JUDGMENT OF THE COURT
8 July 1999 (1)
(EC/Mauritania fisheries agreement Agreements with important budgetaryimplications for the Community)
In Case C-189/97,
European Parliament, represented by Gregorio Garzón Clariana, Jurisconsult,Christian Pennera, Head of Division in its Legal Service, and Hans Krück, of itsLegal Service, acting as Agents, with an address for service in Luxembourg at theGeneral Secretariat of the European Parliament, Kirchberg,
Council of the European Union, represented by Jean-Paul Jacqué, Director in itsLegal Service, and John Carbery and Félix van Craeyenest, Legal Advisers in thesame service, acting as Agents, with an address for service in Luxembourg at theoffice of Alessandro Morbilli, Manager of the Legal Affairs Directorate of theEuropean Investment Bank, 100 Boulevard Konrad Adenauer,supported by
Kingdom of Spain, represented by Rosario Silva de Lapuerta, Abogado del Estado,acting as Agent, with an address for service in Luxembourg at the SpanishEmbassy, 4-6 Boulevard E. Servais,APPLICATION for the annulment of Council Regulation (EC) No 408/97 of 24February 1997 on the conclusion of an Agreement on cooperation in the seafisheries sector between the European Community and the Islamic Republic ofMauritania and laying down provisions for its implementation (OJ 1997 L 62, p. 1),
composed of: G.C. Rodríguez Iglesias, President, P.J.G. Kapteyn, J.-P. Puissochet(Rapporteur), G. Hirsch and P. Jann (Presidents of Chambers), J.C. Moitinho deAlmeida, C. Gulmann, J.L. Murray, D.A.O. Edward, H. Ragnemalm, L. Sevón,M. Wathelet and R. Schintgen, Judges,
Advocate General: J. Mischo,
Registrar: L. Hewlett, Administrator,
having regard to the Report for the Hearing,
after hearing oral argument from the parties at the hearing on 2 February 1999,
after hearing the Opinion of the Advocate General at the sitting on 11 March 1999,
gives the following
- By application lodged at the Court Registry on 16 May 1997, the EuropeanParliament brought an action under Article 173 of the EC Treaty (now, afteramendment, Article 230 EC) for the annulment of Council Regulation (EC) No408/97 of 24 February 1997 on the conclusion of an Agreement on cooperation inthe sea fisheries sector between the European Community and the Islamic Republicof Mauritania and laying down provisions for its implementation (OJ 1997 L 62, p.1; 'the contested regulation).
- By order of the President of the Court of 2 October 1997, the Kingdom of Spainwas given leave to intervene in support of the form of order sought by the Council.
- On 18 January 1996, the Islamic Republic of Mauritania withdrew from theagreement on fishing off the coast of Mauritania which bound it to the EuropeanEconomic Community. The two parties then entered into negotiations, whichculminated on 20 June 1996 in the signature of a new agreement ('the fisheriesagreement with Mauritania).
- That agreement, concluded for a period of five years from 1 August 1996, enablesEuropean Community fishermen to fish in waters under the sovereignty orjurisdiction of the Islamic Republic of Mauritania. Article 7 of the agreementprovides for financial compensation for Mauritania and for financial support forthat country at the Community's expense. Under Article 2(1) of the Protocol settingout fishing opportunities and the financial compensation and financial contributionsfor the period from 1 August 1996 to 31 July 2001, annexed to the fisheriesagreement with Mauritania:
'The total financial compensation provided for in Article 7 of the Agreement shallbe set for the period referred to in Article 1 of this Protocol at ECU 266.8 million. This financial compensation shall be payable in five annual instalments as follows:
Year 1: ECU 55 160 000
Year 2: ECU 54 360 000
Year 3: ECU 53 560 000
Year 4: ECU 52 160 000
Year 5: ECU 51 560 000.
- On a proposal from the Commission, the Council adopted Decision 96/731/EC of26 November 1996 on the conclusion of an Agreement in the form of an Exchangeof Letters concerning the provisional application of the Agreement on cooperationin the sea fisheries sector between the European Community and the IslamicRepublic of Mauritania (OJ 1996 L 334, p. 16).
- The Commission also sent to the Council, on 9 September 1996, a Proposal for aCouncil regulation on the conclusion of an Agreement on cooperation in the seafisheries sector between the European Community and the Islamic Republic ofMauritania and laying down provisions for its implementation (OJ 1996 C 352, p.5). That proposal, based on the EC Treaty 'and in particular Articles 43 and 228(3)(2) thereof (now, after amendment, Article 37 EC and the secondsubparagraph of Article 300(3) EC), involved obtaining the Parliament's assent.
- On 13 November 1996, the Council decided to consult the Parliament on thatproposal for a regulation. However, by basing that request for consultation onArticle 43 of the Treaty in conjunction with Article 228(2) and the firstsubparagraph of Article 228(3), the Council showed that it did not consider itselfbound to obtain anything more than the Parliament's opinion.
- The relevant committee of the Parliament approved the proposal for a regulation,subject to a return to the legal basis proposed by the Commission. It maintained,in particular, that the fisheries agreement with Mauritania had important budgetaryimplications within the meaning of the second subparagraph of Article 228(3) ofthe Treaty, and that its conclusion therefore required the Parliament's assent.
- On 28 November 1996, the Parliament adopted its Decision on the proposal for aCouncil regulation on the conclusion of an Agreement on cooperation in the seafisheries sector between the European Community and the Islamic Republic ofMauritania and laying down provisions for its implementation (OJ 1996 C 380, p.19). Substituting the second subparagraph of Article 228(3) of the Treaty for thelegal basis cited by the Council, the Parliament gave its assent to the adoption ofthe contested regulation.
- On 24 February 1997, the Council adopted the contested regulation, which is basedon the Treaty and in particular on Article 43 thereof, in conjunction with Article228(2) and the first subparagraph of Article 228(3). It cites 'the opinion of theEuropean Parliament.
- Claiming an infringement of its prerogatives, the Parliament raises two pleas in lawin support of its action. The first alleges infringement of the second subparagraphof Article 228(3) of the Treaty in that, since the fisheries agreement withMauritania had important budgetary implications for the Community, the contestedregulation should have been concluded on the basis of that article, while the secondalleges infringement of Article 253 EC (ex Article 190), in that the Council failedto state the reasons why it changed the legal basis proposed by the Commission.
- The Council, supported by the Spanish Government, considers the action to beinadmissible in so far as it is based on infringement of Article 253 EC, since theParliament has failed to provide any relevant indication as to how that infringementwas such as to impair its prerogatives. It further argues that the first subparagraphof Article 228(3) of the Treaty constitutes the appropriate legal basis for theadoption of the contested regulation, since the fisheries agreement with Mauritaniadoes not have important budgetary implications within the meaning of the secondsubparagraph of Article 228(3).
- Pursuant to the third paragraph of Article 173 of the Treaty, the Parliament maybring an action before the Court for the annulment of an act of another institutionprovided that it does so in order to protect its prerogatives. The Court has heldthat that condition is satisfied where the Parliament indicates in an appropriatemanner the substance of the prerogative to be safeguarded and how thatprerogative is allegedly infringed (see, in particular, Case C-303/94 Parliament vCouncil  ECR I-2943, paragraph 17).
- By virtue of those criteria, the Court has hitherto declared actions by theParliament inadmissible to the extent to which they were founded on infringementof Article 253 EC. In alleging that the contested provisions were inadequately orincorrectly reasoned for the purposes of that article, the Parliament failed toprovide any relevant indication as to how that infringement, assuming that it hadbeen committed, was such as to impair its own prerogatives (Case C-156/93Parliament v Commission  ECR I-2019, paragraph 11; Parliament v Council,cited above, paragraph 18).
- In this case, however, the Parliament considers that it has explained in what wayinfringement of Article 253 EC is capable of infringing its prerogatives by arguingthat the change of legal basis by the Council without giving reasons had the effectof altering the conditions of its involvement in the procedure for concluding thefisheries agreement with Mauritania.
- The Parliament thus confines itself to arguing that the Council's amendment of thelegal basis proposed by the Commission has affected its powers. It does not,however, state how the fact that the contested regulation does not contain anyspecific reasoning in that respect could in itself impair its prerogatives.
- It follows that, in so far as it is based on infringement of Article 253 EC, the actionis inadmissible.
- Article 228(3) of the Treaty provides that:
'The Council shall conclude agreements after consulting the European Parliament,except for the agreements referred to in Article 113(3) [now, after amendment,Article 133(3) EC], including cases where the agreement covers a field for whichthe procedure referred to in Article 189b [now, after amendment, Article 251 EC]or that referred to in Article [252 EC (ex Article 189c)] is required for the adoptionof internal rules. ...
By way of derogation from the previous subparagraph, agreements referred to inArticle [310 EC (ex Article 238)], other agreements establishing a specificinstitutional framework by organising cooperation procedures, agreements havingimportant budgetary implications for the Community and agreements entailingamendment of an act adopted under the procedure referred to in Article 189b shallbe concluded after the assent of the European Parliament has been obtained.
- The Parliament argues first of all that the Treaty on European Union hassubstantially increased its involvement in the conclusion of international
agreements, especially by enlarging the scope of the assent procedure. Its positionis therefore closer to that of the parliaments of the Member States, whose powersin the matter should serve as a frame of reference for the interpretation of thesecond subparagraph of Article 228(3) of the Treaty.
- The Parliament maintains, secondly, that by requiring its assent for the conclusionof agreements with important budgetary implications, that provision is intended tosafeguard its internal powers as a constituent part of the budgetary authority. Inthe light of that objective, it proposes that, in determining whether an agreementhas important budgetary implications, the criteria to be taken into account shouldinclude the fact that expenditure under the agreement is spread over several years,the relative share of such expenditure in relation to expenditure of the same kindunder the budget heading concerned, and the rate of increase in expenditure underthe agreement in question in relation to the financial section of the previousagreement.
- The Parliament goes on to state that the fisheries agreement with Mauritaniaundoubtedly satisfies those three criteria. First, it makes provision for financialcompensation split into five annual tranches, the amounts of which vary betweenECU 51 560 000 and ECU 55 160 000. Second, that financial compensationrepresents, for each of the years in question, more than 20% of the appropriationsentered under the budget heading concerned (heading B7-8000, 'Internationalfisheries agreements). Finally, the financial outlay in favour of the IslamicRepublic of Mauritania has increased more than fivefold in relation to the previousagreement, or has more than doubled if only the year 1995, which includedexceptional supplementary compensation, is used as the point of reference.
- The Council, supported by the Spanish Government, contends that the secondsubparagraph of Article 228(3) of the Treaty must be strictly interpreted, since itconstitutes a derogation from the rule laid down by the first subparagraph, wherebythe Council is to conclude agreements after consulting the Parliament.
- The Council considers, in that respect, that the criteria put forward by theParliament are inoperative. First, the fact that expenditure is spread over severalyears is not decisive, because the budget is, by definition, annual. Nor is the extentof the financial impact of the agreement in relation to expenditure of the samekind under the budget heading in question significant, given that budgetarynomenclature is capable of being altered under the budget procedure and that theamount of available appropriations may always be adapted by means of transfersor supplementary budgets. Finally, the rate of increase in expenditure is not veryrevealing, since a high rate may very well correspond to minimal expenditure.
- The Council therefore maintains that, in order to assess whether an agreement hasimportant budgetary implications, it is necessary to refer to the overall budget ofthe Community, and that it did not act in a manifestly erroneous and arbitrary
manner in seeking merely an opinion of the Parliament for a fisheries agreementunder which annual expenditure amounted to 0.07% of that budget.
- In the context of the organisation of powers in the Community, the choice of alegal basis for a measure must be based on objective factors which are amenableto judicial review (see, in particular, Case 45/86 Commission v Council  ECR1493, paragraph 11; Case C-22/96 Parliament v Council  ECR I-3231,paragraph 23; and Joined Cases C-164/97 and C-165/97 Parliament v Council ECR I-0000, paragraph 12).
- In order to assess whether an agreement has important budgetary implicationswithin the meaning of the second subparagraph of Article 228(3) of the Treaty, theCouncil has referred to the overall budget of the Community. It should be pointedout, however, that appropriations allocated to external operations of theCommunity traditionally account for a marginal fraction of the Community budget. Thus, in 1996 and 1997, those appropriations, grouped under subsection B7,'External operations, barely exceeded 5% of the overall budget. In thosecircumstances, a comparison between the annual financial cost of an agreement andthe overall Community budget scarcely appears significant, and to apply such acriterion might render the relevant wording of the second subparagraph of Article228(3) of the Treaty wholly ineffective.
- The Council maintains, however, that the criterion upon which it relies does nothave the effect of excluding the use of that legal basis altogether. In support ofthat view, it cites the Agreement on cooperation in the sea fisheries sector betweenthe European Community and the Kingdom of Morocco (OJ 1997 L 30, p. 5), thefinancial implications of which, amounting to 0.15% of the Community budgetannually, it acknowledged were important.
- The Council has not, however, explained in any way how such a small percentagecould render the financial implications of an agreement important, when thescarcely more insignificant figure of 0.07% is said to be insufficient in that respect.
- As regards the three criteria proposed by the Parliament, the Court finds that thefirst of them may indeed contribute towards characterising an agreement as havingimportant budgetary implications. Relatively modest annual expenditure may, overa number of years, represent a significant budgetary outlay.
- The second and third criteria put forward by the Parliament do not, however,appear to be relevant. In the first place, budget headings, which can moreover bealtered, vary substantially in importance, so that the relative share of theexpenditure under the agreement may be large in relation to appropriations of thesame kind entered under the budget heading concerned, even though theexpenditure in question is small. Moreover, the rate of increase in expenditure
under the agreement may be high in comparison with that arising from the previousagreement, whilst the amounts involved may still be small.
- As has been pointed out in paragraph 26 of this judgment, a comparison betweenthe annual financial cost of an international agreement and the overall budgetscarcely appears significant. However, comparison of the expenditure under anagreement with the amount of the appropriations designed to finance theCommunity's external operations, grouped under subsection B7 of the budget,enables that agreement to be set in the context of the budgetary outlay approvedby the Community for its external policy. That comparison thus offers a moreappropriate means of assessing the financial importance which the agreementactually has for the Community.
- Where, as in this case, a sectoral agreement is involved, the above analysis may, inappropriate cases, and without excluding the possibility of taking other factors intoaccount, be complemented by a comparison between the expenditure entailed bythe agreement and the whole of the budgetary appropriations for the sector inquestion, taking the internal and external aspects together. Such a comparisonmakes it possible to determine, from another angle and in an equally consistentcontext, the financial outlay approved by the Community in entering into thatagreement. However, since the sectors vary substantially in terms of theirbudgetary importance, that examination cannot result in the financial implicationsof an agreement being found to be important where they do not represent asignificant share of the appropriations designed to finance the Community'sexternal operations.
- In this case, the fisheries agreement with Mauritania was concluded for five years,which is not a particularly lengthy period. Moreover, the financial compensationfor which it makes provision is split into annual tranches the amounts of which varybetween ECU 51 560 000 and ECU 55 160 000. In respect of previous budgetaryyears, those amounts, whilst exceeding 5% of expenditure on fisheries, representbarely more than 1% of the whole of the payment appropriations allocated forexternal operations of the Community, a proportion which, whilst far fromnegligible, can scarcely be described as important. In those circumstances, if theCouncil had taken that comparison into account, it would also have been entitledto take the view that the fisheries agreement with Mauritania did not haveimportant budgetary implications for the Community within the meaning of thesecond subparagraph of Article 228(3) of the Treaty.
- Furthermore, the scope of that provision, as set out in the Treaty, cannot, despitewhat the Parliament suggests, be affected by the extent of the powers available tonational parliaments when approving international agreements with financialimplications.
- It follows from all the foregoing considerations that the Council was right toconclude the fisheries agreement with Mauritania on the basis, inter alia, of the first
subparagraph of Article 228(3) of the Treaty. This action must therefore bedismissed.
- Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to beordered to pay the costs if they have been applied for in the successful party'spleadings. Since the Council has applied for costs and the Parliament has beenunsuccessful, the Parliament must be ordered to pay the costs. In accordance withthe first subparagraph of Article 69(4) of the Rules of Procedure, the SpanishGovernment, which has intervened in the dispute, must bear its own costs.
On those grounds,
1. Dismisses the application;
2. Orders the European Parliament to pay the costs;
3. Orders the Kingdom of Spain to bear its own costs.
Moitinho de AlmeidaGulmann
Delivered in open court in Luxembourg on 8 July 1999.
G.C. Rodríguez Iglesias