EU LAW

THE TREATIES &

THEIR SIGNIFICANCE
Prepared by Subana Keris for ATC
subanakeris@atc2u.edu.my
Syllabus
■ The Treaties and their significance
■ The institutions of the EU Institutional and
constitutional law
■ The courts
■ The foundational principles of EU Law
■ Free movement of goods
■ Services and establishment
■ Free movement of capital
Substantive law, the four
■ Trade harmonization freedoms, competition,
■ Competition policy human rights, discrimination
■ Free movement of persons and citizenship
■ EU human rights

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Syllabus, Textbook(s), Online Sources
■ For further clarification on the content of each chapter, please refer to Pages 4, 5
and 6 of the 2021-2022 EU Law Module Guide provided by the University of London.
■ The core textbook recommended by the University of London for EU Law is Steiner &
Woods EU law, 14th Edition 2020 by Costa, M and S Peers.
■ The statute book for this module is Core EU legislation 2021–22 (Palgrave
Macmillan).
■ A list of further reading materials can be found on Page 7 of the 2021-2022 EU Law
Module Guide. Of these, my preferred option is EU Law: texts, cases and materials
by Craig, P. and G. de Burca, seventh edition.
■ A list of useful websites can be found on Page 7 of the 2021-2022 EU Law Module
Guide.

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General Guidance: Case Citations

■ Decisions of the ECJ and General Court are assigned a unique number.
– Each case number has two parts.
■ The first part refers to the court hearing the matter.
– Cases decided by the ECJ have a ‘C’.
– Cases decided by the ECJ have a Roman I before the page number.
– Cases decided by the General Court have a ‘T’.
– Cases decided before the General court have a Roman II before the number.
■ The second part indicates the year in which the case was registered in Court.
■ Case references will usually be to the European Court Reports (ECR).
■ In the exams, you are not required to cite the number or full name of the case.
– A shorter name of the case is sufficient.

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General Guidance: Terminology &
Abbreviations
■ Please refer to Page 9 of the 2021-2022 EU Law Module Guide provided by the
University of London.

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General Guidance: Learning Outcomes

■ Each chapter of the Module Guide sets out several learning outcomes.
■ The best way to prepare for the EU Law exam is to ensure you have met all of the learning outcomes.
■ For example, Chapter 2: The Treaties and Their Significance sets out 15 learning outcomes, including:
– Stating what the Council of Europe, the European Convention on Human Rights and the European
Court of Human Rights are;
– Explaining why the European Convention on Human Rights and the European Court of Human
Rights are not part of the European Union;
– Identifying the essential elements that create a common market.
■ Ensure you are able to do all these things before moving on to the next chapter.
– Even if something seems fairly basic and/or redundant, it will often be relevant and/or applicable
in a subsequent chapter.
■ The Module Guide also sets out ‘self-assessment questions’ and activities which will help you determine
if you are ready to move on.

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Background of the EU

■ There were six original Member States (Germany, France, Italy, Belgium, the Netherlands
and Luxembourg) and the Union slowly grew to include 28 Member States, until the UK
withdrew from the Union in 2018.
■ Within the boundaries of the EU, an internal market eliminating trade barriers between
the Member States was established.
■ A single set of trade rules applies across the EU. There is a Common Customs Tariff that
applies whenever goods from countries outside the Union enter its borders.
■ The European Economic Community (EEC) was created by the Treaty of Rome in 1956. it
had the aim of fostering economic growth and increased productivity among the six
participating Member States.
■ The EEC grew out of the success of the European Coal and Steel Community (ECSC)
which had been established among the same six countries.

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History of the EU

■ The ECSC was created to prevent another war in Europe by placing the production of
coal and steel under common control.
■ The six founding Member States of the European Communities signed the Treaty of
Paris in 1951, establishing the ECSC and created a common market in coal and
steel.
■ The ECSC created supranational institutions, the High Authority, an Assembly, a
Council and a Court with powers over the signatory states.
■ Later, the six founding Member States formed two further communities, the
European Atomic Energy Community (Euratom) and the EEC. Euratom was intended
to place the development of nuclear energy for peaceful purposes under the
common control of the Member States.

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History of the EU

■ The goal of the EEC was to establish a common market among the signatory states.
■ The Treaty of Rome, which established the EEC, was signed on 25 March 1957.
■ The aims of the Treaty of Rome were predominantly economic in nature. Indeed, the
common market was established to increase wealth, growth and productivity in Europe.
■ The EEC was renamed the European Community in 1993 to reflect the expansion of its
aims and competences which were no longer solely economic.
■ In 1993 the broader European Union was founded on the European Community and it
expanded the cooperation between the Member States beyond the areas covered by the
Treaty of Rome and into foreign policy, defence, policing and judicial cooperation.
■ The enhanced cooperation is governed by the TEU.

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Key Concept: ‘Internal Market’

■ An internal market is a form of economic integration between states.

■ It first requires the removal of customs duties between Member States.
– Goods produced in any Member State are free to circulate and move across
borders within the internal market without incurring customs duties.
■ Goods produced outside the internal market are subject to a Common Customs
Tariff.
– Goods imported into the internal market from third countries are subject to
customs duties at the same rate, regardless of which Member State they enter
the internal market through.
– Imported goods are free to circulate without incurring customs duties within
the internal market.

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Key Concept: ‘Internal Market’

■ The general principle behind the idea of an internal market is that there should be no
discrimination between Member States, Article 18 TEU.
■ Thus, the common market established by the Treaty of Rome guaranteed four freedoms:
– Free movement of goods;
– Free movement of persons;
– Free movement of services and freedom of establishment; and
– Free movement of capital.
■ The Treaty of Rome also contained provisions establishing a competition policy, currently Articles
101-109 TFEU.
– This is to protect the consumer from cartels and monopolies artificially inflating prices.
– It also ensures that the internal market is not partitioned by companies deciding to share out
national markets.

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Key Concept: ‘Internal Market’

■ The main benefits of an internal market:

– Companies can produce goods and sell them throughout the entire internal market.
– This leads to economics of scale, greater competitiveness, higher growth, greater incentive to
innovate.
– Consumers benefit because of lower prices and better choice.
■ The end result of an internal market is growth in productivity for all participating countries.
■ It was initially expected that the internal market would be partly achieved through the
harmonisation of standards across the Member States, through secondary legislation enacted by
the institutions of the Union. This, however, has been difficult to achieve, due to a lack of
agreement on common standards.
– Thus, the ECJ has generally led a movement towards deregulation, i.e. the removal of
national laws which create obstacles to free movement.

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History of the EU: A Summary

■ After WWII, the economies of the nation states of Europe were in shambles.
■ There was a need to:
– Rebuild the economic viability of the countries of Europe;
– Ensure autonomy in food supply;
– Ensure that another world war could never break out because of conflict between
Germany and France.
■ Thus, the six founding Member States:
– Signed a Treaty to place coal and steel under common ownership and control;
– Established a ‘common market’ within their borders;
– Created a common agricultural policy;
– Established Euratom.

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The Council of Europe

■ In 1949, the Council of Europe was established.

■ This is an organisation that is entirely separate from the European Community.
■ The Council of Europe is an international organisation based in Strasbourg, with the aims
of strengthening democracy, human rights and the rule of law.
■ The Council of Europe is responsible for the European Convention on Human Rights
(ECHR) which allows individuals from signatory countries who have exhausted their
domestic remedies to bring actions in the European Court of Human Rights (ECtHR) to
enforce human rights protected by the Convention.
■ The Council of Europe and the ECtHR are institutionally separate from the institutions
and the Court of Justice of the EU.
■ Note however, that Article 6(2) of the Treaty on European Union (TEU) provides that the
EU will accede to the ECHR.

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Accession of Member States in
Chronological Order
■ 1.1.1958 ■ 1.1.1981 – Hungary
– Belgium – Greece – Latvia
– France ■ 1.1.1986 – Lithuania
– Germany – Portugal – Malta
– Italy – Spain – Poland
– Luxembourg – Slovakia
■ 1.1.1995
– Netherlands – Austria – Slovenia
■ 1.1.1973 – Finland ■ 1.1.2007
– Denmark – Sweden – Bulgaria
– Ireland – Romania
■ 1.5.2004
– United Kingdom (left – Cyprus ■ 1.7.2013
on 31.1.2020)
– Czechia – Croatia
– Estonia
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Why is the history of the EU, its institutions
and the methodology of lawmaking
important?
■ The EU represents a new legal order.
– EU law is supreme over national law.
– Where there is conflict between national law and EU law, EU law prevails and
national law must be disapplied.
– The judgments of the ECJ are the ultimate authority in the judicial hierarchy of
all Member States.
– EU Law has become a part of domestic legal systems, where prior to the
formation of the EU, international law of this nature was treated as being
inferior to domestic law.

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Introduction

■ The EU was created by the Treaty on European Union (TEU, the Maastricht Treaty) in
1993.
■ The legal system of the EU has been termed ‘a new legal order’ and ‘sui generis’, i.e.
that it is of its own, unique type, not like any other legal system in the world.
■ The Member States are part of a supranational organisation which is governed by
several institutions to which the Member States have transferred certain powers and
to which they have given legislative competence, within limited areas. This
legislation is binding upon the Member States.

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Main Treaties in Chronological Order

Treaty establishing
Treaties of Rome:
the European Coal Merger Treaty – Single European
EEC and EURATOM
and Steel Brussels Treaty Act
treaties
Community

Treaty on European
Treaty of
Union – Maastricht Treaty of Nice Treaty of Lisbon
Amsterdam
Treaty

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Treaty establishing the European Coal
and Steel Community (ECSC Treaty)
■ Signed on 18 April 1951.
■ Entered into force on 23 July 1952.
■ Expired on 23 July 2002.
■ Purpose: to create interdependence in coal and steel so that one country would not be
able to mobilise its armed forces without others knowing. This was to ease distrust and
tensions after WWII.
■ Created four key institutions with legislative, executive and judicial powers:
– High Authority;
– Council of Ministers;
– European Assembly (later, European Parliament); and
– European Court of Justice.

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Treaties of Rome: EEC and EURATOM
treaties
■ Signed on 25 March 1957.
■ Entered into force on 1 January 1958.
■ Purpose: to set up the European Economic Community (EEC) and the European
Atomic Energy Community (Euratom).
■ Main changes: extended European integration to include general economic
cooperation.
■ Created an EEC and Euratom Commission in parallel to the High Authority of the
ECSC Treaty.
– The other institutions had their powers extended so that they could exercise
functions in respect of all three Communities.

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Treaties of Rome: EEC Treaty

■ The aims and objectives of the EEC were set out in the Preamble to the Treaty of Rome and in
Article 2.
– Preamble:
■ To “lay the foundations of an ever closer union among the peoples of Europe”;
■ “To ensure economic and social progress”;
■ To achieve “constant improvements of the living and working conditions of the peoples of Europe”.
– Article 2 of the original EEC Treaty:
■ The establishment of a common market was clearly stated as an aim.
■ The common market was to promote “harmonious development of economic activities, a continued
and balanced expansion, an increase in stability, an accelerated raising of the standard of living and
closer relations between the states belonging to it”.
■ The primary aims and objectives of the EEC were predominantly economic in nature, focused on
the creation of the common market.

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The EEC

■ The EEC was established to create a common market in Europe based on the principle of non-
discrimination between Member States (Article 18 TFEU), characterised by the four freedoms, a Common
Customs Tariff, a competition policy, rules on anti-dumping and state aids, a Common Commercial Policy
and Common Agricultural Policy, a Transport Policy and the Common Fisheries Policy.
■ The EEC had four key institutions, the Council, the Commission, the European Parliament and the Court of
Justice.
■ The Treaty:
– Sets out the structure and powers of the institutions;
– The competences of the Community;
– Its legislative and judicial processes; and
– Provides the legal base for secondary legislation.
■ However, it is a traité cadre, i.e. a framework treaty, meant to be completed by case law and secondary
legislation.

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Merger Treaty – Brussels Treaty

■ Signed on 8 April 1965.

■ Entered into force on 1 July 1967.
■ Purpose: to create a single Commission and a single Council to serve the then three
European Communities (EEC, Euratom, ECSC).
■ Repealed by the Treaty of Amsterdam.
■ Through the Merger Treaty, the High Authority of the ECSC was merged with the
Euratom and EEC Commissions to form the present European Commission and the
Council was joined with the Council of Ministers.

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The Luxembourg Accords: voting procedure,
qualified majority vote (QMV) and unanimity
■ Under the original Treaty of Rome, the Council (composed of representatives of the
Member States) was the key legislative body (note that legislation had to be initiated by
the Commission).
■ By virtue of ‘unanimity’, every country has a veto and no Member State is bound by any
measure which it opposes.
– Any Member State can be uncompromising.
■ Where the vote is by QMV, decision-making becomes supranational. Any country can be
overruled and become bound by a decision which it has opposed if the necessary
majority is in favour.
– Because no single Member State can block the passage of legislation, they are
pressured to reach workable compromises.
– This is easier to achieve than unanimity.

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The Luxembourg Accords: voting procedure,
qualified majority vote (QMV) and unanimity
■ The qualified majority voting mechanism for the EU is based on an allocation of votes per
Member State.
– The number of votes are allocated according to each country’s population.
– Voting weights are set out in Article 238 TFEU.
■ Under the Treaty of Rome, it was intended that after a transitional period, there would be
a shift from unanimous to qualified majority voting in many areas.
– However, France refused to give up the veto.
– Between 1965 and 1966, the protest took the form of the ‘empty chair’ policy –
French delegates refused to attend meetings in Council. This led to legislative
paralysis.
■ This was resolved in 1966 through the ‘Luxembourg Accords’ or the ‘Luxembourg
Compromise’ – where a matter was considered to concern important national interests,
discussion would continue until agreement was reached.

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Single European Act (SEA)

■ Signed on 17 February 1986 (Luxembourg) | 28 on February 1986 (The Hague).

■ Entered into force on 1 July 1987.
■ Purpose: to reform the institutions in preparation for Portugal and Spain’s
membership and to speed up decision-making in preparation for the single market.
■ Main changes:
– Extension of qualified majority voting in the Council to make it more difficult for
a single country to veto proposed legislation.
– Creation of the cooperation and assent procedures, giving Parliament more
influence.

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Single European Act (SEA)

■ The SEA amended the Treaty of Rome, partly due to the publication of a White Paper
by the Commission, which set out the trade barriers which still existed within the
common market.
■ The White Paper concluded that all Member States would greatly benefit if these
barriers were removed.
■ Thus, a program to complete the formation of the ‘single’ or ‘internal’ market by
31.12.1992 was launched.
■ To achieve this target, the SEA introduced QMV for measures to complete the single
market in what is now Article 114 TFEU.
– This broke the deadlock in the Council.

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Single European Act (SEA)

■ The SEA also introduced a new legislative procedure – the cooperation procedure.
– This procedure greatly increased the role of the Parliament.
– Previously the Parliament’s key involvement had been the right to be consulted
on legislation, where there was provision in the Treaty.
■ The cooperation procedure has generally been replaced by the ‘co-decision’
procedure throughout the Treaties.
– However, the cooperation procedure was a significant and important step in
the enhancement of the powers of the European Parliament.
■ The SEA also began the process of enlarging the competence of the Community.
– It added research and development, economic and social cohesion and
environmental policy to the competences set out in Article 2.

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Single European Act

■ The SEA prepared for the introduction of the Court of First Instance, now known as
the General Court of the European Union.
■ The SEA referred to the European Council and placed its meetings on a formal
footing.
– The European Council is now one of the institutions of the Community.

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Treaty on European Union (TEU) –
Maastricht Treaty
■ Signed on 7 February 1992.
■ Entered into force on 1 November 1993.
■ Purpose: to prepare for the European Monetary Union and to introduce elements of
a political union (citizenship and a common foreign and internal affairs policy).
■ Main changes:
– Establishment of the European Union and introduction of the co-decision
procedure to give Parliament more say in decision-making.
– Created new forms of cooperation between EU governments, e.g. on defence,
justice and home affairs.

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Treaty on European Union (TEU) –
Maastricht Treaty
■ The TEU faced several challenges:
– There was a ‘no’ vote in a Danish referendum on whether to ratify the treaty;
– There were legal challenges in the UK (R v Secretary of State for Foreign and
Commonwealth Affairs ex parte Rees-Mogg) and in Germany (Brunner v
European Union Treaty).
■ The TEU created the EU with a three-pillar structure, substantially amended the
Treaty of Rome by adding citizenship, subsidiarity, economic and monetary union,
new competences, a new legislative procedure (co-decision – making the Parliament
a co-legislator) and strengthened the European Parliament in other ways.
■ The TEU also renamed the EEC – it became the European Community, to reflect its
wider sphere of influence.

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Establishment of the European Union

■ The TEU created the EU.

■ The first pillar of the EU is comprised of the EC, ECSC and Euratom.
■ The second pillar of the EU is the Common Foreign and Security Policy (CFSP).
■ The third pillar of the EU is Justice and Home Affairs (JHA, referred to as the ‘Police
and Judicial Co-operation in Criminal Matters’ (PJCCM) in the Nice Treaty).
■ Pillars two and three are not governed by the same law and institutional framework
as pillar one. Pillars two and three are intergovernmental in nature.

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Establishment of the European Union:
Pillar 2 - CFSP
■ The CFSP was the beginning of a common foreign and defence policy for the EC.
■ As this was a delicate area that affects national sovereignty, the framework of this
pillar was intergovernmental.
■ Leading institution – the Council.
■ Default method of voting – by unanimity.

33
Establishment of the European Union:
Pillar 3 – JHA/PJCCM
■ The focus here is on policy matters regarding the movement of persons across
borders.
– This includes asylum, immigration and third-country nationals, the control of
international crime and cooperation by police and judicial authorities.

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Abolishment of the three-pillar structure

■ The Treaty of Lisbon abolished the three-pillar structure.

■ Former third pillar matters are now a part of the Treaty of Lisbon.

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Changes to the Treaty of Rome by the
TEU
■ The TEU substantially amended the Treaty of Rome.
– It introduced citizenship of the Union, Articles 20-25 TEU;
– It introduced the principle of subsidiarity, Article 5 TEU;
■ Decisions should be taken at the lowest possible level, as close as possible to the
individual.
■ In areas of shared competence between the Member States and the EU, decisions
should be taken at the Member State level except where the objectives of the
action cannot be sufficiently achieved by action by the Member States and for
reasons of scale or efficiency should be dealt with at the Union level.
– It introduced the Economic and Monetary Union (EMU), Articles 120-144 TEU;
■ Introduced the aim of establishing EMU and of introducing a common currency.

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Changes to the Treaty of Rome by the
TEU
– It added new competences:
■ Article 2 was amended to include convergence of economic policies, social protection,
economic and social cohesion;
■ Article 3 was amended to include environment, health, education and training, flowering
of cultures of Member States, development cooperation, consumer protection, energy,
civil protection and tourism;
■ The co-decision procedure was introduced by the TEU, making the European Parliament
a co-legislator with the Council. The Parliament now has a veto over legislation.
– The Parliament was strengthened by enabling it to:
■ Request the Commission to initiate legislative proposals;
■ Appoint an Ombudsman.
– The Commission as a whole was made subject to a vote of approval by the
Parliament.

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Treaty of Amsterdam (TOA)

■ Signed on 2 October 1997.

■ Entered into force on 1 May 1999.
■ Purpose: to reform the EU institutions in readiness for the arrival of future member
countries.
■ Main changes:
– Amendment, renumbering and consolidation of the EU and EEC treaties.
– More transparent decision-making through the increased use of the ordinary
legislative procedure.

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Changes to the Treaty of Rome by the
TOA
■ TOA added new aims and objectives to Article 2:
– Equality between men and women, sustainable development, a high level of
protection and improvement of the environment.
■ TOA simplified the co-decision legislative procedure and widened the scope of
application of the co-decision procedure.
■ TOA introduced a new competence to combat discrimination, through Article 13 EC.
– The Council was given powers to ‘take appropriate action to combat discrimination
based on sex, racial or ethnic origin, religion or belief, disability, age or sexual
orientation’.
■ TOA introduced ‘variable geometry’, a new institutional procedure allowing groups of
Member States to act on initiatives together, within the EU framework, to establish closer
cooperation.

39
Changes to the Treaty of Rome by the
TOA
■ TOA strengthened the powers of the European Parliament vis-à-vis the appointment of
the Commission;
– Article 214 EC was amended so that the European Parliament’s approval is now
required for the appointment of the President of the Commission.
■ TOA provided for increased transparency and protection of liberty, democracy and human
rights;
– Article 1 TEU: decisions are to be taken ‘as openly as possible’;
– Article 2 TEU: introduced the aim of inter alia, maintaining and developing the
Union as an area of ‘freedom, security and justice’;
– Article 6 TEU: the Union is founded on principles of liberty, democracy, respect for
human rights and fundamental freedoms and the rule of law;
– Article 7 TEU: ‘serious and persistent breach’ of these principles leads to
suspension of rights for a Member State.

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Treaty of Nice (TON)

■ Signed on 26 February 2001.

■ Entered into force on 1 February 2003.
■ It remained in force until the ratification process of the Treaty of Lisbon was
complete.
■ Purpose: to reform the EU institutions so that the EU could function efficiently after
accepting its 25th Member State.
■ Main changes:
– Methods for changing the composition of the Commission.
– Redefined the voting system in the Council.

41
Changes made by the Treaty of Nice

■ Changes made were primarily to cater for an expanded and growing EU pending
further enlargement.
■ Thus, there were changes to the composition of the Commission, the European
Parliament’s distribution of seats and the allocation of votes in the Council.
■ The European Parliament became a privileged applicant for bringing an action for
judicial review.
■ Changes were introduced to the judicial structure to address the problem of a large
and persistent backlog of cases.
■ The procedure for setting up variable geometry was simplified by the TON.

42
Draft Treaty Establishing a Constitution
for Europe
■ After TON, there was a calling together of a Convention to consider the future of Europe.
■ This resulted in the Draft Treaty Establishing a Constitution for Europe.
■ It was adopted by all Member States in 2004 but there were issues with ratification.
– A number of Member States ratified, but the text of the Draft Treaty was rejected in
referenda held in France and the Netherlands.
– The European Council then had to search for a compromise which would take note
of the fact that the ratification process had been completed in several Member
States but the remaining had reservations.
– A new Treaty was drafted and signed, i.e. the ‘Reform Treaty’ or the Lisbon Treaty.
■ Note: you are expected to know about the events of the three years leading up to the
rejection of the Constitution and the subsequent adoption and ratification of the Lisbon
Treaty.

43
Treaty of Lisbon (TOL)
■ Signed on 13 December 2007.
■ Entered into force on 1 December 2009.
■ Purpose: to make the EU more democratic, more efficient and better able to address global
problems, such as climate change in a unified fashion.
■ Main changes:
– More power for the European Parliament.
– Changes of voting procedures in the Council.
– Citizens’ initiative.
– A permanent president of the European Council.
– A new High Representative for Foreign Affairs.
– A new EU diplomatic service.
■ The Treaty of Lisbon clarifies which powers belong to the EU, belong to EU member countries and
are shared.
■ The goals and values of the EU are set out in both the Lisbon Treaty and the EU Charter of
Fundamental Rights.

44
Treaty of Lisbon

■ This Treaty amended the Treaty on European Union and the Treaty on the
Functioning of the European Union.
■ It was established on the basis of a comparison between the Constitutional Treaty
and the existing Treaties.
■ A key difference between the TOL and the Constitution is that it does not claim to be
constitutional.
■ The supremacy of EU law is no longer expressly contained in the Treaty. Instead, a
Declaration stipulates that the supremacy of CJEU case law has been explicitly
defined.
■ The TOL is presented as a Treaty amending the previous treaties in force, not as a
text replacing them.

45
Treaty of Lisbon: Changes

■ The TEU retains its title.

■ The Treaty establishing the European Community was retitled to the ‘Treaty on the
Functioning of the European Union’ (TFEU). It contains articles on institutional
procedures and policies of the Union.
■ The new Treaty includes previous pillar areas in which the EU had little involvement.
■ References to the EC were removed.
■ The ‘three-pillar’ structure was removed.

46
Treaty of Lisbon: Changes

■ The TOL made changes with respect to, inter alia:

– Presidency of the European Council;
– The extended scope of QMV;
– The scope of co-decision with the European Parliament; and
– Specific definition of Member State and EU competences.
■ The TOL also:
– Accorded binding force to the Charter of Fundamental Rights;
– Gave the EU a legal personality;
– Made a commitment to negotiate for EU accession to the ECHR; and
– Amended EU accession conditions.

47
The Fiscal Compact Treaty

■ The future of the Eurozone was uncertain due to a sovereign debt crisis.
– Sovereign bond market pressures revealed the unstable condition of the finances
of several Member States.
– Thus, the European Financial Stability Facility (EFSF) was established in 2010 to
help Eurozone states in difficulty and bailouts were organised by the EU and the
IMF.
– However, the EFSF did not have enough money to bail out all the Eurozone states in
danger and there was a general crisis in confidence.
■ After several initiatives, a proposal for a Fiscal Compact was adopted under which
participating Member States would submit to a requirement for national budgets to be in
balance or surplus and to a system of surveillance with penalties for states in breach.

48
The Fiscal Compact Treaty

■ The Fiscal Compact Treaty or ‘Treaty on Stability, Coordination and Governance in

the Economic and Monetary Union’ has several main tenets:
– The Member States have committed to a budgetary position in ‘balance or in
surplus’.
– The Treaty requires participating States to pass a national law or an
amendment of the national constitution that limits the structural budget
deficit.
– The Treaty extended the jurisdiction of the CJEU. A Member State can bring an
action against another Member State if it believes that the other state has not
fulfilled its duties to balance its budget.
– The Treaty provides for an excessive deficit procedure.

49
The Fiscal Compact Treaty

■ The European stability mechanism (ESM) was created.

■ See: European Council Decision 2011/199, which provided for an addition to the Treaty
of a new provision – Member States whose currency is the euro may establish a ESM to
be activated if indispensable to safeguard the stability of the euro area as a whole.
■ The Treaty amendment was adopted under a simplified revision procedure.
■ On 2 February 2012, the euro area Member States concluded the Treaty establishing the
ESM.
■ The ESM is meant to make available funding and provide stability support under strict
conditionality, appropriate to the financial assistance instrument chosen, to the benefit
of ESM Members which are experiencing or fearing severe financial problems.
■ The support will only be granted if indispensable to safeguard the financial stability of
the euro area as a whole and of its Member States.

50
The ESM: Challenged before the ECJ

■ An action was brought before the Irish court to the effect that the amendment of the
Treaties ought to have taken place through the ordinary (not the simplified) revision
procedure. Accordingly, it was argued that the European Council Decision was not validly
adopted.
■ It was argued that the ESM Treaty itself was substantively incompatible with economic
policy provisions of the TEU.
■ The Irish court referred the question to the ECJ which dismissed the action.
■ The ECJ held in Pringle v Ireland that Decision 2011/199 applied to the internal policies
and actions of the EU and did not increase the competences conferred on the EU in the
Treaties. Accordingly it was lawfully adopted under the simplified revision procedure.
■ The Court also rejected the argument that the ESM Treaty was incompatible with
obligations under the EU Treaties.

51
Brexit – does it matter?

■ No, except insofar as EU law has changed.

■ The module is focused on EU law, not on the
UK’s position vis-à-vis EU law.
■ The only changes you would need to be
aware of are:
– The UK now has the status of a third
country.
– If the UK is mentioned in a problem
question, do not treat them as a
Member State!
– Note: in exam questions set prior to
Brexit, the UK was and should be
considered a Member State.
– However, from 31.1.2020, the UK is
no longer a part of the EU.

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Exiting the European Union

■ In June 2016, the UK voted to leave the EU in a referendum.

■ The focus here is on what the economic, political and legal landscape will look like now that Article 50
TEU has been triggered.
■ Article 50 sets out the procedure by which a Member State can withdraw from the EU.
– Article 50 only provides for a set of procedural rules.
– It does not set out the substantive conditions of withdrawal.
■ The essential procedural steps to exit the EU are:
– Notification of withdrawal;
– Negotiation of a withdrawal agreement;
– Either the conclusion of such an agreement or automatic exit of the withdrawing Member State.
■ Article 50(1) provides that a Member State may decide to withdraw from the Union in accordance with its
own constitutional requirements.

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Exiting the European Union

■ In Miller v Secretary of State for the European Union (2016), the issues raised
concerned the sovereignty of Parliament, constitutional law and democracy.
– The judges agreed with the claimants that the scope of government powers
(the Royal Prerogative) is not wide enough to cover the triggering of Article 50
because withdrawal would change domestic law and remove or limit the rights
created by EU law.
– Thus, Parliamentary intervention is necessary.
■ The Supreme Court confirmed this ruling in R (Miller) v Secretary of State for Exiting
the EU (2017).
■ Thus, on 29 March 2017, after obtaining a vote in Parliament, the UK notified the
European Council of the EU of its intention to leave the EU.

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Exiting the European Union: can a
withdrawing Member State revoke their
notice submitted under Article 50 TFEU?
■ In Wightman & Others v Secretary of State for Exiting the European Union, the issue
was whether “where, in accordance with Article 50 [TEU], a Member State has
notified the European Council of its intention to withdraw from the European Union,
does EU law permit that notice to be revoked unilaterally by the notifying Member
State; and, if so, subject to what conditions and with what effect relative to the
Member State remaining within the European Union”.
■ The Court held that Article 50 does allow for the unilateral revocation of the
notification of the intention to withdraw from the EU.

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Exiting the European Union: can a
withdrawing Member State revoke their
notice submitted
■ The Court also said that:
under Article 50 TFEU?
– Revocation will be possible until a withdrawal agreement has entered into force,
provided that the revocation has been decided upon in accordance with the
Member State’s constitutional requirements and is formally notified to the
European Council.
– The revocation must be done within the two-year time frame stipulated in the
Article, unless extended.
– Unilateral revocation is to be done in an unequivocal and unconditional manner.
– The purpose of such revocation is to confirm that the Member State concerned
continues its membership under the same terms by which it has been a Member
State.
– There is thus no change in its status by virtue of the fact that it tried to leave the
Union.

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Exiting the European Union: The UK
perspective
■ The official position adopted by the UK in relation to the withdrawal process was
expressed in the two White Papers of 2 February 2017(‘The United Kingdom’s exit
from and new partnership with the European Union’) and 30 March 2017
(‘Legislating for the United Kingdom’s withdrawal from the European Union’).
■ In the February White Paper, the government stipulated that one of the priorities is
to provide ‘business, the public sector and the public with as much certainty as
possible’.
■ As such, the government would introduce the Great Repeal Bill to remove the
European Communities Act 1972 from the statute book and convert the ‘acquis’ –
the body of existing EU law – into domestic law.

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Exiting the European Union: The UK
perspective
■ Thus, “wherever practical and appropriate, the same rules and laws will apply on the day
after we leave the EU as they did before… This approach will preserve the rights and
obligations that already exist in the UK under EU law and provide a secure basis for
future changes to our domestic law. This allows businesses to continue trading in the
knowledge that the rules will not change significantly overnight and provides fairness to
individuals whose rights and obligations will not be subject to sudden change”.
■ This approach was crystallised into the EU Withdrawal Act 2018.
– Main function: to repeal the European Communities Act 1972.
– Aim: to ‘domesticate’ existing EU law provisions into UK law to ensure a smooth
transition.
■ However, the Act grants wide powers to the government to ‘correct’ retained EU law, i.e.
repeal powers and the power to amend specific areas or provisions.

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Exiting the European Union: The
negotiations
■ There were two phases of negotiations:
– First, aimed at concluding an agreement dealing with specific aspects to guarantee
an orderly withdrawal. Culminated in the EU-UK Withdrawal Agreement.
■ The aspects were identified by the European Council and the European Commission,
later accepted by the UK and included:
– Reciprocal protection for Union and UK citizens to enable the effective exercise of
rights derived from Union law and based on previous live choices, provided those
citizens have exercised their free movement rights by a given date;
– The status of Northern Ireland;
– Financial settlement of the UK contributions to the EU.
– Second, focused on the future relationship between the EU and the UK.

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Test yourself!

■ Complete:
– The self-assessment questions on Page 14 of the Module Guide;
– Activity 2.1 on Page 17 of the Module Guide;
– Activity 2.2 on Page 17 of the Module Guide;
– Activity 2.3 on Page 24 of the Module Guide;
– Activity 2.4 on Pages 25-26 of the Module Guide;
– Activity 2.5 on Page 26 of the Module Guide; and
– The quick quiz on Page 29 of the Module Guide.

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Questions?

■ Feel free to contact me at subanakeris@atc2u.edu.my

■ Please clearly state your name, centre (ATC KL) and module (EU Law) in your email.

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