Case C‑77/11, Council v. Parliament

Only President of European Parliament endowing EU budget with binding force


>> In this case, the Grand Chamber of the Court of Justice had to decide on Act 2011/125/EU, Euratom of the President of the European Parliament of 15 December 2010, by which the latter declared that the budgetary procedure initiated under Article 314 TFEU had been completed and that, accordingly, the European Union’s general budget for the financial year 2011 had been definitively adopted   
On 15 December 2009, the Council reminded the Parliament of the Council’s powers under the FEU Treaty as co-author of the legislative act establishing the budget by proposing that the President of the Parliament and the President of the Council should both sign the act establishing the budget.
Notwithstanding the Council’s request, on 17 December 2009 the President of the Parliament adopted and signed the Union’s annual budget for the financial year 2010 alone.
On 12 November 2010, in the course of the budgetary procedure for the financial year 2011, the President of the Council sent to the President of the Parliament a letter in which he pointed out that, following the entry into force of the Treaty of Lisbon, the President of the Council and the President of the Parliament were both required to sign the act establishing the European Union’s annual budget, since those two institutions are now co-authors of that act. That act is to be distinguished from the act of the President of the Parliament declaring, in accordance with Article 314(9) TFEU, that the budget has been definitively adopted.
Also on 15 December 2010, the contested measure was adopted. The single article of that measure, signed only by the President of the Parliament, provides that ‘[t]he procedure initiated under Article 314 TFEU has been completed and the Union’s general budget for the financial year 2011 has been definitively adopted’.
The Council submitted that the Treaty of Lisbon altered the budgetary procedure significantly, making the Parliament and the Council equal partners, inter alia, by abolishing the distinction between compulsory and non-compulsory expenditure and by providing that there was to be a single reading of the draft budget by the two institutions concerned.
In the view of the Council, the principal change was to be found in the introductory paragraph of Article 314 TFEU. That provision, read in conjunction with other Treaty provisions, now required the procedure to be concluded by the joint adoption of a legislative act bearing the signatures of the Presidents of both the institutions concerned. Accordingly, the practice under the Treaty establishing the European Community, whereby the President of the Parliament simply declared that the budgetary procedure had been completed, was. according to the Council, no longer applicable.
The Council argued hat the Union’s annual budget and amending budgets must now, as a result of the reform brought about by the Treaty of Lisbon, be established by a joint legislative act. The Council thus considered the case‑law established by the famous judgment in Case 34/86 Council v Parliament [1986] obsolete. In that case, the Court held that it is the President of the Parliament who formally declares that the budgetary procedure has been brought to a close by the final adoption of the budget and thus endows the budget with binding force vis-à-vis both the institutions and the Member States.
The Court held that the procedure for the establishment of the Union’s budget was governed by the provisions of Article 314 TFEU. The Court pointed out that introductory paragraph of Article 314 TFEU stated that the budget was to be adopted in accordance with a special legislative procedure. The Court held that it was apparent from the very wording of Article 314(9) TFEU that the act based on that provision concluded the procedure for the establishment of the Union’s budget and was signed only by the President of the Parliament.
The Court thus found that, contrary to contentions of the Council and the Kingdom of Spain, the budgetary procedure laid down in Article 314 TFEU was not concluded by an act jointly signed by the Presidents of the Parliament and the Council. It was the act based on Article 314(9) TFEU – by which the President of the Parliament declared, after verifying that the procedure had been conducted lawfully, that the budget had been definitively adopted – which constituted the final stage of the procedure for the adoption of the Union’s budget and endowed the budget with binding force.
The Court held that by stating that the Parliament and the Council were to establish the Union’s budget, the introductory paragraph of Article 314 TFEU served as a reminder that, in accordance with Articles 14(1) TEU and 16(1) TEU, budgetary functions were to be exercised jointly by those two institutions. However, the introductory paragraph of Article 314 TFEU stated that the budget was to be established ‘in accordance with the following provisions’. The Court stated that no provision in Article 314 TFEU provided for the adoption, at the end of the budgetary procedure, of an act which was to be signed by the Presidents of both the Parliament and the Council.
Accordingly, it was the President of the Parliament, in his capacity as organ of that institution, who, by adopting the act based on Article 314(9) TFEU, endowed the Union’s budget with binding force at the conclusion of a procedure characterised by the joint action of the Parliament and the Council 
The Council and the Kingdom of Spain also argued that the contested measure, which was adopted in accordance with a special legislative procedure, was unlawful because, contrary to the requirements of Articles 288 TFEU and 289(2) TFEU, it did not take the form of a regulation, directive or decision. The Court however, held that that argument also had to be rejected.
The Court held that even though the act based on Article 314(9) TFEU was the outcome of a special legislative procedure, it did not, due to the nature of the budget, take the form of a legislative act in the strict sense of the term for the purpose of Articles 288 TFEU and 289(2) TFEU, and was, in any event, a measure open to challenge for the purpose of Article 263 TFEU, since it endowed the Union’s budget with binding force.