Independence and Legitimacy in the Institutional System of the European Union (Collected Courses of the Academy of European Law) 0198769792, 9780198769798

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The Collected Courses of the Academy of European Law Series Editors: Professor Loïc Azoulai Professor Nehal Bhuta Professor Marise Cremona European University Institute, Florence

Assistant Editor: Anny Bremner European University Institute, Florence

VOLUME XXIII/2

Independence and Legitimacy in the Institutional System of the European Union

The Collected Courses of the Academy of European Law Edited by Professor Loïc Azoulai, Professor Nehal Bhuta, and Professor Marise Cremona Assistant Editor: Anny Bremner Each year the Academy of European Law in Florence, Italy, invites a group of outstanding lecturers to teach at its summer courses on Human Rights law and European Union law. A ‘general course’ is given in each of the two fields by a distinguished scholar or practitioner, who examines the field as a whole through a particular thematic, conceptual, or philosophical lens, or looks at a theme in the context of the overall body of law. In addition, a series of ‘specialized courses’ brings together a group of highly qualified scholars to explore and analyse a specific theme in relation to Human Rights law and EU law. The Academy’s mission, to produce scholarly analyses which are at the cutting edge of the two fields, is achieved through the publication of this series, the Collected Courses of the Academy of European Law.

Independence and Legitimacy in the Institutional System of the European Union Edited by

DOMINIQUE RITLENG

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Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © The several contributors 2016 The moral rights of the authors have been asserted First Edition published in 2016 Impression: 1 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Crown copyright material is reproduced under Class Licence Number C01P0000148 with the permission of OPSI and the Queen’s Printer for Scotland Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2015951526 ISBN 978–0–19–876979–8 Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work.

Contents Notes on Contributors

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Introduction Dominique Ritleng

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1. Lost in Transition: The European Commission between Intergovernmentalism and Integration Jean Paul Jacqué

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2. The Politics of Delegation in the European Union Renaud Dehousse

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3. The Independence and Legitimacy of the European Court of Justice Dominique Ritleng

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4. The Independence of the European Central Bank and Its New Banking Supervisory Competences Chiara Zilioli 5. Independence, Interdependence and Legitimacy: The EU Commission, National Competition Authorities, and the European Competition Network Giorgio Monti

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6. EU Agencies and Independence Ellen Vos

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Index

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Notes on Contributors Renaud Dehousse holds a Jean Monnet Chair in European Union Law and Politics at Sciences Po, Paris, where he directs the Centre d’études européennes. He has published extensively on the institutions and political system of the European Union and on EU public policy. Jean Paul Jacqué is Professor Emeritus at the University of Strasbourg. He is also Honorary Director General in the Council of the European Union, former Dean of the Faculty of Law of the University of Strasbourg, and former President of the University Robert Schuman, Strasbourg. He has been a visiting professor in the College of Europe, Bruges and Natolin. His areas of research and teaching interest are European law, human rights, and constitutional law. His most recent publication is Droit institutionnel de l’Union européenne (8th edn, 2015). Giorgio Monti is Professor of Competition Law at the European University Institute. He is the co-author, with Damian Chalmers and Gareth Davies, of European Union Law: Text and Materials (3rd edn, 2014). He writes on all aspects of competition law. Since 2011 he has served as scientific director for a programme that trains judges in EU competition law: European Networking and Training for National Competition Enforcers. He is a nongovernmental advisor to the International Competition Network. Dominique Ritleng is Professor of Law at the University of Strasbourg, where he was also Vice President of the University in 2005–2006. Prior to joining the University of Strasbourg, he was Professor at the University of Nancy II from 2000 to 2004. Dominique Ritleng was also a legal clerk at the European Court of Justice and served in the cabinet of Advocate General Poiares Maduro from 2006 to 2009 and in the cabinet of Judge Safjan from 2009 until January 2013. Ellen Vos is Professor of European Union Law at the Law Faculty of Maastricht University. She is co-director of the Maastricht Centre for European Law. She is also co-director of the Centre for European Research in Maastricht. She holds a PhD in Law from the European University Institute in Florence. Her main areas of interest are EU law and governance (comitology and agencies), market integration, and EU risk regulation (precautionary principle, food safety, pharmaceuticals, nanotechnology). She has published extensively in these areas. Chiara Zilioli began her career at the Legal Service of the EU Council in 1989. She moved to the European Monetary Institute in 1995 and then to the European Central Bank in 1998, where she was first appointed Head of Division and then Director General of Legal Services (General Counsel) of the ECB. She holds an LLM from Harvard Law School and a PhD from the European University Institute. Dr Zilioli has published three books and many articles, mainly on the functions of the ECB and its position within the EU institutional framework. She has been a lecturer for several years at the Institute for Law and Finance of the J-W Goethe Universität, Frankfurt and at the Collegio Europeo di Parma, Italy. Dr Zilioli is a member of the Italian Bar, is married and has four children.

Introduction Dominique Ritleng

The debate on the legitimacy of the European Union is as old as the European integration process itself.1 A great part of the critique of the European Union’s democratic deficit focuses on the independence and lack of accountability of nonmajoritarian EU bodies. These bodies are said to significantly contribute to the democratic failings of the EU.2 This criticism has grown fiercer in tandem with the increasing role played by the non-majoritarian bodies within the EU’s institutional system. Recent events have indeed brought to the fore the importance gained today by the independent bodies in the governance of the European Union. A number of recent episodes show this. First and foremost, it was the initiatives taken by the European Central Bank (ECB) that rescued the common currency during the financial crisis that erupted in 2008. For instance, in September 2012 the ECB announced the outright monetary transactions (OMT) programme under which the ECB would offer to purchase, under strict conditions, Eurozone countries’ short-term bonds on the secondary market in order to bring down the market interest rates faced by countries subject to speculation. The introduction of this programme greatly helped to calm the financial markets. On 4 February 2015 the ECB’s Governing Council lifted the waiver that had allowed Greek banks to use the country’s junk-rated government bonds as collateral for cheap loans from the ECB. The ECB justified the suspension of the waiver on the ground that it was not possible to assume a successful conclusion of the bailout programme review for Greece, owing to the refusal of the new Greek government to negotiate with the Troika, whereas compliance with the bailout programme was a prerequisite of the waiver.3 In doing so, the ECB ratcheted up the pressure on the far-left government of Greece to reach an

1 For a survey, see Craig, ‘Integration, Democracy and Legitimacy’, in P. Craig and G. de Búrca (eds), The Evolution of EU Law (2nd edn, 2011), at 13. 2 See, however, for another point of view, Menon and Weatherill, ‘Democratic Politics in a Globalizing World: Supranationalism and Legitimacy in the European Union’, LSE Law, Society and Economy Working Papers, 13/2007. 3 See Press Release of the ECB of 4 February 2015, available at (last visited 17 July 2015).

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agreement with its creditors on an extension of the bailout programme, thereby dampening Greek expectations of a change in politics. On 9 March 2015 a quantitative easing programme of €1.1 trillion intended to be carried out until end-September 2016 was launched through which assets would be purchased, including bonds issued by national governments and EU institutions such as the European Commission, with the aim of boosting the Eurozone’s stalling economy and warding off the spectre of deflation. The European Court of Justice, for its part, recently issued some decisive decisions with regard to shaping the future of the European Union. Thus, it helped to assuage the financial markets by giving the green light to the European Stability Mechanism in its Pringle judgment.4 It also allowed Member States to exclude economically inactive Union citizens who exercise their right to freedom of movement solely in order to obtain another Member State’s social assistance (even though they do not have sufficient resources to claim a right of residence) from certain social benefits, thereby allaying fears of ‘welfare tourism’.5 In a muchawaited opinion delivered on 18 December 20146 the Court of Justice held that the draft agreement on the accession of the European Union to the European Convention of Human Rights was not compatible with the EU treaties and in doing so blocked the path to accession, perhaps indefinitely. As for the European Commission, at the end of 2014 it announced the launch of an ‘Investment Plan for Europe’ to boost the EU’s stagnating economy by means of the establishment of a European Fund for Strategic Investments (EFSI) which would mobilize at least €315 billion in private and public investment across the European Union over the next three years.7 On 25 February 2015, within the framework of its role of monitoring the Euro Area Member States’ budgets, the Commission avoided imposing a fine on France for persistently breaching the euro rules and gave it until 2017 (despite it having already missed a 2015 deadline) to bring its budget within EU rules and reduce the deficit from the projected 4.1 per cent of GDP in 2015 to below 3 per cent. Finally, one ought to also mention the establishment of the European System of Financial Supervisors (ESFS) in 2011, consisting of three European supervisory authorities (ESAs): a European Banking Authority (EBA), a European Securities and Markets Authority (ESMA), and a European Insurance and Occupational Pensions Authority (EIOPA). 4 See Case C-370/12, Thomas Pringle, judgment of 27 November 2012, not yet reported (ECLI: EU:C:2012:756). 5 See Case C-333/13, Elisabeta Dano, judgment of 11 November 2014, not yet reported (ECLI: EU:C:2014:2358). For a comment, see Verschueren, ‘Preventing “Benefit Tourism” in the EU: A Narrow or Broad Interpretation of the Possibilities Offered by the ECJ in Dano?’, 52 CMLR (2015), 363. 6 See Opinion C-2/13 of the Court, 18 December 2014 (ECLI:EU:C:2014:2454). 7 See European Commission Press Release of 26 November 2014, ‘EU launches Investment Offensive to boost jobs and growth’, available at (last visited 17 July 2015); see also Press Release of 13 January 2015, ‘Delivery of € 315 billion Investment Plan on track: Commission presents law for the European Fund for Strategic Investments’, available at (last visited 17 July 2015).

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At the same time, the increasing role played by independent bodies in the making of Europe arouses more and more concerns and criticisms about the legitimacy of such organs. The most telling example has been provided by the newly appointed Greek government, which has denounced the Troika’s lack of democratic legitimacy and refused to discuss potential reforms with it, seeking to deal only with the Member States and those EU institutions representing them. The essays collected in this book strive to shed some light on the tension between independence and legitimacy in the EU’s institutional system and explore the ways to reconcile these concepts. They enable us to take stock of the EU’s recourse to such independent bodies, to identify the reasons why the EU resorts to them and the means used to guarantee independence. Moreover, the essays confront independent EU bodies with the legitimacy issue and seek to assess whether, to what extent, and how, the legitimacy of such bodies can be ensured.

1. The Scale of the Phenomenon of Recourse to Independent EU Bodies One of the peculiarities of the European integration process from the outset has been the granting of important powers to autonomous institutions.8 Such a design lies at the very heart of the supranationalism doctrine which underpinned the setting up of the European Coal and Steel Community with regulatory powers accorded for the main part to the High Authority and subject to the control of an independent judicial body, the European Court of Justice. It further inspired the institutional system of the European Economic Community even though the balance of powers was tilted somewhat in favour of the Council. The so-called ‘community method’ attributes a central role to the Commission in the decisionmaking process, the Commission holding a near monopoly on the legislative initiative. Moreover, it is in charge of the oversight of the application of Union law and was entrusted, at the time of drafting the EEC treaty, with the implementation of competition policy principles. As Ritleng recalls (see Chapter 3), the European Court of Justice has been given a broad mandate, and endowed with wide powers to fulfil it, which has enabled it to play such a prominent role in the making of Europe that the integration process appears to have been so far largely judge-led. Far from decaying, the importance of non-majoritarian bodies—i.e. bodies ‘which by design are not directly accountable to the voters or to their elected representatives’9—in the EU’s institutional system has in fact increased in recent times. In addition to an independent executive and an independent judiciary, the Treaty of Maastricht established a central bank insulated from direct political control and assigned it the task of defining and implementing the monetary policy 8 See Vauchez, Démocratiser l’Europe (2014); Vauchez, ‘La politisation de l’Europe? Les “indépendants” dans le gouvernement de l’Union européenne’, Les Petites Affiches (2013), no. 151, 18. 9 Majone, ‘Europe’s Democratic Deficit: The Question of Standards’, 1 ELJ (1998) 5, at 15.

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of the Union.10 In the aftermath of the financial crisis, its powers have been broadened. With a view to establishing a single supervisory mechanism (SSM), the ECB has been conferred supervisory competences over significant credit institutions, financial holding companies, and mixed financial holding companies11 which amount to the prudential supervision of the 123 biggest European banks in 2015.12 And in order to accomplish this new task, the ECB has also been granted independence. As Jacqué has recalled (see Chapter 1), the lessons learned from the crisis, notwithstanding its handling by an intergovernmental institution, have also led to the strengthening of the monitoring and supervision powers of the Commission. This has been primarily achieved through secondary law. According to the Six Pack (five regulations and one directive adopted in 2011) and the Two Pack (two regulations passed in 2013), that have reinforced the Stability and Growth Pact (SGP), the Commission is to examine the Member States’ draft budgetary plans and may ask for changes if they are not in compliance with the SGP. Further, with regard to the corrective arm of the SGP, reverse qualified majority voting has been introduced so that a Commission proposal of financial sanctions for a Euro Area Member State which does not abide by the fiscal discipline imposed by the SGP can be considered adopted in the Council unless a qualified majority of Member States vote against it. Moreover, the use of international law instruments, far from hampering this move, has also resulted in the Commission being given more powers. On the one hand, the Treaty on Stability, Coordination and Governance signed on 2 March 2012 reinforces the fiscal surveillance of Euro Area Member States by the Commission and gives the Court of Justice jurisdiction to review the proper incorporation of the balanced budget rule into national law. On the other hand, the Treaty establishing the European Stability Mechanism (ESM) of 2 February 2012 entrusts to the Commission the task of managing the financial assistance that the treaty aims to grant to Member States who experience severe financing problems. Under the ESM Treaty the Commission is in charge of negotiating, in liaison with the ECB and, wherever possible, together with the International Monetary Fund (IMF), a Memorandum of Understanding (MoU) with the requesting Member State detailing the conditionality of the financial assistance, after having assessed the existence of a risk to the financial stability of the Euro Area as a whole or of its Member States, the actual financing needs of the Member State concerned, and the sustainability of its public debt. The ESM treaty also gives the Commission, in liaison with the ECB and, wherever possible,

10 See Articles 127(2) TFEU and 3 of the Protocol of the European System of Central Banks and of the European Central Bank. 11 See Council Regulation 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions, OJ 2013 L 287/63. 12 See the list of the significant supervised banks (as of 30 January 2015) published by the ECB, available at (last visited 17 July 2015).

Introduction

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together with the IMF, the responsibility of monitoring compliance with the conditionality attached to the financial assistance. Beyond the extension of the scope of the powers of the EU’s non-majoritarian institutions that the economic and financial Euro Area crisis has brought about, the mushrooming of EU agencies since the 1990s has also led to an augmentation of the weight of the independent bodies within the EU’s institutional system. Regarded as a new mode of governance, the spread of European agencies has come in different waves, the last one following the outbreak of the economic and financial crisis and resulting in the establishment of the ESAs in the financial sector. Today13 there are 37 decentralized EU14 agencies15 and the process of agencification is not likely to slow down. It is not only the number of such agencies but also the policy fields in which they operate—including food, air safety, medicine, the environment, border control, and financial supervision— and the tasks and powers they are entrusted with which have markedly increased and diversified. Some agencies provide additional technical or scientific expertise by means of opinions and recommendations upon which the Commission can then base a decision. Others have been empowered to adopt individual decisions with direct effect and some have even had supervisory and regulatory powers conferred upon them. In the absence of a common framework, the structure and institutional design of the decentralized agencies may also vary from one agency to another, hence the degree of autonomy and independence they enjoy. Independence is, notwithstanding, the distinctive feature of EU decentralized agencies, ‘their real raison d’être’.16 True, the increasing recourse to independent bodies is not confined to the European Union. This transformation of governance also affects individual States. With regard to Member States recourse to such bodies is in fact often dictated or triggered by EU law.17 Thus, Articles 130 TFEU and 7 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank grant all central banks of the Member States independence for the fulfilment of the tasks assigned to them by the Treaty. During the process of liberalization of

13 See the list, available at (last visited 17 July 2015). 14 Or ‘regulatory agencies’, as the Commission sometimes prefers to name them: see Communication from the Commission of 11 December 2002, ‘The operating framework for the European Regulatory Agencies’, COM (2002) 718 final; Communication from the Commission to the European Parliament and the Council of 11 March 2008, ‘European agencies – The way forward’, COM (2008) 135 final. 15 Decentralized agencies are to be distinguished from executive agencies which may be established by the Commission on the basis of Council Regulation 58/2003, OJ 2003 L 11 (Regulation of 19 December 2002 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes,) and are designed to assist the Commission in the management of the EU’s financial support programmes. Executive agencies enjoy far less autonomy than decentralized agencies. 16 Communication from the Commission of 11 December 2002, supra note 14, at 5. 17 For a recent account, see De Somer, ‘International and European Impulse with regard to the Creation of Autonomous Public Bodies: An Emerging Trend’, 3 UCL Journal of Law and Jurisprudence (2014) 58.

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network economies such as electricity,18 gas,19 postal services,20 or telecommunications,21 EU secondary law has compelled Member States which have a share in one of the enterprises acting in the market concerned to set up independent regulatory authorities as a consequence of the requirement to separate regulatory functions from those functions associated with the ownership or control of undertakings operating in the regulated market.22 Today the independence of the national regulatory authorities is no longer implied only by the exclusion of influence from market parties, it is required by the prescription of being independent from the government.23 Furthermore, the trend towards increasing resort to independent EU bodies is not entirely one-sided. A shift towards intergovernmentalism may at the same time be observed in some respects. Jacqué has shown that the making of Europe is characterized by the constant interplay between intergovernmental and integrated methods. For instance, whilst legal responses to the economic and financial crisis have brought about a strengthening of the control powers of the Commission, its role and influence in the legislative process has been reduced. Although legally the Commission still holds its legislative prerogatives, its power to initiate legislation has been significantly eroded in practice by both the European Council and the Council and the way the codecision procedure works has given it less control over the legislative process. Be that as it may, the increase in recourse to independent EU bodies is indisputable. That prompts to look for the reasons for resorting to such bodies. 18 See Article 23 of Directive 2003/54/EC of the European Parliament and of the Council of 20 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC, OJ 2003 L 176/37. 19 See Article 25(1) of Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC, OJ 2003 L 176/57. 20 See Article 22 of Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 on common rules for the development of the internal market of Community postal services and the improvement of quality of service, OJ 1998 L 15/14. 21 See Article 3(2) of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services, OJ 2002 L 108/33. 22 The European Court of Justice even speaks about ‘the principle of the separation of regulatory and operational functions’ (Case C-424/07, Commission v. Germany, [2009] ECR I-11431(ECLI:EU: C:2009:749), at para. 54; Case C-389/08, Base NV and Others v. Ministerraad, [2010] ECR I-09073 (ECLI:EU:C:2010:584), at para. 28. 23 See especially, concerning electronic communications, Articles 3(3) and 3(3) bis of Directive 2002/ 21/EC as amended by Directive 2009/140/EC of the European Parliament and of the Council of 25 November 2009 amending Directives 2002/21/EC on a common regulatory framework for electronic communications networks and services, 2002/19/EC on access to, and interconnection of, electronic communications networks and associated facilities, and 2002/20/EC on the authorization of electronic communications networks and services, OJ 2009 L 337/37; regarding electricity, Article 35(4) of Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC, OJ 2009 L 211/ 55; regarding data protection, Article 28(1) of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data, OJ 1995 L 281/31, and the interpretation thereof given by the Court of Justice (Case C-518/07, European Commission v. Federal Republic of Germany, [2010] ECR I-01885 (ECLI:EU:C:2010:125); Case C-614/10, European Commission v. Republic of Austria, judgment of 16 October 2012, not yet reported (ECLI:EU:C:2012:631).

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2. Why Resort to Independent EU Bodies? To unravel the motivations for having recourse to independent EU institutions, Dehousse, taking a political science approach, relies on the principal-agent model (see Chapter 2). He argues that in an institutional system such as that of the European Union characterized by the existence of several principals, mistrust between them is a frequent motivation to delegate important powers to independent bodies. Thus, Dehousse recalls that the setting up of the ECB was the result of a compromise between French and German preferences: France saw the monetary union as a means to tie a unified Germany into Europe and to put an end to the Bundesbank’s domination in the European monetary system; Germany insisted on granting the ECB strong independence to ensure monetary and price stability. The fact that Member States did not trust the credibility of each other’s commitments also explains the establishment of the European Court of Justice endowed with enforcement powers without precedent in the international sphere, which enable it to ensure that ‘the law is observed’.24 Another example given by Dehousse is the delegation to EU agencies. Here as well the multiplicity of principals and the tensions among them explain both the creation of EU agencies and the kind of delegation granted to them. Member States, which demur at enlarging the Commission’s prerogatives, favour enhanced cooperation through the means of EU agencies while the Commission, backed by the European Parliament, anxious to preserve the unity of the executive function to its benefit, advocates limiting the powers transferred to EU agencies. Moreover, the willingness to prevent the capture of the newly created body by one of the other principals also explains, according to Dehousse, the number and variety of control and accountability devices to monitor EU agencies’ actions. Recently, in the wake of the economic and financial crisis, the deep mistrust that existed between European governments has led to the extension of the Commission’s control powers and to the decision to make the ECB the cornerstone of the single supervisory mechanism. Fiscally orthodox Eurozone members who had consented to provide financial aid to Member States in need demanded the Commission be provided with tight control mechanisms aimed at ensuring that all commitments would be honoured. Likewise, the conferral of strong supervisory powers on the ECB in the banking sector was a precondition to the creation of some mutualization of the guarantees offered to investors. There is certainly much truth in the arguments of Dehousse. Beyond that, various motives may exist which incite the delegation of powers to independent bodies. Thus, granting the Commission the monopoly of initiative was seen as the way to ensure the promotion of the common interest against the interests of the Member States and hence to secure the commitment of the latter to European integration.25 Similarly, Monti recalls, entrusting the implementation of EU 24

Article 19 TEU. On the scope of this power of initiative and on the question as to whether the initiative of the Commission entails a discretionary power to withdraw its proposal, see Case C-409/13, Council of the 25

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competition policy to the Commission and to national independent competition authorities was considered necessary to secure commitment to free market-based policies (see Chapter 5). By the same token, Zilioli explains that the main reason to guarantee the ECB independence from political institutions at EU and national level in performing its monetary policy tasks is the short-term bias of politicians (see Chapter 4). Whereas maintenance of price stability is by definition a long-term goal, politicians may, for electoral reasons, have difficulty in sticking to the fiscal austerity or anti-inflation policies they committed themselves to; and if financial stability is expected to be achieved, the same reasons militate as well in favour of granting the ECB independence in its supervisory functions. As regards EU agencies, the arguments for resorting to them cited by Vos relate to the need of expertise in highly complex and technical matters removed from partisan politics and the possibility of the Commission focusing on its core tasks (see Chapter 6). Furthermore, effective control of respect for the law may only be ensured if it is put in the hands of independent bodies. Ritleng underlines that independence is inherent in the task of adjudication. Jacqué recalls that had the function of oversight of enforcement of EU law been assigned to Member States, debates would not have been kept to legal ones and disputes would have most likely been settled along political lines. The inability of the Council to take measures in 2003 when France and Germany did not abide by SGP requirements provides sufficient evidence of this fact.26 What transpires, by and large, from these varied justifications is the idea of effectiveness: independent bodies are deemed better able to perform certain functions and to achieve certain goals; therefore they are presented as a new model of EU good governance.27

3. How to Ensure Independence Whatever the significance of independence is, the Court of Justice has striven to specify it. In ruling on the requirement of independence of national data protection authorities the Court has held in terms which obviously go beyond the specific case that ‘in relation to a public body, the term “independence” normally means a status which ensures that the body concerned can act completely freely, without taking any instructions or being put under any pressure’, that is ‘without any direct or indirect external influence’.28 And in the context of the composite legal order of the European Union, the outside influences an independent EU body is to be shielded European Union v. European Commission, judgment of 14 April 2015, not yet reported (ECLI:EU: C:2015:217). 26 See Case C-27/04, Commission v. Council of the European Union, [2004] ECR I-06649 (ECLI: EU:C:2004:436). 27 See Majone, ‘From the Positive to the Regulatory State: Causes and Consequences of Changes in the Mode of Governance’, 17 Journal of Public Policy (1997) 139. 28 Case C-518/07, supra note 23, at paras 18–19; see also Case C-614/10, supra note 23, at para. 41.

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from may come from Member States but also, where appropriate, from other EU bodies and from market and private interests. All authors of the essays list and assess the elements of the status of the different bodies concerned that are designed to protect their independence as defined in the previous paragraph. Those elements vary from one body to another but we may find for each of them that they are meant to ensure their functional and personal as well as their institutional and financial independence. Functional and personal independence is usually guaranteed by the prohibition on members of the independent authorities on taking or seeking instructions from anybody in the performance of their tasks and the prohibition on stakeholders giving them instructions or seeking to exert influence. Such prohibitions are to be found in the status of the Commission,29 of the ECB,30 and of EU agencies.31 Other devices intended to safeguard functional and personal independence that may also be part of the status are, among others, rules designed to avoid conflict of interests such as incompatibilities, selection and appointments based on criteria relating solely to technical and professional competence and not political allegiance, immunities and privileges, irremovability during the term of office, absence of the possibility of reappointment, and collegial decision-making. Institutional independence pertains to the participation of political institutions, national governments, and stakeholders in the decision-making bodies of the independent authorities. Financial independence requires the independent body be allocated sufficient resources to carry out properly and in an independent way its tasks32 and budgetary autonomy. If those different features of independence are more or less to be found in the status of each of the EU non-majoritarian bodies, the different essays show that they enjoy different degrees of independence. This is anything but a surprise. The independence of EU agencies turns out to be much lower than the independence of the European Court of Justice, the ECB, or the Commission. For instance, the principle of representation of each Member State applies to EU agencies as well as to the European Court of Justice, the Commission, and the ECB. However, Commissioners, judges and governors of national central banks seated in the Governing Council of the ECB do not act as representatives of their countries. On the contrary, representatives of Member States on the EU agencies’ management 29

See Articles 17(3) TEU and 245 TFEU. See Articles 130 TFEU and 7 of the Statute of the European System of Central Banks (ESCB). 31 See for example, about the European Data Protection Supervisor, Article 44(1) and (2) Regulation (EC) 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data, OJ 2001 L 8/1; about the three ESAs, Articles 42, 46, 49 and 52 of Regulation (EU) 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), OJ 2010 L 331/12; Articles 42, 46, 49 and 52 of Regulation (EU) 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), OJ 2010 L 331/48; Articles 42, 46, 49 and 52 of Regulation (EU) 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), OJ 2010 L 331/84. 32 For a reminder, see Case C-614/10, supra note 23, at para. 58. 30

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boards are mandated to defend national interests and do not sit in their personal capacities. Although this legal reality clearly impacts on agencies’ independence, it reflects as Vos explains, the composite character of the EU executive. The level of independence ensured to EU agencies is nonetheless far from being homogeneous and, as Vos observes, the presence of Member States representatives defending their national interests does not apply to the ESAs. Rather than the existence of differences between degrees of independence ensured in relation to the various EU non-majoritarian bodies, what is sometimes more surprising is the kind of difference. In particular, independence being consubstantial with the judiciary, it might be expected that the European Court of Justice would be guaranteed the highest level of independence: Yet, its independence proves to be lower than that granted to the ECB. While, as Ritleng shows, the possibility of reappointment of the members of the Court creates a risk for their independence, the mandate of the members of the Executive Board of the ECB cannot be renewed. In addition, the ECB is, of all non-majoritarian bodies, the only one that ‘has its own resources and budget’33—a budget that the ECB manages independently from the budget of the European Union in accordance with the requirement laid down in Article 282(3) TFEU.34 Furthermore, when national and independent EU authorities gather in networks in charge of the implementation and the enforcement of EU policies, the interdependence may come to undermine the independence of the national bodies. Monti points out that the emphasis put on convergent and effective enforcement of EU competition policy prompts the European Court of Justice and the Commission to police the application of competition law by the national competition authorities, thereby leaving them less room to experiment (see Chapter 5). Likewise, the independence provided by Article 130 TFEU to national central banks does not prohibit interference from within the Eurosystem and, indeed, they are subject to clear instructions from the ECB in order to ensure the unity of the monetary policy. Another noteworthy observation is that the intensity of the protection of the independence bestowed on a non-majoritarian body is closely linked to the functions it has been assigned, and hence can vary according to the function concerned. Zilioli wonders whether the standard of independence applying to the ECB in the performance of its monetary and supervisory tasks respectively should be the same. After an in-depth discussion, Zilioli provides a positive answer to this question while at the same recognizing that compliance with democratic principles has led to enhanced accountability for the supervisory decisions of the ECB.35 However, the counter-arguments she mentions—the nature and extent of the supervisory powers which are assigned several goals and which are liable to markedly affect the

33 Case C-11/00, Commission v. European Central Bank, [2003] ECR I-07147 (ECLI:EU:C: 2003:395), at para. 132. 34 Article 282(3) TFEU: the ECB ‘shall be independent . . . in the management of its finances’. 35 For a similar view, see Ter Kuile, Wissink and Bovenschen, ‘Tailor-made Accountability within the Single Supervisory Mechanism’, 52 CMLR (2015) 155.

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interests of financial institutions, financial consumers, states, and taxpayers—may also support the interpretation that the EU legislator has endowed the ECB with a lower level of independence for its new supervisory tasks than that granted by Article 130 TFEU for the exercise of its monetary policy functions. This last observation suggests that independence cannot be granted to a nonmajoritarian body at the expense of any accountability, otherwise it would call into question its legitimacy.

4. Independence and Legitimacy: An Insolvable Dilemma? Non-majoritarian institutions draw a main part of their legitimacy from being outside the channels of direct democratic legitimation. Recourse to independent bodies is generally welcomed precisely because they are deemed apolitical and hence viewed as a remedy for fading trust in politics and politicians. As such, they may be seen as illustrations of Benjamin Constant’s concept of ‘pouvoir neutre’.36 Moreover, because of their insulation from political process and electoral concerns, and owing to their technical expertise, they usually turn out to carry out the tasks assigned to them more efficiently, thereby enjoying output legitimacy. Thus, Ritleng emphasizes the importance of the role played by the European Court of Justice in the making of Europe and it is undisputed that the ECB has so far succeeded in achieving price stability. Yet, despite their functional benefits, independent EU institutions today come under growing attack precisely for the reason they were originally praised, namely their operation at arm’s length from political organs. This paradox is understandable. The criticisms are a consequence of the increase in the tasks and powers of independent EU bodies. Indeed, the granting of independence may only be vindicated as long as the powers conferred remain narrowly defined and related to clearly stated objectives. But this appears to be less and less the case. The apolitical character of EU nonmajoritarian bodies does not mean that their decisions cannot entail (sometimes far reaching) political consequences. Thus, due to the increase of EU competences and the ever-expanding reach of EU law, the European Court of Justice increasingly has to deal with issues relating to sensitive areas of national policies touching upon the core of state competences. EU agencies may today be given regulatory powers thanks to the relaxing of the Meroni doctrine by the European Court of Justice— something which was long thought legally impossible.37 Whereas in its monetary 36 See Rolland, ‘Comment préserver les institutions politiques? La théorie du pouvoir neutre chez B. Constant’, Revue française d’histoire des idées politiques, no. 27 (2008) 44; Baume, ‘De l’usage des pouvoirs neutres’, Pouvoirs no. 143 (2012) 17. 37 See Case C-270/12, United Kingdom and Northern Ireland v. European Parliament and Council of the European Union, judgment of 22 January 2014, not yet reported (ECLI:EU:C:2014:18), where the Court approved the delegation of powers to issue measures of general application to the ESMA agency. For a comment, see Bergström, ‘Shaping the New System for Delegation of Powers to EU Agencies, 52 CMLR (2015) 219.

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policy tasks the ECB pursues the single objective of preserving price stability, the conduct of prudential supervision follows several goals and may lead to the involvement of public funds and that is why the extension of the independence bestowed on the ECB for its monetary competences to its newly conferred supervisory powers does not go without saying. Moreover, with the responses it has provided to resolve the Eurozone crisis, the ECB has not just warded off the risks of financial instability but also extended its influence over the economic governance of the Euro Area countries. The rescue measures taken by the ECB, mainly as part of the Troika missions, usually being attached to specific economic and budgetary conditions, have enabled the ECB to exert coercive pressure on the economic reforms of Member States receiving financial assistance38 and even to impose policies that have been rejected by the citizens, as the example of Greece shows. As political power goes hand in hand with responsibility, it is therefore not surprising that the critics complain about the lack of democratic accountability of independent EU bodies and, accordingly, question their legitimacy. So the European Parliament has deplored the involvement of the ECB in budgetary, fiscal, and structural policies and the policy leverage exerted on decision-makers in violation of the limitation of its mandate to the areas of monetary policy and financial stability. To remedy what it sees as a lack of democratic accountability, the European Parliament has called for the ECB to be subject to regular reporting and scrutiny and more generally to ensure enhanced transparency regarding the activity of the Troika.39 Likewise, in its first reference for a preliminary ruling, the German Federal Constitutional Court has recalled that the compatibility of the independence of the ECB with the national constitutional principle of democracy is limited to a primarily stability-oriented monetary policy and cannot be transferred to other policy areas.40 So, the growing political influence of EU non-majoritarian bodies has given rise to strong calls for more control and accountability to the repositories of EU’s democratic legitimacy. However, all authors underscore the inherent tension between independence and accountability41 and wonder about the possibility of controlling EU non-majoritarian bodies and making them answerable for what they do while at the same time upholding their independence. The control and accountability mechanisms are known and listed by the authors.42 The main 38 See Fontan, Une Institution Politique à l’Épreuve de la Crise: la Banque Centrale Européenne dans l’Union Économique et Monétaire (août 2007—janvier 2012), PhD Thesis, University of Grenoble (2012). See also Fontan, ‘The ECB: A Democratic Problem for Europe?’, Books and Ideas, 30 April 2015, available at (last visited 17 July 2015); also Fontan, ‘La BCE et la Crise du Capitalisme en Europe’, La Vie des Idées, 24 février 2015, available at