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Document 62004CP0027

View of Advocate General Tizzano delivered on 19 May 2004.
Commission of the European Communities v Council of the European Union.
Action for annulment - Article 104 EC - Regulation (EC) No 1467/97 - Stability and Growth Pact - Excessive government deficits - Council decisions under Article 104(8) and (9) EC - Required majority not achieved - Decisions not adopted - Action challenging "decisions not to adopt the formal instruments contained in the Commission's recommendations' - Inadmissible - Action challenging "Council conclusions'.
Case C-27/04.

European Court Reports 2004 I-06649

ECLI identifier: ECLI:EU:C:2004:313

Language of the case

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Conclusions

VIEW OF ADVOCATE GENERAL
TIZZANO
of 19 May 2004(1)

Case C-27/04

Commission of the European Communities
v
Council of the European Union

(Action for annulment – Action for failure to act – Article 104 EC – Regulation (EC) No 1467/97 – Stability and Growth Pact – Excessive budget deficits – Council decisions not to adopt measures recommended by the Commission pursuant to Article 104(8) and (9) EC – Conclusions of the Council holding the excessive budget deficit procedure in abeyance)

I – Introduction

1. In the present case, which was brought by an application lodged on 27 January 2004, the Commission requests the Court to annul a series of measures taken by the Council in connection with the excessive deficit procedures initiated in relation to France and Germany under Article 104 EC.

2. The Commission seeks, first, the annulment of what it describes as ‘decisions’ of the Council not to adopt the measures recommended by the Commission pursuant to Article 104(8) and (9) EC in respect of France and Germany respectively, taken at the meeting of the ‘General Affairs’ Council on 25 November 2003 (‘the contested negative decisions’).

3. Secondly, the Commission contests the ‘conclusions’, reached by the Council at that meeting of 25 November 2003, on assessing the actions taken by France in response to recommendations of the Council under Article 104(7) EC and the corresponding ‘conclusions’ of the Council with regard to Germany.

4. The Council not only contests the merits of the Commission’s claims but also asserts as a preliminary point that the application is inadmissible on two grounds, which it is appropriate to examine immediately.

II – Admissibility of the application

5. The Council’s objections relate to the admissibility of the application in so far as the application addresses the failure to adopt the measures recommended by the Commission pursuant to Article 104(8) and (9) EC and in so far as it contests the ‘conclusions’ of 25 November 2003.

A – The objection relating to the failure to adopt the measures recommended by the Commission

1. Positions of the parties

6. The first objection is based on the claim that the action for annulment brought by the Commission constitutes an abuse of process in that in reality it conceals an attempt to circumvent the procedure for failure to act governed by Article 232 EC.

7. According to the Council, in the present instance the Commission is essentially aggrieved at the Council’s inaction as a result of the failure to achieve the necessary majorities for the adoption of certain acts. Such situations may, in the opinion of the Council, be reviewed by the Court only in accordance with the procedure and under the conditions set out in Article 232 EC.

8. Here, however, those conditions are not met, first because the Commission did not first call upon the Council to act, and secondly, and above all, because the Council is not legally required to adopt the decisions referred to in Article 104(8) and (9) EC.

9. In any event, according to the Council, it cannot be maintained that it failed to act, as it took a vote on the Commission’s recommendations.

10. The Council in fact itself foresees the objection that might be raised against its reasoning on the basis of the Eurocoton judgment, (2) which might lead the failure to adopt an act proposed or recommended by the Commission to be regarded as an implied decision of refusal, and hence as an act open to challenge under Article 230 EC.

11. In the opinion of the Council, however, that judgment is not relevant to the present case, because the solution it reached is in reality justified only by the special nature of anti-dumping proceedings and hence does not affect the traditional case-law to a different effect.

12. In response to this objection, the Commission states that in the system established by Article 104 EC the vote by which the Council adopts a position on the Commission recommendation seeking the adoption of the finding referred to in Article 104(8) EC or the notice given pursuant to Article 104(9) EC in any case constitutes a decision – positive or negative, depending on its outcome – and hence is an act open to challenge in accordance with Eurocoton.

13. The Commission contends that in its rejoinder the Council implicitly subscribed to this interpretation by asserting that the negative vote on the Commission recommendation placed the procedure in abeyance: if that were so, it would confirm that such an act produced legal effects.

14. But that is not all: according to the Commission, by refusing to establish that no effective action had been taken by France and Germany, the Council in reality determined, albeit only implicitly, that in its opinion those two countries had in fact taken effective action, contrary to the view of the Commission. But if that were so, the Council had clearly lost the power to decide on the measures provided for in Article 104(9) EC; hence, the Council ruled on such measures without having a legal basis for doing so.

15. The Commission raises a further and final argument in support of its claim that the negative decision under Article 104(9) EC was unlawful. In its opinion, the Council’s negative vote on that issue is an act that produces legal effects and is therefore open to challenge in that it attests to the Council’s refusal to continue with the procedure laid down in the Treaty in spite of the fact that the conditions for the next stage in the procedure had been met.

2. Assessment

16. It seems clear to me that the objection under examination raises first a question of how to classify the facts to be assessed by the Court. This involves establishing whether the failure to adopt the Commission recommendations pursuant to Article 104(8) and (9) EC constitutes inaction on the part of the Council, which as such is open to review by means of the procedure set out in Article 232 EC, or whether it can be classified as an implied decision of refusal and hence, at least in principle, as an act open to challenge under Article 230 EC.

17. In the first case, the application for annulment made by the Commission is obviously without purpose and must therefore be considered manifestly inadmissible. (3) In the second case, however, the starting point is the opposite, although it then remains to be established that the individual conditions for admissibility under Article 230 EC are met.

18. That having been stated, I must point out that the EC Treaty does not reiterate the clear rules embodied in the third paragraph of Article 35 of the ECSC Treaty (4) and, moreover, that Community case-law does not enable us to resolve with certainty the problem of classification that I have raised.

19. Whereas in the past the Court held that the Council’s failure to adopt an act proposed by the Commission constituted unlawful abstinence, and hence inaction on the part of the institution open to review by means of the procedure laid down in Article 175 of the Treaty (now Article 232 EC), (5) that conclusion does not appear to be compatible with the recent judgment in Eurocoton, cited above, in which the Court construed the failure to adopt a measure proposed by the Commission as an implied decision rejecting the proposal.

20. That having been said, I believe that it is not essential to embark on a lengthy explanatory investigation of the case-law and the limits imposed on its scope by the indubitably specific nature of the case considered in Eurocoton, since, in my opinion, in the present case both of the classifications of the contested conduct of the Council could lead to the same result, that is to say to the inadmissibility of the action.

21. The action would be plainly inadmissible, as I have just said (in point 17), if it were concluded that the failure to adopt the decisions recommended by the Commission were to be classified as inaction on the part of the Council.

22. But I believe that one could also arrive at the same conclusion by choosing to follow the Court’s approach in Eurocoton, and hence regarding the failure to adopt the acts recommended by the Commission as an implicit decision of refusal on the part of the Council.

23. In this regard, I observe first that in that precedent the Court did not simply equate the Council’s failure to decide to a negative decision, and hence to an ‘act’ open to challenge. Such automatic assimilation, which as I have already said was provided for in the ECSC Treaty (after an appropriate procedure for giving notice) but not in the EC Treaty, would inevitably have made the procedure laid down in Article 232 EC for the failure of Community institutions to act meaningless.

24. On the contrary, the Court carried out a more precise analysis that led it to set out a number of conditions necessary for establishing whether, and on what conditions, the failure to adopt an act within the time-limit laid down can be construed not as an unlawful omission but as a reviewable act.

25. In particular, it seems that, according to the Court, in order to establish whether a reviewable act is at issue, it is necessary to enquire: (i) whether the Council has adopted a position on the Commission’s proposal or recommendation (paragraphs 57 to 59); (ii) whether that negative position is definitive (paragraphs 63 to 65); and finally (iii) whether it produces legal effects (paragraphs 66 and 67).

26. If it is wished to apply that test to the case in point, it is necessary first to establish whether, by means of the vote of 25 November 2003, the Council ‘adopted a position’ on the Commission’s recommendations concerning the adoption of the finding referred to in Article 104(8) EC and the notice given pursuant to Article 104(9) EC in relation to France and Germany respectively.

27. It seems to me that when a Commission recommendation has been placed on the agenda of Council meetings and is put to the vote, it can be stated that the Council has indeed ‘adopted a position’ with regard to that recommendation regardless of the outcome of the vote, both if the vote leads to the adoption of the recommended act and, as in the present case, if the recommendation is rejected. (6)

28. In the present case it must therefore be held that the vote of 25 November 2003 constitutes the adoption of a (negative) ‘position’ by the Council with regard to the abovementioned Commission recommendations.

29. It is more difficult to rule on the ‘finality’ of the Council’s position, because review of that condition here relates not to an ‘act’ but to the adoption of a negative ‘position’, that is to say to the failure to adopt the act.

30. In the first case it can be said that in principle finality must be assessed on the basis of the external effects of the act and their impact (which is indeed final) on the legal situations to which the act relates.

31. In the other case, as it is obviously not possible to rely on the same test given the nature of the ‘act’, the finality of the effects of the ‘adoption of a position’ must instead be determined on the basis of other parameters, and in particular, in my view, with regard to the procedure of which it is part. It can therefore be considered to be final if it constitutes the conclusive stage of that procedure, in the sense that after the adoption of a position the procedure must be considered closed and the act can no longer be adopted, except possibly by recommencing the procedure afresh.

32. Otherwise, proceedings may be brought against the institution for unlawful inaction (provided that it is laid down that the act had to be adopted within a certain period), but if it still has the power validly and effectively to adopt the act recommended to it by the Commission, I doubt that the ‘adoption of a position’ can be considered final and hence to constitute a reviewable act.

33. Moreover, it seems to me that this conclusion is supported inter alia by the well-known precedent relating to transport policy, (7) in which the Council ‘adopted a position’ by putting to the vote Commission proposals aimed at achieving freedom to provide services, but did not obtain the necessary majorities and therefore did not adopt those acts, (8) despite the fact that Article 75 et seq. of the EC Treaty (now Article 71 EC et seq.) set precise deadlines in this regard.

34. In that instance the Court did not find against the Council for having adopted negative ‘positions’, and hence acts open to challenge under Article 173 of the Treaty (now Article 230 EC), but on account of its unlawful inaction, which it should have remedied by adopting the necessary acts, as it subsequently did, obviously for the very reason that it had retained its power of decision on this issue, even after expiry of the deadline laid down in the Treaty. (9)

35. On the other hand, if the Eurocoton precedent is viewed in this light it will be seen that the Court’s assessment of the finality of the ‘adoption of a position’ held against the Council in that case (in other words the failure to adopt the measure) was linked to the fact that, as the Court states, ‘once the ... period laid down in [the legislation] had expired the Council could no longer adopt [the] proposal for a regulation’ on which it had been called on in vain to decide (paragraph 64). In that case the specific legislation in the field in question meant that the expiry of the period granted to the Council for reaching a decision without any decision being reached could be equated to an implicit decision of rejection, automatically closing the anti-dumping proceedings and hence making it necessary to recommence the entire exercise. (10)

36. I would then point out that the Court of First Instance has stated that ‘[m]ere silence on the part of an institution cannot produce [binding legal effects capable of making it a reviewable act] other than where that result is expressly contemplated by a provision of Community law’. (11) Although ‘Community law provides that, in certain specific instances, silence on the part of an institution is deemed to constitute a decision where the institution has been called upon to express its view and has not done so by the end of a given period[, w]here there are no such express provisions laying down a deadline by which an implied decision is deemed to have been taken and prescribing the content of the decision, an institution’s inaction cannot be deemed to be equivalent to a decision without calling into question the system of remedies instituted by the Treaty’. (12)

37. Against that background, it is now necessary to determine whether, after adoption of the ‘positions’ at issue and despite expiry of the deadlines laid down in Regulation No 1467/97, the Council retained the power effectively to adopt the acts recommended by the Commission. If it did, it has to be doubted whether those positions could be considered ‘final’.

38. In this regard, it may be noted as a preliminary point that Article 104 EC granted the Council the power to decide on recommendations from the Commission without any time-limit and that it was the regulation, in other words an instrument of secondary legislation, that set ‘deadlines for the implementation of the excessive deficit procedure in order to ensure its expeditious and effective implementation’ (12th recital in its preamble).

39. Moreover, the setting of those deadlines was provided for in the resolution of the European Council of Amsterdam, which together with that regulation constitutes the ‘Stability and Growth Pact’ (13) and therefore at the very least represents an essential aid to interpreting it. However, the resolution itself clearly states that the deadlines in question are intended solely to speed up the procedure and merely ‘urges’ (rather than formally obliges) the Council to comply with them. (14)

40. On this basis alone, it could therefore be maintained that the sole purpose of setting these deadlines is to speed up the procedure laid down in the Treaty and not to diminish the Council’s power to adopt acts recommended by the Commission in the context of that procedure.

41. Apart from that, however, there are even more significant indications that, even after the vote of 25 November 2003, the question of the excessive deficits of France and Germany remain before the Council, which can still proceed, within effective and reasonable time-limits, to adopt the acts recommended by the Commission.

42. First of all, this was recognised by the Commission itself at the hearing and is also confirmed by paragraph 6 of the contested ‘conclusions’, in which the Council states that it wishes to hold the procedure in abeyance and reserves the right to adopt the omitted resolutions at a later date.

43. That interpretation also appears to be supported by Article 10(2) of Regulation No 1467/97, under which the Council ‘shall immediately take a decision’ to give notice to take measures under Article 104(9) EC – hence even after expiry of the deadline set in Article 5 – if ‘action taken … by the Member State concerned in response to recommendations made under Article [104(9) EC] … is not being implemented or, in the Council’s view, is proving to be inadequate’.

44. Besides, to maintain the opposite would conflict with the purpose which the regulation attributes to the setting of deadlines, which as we have seen consists in the need to ensure the ‘expeditious and effective implementation’ of the procedure (12th recital in its preamble). Any other solution would make it necessary to recommence the entire procedure.

45. In more general terms, however, a criterion of cohesion within the system militates in this direction. It would be illogical to suppose that even a short delay on the part of the Council in adopting an act because the prescribed majorities cannot be achieved can divest that institution of the power to adopt the act if the legislation does not expressly so provide. Plainly, there is a danger that this would seriously prejudice the very life of the Community, because the possibility that the Council cannot achieve the necessary majorities (not to mention cases where unanimity is required!) is in a sense normal rather than a malfunction of the system.

46. As I have already stated, in such situations the conditions may be met for finding that the Council unlawfully failed to act, but this will not in principle preclude the subsequent exercise of its power of decision.

47. I deduce from this that the ‘adoption of positions’ contested here cannot be considered ‘final’ and may therefore be challenged under Article 232 EC but not under Article 230 EC. If one wishes to remain consistent with the judgment in Eurocoton, one of the requirements identified by the Court in order for the ‘adoption of positions’ to be regarded as ‘acts’ open to an action for annulment is therefore not met.

48. I would add that this conclusion is valid for both of the instances considered here. First, it is valid for the finding made under Article 104(8) EC, which obviously remains possible until the Member State concerned has adopted national measures which can ensure compliance with the Council’s recommendations under Article 104(7) EC.

49. But the same must also be said of the giving of notice referred to in Article 104(9) EC, a fact which was – I repeat – recognised by the Commission itself at the hearing and which also emerges from the contested ‘conclusions’ of 25 November 2003 (see point 42 above).

50. Either the Member State concerned has complied with the recommendations adopted by the Council under Article 104(7) EC, in which case there is no longer any reason to give notice of the measures provided for in Article 104(9) EC, or the excessive deficit persists, in which case the interest in adoption of those measures clearly remains unchanged even after expiry of the deadline by which the Council should have taken a decision on the Commission’s recommendations under Article 104(9) EC.

51. With regard to the first objection, I therefore feel able to conclude that the Commission’s application must be declared inadmissible in so far as it relates to the failure to adopt the finding mentioned in Article 104(8) EC and in so far as it relates to the failure to give notice pursuant to Article 104(9) EC, with regard to France and Germany respectively.

B – The objection relating to the ‘conclusions’ of 25 November 2003

1. Positions of the parties

52. As I have already stated, according to the Council the Commission’s application is also inadmissible in so far as it challenges the lawfulness of the ‘conclusions’ adopted by the Council on 25 November 2003 with regard to the excessive deficit procedures concerning France and Germany.

53. According to the Council, the application is inadmissible here because in reality it relates to purely political acts, the adoption of which is at the discretion of the Council.

54. Furthermore, the ‘conclusions’ produce no legal effect, and hence cannot be challenged under Article 230 EC, because they merely describe the stage reached in the excessive deficit procedures in relation to France and Germany following the vote in the Council.

55. The reference made in the conclusions to the holding of those procedures in abeyance is essentially political and not legal in nature: the Council took note of a holding in abeyance which, from a legal point of view, necessarily follows from the negative outcome of the vote on the Commission’s proposals.

56. In any case, holding the excessive deficit procedures in abeyance does not have binding legal effects because the procedures remain open and the Commission may at any moment submit new recommendations to the Council under Article 104(7), (8) or (9) EC.

57. The Commission replies that if, as the Council appears to maintain, the holding in abeyance of the excessive deficit procedures in relation to France and Germany was the automatic consequence of the failure to adopt the decisions recommended by the Commission, it cannot be explained why the Council felt the need to decide formally that they be held in abeyance, as it did in paragraph 6 of the conclusions, rather than simply taking note of an automatic process that had taken place.

58. Above all, the Council’s contested ‘conclusions’ are in reality sui generis recommendations, whose main legal effect is to free the Council – and the Member States concerned, in this instance France and Germany – from the binding legal framework created by Article 104 EC and Regulation No 1467/97, replacing it with new guidelines on the application of Article 104(9) EC and a new framework for monitoring the excessive deficits of the Member States concerned.

59. It is therefore evident that the ‘conclusions’ in question produce legal effects and hence are acts open to challenge under Article 230 EC.

2. Assessment

60. In moving on to assess these arguments, I must first point out that, according to settled case-law, the objective of the action provided for in Article 230 EC ‘is to ensure, as required by Article 164 [of the Treaty, now Article 220 EC], observance of the law in the interpretation and application of the Treaty’ (15) and that ‘[i]t would be inconsistent with this objective to interpret the conditions under which the action is admissible so restrictively as to limit the availability of this procedure merely to the categories of measures referred to by Article 189 [of the Treaty, now Article 249 EC]’. (16) It follows that ‘[a]n action for annulment must therefore be available in the case of all measures adopted by the institutions, whatever their nature or form, which are intended to have legal effects’. (17)

61. Hence, even an atypical measure such as the ‘conclusions’ at issue can be regarded as an act open to challenge, provided it produces legal effects.

62. This is the very assessment which must now be undertaken.

63. To that end, I consider it useful first to note, very succinctly, that in those ‘conclusions’ the Council: (a) recalls the factors that it has taken into account in assessing the budgetary situation, in particular the change in the economic environment (paragraph 1); (b) notes the measures adopted by the Member State concerned following the recommendation made to it under Article 104(7) EC (paragraph 2); (c) welcomes the public commitment by the Member State concerned to bring the deficit below the 3% threshold by 2005 (paragraph 3); (d) makes recommendations for the measures to be taken to achieve that objective (paragraph 4); (e) states that, in the light of those recommendations and the unilateral commitment by the Member State concerned set out in paragraph 3, it has decided not to adopt the measures proposed by the Commission under Article 104(9) EC (paragraph 5); (f) decides to hold the excessive deficit procedure in abeyance, but declares that it stands ready to take a decision under Article 104(9) EC on the basis of the Commission recommendation, should it emerge from the assessment based on paragraph 7 that the Member State concerned has not abided by the commitments undertaken (paragraph 6); (g) lastly, invites the Member State concerned to report on a regular half-yearly basis on the progress made in fulfilling those commitments (paragraph 7).

64. For present purposes it is not necessary to examine all the points indicated. It will be sufficient to concentrate on paragraph 6, disregarding even the first part of that paragraph explicitly announcing the Council decision to hold the procedure in abeyance (‘The Council agrees to hold the excessive deficit procedure … in abeyance for the time being’). As we shall see below (point 132), it is debatable whether the Council had the power to take such a decision and whether in any case it achieved the intended result. Hence, it is not appropriate to examine this issue in depth at this stage.

65. The passage that I regard as decisive for replying to the question raised is the one that follows immediately in paragraph 6.

66. In that passage the Council states that it stands ready ‘to take a decision under Article 104(9), on the basis of the Commission Recommendation, should [the Member State concerned] fail to act in accordance with the commitments set out in these conclusions as it would emerge from the assessment based on paragraph 7 below’. (18)

67. The ‘commitment’ mentioned in this passage is nothing more than the unilateral commitment referred to in paragraph 3 of the contested ‘conclusions’, which was undertaken by France and Germany outside the framework laid down in the Council’s recommendations.

68. It follows that the Council’s assessment for the purposes of the decision which it should take under Article 104(9) EC will no longer have the content of the Council’s recommendations under Article 104(7) EC as its frame of reference, but the unilateral commitment of the Member State concerned.

69. Not only that, but in this manner, and moreover by means of an instrument not envisaged by the Treaty (that is to say the contested ‘conclusions’), the Council also altered the substance of the recommendation which it had previously adopted under Article 104(7) EC by indicating a new and different means of consolidating public finances based not on the provisions of that recommendation but on the abovementioned unilateral commitments.

70. By means of these ‘conclusions’, the Council (i) extended the final deadline for bringing the budget deficit below the threshold of 3% laid down in Article 1 of the Protocol on excessive deficits and (ii) in consequence, altered the scale of the consolidation measures required, in the way which I shall now describe.

71. In the case of France, the ‘conclusions’ extend to the 2005 financial year the deadline for correction of the deficit, which the Council’s recommendation under Article 104(7) EC had set for the 2004 financial year.

72. Also, the measures to be taken to achieve the adjustment within that deadline are therefore significantly changed. The ‘conclusions’ recommend achieving a reduction in the cyclically-adjusted deficit of 0.8% of GDP in 2004, followed in 2005 by a further reduction of 0.6% of GDP or whatever higher percentage is needed to bring that ratio finally below the threshold laid down in the Protocol. On the basis of the recommendation adopted under Article 104(7), however, France was required to reduce the deficit by at least 1% of GDP during 2004. (19)

73. Similarly, with regard to Germany, the ‘conclusions’ extend to the 2005 financial year the deadline for correction of the deficit, which the Council’s recommendation under Article 104(7) EC had set for the 2003 financial year (or at the latest 2004), (20) and consequently make fairly substantial changes in the measures to be taken to achieve the adjustment by the deadline.

74. In order to comply with the Council’s previous recommendations, Germany should have reduced the deficit by 1.2% by the end of 2003, in other words in just over one month from the Council meeting of 25 November 2003. (21) By contrast, the ‘conclusions’ adopted on that day recommend that Germany achieve a reduction of 0.6% of GDP in the cyclically-adjusted deficit in 2004, followed in 2005 by a further reduction of 0.5% of GDP, or whatever higher percentage is needed to bring that ratio finally below the threshold laid down in the Protocol on the excessive deficit procedure.

75. It can certainly be maintained, as does the Council, that the changes I have indicated were an inevitable consequence of the failure to reach a decision on the Commission’s recommendations and that the Council had no alternative at that point. What matters, however, irrespective of the merit of those changes, is that it is difficult to downgrade them to mere political assessments and to deny that they have legal effects.

76. I therefore believe that, in so far as it relates to the ‘conclusions’ of the Council, the Commission’s application should be declared admissible.

III – Substance

A – Examination of the negative positions adopted

77. I now come to the substance of the Commission’s application.

78. I wish to point out immediately in this regard that, notwithstanding the outcome of the foregoing analysis and the conclusion that the first part of the application is inadmissible, I consider it appropriate to examine all of the Commission’s complaints in case the Court does not share my opinion.

1. Positions of the parties

79. On that premiss, with regard to the first head of the application I note that the applicant institution claims that the negative decisions inherent in the failure to adopt the measures recommended under Article 104(8) EC are unlawful, asserting that the Council had no discretion in deciding whether or not to adopt the finding laid down in that provision of the Treaty.

80. According to the Commission, the Council must confine itself to ascertaining, from an objective point of view, whether in the period laid down effective action has been taken to comply with the recommendations adopted under Article 104(7) EC. If it has not, it is required to state that finding explicitly.

81. Even supposing that the Council has a degree of discretion in this regard, it is nevertheless required under Article 253 EC to state the reasons for its decisions not to adopt the finding under Article 104(8) EC in relation to France and Germany respectively. Such statements of reasons are clearly lacking in the present case.

82. As to the negative decisions on action to be taken under Article 104(9) EC, the Council infringed the Treaty by voting on the measures recommended by the Commission without having first made the finding provided for in Article 104(8) EC. Moreover, those negative decisions also lacked a sufficient statement of reasons to ensure compliance with Article 253 EC.

83. The Council, for its part, contends in essence that, even after adoption of the decisions provided for in Article 104(6) and (7) EC, the Treaty does not impose any requirement to adopt the proposals contained in the Commission’s recommendations pursuant to Article 104(8) and (9) EC: on the contrary, it is evident from the content and spirit of those provisions that it has a wide discretion in that regard.

84. In addition, the Council disputes that the adoption of a decision under Article 104(8) EC is a necessary precondition for voting on and possibly adopting a decision under Article 104(9) EC.

85. Lastly, with regard to the claimed infringement of the requirement to provide a statement of reasons, the Council maintains that such an obligation does not exist in relation to the failure to adopt the decisions recommended by the Commission for the simple reason that it was not obliged to act.

86. However, even if it is accepted that there is an obligation to provide a statement of reasons, the Council responds that its conclusions of 25 November 2003 constitute a sufficient statement of reasons for the failure to adopt the Commission’s recommendations.

2. Assessment

87. I shall examine separately the Commission’s complaints about the failure to adopt the finding provided for in Article 104(8) EC and the infringement of Article 104(9) EC.

(a) Article 104(8) EC

88. Under Article 104(8) EC ‘[w]here it establishes that there has been no effective action in response to its recommendations within the period laid down, the Council may make its recommendations public’.

89. It seems to me that two distinct steps can be identified from the wording of the provision.

90. First, the Council is called on to ‘establish’ whether or not effective action has been taken in response to the recommendations adopted under Article 104(7) EC; if the finding is negative, it must decide whether to publish the content of its recommendations, thereby reacting to the inaction of the Member State concerned.

91. I wish to point out at the outset that for present purposes it is not necessary to enquire whether the Council is required to decide to publish the recommendations, because in this instance publication was not recommended in relation to either France or Germany.

92. Rather, at issue here are the conditions governing the ‘determination’ referred to in the first part of Article 104(8) EC and, in particular, what is being determined, and whether or not the Council is required to perform this exercise once the Commission has sent it a recommendation to that effect.

93. With regard to the first point, I have to say that it is not in fact clear exactly what is the subject of the examination by the Council, because comparison of the various language versions of the provision in question permits of two differing interpretations.

94. According to the French version of Article 104(8) EC, the subject of the Council’s finding is the absence of any effective action. (22) This is precisely the interpretation put forward by the Council in the present proceedings.

95. Other versions, by contrast, (23) would appear to support the idea of a global assessment of the measures taken by the Member State in question. In other words, the Council is called upon to establish whether the Member State concerned has taken measures which, as a whole, are judged capable of achieving the budgetary consolidation objectives laid down in the recommendation pursuant to Article 104(7) EC.

96. The versions in English (24) and Portuguese (25) also appear to be easier to reconcile with this second interpretation, which, moreover, the Commission adopted in the procedures relating to the deficits of France and Germany and has defended in the proceedings before the Court.

97. For myself, I must say that although on the basis of the wording both interpretations appear plausible, considerations relating to the broad logic of the system none the less cause me to lean more towards the interpretation put forward by the Commission.

98. I do not, however, see the need to examine this question at greater length here, because I believe that the Commission is right in maintaining that, in either case, the Council is required, at the request of the Commission, to establish in accordance with Article 104(8) EC whether the Member State concerned has taken effective action or has failed to do so (in whole or in part).

99. On the substance, it may obviously depart from the Commission’s recommendation if it so decides; but in my opinion it cannot do what it did in the present case, that is to say abstain from assessing the measures taken by the Member State concerned at the end of the period indicated in the recommendation made under Article 104(7) EC.

100. The reason is that within the system established under Article 104 EC such an assessment constitutes an important step in order to enable the Community institutions to react speedily to any inadequacy of the measures prescribed for the Member State concerned (or worse, to the absence thereof).

101. It follows that the Council’s failure to make a finding must be considered a breach of its obligation under Article 104(8) EC, in accordance with the purpose and requirements of the excessive deficit procedure and with the role assigned to the Council in the operation of that procedure.

102. Hence, in the alternative to my conclusion that the application is inadmissible in this regard, I consider that the Commission’s complaint regarding Article 104(8) EC is well founded.

(b) Article 104(9) EC

103. As I have already said, according to the Commission the negative decision with regard to Article 104(9) EC appears to be vitiated because it was adopted without first establishing that the Member State concerned had taken ‘no effective action’ within the meaning of Article 104(8) EC.

104. In the Commission’s opinion, that determination is a necessary step in the excessive deficit procedure and is laid down to protect the rights of defence of the Member State concerned. Otherwise, that State would be denied the opportunity, before the possible giving of notice under Article 104(9) EC, to express its views in defence of the effectiveness of the measures it has taken.

105. I have to confess, however, that I do not find such a rigid reconstruction of the relationship between Article 104(8) EC and Article 104(9) EC convincing.

106. First, situations could arise in which the step described in Article 104(8) EC is patently superfluous. Take, for example, the case of a Member State which, after having received a recommendation under Article 104(7) EC, announces even before the end of the period set in the recommendation that it cannot take the action recommended or announces measures that are certainly incapable of bringing the deficit within the prescribed limits.

107. It is Regulation No 1467/97 itself that suggests a possible solution in such cases, given that Article 10(2) permits the Council to adopt the measures laid down in Article 104(9) EC ‘immediately’, hence dispensing with the step described in Article 104(8) EC. If non-compliance is actually ‘deliberate’, the last sentence of Article 7 of the regulation provides for an ‘expedited procedure’, which will undoubtedly concern the timing but also, I believe, the procedural steps.

108. In all of these cases, given also that publication of the recommendations under Article 104(7) EC no longer depends on a Council decision, the determination required by Article 104(8) EC would be reduced to a mere formality, devoid of any value, and its only effect would be to delay the procedure unnecessarily.

109. Doubts about the need for this step could also arise in cases in which application of Article 104(8) EC is certainly imposed, such as those under examination, in my opinion. In such cases, the Council’s failure to act would, as I have stated previously (see point 99 above), undoubtedly constitute a breach of the Treaty, as could therefore be found in judicial proceedings. It has to be asked, however, whether it would necessarily also preclude the subsequent steps in the excessive deficit procedure.

110. In my opinion, anyone advocating an affirmative reply to this question should ponder the spontaneous and irrational consequences that would flow from such a formalistic insistence on the chronological sequence of the step prescribed in Article 104(8) EC and the application of Article 104(9) EC. There can be no doubt but that to follow this course would paradoxically lead to the complete blocking of the excessive deficit procedure at a crucial stage, that is to say the giving of notice under Article 104(9) EC.

111. Frankly, to me it seems difficult to maintain that this solution is consistent with the system established by the Treaty. I repeat that I do not deny that the Council is under an obligation to comply with Article 104(8) EC; I consider, however, that the consequence of non-compliance cannot be the paralysis of the entire procedure, but the possible finding that the Council has improperly failed to act.

112. Furthermore, given what I have already said about the publication of recommendations, I see no serious reason to maintain that omission of the step described in Article 104(8) EC gravely compromises the course of the procedure. The only valid argument raised in this regard does not appear insuperable. As we have seen, it relates to the right of the Member State concerned to defend itself and consists in objecting that without that step the Member State would be denied the right to be heard before the adoption of a decision under Article 104(9) EC.

113. It seems to me that in reality the protection of that right does not necessarily require the application of Article 104(8) EC. Even if the Council were to assess the effectiveness of the national measures directly on the basis of Article 104(9) EC, the Member State concerned would still be able to defend those measures during the discussion preceding the giving of notice under that provision.

114. Nor, lastly, can it be argued against the approach I have envisaged on the ground that Article 104(9) EC makes reference to non-compliance that ‘persists’. It is objected that the use of that verb presupposes that an assessment under Article 104(8) EC has already been made, because only after such assessment could it make sense to speak of ‘persistent’ non-compliance, where indeed it continued.

115. I do not find this a decisive argument, however. It is clear that that verb was chosen in the light of the ‘normal’ situation in which the step described in Article 104(8) EC has been observed. But if that does not happen, what matters for the purposes of applying Article 104(9) EC is to establish whether or not the Member State has implemented the recommendations made under Article 104(7) EC, not whether non-compliance has already been established and is therefore ‘persistent’.

116. It can therefore be confirmed unhesitatingly that the finding provided for in Article 104(8) EC is an important stage in the institutions’ monitoring of compliance with the recommendations made under Article 104(7) EC. It cannot, however, be regarded as a necessary and essential condition for the giving of notice to the Member State concerned under Article 104(9) EC.

117. From this I deduce that, as far as the present case is concerned, the Council could vote on the Commission’s recommendation under Article 104(9) EC even if a finding for the purposes of Article 104(8) EC was not previously adopted.

118. In the alternative to my conclusion that the application is inadmissible in this regard, I therefore propose that the Court declare the Commission’s action against the negative decision taken by the Council under Article 104(9) EC to be unfounded.

B – The ‘conclusions’ of 25 November 2003

1. The positions of the parties

119. The Commission submits first that the decision to hold the excessive deficit procedure in abeyance contained in the contested ‘conclusions’ is unlawful because it infringes Article 9 of Regulation No 1467/97. According to the Commission, it may be held in abeyance only in the circumstances explicitly contemplated in that provision, but they do not apply in the present case.

120. Furthermore, the necessary statement of reasons for the decision to hold the procedures in abeyance was lacking.

121. More generally, the ‘conclusions’ in question were adopted in breach of the rules on voting. The Council adopted them on the basis of the majority applicable to decisions under Article 104(9) EC, whereas, given their content and the stage reached in the excessive deficit procedures, it should have followed the voting rules applicable to decisions under Article 104(7) EC.

122. Lastly, having chosen to act by means of an atypical instrument such as the contested ‘conclusions’, the Council infringed the Treaty and in particular Article 104 thereof.

123. Although it is true that the Council may, in certain circumstances, adopt acts for which the Treaty makes no specific provision, that option is not available where, as in the present case, the Council is legally obliged to adopt a decision, in other words a binding act.

124. The discretion that the Council enjoys in the application of Article 104(9) EC is limited to the choice of the measures to be indicated to the Member State concerned and to setting the period of time within which such measures are to be adopted. The Council does not have any discretion regarding the legal instrument by means of which it intervenes.

125. The Council, for its part, replies that the ‘conclusions’ of 25 November are exclusively political acts and not legal acts, which it was therefore free to adopt or not.

126. In the present case, according to the Council, their adoption was necessary because the recommendations adopted by it under Article 104(7) EC had become out of date owing to the change in the relevant economic environment. In such circumstances, and in the absence of a proposal from the Commission to amend those recommendations, the Council had no alternative but to adapt its indications to the Member States concerned by adopting a non-binding, essentially political act.

127. Silence on its part would have jeopardised the credibility of the Stability and Growth Pact and would have created a situation of uncertainty, with damaging consequences.

128. Lastly, with regard to the alleged infringement of Article 9 of Regulation No 1467/97 as a result of the holding in abeyance of the procedure, supposedly ‘decided on’ by means of the contested conclusions, the Council observes that that article merely provides for holding the procedure in abeyance in two specific circumstances but does not rule it out in other situations as well.

129. In the present case, the holding in abeyance was the automatic consequence of the failure to adopt the decision under Article 104(9) EC, and the conclusions merely took note of that fact.

2. Assessment

130. I have already dealt with some of the questions raised immediately above while examining the admissibility of the present action (see point 64 et seq.). I shall now re-examine them in greater depth in connection with the Commission’s complaints as to the substance.

131. For that purpose, it is necessary to enquire first whether the Council has the power to hold the procedure in question in abeyance and to amend the recommendations previously adopted on the basis of Article 104(7) EC, despite the Commission’s having recommended that it take action under Article 104(9) EC.

132. With regard to the first point, I repeat that it is not at all clear whether, in the present case, the Council could hold the excessive deficit procedure in abeyance. I am inclined, however, to reply in the affirmative. It is true that the regulation makes provision for holding the procedure in abeyance in only two situations, but it seems reasonable to hold that this does not exclude its being held in abeyance on other grounds, strictly justified by unforeseeable requirements consistent with the purposes of the Treaty and the regulation.

133. I feel greater conviction, however, in sharing the Council’s view regarding its power, in the situation I have just indicated, to amend its own recommendations adopted under Article 104(7) EC.

134. I observe first that, in accordance with a general principle, the power of the institutions to adopt a particular act necessarily also includes the power to amend that act, on condition that the provisions on the exercise of the relevant power are complied with.

135. The opposite conclusion would have to be drawn, in my opinion, only if it were shown that the act being amended had been adopted as part of a rigidly regulated procedure which carried an obligation for the competent institution to adopt the subsequent act in the procedural chain by a set deadline, after which the institution lost the power to take a decision.

136. As I have sought to demonstrate above (points 38 et seq. and 41 et seq.), the expiry of the periods laid down in the regulation for the adoption of the measures prescribed under the excessive deficit procedure does not lead to the loss of the Council’s power to take a decision.

137. Nor can it be maintained that once the Council has received a recommendation from the Commission under Article 104(9) EC it has to reach a decision on that recommendation and can no longer amend the recommendations it has previously adopted under Article 104(7) EC where the conditions for so doing are met.

138. It is clear from Article 104(9) EC that the Council has no obligation to endorse the recommendations made by the Commission under that article and hence to adopt the decision it seeks. This also applies where, in contrast to what occurred in the present case, the Council has made the finding referred to in Article 104(8) EC.

139. By confining itself to enabling the Council to exercise a decision-making power, (26) Article 104(9) EC in fact grants it wide discretion in deciding whether and how to exercise that power. It could be debated whether such discretion has been exercised within the limits set by Community case-law for similar cases, but its existence cannot be denied.

140. To maintain the opposite would be tantamount to saying that in reality the decision-making power in this regard lies exclusively with the Commission and that the Council performs a purely notarial role because it should confine itself to merely rubber-stamping the Commission’s recommendations. Such a claim would patently be at odds with the balance between the institutions defined in the Treaty and also with the system set out in the specific legislation under examination.

141. Nor, lastly, can it be objected that Article 10(2) of Regulation No 1467/97 provides that where the action taken by the Member State concerned in response to recommendations made under Article 104(7) EC is inadequate the Council ‘shall immediately take a decision’ under Article 104(9) EC. It is clear that the purpose of this provision, in the situation which it envisages, is to skip certain procedural steps preceding the Council’s adoption of a decision under Article 104(9) EC. Even then, however, the conditions laid down for the adoption of that decision, which obviously include those relating to the Council’s powers mentioned above, continue to apply, as indeed is confirmed by the reference to Article 104(9) EC.

142. Hence, if the Council is not obliged to follow the recommendations made by the Commission under Article 104(9) EC, it has to be deduced that even after such recommendations have been submitted it retains, in principle, the power to amend its own recommendations made under Article 104(7) EC.

143. Naturally, however, in exercising that power the Council must comply with the formal requirements and the procedures laid down in this regard in the Treaty, which obviously must be those laid down for the adoption of the act the amendment of which is at issue.

144. As we have seen above (point 69 et seq.), that act is the recommendation adopted under Article 104(7) EC, and it is therefore to that provision that reference must be made.

145. Hence, in the present case it will be necessary, first, that the Commission has made a recommendation proposing adoption of a new Council recommendation under Article 104(7) EC (see Article 104(13) EC).

146. Secondly, the amendment recommended in this way will have to take the form of the specific instrument mentioned in the relevant provisions, in other words the form of a ‘recommendation’ from the Council.

147. Lastly, the amendment will have to be approved in accordance with the voting rules applicable to the amended act, and hence by a majority of two thirds of the votes of the Member States of the Community excluding the votes of the representative of the Member State concerned (Article 104(13) EC).

148. It is evident from the documents before the Court that in the present case the Council’s ‘conclusions’ were adopted without a recommendation having been received from the Commission and that, moreover, they were adopted not in the form of a ‘recommendation’ but in that of an atypical act.

149. As regards the voting rules, it has been ascertained that the ‘conclusions’ were approved without obtaining the majority of two thirds of the votes of the Member States needed for the adoption of a recommendation of the Council under Article 104(7) EC.

150. Nor can it be claimed – as does the Council – that at the stage reached in the procedure the necessary majority was that provided for in Article 104(9) EC, in other words a majority of votes in the calculation of which those normally attributed to the Member States not participating in the third stage of economic and monetary union are excluded. (27)

151. Such a claim would entail a manifest abuse of process, given that, as we have seen above, by means of the ‘conclusions’ in question the Council did not give notice of measures under Article 104(9) EC to correct the deficit but adjusted the recommendations already in force under Article 104(7) EC.

152. In the light of the foregoing, it therefore appears plain to me that the adoption of the Council’s ‘conclusions’ of 25 November 2003 was vitiated by failure to comply with the essential procedural requirements laid down by the Treaty.

153. I therefore deduce that, in so far as it relates to the ‘conclusions’, the action brought by the Commission must be upheld.

IV – Final considerations

154. In conclusion, I consider that the action must be declared inadmissible both as regards the failure to adopt the finding referred to in Article 104(8) EC and as regards the failure to give notice as provided for in Article 104(9) EC in relation to France and Germany respectively.

155. In the alternative, the action must be declared well founded as regards the failure to adopt the finding referred to in Article 104(8) EC and unfounded as regards the failure to give notice as provided for in Article 104(9) EC.

156. The action must, however, be declared admissible and well founded as regards the ‘conclusions’ of 25 November 2003 in relation to France and Germany.

V – Costs

157. Under Article 69(3) of the Rules of Procedure, where each party succeeds on some and fails on other heads, the Court may order that the parties bear their own costs.

158. As the action must be declared partly inadmissible and partly admissible and well founded, I consider that the Council and the Commission must be ordered to bear their own costs.

VI – Conclusion

In the light of the foregoing, I propose that the Court declare that:

1.: The Commission’s application is inadmissible as regards the failure to adopt the finding referred to in Article 104(8) EC and the failure to give notice as provided for in Article 104(9) EC in relation to France and Germany respectively;

: in the alternative, the application is:

– well founded as regards the failure to adopt the finding referred to in Article 104(8) EC and

– unfounded as regards the failure to give notice as provided for in Article 104(9) EC.

2.: The application is admissible and well founded as regards the ‘conclusions’ of 25 November 2003 in relation to France and Germany.

: Those ‘conclusions’ must therefore be annulled.

3.: The Council and the Commission shall each bear their own costs.

1 –: Original language: Italian.

2 –: Judgment in Case C‑76/01 P Eurocoton and Others v Council [2003] ECR I‑10091.

3 –: See the order in Case C‑514/99 France v Commission [2000] ECR I‑4705, paragraph 48 et seq.

4 –: In the event of a call to act being made, that paragraph provided that ‘if at the end of two months the High Authority has not taken any decision or made any recommendation, proceedings may be instituted before the Court within one month against the implied decision of refusal which is to be inferred from the silence of the High Authority on the matter’ (my italics).

5 –: Judgment in Case 13/83 Parliament v Council [1985] ECR 1513, in particular paragraphs 68 and 78.

6 –: See paragraphs 58 and 59 of the Eurocoton judgment and paragraph 75 of Advocate General Jacobs’ Opinion in the same case, which I reproduce verbatim here: ‘The statement in paragraph 58 of the judgment under appeal (“If a positive vote is the legal means by which the act is adopted, a negative vote merely indicates the absence of any decision”) is in my view wrong. An “absence of any decision” would imply that the Council either did not address the question or, having addressed it, formed no view. Both of those hypotheses are contradicted by the existence of a “negative result” described in the press release … and the finding that the necessary majority was not achieved.’

7 –: Which gave rise to the judgment in Parliament v Council, cited above.

8 –: See the judgment in Parliament v Council, cited above, especially paragraph 73.

9 –: See the judgment in Parliament v Council, cited above, especially paragraph 70 et seq.

10 –: See Article 6(9) of, and the 15th recital in the preamble to, Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1).

11 –: Judgment in Joined Cases T‑190/95 and T‑45/96 Sodima v Commission [1999] ECR II‑3617, paragraph 31.

12 –: Ibid., paragraph 32.

13 –: According to paragraph III of that resolution, ‘[t]he Stability and Growth Pact, which provides both for prevention and deterrence, consists of this Resolution and two Council Regulations, one on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies and another on speeding up and clarifying the implementation of the excessive deficit procedure’.

14 –: See point 2 of the political guidance addressed to the Council by the European Council of Amsterdam in the resolution on the Stability and Growth Pact.

15 –: Judgment in Case 22/70 Commission v Council [1971] ECR 263 (the ‘ERTA’ judgment), paragraph 40.

16 –: The ERTA judgment, cited above, paragraph 41.

17 –: The ERTA judgment, cited above, paragraph 42.

18 –: My italics.

19 –: The recommendation under Article 104(7) EC recommends that France ensure a reduction in the deficit of at least 0.5% of GDP, or the higher percentage needed. In the event, in the light of the change in economic conditions, in order to comply with that recommendation France would in fact have to reduce the deficit by 1.5% of GDP in 2004. See the sixth paragraph of point 2 of the explanatory memorandum for the Commission’s Recommendation for a Council decision under Article 104(9), SEC (2003) 1121 final (‘the total reduction in the cyclically-adjusted balance required to bring the deficit below 3% of GDP in 2004 would then amount to roughly 1.5 percentage point of GDP’).

20 –: The parties to the present proceedings have made reference to the 2004 financial year, whereas the texts appear to refer to 2003. The recommendation under Article 104(7) recommends the German authorities to ‘implement … their budgetary plans for 2003 which … aim at reducing the general government deficit in 2003 to 2¾% of GDP’ and in particular to that end to implement the announced measures, which amounted to 1% of GDP, and any further adjustment measures necessary ‘to ensure a reduction of the government deficit in 2003 as planned’.

21 –: In fact, on the basis of the November 2003 data, Germany’s deficit reached 4.2% of GDP (see Commission Recommendation for a Council decision under Article 104(9), SEC (2003) 1316 final, explanatory memorandum, paragraph 7, under the heading ‘Budgetary adjustment in 2003’).

22 –: The French version reads: ‘Lorsque le Conseil constate qu’aucune action suivie d’effets n’a été prise en réponse à ses recommandations dans le délai prescrit, il peut rendre publiques ses recommandations’. The provision in question is similar in the German version: ‘Stellt der Rat fest, dass seine Empfehlungen innerhalb der gesetzten Frist keine wirksamen Maßnahmen ausgelöst haben, so kann er seine Empfehlungen veröffentlichen’.

23 –: The Italian version reads: ‘Il Consiglio, qualora determini che nel periodo prestabilito non sia stato dato seguito effettivo alle sue raccomandazioni, può rendere pubbliche dette raccomandazioni’; the Spanish version: ‘Cuando el Consejo compruebe que no se han seguido efectivamente sus recomendaciones en el plazo fijado, el Consejo podrá hacerlas públicas’; and the Dutch version: ‘Wanneer de Raad vaststelt dat binnen de voorgeschreven periode geen effectief gevolg aan zijn aanbevelingen is gegeven, kan hij zijn aanbevelingen openbaar maken’.

24 –: See point 88 above.

25 –: ‘Sempre que verificar que, na sequência das suas recomendações, não foram tomadas medidas eficazes no prazo estabelecido, o Conselho pode tornar públicas as suas recomendações.’

26 –: The provision states: ‘the Council may decide’; ‘può decidere’; ‘peut décider’; ‘podrá decidir’; ‘pode decidir’; ‘kann der Rat beschließen’; ‘kan de Raad besluiten’; etc.

27 –: See Article 122(3) and (5) EC.

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