7: The European Court of Justice

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7 The European Court of Justice
European Co-operation and Integration
2.06.2009
Universität Konstanz, Dept. Politics and
ManagementSummer 2009Gerald Schneider
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Outline

• The Formal Power and Structure of the ECJ
• Master or Servant? The Power of the ECJ
• Short Examination

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Administrative Decision Making The
Principal-Agent Problem

• ..there is always some conflict between the
  interests of those who delegate authority
  (principals) and the agents to whom they delegate
  it. Agents behave opportunistically, pursuing
  their own interests subject only to the
  constraints imposed by the relationship with the
  principal. The opportunism that generates agency
  losses is an ubiquitous feature of the human
  experience. Kiewit/McCubbins 1991. The Logic of
  Delegation. Chicago University of Chicago press.
  
• In the EU, delegation problems are paramount
  because of the multitude of principals. If these
  principals disagree, the constraints on the
  agents are less severe.

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Delegation problems with multiple principals
Bureaucratic drift
P3
A
P1
P2
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Budget maximization The Niskanen model
CEMarginal benefit of bureaucratic
output AMMarginal costs qBOutput with maximal
budget
Quelle Breton/ Wintrobe JPE 1975
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Counter-measures of the principal I
"The most direct way to control agencies is for
today's authorities to specify, in excruciating
detail, precisely what the agency is to do and
how it is to do it, leaving as little as possible
to the discretionary judgment of bureaucrats -
and thus as little as possible for future
authorities to exercise control over, short of
passing legislation ... Terry Moe 1990.
"Political Institutions The Neglected Side of
the Story." Journal of Law, Economics, and
Organization 6213-53.
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Counter-measures of the principal II

• Ex ante design of institutions (e.g. extent of
  discretionary power, legal instruments)
• Selection of agents
• 3) Accountability measures
• 4) Monitoring
• a) "Fire-alarms" (outside supervision)
• b) Controlling through other institutions (court
  of auditors, parliament)
• c) "Police patrols" (inside supervisiondirect
  supervision of agent)

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Two views on delegation

• The traditional view the most direct way to
  control agencies is for todays authorities to
  specify, in excruciating detail, precisely what
  the agency is to do and how it is to do it,
  leaving as little as possible to the
  discretionary judgments of bureaucrats and thus
  as little as possible for future authorities to
  exercise control over, short of passing
  legislationTerry Moe 1990. Political
  Institutions The Neglected Side of the Story.
  Journal of Law, Economics, and Organization
  6213-53.
• A transaction cost perspective Policy can be
  made either through direct legislation or by
  delegation to the executive branch There are
  political transaction costs associated with
  either option the costs of making policy
  internally come from the inefficiencies of the
  committee system, while the problems of
  delegation stem mainly from Congresss principal
  agent problems of oversight and control the
  boundaries of the administrative state will be
  determined by the trade-off between these two
  sets of transaction costs.David Epstein/Sharyn
  OHalloran 1999. Delegating Powers. Cambridge
  CUP.

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Delegation in the EU Comitology

• Most EU regulation in not enacted as legislation
  by the Council and Parliament but as
  implementation measures under the executive
  duties of the Commission. Such regulation can be
  adopted when the Council has conferred executive
  powers on the Commission and after an
  implementation committee, composed of policy
  experts from the Member States, has given its
  opinion on or approved the Commission's proposed
  measures. The committee procedures are commonly
  referred to as "comitology".Source
  http//www.euractiv.com/en/governance/comitology/a
  rticle-117454

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Comitology Types of Committees I

• Advisory committees following draft measures by
  the Commission, the committee delivers its
  opinion within a certain time limit "if necessary
  by taking a vote" (simple majority). The
  Commission is to take the "utmost account of the
  opinion delivered" and inform the committee of
  the manner in which its opinion has been taken
  into account. This procedure is generally used
  when the policy matters considered are not very
  sensitive politically
• Management committees where the measures adopted
  by the Commission are not consistent with the
  committee's opinion (delivered by qualified
  majority), the Commission must communicate them
  to the Council which, acting by a qualified
  majority, can take a different decision. This
  procedure is used in particular for measures
  relating to the management of the Common
  Agricultural Policy, fisheries and the main
  Community programmes

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Comitology Types of Committees I

• Regulatory committees the Commission can adopt
  implementing measures only if it obtains the
  approval of the committee (voting by qualified
  majority). In the absence of this approval, the
  proposed measure is referred back to the Council
  which takes a decision by qualified majority.
  However, if the Council does not take a decision,
  the Commission can adopt the measure provided
  that the Council does not object by a qualified
  majority. This procedure is used for measures
  relating to protection of the health or safety of
  persons, animals and plants and measures amending
  non-essential provisions of the basic legislative
  instruments.

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The Efficiency of Delegation in the European Union

• there seems to be a more general trade-off in
  the design of EU institutions. On the one hand,
  the monopoly proposal power is a powerful
  resource for the Commission. It leads to high and
  stable degrees of discretion. On the other hand,
  implementation committees are equally powerful
  mechanisms of control, especially because used by
  many principals Comitology balances the
  Commissions initiations power and its bias for
  legislative intervention. A reform towards less
  restrictive committee procedures should probably
  be linked to a reform of the legislative
  prerogatives of the Commission such as the
  conferral of the power of initiation upon the
  Council of Ministers and the Parliament.
• Fabio Franchino 2000. The Commissions
  Executive Discretion, Information and
  Comitology. Journal of Theoretical Politics
  12/2155-81.

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Two interpretations of comitology
1. Comitology as a discussion forum Comitology
"is a rather normal tool of the policy maker and
policy implementer, namely the convening of
groups through which the Commission discusses ...
the progress of policy implementation." Quelle
Fiona Hayes-Renshaw/Helen Wallace 1997. The
Council of Ministers. London Macmillan. 2.
Comitology as a means to supervise the agent
"The likelihood that a restrictive committee is
preferred to a permissive one increases as either
uncertainty of or conflict among Union
legislators deepen. "Conflict and uncertainty
are also important factors affecting the degree
of stringency in control. Quelle Fabio
Franchino 2000. European Union Politics
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Delegation as a consequence of uncertainty and
conflict (Franchino EUP 2000)
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Delegation to National Administrations (Franchino
2007, CUP)
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Summary
The Council will delegate greater discretionary
authority to the Commission in acts adopted under
qualified majority voting, and issue areas that
require general and managerial skills at the
supranational level it will delegate greater
executive discretion to the member states in acts
adopted under unanimity, and in issue areas that
require specialized and technical
knowledge. intergovernmentalist expectations
seem validated because, if decision rules
reflect underlying preferences and distributive
elements, these results produce a set of policy
outcomes that broadly match member states
intent. Fabio Franchino 2004. Delegating Powers
in the in the European Community. BJPS
34269-293.
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Regulatory Policy Making The Stigler-Peltzman
approach
Monopoly regulators set a price such that the
marginal gain in support from the producers for
an increment in monopoly rents, R, is just offset
by the loss in consumer votes... ...the
vote-maximizing politician may favor the
regulated industrys producers, but stops short
of setting price at the rent maximizing level
regulation brings price to a level somewhere
between the pure monopoly and pure competition
prices....By this argument, Peltzmann helps to
explain the ubiquitous regulation of agriculture
around the world and other interventions in
seemingly competitive industries like trucking
and taxicabs. Source Dennis C. Mueller 2003.
Public Choice III. CUP
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Political economy of regulation logrolling
...a winning coalition in the legislature of the
central government exploits the potential
inherent in the majority rule and provides the
local public good to only its members and/or
provides these goods using discriminatory tax
formulas. This sort of tyranny by the majority
coalition has obvious attractions for its members
but, given the high probabilities of cycling, it
also has its risks. The representative or party
that finds itself in a winning coaltion today may
be on the losing side tomorrow. ...Often the
effect of geographic representation seems not to
be that a particular public good is provided by
the central government to each local community,
but that different local public goods are
provided. Each representative in the federal
legislature proposes a pet project that her
constituents would like to see the federal
government finance. Source Dennis C. Mueller
2003. Public Choice III. CUP
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An example of the politcal economy approach
fishing policy
Ministers increase TAC to a lesser extent when
they care more about protecting the environment.
The impact is not negligible. Let us consider
the two extreme values of Environment. The
increase in TAC when the concern for the
environment was at its lowest in 1984 was almost
three thousand tons more than when such concern
was at its highest, in 1991. .
left-wingministers or those less supportive of
fishermen/farmers tend toaugment TAC to a lesser
extent only as the number of statesincreases.
.. the mere addition of one interest around a
specific species leads to an increase in the
proposed quantity of TAC of about 370 tons. This
is equivalent to Germanys 1999 cod quota for the
Skagerrak. Franchino/Rahming 2003
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Federalism and redistribution
Source Rodden 2002
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Federalism and redistribution II

• The empirical analysis demonstrates a close
  connection between the distribution of votes and
  fiscal transfers in the legislative institutions
  of the European Union. Other things equal, small
  member states with more votes and relative voting
  power per capita are favored in the distribution
  of transfers. This relationship has held up
  through successive enlargements. Perhaps these
  results should not be surprising. Large states
  might desire the gains associated with forming
  and deepening a federal unionso much so that
  they are willing to pay off fearful, indifferent,
  or simply manipulative states. Perhaps when such
  states are offered more votes per capita in the
  initial bargain, fiscal redistribution in the
  future is an implicit part of the offer.
• J. Rodden 2002 EUP

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Portfolio Distribution in the Commission Theory

• Gamsons Law Distribution according to share of
  a party in the parliament any participant will
  expect others to demand from a coalition a share
  of the payoff proportional to the amount of
  resources which they contribute to a coalition
  (Gamson 1961).
• Bargainining in legislature theory (Baron and
  Ferejohn 1989) distribution according to the
  voting weights with an advantage for the
  proposer Source F. Francino 2009, EJPR

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Source Franchino 2009, EJPR
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Portfolio Distribution in the Commission Results

• Support for both Gamsons law and bargaining
  theory with a slight predictive advantage for the
  latter
• Experience in a specific portfolio also matters
• Commissioners are appointed to some extent to
  portfolios that are linked to dimensions on which
  they are moderates
• Some ideologocial distributions left-right
  portfolios are given to Commissioners with a
  specific left-right agenda, but at a certain
  level experience is much more important Source
  F. Franchino 2009, EJPR

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The Importance of Ideology in the European
Commission
Source H. Döring 2007, EUP
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Structure and Decision Making

• Court of Justice- 15 judges, 9 advocates
  general, 1 Chancellor - 6 chambers each
  comprising 3 to 5 judges
• Court of First Instance - 15 judges - 4
  chambers each comprising 3 to 5 judges
• Decision making mode- 6 (4) Chambers - The
  Court of Justice decides in a plenary session in
  case a EU institution demands it

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Responsibilites, Functions, Procedures

• Responsibilities- Action for failure to fulfill
  Treaty obligation - Action for annulment
  (judicial review) - Action for failure to act
  (against EU institutions) - Action for damages
  (against EU institutions or servant -
  Preliminary rulings on the interpretations or
  validity of Community law- Appeals against
  judgments of the Court of First Instance-
  Actions for annulment etc. brought by natural and
  legal persons (Court of First Instance)
• Functions- Constitutional Court/Administrative
  Court/Civil Court - Arbitration
• Procedures- Decisions on disputes- Decisions on
  matters that other courts do not want to decide
  without the opinion of the Court

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Examples

• Nº 33/2004 29 April 2004 Judgment of the Court
  of Justice in Case C-476/01 Kapper Transport
• A MEMBER STATE IS NOT ENTITLED TO REFUSE TO
  RECOGNISE A DRIVING LICENCE ISSUED BY ANOTHER
  MEMBER STATE ON THE GROUND THAT, ACCORDING TO THE
  INFORMATION AVAILABLE TO THE FIRST MEMBER STATE,
  THE HOLDER HAD NOT, WHEN THE LICENCE WAS ISSUED,
  TAKEN UP NORMAL RESIDENCE IN THE MEMBER STATE
  WHICH ISSUED THE LICENCE

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..

• COURT OF JUSTICE
• Tuesday 20 June
• Grand Chamber
• 09.30            Hearing C-265/05 Perez
  NaranjoSocial security for migrant
  workersReference for a preliminary ruling - Cour
  de cassation - Civil chamber - Paris -
  Interpretation of Articles 4(2a), 10a., 19(1) and
  95b of Council Regulation (EEC) No 1408/71 of 14
  June 1971 on the application of social security
  schemes to employed persons and their families
  moving within the Community (OJ English Special
  Edition 1971 (II), p. 416), as amended - National
  legislation making the grant of supplementary
  allowance from the National Solidarity Fund
  subject to a residence condition - Concept of a
  special non-contributory benefit - Listing of the
  allowance in Annex IIa to Regulation (EEC) No
  1408/71

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Landmark decisions

• 1962 Van Gend en Loos Direct precedence of
  certain treaty regulations
• 1964 Costa/ENEL Precedence of EU law over
  national law
• 1971 AETRMember states are not bound by
  inconsistent rules
• 1978 Simmenthal Direct precedence of EU law
• 1979 Cassis de Dijon Direct precedence of EU
  law
• 1984 Von Colson National courts must interpret
  national law in conformity with EU law
• 1991 FrancovichA member state is obliged to
  compensate persons for damage caused by a breach
  of EC law for which it is responsible

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Careers

• Vassilios Skouris, Born in 1948 .... Awarded,
  doctorate in constitutional and administrative
  law at Hamburg University (1973) Assistant
  Professor at Hamburg University (1972-77)
  Professor of Public Law at Bielefeld University
  (1978) Professor of Public Law at the University
  of Thessaloniki (1982) Minister of Internal
  Affairs (1989 and 1996) ..President of the Court
  of Justice since 7 October 2003.

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Competing Model of Jurisprudence
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Jurisdiction in the EU
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Supranational Principal or Agent of the Member
States?
Source Garrett IO 1995
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Source Garrett IO
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The original rationalist argument
Garrett IO
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Other member states as strategic players
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The Brunell-Stone-Sweet Model
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The Carruba-Model
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The Discretion of the Court