject-matter of this action.
12. With one exception, which I shall point out when I examine the Council's principal claim, the arguments summarized above cannot be upheld. The second argument, for example, confuses two different concepts, those of procedure and act. No one denies that the budget is adopted at the end of a common (or, rather, complex) procedure. However, and this is the point, that procedure does not constitute an act of which it may be asked whether it is valid or not. Legally, the budget is only un compte ou plus exactement un ensemble de comptes (Gaudemet and Mounier, Finances publiques, 4th Edition, Paris, 1983, p. 250); or, if one prefers, an accounting document which contains two statements relating to the revenue to be realized and to the expenditure to be provided for within a given period of time (Buscema, Bilancio dello Stato, in Enciclopedia del Diritto, V, Milan, 1959, p. 378; Duverger, Finances publiques, 8th Edition, Paris, 1975, p. 213). It is annexed to the act which promulgates it; and there can be no doubt that in the Community system that act is to be attributed to the Assembly alone or, more specifically, to its President.
13. Let us now turn to the substance of the case. In the Council's opinion, the act whereby the President declared the budget is invalidated by an infringement of essential procedural requirements inasmuch as its author considered the procedure to be completed within the meaning of Article 203 (7). On the other hand, the defect which, according to the Council, invalidates the budget is the infringement of the Treaty and in particular: (a) Article 203 (9), inasmuch as the Parliament unilaterally increased NCE to an extent greater than the rate resulting from the draft approved by the Council at its second reading; (b) Article 203 (5) and (6), inasmuch as the Parliament modified at its second reading certain budgetary lines which constitute CE.
14. In my opinion the Court may, in ruling on the issues which I have thus summarized, leave aside the problem of the classification of expenditure and in particular refrain from establishing the criteria in the light of which CE and NCE are to be distinguished. If, as a result of such an exercise, the expenditure in dispute should prove to be compulsory, and thus subject to the last word of the Council, the charge which the latter levels against the Parliament would seem to be entirely well founded. If, on the contrary, the lines in question were to be regarded as NCE, the use which the Parliament made of them at its second reading would lead us to find that the maximum rate had been further increased: their legality would then depend on the Court's decision on the principal claim.
15. Accordingly, the Parliament's first line of defence does not stand up to close scrutiny. What is there to be said about its second line of defence? The applicant and the intervening States have no doubts: it is unfounded from beginning to end. First of all, it is not true that the application of the code adopted by the Council in December 1984 compresses the Parliament's powers: that set of rules is in fact fully in conformity with the Treaty. Secondly, it is wrong to say that the Council's first reading was deficient in regard to the unavoidable expenditure and that the second reading had to make good its mistakes. On the contrary, points out the United Kingdom, that reading represented a serious effort... to reach an agreement with the Parliament (United Kingdom's statement in intervention, p. 8). Finally, it is absurd to claim that the Assembly was constrained to carry out only a formal first reading: that is proved ad abundantiam by the trenchant proposals for modification and the no less vigorous amendments which emerged from that stage of the procedure.
16. The instances of unlawful conduct which are to be attributed to the Council in the affair before the Court are therefore two in number and one of them — the omissions in the matter of the cost of the past — is extremely serious if it is true, as the Commission remarks in presenting the preliminary draft budget for 1987, that the principal feature of the European Community is that it is based on law, and so must honour its commitments. If it does not, its political and legal legitimacy will be undermined both inside and outside the Community (Doc. COM (86) 200, 12 May 1986, p. 2). However, and here we arrive at the real nub of the case, can it be said that the regrettable conduct of the other authority enabled the President of the Assembly to declare, albeit in the absence of an agreement on the maximum rate, that the procedure was completed and to promulgate the budget with the figures decided on at the second reading by his institution?
17. With this conclusion, which carries with it the proposal that the said measure be annulled, it might be thought that my task is discharged. I have already said that only the President's act of declaration is open to challenge and not that mere accounting document constituted by the budget when it emerges from the last reading by the Parliament. In so saying, I have denied in principle that the Council's principal claim — for the partial annulment of the budget — is one that can be entertained by the Court. It may be, however, that the Court will not accept my view; it may even (although I rather doubt it) espouse that of the Agent for the United Kingdom who, astute lawyer that he is, became fully aware of the blunder which the applicant had made and, in a little coup de theatre at the end of the hearing, suggested that the Court should not annul the President's act but should interpret it in such a way as to give effect to the budget to the extent to which the Assembly had lawfully adopted it. In the light of such considerations, and notwithstanding my own convictions, I shall examine the Council's claim as if it were one which the Court could entertain.
18. The solution which I am suggesting to the Court consists, then, in granting the Council's alternative claim for the annulment of the President's act of declaration. The Court should, however, apply by analogy the second subparagraph of Article 174 and therefore consider as definitive the commitments entered into and the payments made, on the basis of the budget promulgated by the President, before the delivery of its judgment. It scarcely needs to be remarked that this request does not in any way contradict the points suggested to me by the Council's last argument. The request is made necessary by the indispensable requirements of certainty. The promulgation of the budget, although unlawful, has already had a vast series of direct and indirect effects: to cancel them out, to nullify the rights acquired by so many parties would give rise to a situation more serious than the actual survival of the contested act.
19. Mr President, Members of the Court, I have devoted the first part of this Opinion to describing the parties' conduct between 1974 and 1985 and then a long paragraph to the facts in this case. The lessons which may be drawn from that survey do not augur well for the future. On the contrary, the poor drafting of the provision which governs the budgetary procedure and the conflicting political objectives of the two institutions invite the conclusion that, even if the Court's judgment does not have the effect of exacerbating their relations, it will have very little impact on them. I will hazard a forecast: next year, perhaps even this year, the conflict which has always divided the Council and the Parliament will flare up again in similar or even identical form.
20. Having now arrived, with these considerations, which may perhaps be of some value, at the end of my task, I propose that the Court should, in its decision on the action brought by the Council of the European Communities against the European Parliament, by an application lodged at the Court Registry on 11 February 1986, hold that:
1 Translated from the Italian.