EU REFERENDUM SPECIAL: A substantial and binding reform

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Professor Sir Alan Dashwood QC assesses the substance and legal character of the reform package negotiated for the UK with the EU

This article examines the ‘new settlement for the United Kingdom within the European Union’, which is contained in texts annexed to the conclusions of the European Council of 18 and 19 February 2015.

The centrepiece is a decision of the heads of state or government, meeting within the European Council (the HSG Decision), which is supplemented by a number of declarations. The settlement represents the outcome of the negotiating process formally set in motion by the UK Prime Minister’s letter of 10 November 2015 to Mr Donald Tusk, the European Council President.

The article is in two parts, the first focusing on the legal arrangements designed to give the settlement binding effect, while the substance of the settlement is reviewed (necessarily briefly) in the second part.

Legal arrangements

Decisions of representatives of the governments of the member states provide the latter with a means of exercising national powers collectively. Such decisions are treaties in simplified form, concluded by consensus between, and binding in international law upon, the member states. They have been used at heads of state or government level on two previous occasions, in December 1992 to address legal concerns raised by Denmark regarding the Maastricht Treaty and again in June 2009 to address Irish concerns regarding the Treaty of Lisbon.

Though somewhat more elaborate, the HSG Decision conforms to those precedents. Like the decisions on Denmark and Ireland, it contains only provisions that explain or complement, but are compatible with, the existing treaties. Its legal nature and effect, like theirs, is that of a binding international agreement. Like them, it will be registered as a treaty with the UN Secretariat, and some parts of it will, in due course be incorporated into the treaties. What is more, as an international agreement reached by consensus, the HSG Decision can only be amended or rescinded by consensus – in other words, with the agreement of the UK. In that sense, it is irreversible.

Two main legal techniques are used to give effect to specific elements of the settlement.

A first technique consists of the establishment of principles to serve as a binding instrument for interpreting the treaties. This is based on the rule in Art 31 (3) (a) of the Vienna Convention on the Law of Treaties. The Court of Justice of the 
EU (CJEU) has acknowledged that it was bound to take the decision on Denmark into consideration when interpreting relevant treaty provisions (C-135/08, Rottmann [2010] ECR I-1449, para 40), and it will have to do the same in respect of the new HSG Decision.

A second legal technique employed in the HSG Decision involves what may be termed ‘Council conduct agreements’. These are agreements binding the member states as to how they will behave in certain circumstances, when acting in their capacity as members of the Council.

How those techniques are intended to operate will be illustrated below.

Substance of the settlement

This is considered under the headings of the four sections of the HSG Decision, which correspond to the items of the negotiating agenda laid out in the letter of 10 November 2015.

A. Economic governance

The economic governance section is about the appropriate ordering of the relationship between economic and monetary union (EMU) and the other core EU policies, notably the internal market, and hence between members and non-members of the Eurozone. This is an important constitutional issue – hitherto neglected – and it is to David Cameron’s credit that he has forced the EU to take it seriously.

The relevant arrangements employ both of the legal techniques just described. Interpretative principles, to prevent undue prioritisation of EMU and to protect individuals and businesses against discrimination based on the currency of the member state to which they belong, will be combined with a safeguard mechanism based on a Council conduct agreement. Under this mechanism, a member state may interrupt the Council’s decision-making process by making a reasoned case that the legislative proposal under consideration infringes one or more of the economic governance principles. An effort must then be made to accommodate the concerns of those member states, which may entail referring the issue to the European Council. The mechanism is to be implemented by adding a new provision to an existing Council decision, which provides for a similar procedure, where the threshold for a qualified majority decision is achieved by a relatively narrow margin (Council Decision 2009/857/EC, OJ 2009 L 314/73).

B. Competitiveness

The section on competitiveness is concerned essentially with reinvigorating EU policies of particular interest to the UK, namely strengthening the internal market, improving legislation, reducing regulatory burdens on business and promoting an active trade policy. The commitment by the member states to further those objectives is complemented by declarations of the European Council, exercising its function of setting policy priorities for the EU, and of the Commission, which will propose a programme of work by the end of 2016.

C. Sovereignty

Section C covers a variety of matters, only two of them mentioned here, for reasons of space.

  • First, detailed clarification is provided of the meaning of references to ‘ever closer union’ in the treaties. Here, once again, the legal technique employed is that of establishing binding principles of interpretation.
  • Second, there is to be a ‘red card’ procedure, enabling a group of national Parliaments to stop draft legislation from going forward, which will be implemented through a Council voting agreement. If the prescribed number of Parliamentary votes is reached (55% of the total), the member states have undertaken to discontinue their consideration of the proposal within the Council, unless it is amended to accommodate the concerns expressed by the national Parliaments.

D. Social benefits and free movement

The solution provided by section D combines agreed interpretations of existing legislation with the introduction of two significant rule changes. No amendment of the EU’s primary law was considered necessary.

The HSG Decision offers robust interpretations of the possibilities that exist under current EU rules for limiting access by migrant workers to social benefits, in the light of recent developments in the case law of the CJEU. These are reinforced by a declaration of the Commission on issues related to the abuse of free movement rights.

The first of the rule changes entails amending Regulation 883/2004 on the coordination of social security systems, to give member states the option, where child benefits are exported to a member state other than the one in which the worker resides, of indexing the benefits to the standard of living in that member state. This will initially apply only to new claims, but from 2020 also to existing ones.

The second rule change involves the amendment of Regulation 492/2011 on freedom of movement for workers within the EU, to introduce a so-called ‘emergency brake’ limiting access by newly arrived workers to in-work benefits for up to four years. A declaration by the Commission expresses its understanding that the type of exceptional situation the mechanism is intended to cover already exists in the UK.

Implementation of this vital aspect of the reform package depends on the actual adoption of the necessary amending legislation. The Commission and the member states can be relied on to play their respective parts in the legislative process; and so, surely, can the European Parliament, for which there would be nothing to be gained politically from putting the new constitutional settlement in jeopardy.

Nor, it is submitted, would there be a serious risk of the proposed rule changes’ being struck down by the CJEU. Indexing child benefits is a policy option manifestly open to the EU legislator; while an emergency brake mechanism of the kind contemplated would lie within the scope of the power of the institutions to regulate the exercise of free movement rights.

Conclusion

It is hoped this summary account will be enough to give a sense of the ingenuity that has gone into devising the new settlement, and to show that it constitutes a substantial achievement, likely to benefit not only the UK but the EU as a whole. ●

Contributor Professor Sir Alan Dashwood QC is a silk at Henderson Chambers

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Professor Sir Alan Dashwood QC

Professor Sir Alan Dashwood QC is a silk at Henderson Chambers specialising in EU law. Formerly, director in the Legal Service of the Council of the European Union, he is co-author of Wyatt and Dashwood’s European Union Law.