Council of the European Union v European Commission (C-409/13)

Contents

Judgment of the Court (Grand Chamber)14 April 2015^note(Action for annulment — Macro-financial assistance to third countries — Decision of the Commission to withdraw a proposal for a framework regulation — Articles 13(2) TEU and 17 TEU — Article 293 TFEU — Principle of conferral of powers — Principle of institutional balance — Principle of sincere cooperation — Article 296 TFEU — Obligation to state reasons)In Case C‑409/13,ACTION for annulment under Article 263 TFEU, brought on 18 July 2013,Council of the European Union, represented by G. Maganza, A. de Gregorio Merino and I. Gurov, acting as Agents,Czech Republic, represented by M. Smolek, J. Vláčil and J. Škeřík, acting as Agents,Federal Republic of Germany, represented by T. Henze, acting as Agent,Kingdom of Spain, represented by M. Sampol Pucurull, acting as Agent,French Republic, represented by G. de Bergues, D. Colas and N. Rouam, acting as Agents,Italian Republic, represented by G. Palmieri, acting as Agent, and P. Gentili, avvocato dello Stato, with an address for service in Luxembourg,Kingdom of the Netherlands, represented by M. Bulterman, B. Koopman and J. Langer, acting as Agents,Slovak Republic, represented by B. Ricziová, acting as Agent,Republic of Finland, represented by H. Leppo, acting as Agent,Kingdom of Sweden, represented by U. Persson and A. Falk, acting as Agents,United Kingdom of Great Britain and Northern Ireland, represented by V. Kaye, acting as Agent, and R. Palmer, Barrister,vEuropean Commission, represented by B. Smulders, P. Van Nuffel and M. Clausen, acting as Agents, with an address for service in Luxembourg,THE COURT (Grand Chamber),composed of V. Skouris, President, K. Lenaerts (Rapporteur), Vice-President, M. Ilešič, L. Bay Larsen, T. von Danwitz, C. Vajda, S. Rodin and K. Jürimäe, Presidents of Chambers, A. Rosas, E. Juhász, A. Borg Barthet, J. Malenovský, E. Levits, J.L. da Cruz Vilaça and F. Biltgen, Judges,Advocate General: N. Jääskinen,Registrar: V. Tourrès, Administrator,having regard to the written procedure and further to the hearing on 23 September 2014,after hearing the Opinion of the Advocate General at the sitting on 18 December 2014,gives the following

Judgment

1By its application, the Council of the European Union seeks the annulment of the decision of the European Commission of 8 May 2013 by which it withdrew its proposal for a regulation of the European Parliament and of the Council laying down general provisions for macro-financial assistance to third countries (‘the contested decision’).

Background to the dispute and the contested decision

Proposal for a framework regulation

2Macro-financial assistance (‘MFA’) has the aim of granting financial assistance of a macro-economic nature to third countries that are experiencing short-term balance of payments difficulties. Initially, it was granted by Council decisions adopted, case by case, on the basis of Article 235 of the EC Treaty and then of Article 308 EC (provisions to which Article 352 TFEU corresponds). Since the entry into force of the Treaty of Lisbon, MFA has been granted by decisions taken case by case, on the basis of Article 212 TFEU, by the European Parliament and the Council in accordance with the ordinary legislative procedure, without prejudice to the urgency procedure provided for in Article 213 TFEU.

3On 4 July 2011, the Commission submitted a proposal for a regulation of the European Parliament and of the Council, founded on Articles 209 TFEU and 212 TFEU, laying down general provisions for macro-financial assistance to third countries (‘the proposal for a framework regulation’).

4Recitals 2 to 4, 6 to 8 and 13 of the proposal for a framework regulation stated:(2) At present, macro-financial assistance to third countries is based on ad-hoc country specific decisions of the European Parliament and of the Council. This reduces the efficiency and effectiveness of the assistance by causing unnecessary delays between requests for macro-financial assistance and their actual implementation.(3) A framework for delivering macro-financial assistance to third countries with which the Union has important political, economic and commercial ties should make the assistance more effective. In particular, it should be possible to provide macro-financial assistance to third countries to encourage them to adopt economic policy measures likely to solve a balance of payments crisis.(4) The European Parliament, in its resolution on the implementation of macro-financial assistance to third countries of 3 June 2003 …, called for a framework regulation for macro-financial assistance in order to expedite the decision-making process and provide this financial instrument with a formal and transparent basis....(6) In 2006, the Union overhauled and streamlined its external assistance framework to make it more effective. For all the key external financial instruments, it adopted framework regulations granting implementation powers to the Commission. The only major instrument that does not currently have a framework regulation is macro-financial assistance.(7) In its conclusions of 8 October 2002, the Council established criteria (the so-called Genval criteria) to guide the EU’s macro-financial assistance operations. … It is appropriate to formalise these criteria in a legal act endorsed by both the Parliament and the Council while updating and clarifying them.(8) Appropriate procedures and instruments should be provided for in advance to enable the Union to ensure that macro-financial assistance can be made available expeditiously, especially when circumstances call for immediate action. This would also increase the clarity and transparency of the criteria applicable to the implementation of macro-financial assistance....(13) Macro-financial assistance should be complementary to the resources provided by the International Monetary Fund and other multilateral financial institutions and there should be a fair burden sharing with other donors. Macro-financial assistance should ensure the added value of the involvement of the Union.’

5Article 1 of the proposal for a framework regulation, entitled ‘Aim and scope of the assistance’, provided:1. This Regulation lays down general provisions for the granting of macro-financial assistance to eligible third countries and territories as set out in Article 2.2. Macro-financial assistance shall be an exceptional financial instrument of untied and undesignated balance-of-payments support to eligible third countries and territories. It shall aim at restoring a sustainable external finance situation for countries facing external financing difficulties. It shall underpin the implementation of strong adjustment and structural reform measures designed to remedy balance of payments difficulties.3. Macro-financial assistance may be granted on condition of the existence of a significant and residual external financing gap jointly identified with the multilateral financial institutions over and above the resources provided by the International Monetary Fund (IMF) and other multilateral institutions, despite the implementation of strong economic stabilisation and reform programmes.4. Macro-financial assistance shall be of a temporary nature and shall be discontinued as soon as the beneficiary country’s external financial situation has been brought back into a sustainable situation.’

6Article 2 of the proposal for a framework regulation related to the countries eligible for MFA and referred, in that regard, to Annex I, entitled ‘Countries and territories eligible under Article 2(a) and (b)’. It provided also for the possibility of granting such assistance to third countries other than those referred to in that annex, in exceptional and duly justified circumstances and as long as those countries were politically, economically and geographically close to the European Union.

7Article 3 of that proposal governed the form of MFA (a loan, a grant or a combination of both) and the manner in which it was to be financed.

8Article 4 of that proposal set out the conditions for ensuring the compatibility of MFA with the relevant financial provisions in EU law. Article 5 laid down the rules for determining the amount of MFA.

9Article 6 of the proposal, entitled ‘Conditionality’, provided:1. A pre-condition for granting macro-financial assistance shall be that the recipient country respects effective democratic mechanisms, including multi-party parliamentary systems, the rule of law and respect for human rights.2. Macro-financial assistance shall be conditional on the existence of an IMF programme entailing the use of IMF resources.3. The disbursement of the assistance shall be conditional on a satisfactory track record of an IMF programme. It shall also be conditional on the implementation, within a specific time frame, of a series of clearly defined economic policy measures focusing on structural reforms, to be agreed between the Commission and the beneficiary country and to be laid down in a Memorandum of Understanding.4. With a view to protecting the Union’s financial interests and reinforcing beneficiary countries’ governance, the Memorandum of Understanding shall include measures aiming at strengthening the efficiency, transparency and accountability of public finance management systems.5. Progress on mutual market opening, the development of rules-based and fair trade and other priorities in the context of the Union’s external policy should also be duly taken into account in designing the policy measures.6. The policy measures shall be consistent with the existing partnership agreements, cooperation agreements or association agreements concluded between the Union and the beneficiary country and with the macroeconomic adjustment and structural reform programmes implemented by the beneficiary country with the support of the IMF.’

10Article 7 of the proposal for a framework regulation related to the procedure for granting MFA.

11Article 7(1) of that proposal provided that the country seeking to be granted MFA was to send a request in writing to the Commission.

12Article 7(2) of the proposal, read in conjunction with Article 14(2), provided that, if the conditions referred to in Articles 1, 2, 4 and 6 were met, the assistance requested was to be granted by the Commission acting in accordance with the ‘examination’ procedure established in Article 5 of Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (OJ 2001 L 55, p. 13).

13Article 7(3) of the proposal related to the details that had to be included in, respectively, a decision to provide a loan and a decision to provide a grant. That provision stated that, in both cases, the period of availability of the MFA could not, as a rule, exceed three years.

14Article 7(4) of the proposal, read in conjunction with Article 14(3), provided that, following the approval of the decision granting MFA, the Commission, acting in accordance with the ‘advisory’ procedure established in Article 4 of Regulation (EU) No 182/2011, was to agree with the third country the policy measures referred to in Article 6(3) to (6) of the proposal.

15Article 7(5) of the proposal provided that, following the approval of the decision granting MFA, the Commission was to agree the detailed financial terms of that assistance with the beneficiary in a grant or loan agreement.

16Articles 8 and 9 of the proposal entrusted the Commission with the responsibility for implementation, financial management and disbursement of MFA and with the power to suspend, reduce or cancel such disbursement in certain situations. Article 10 of the proposal related to support measures.

17Finally, Article 11 of the proposal was devoted to protection of the European Union’s financial interests, Article 12 to evaluation of the efficiency of MFA and Article 13 to the annual report on implementation of MFA.

Inter-institutional negotiations relating to the proposal for a framework regulation

18After several meetings of the Council’s Working Party of Financial Counsellors, the proposal for a framework regulation was the subject of a ‘general approach’ of the Council, which was approved by the Permanent Representatives Committee (Coreper) on 15 December 2011. In that ‘general approach’, the Council suggested in particular, so far as concerns Article 7(2) of the proposal, that the conferral of implementing power on the Commission be replaced by application of the ordinary legislative procedure for the purpose of the adoption of each decision granting MFA.

19At its plenary sitting of 24 May 2012, the Parliament adopted the report of its Committee on International Trade relating to the proposal for a framework regulation. That report proposed, inter alia, that delegated acts be used for the adoption of each decision granting MFA.

20The first three tripartite meetings between the Parliament, the Council and the Commission, held on 5 and 28 June and 19 September 2012, confirmed the divergences in those three institutions’ views on the issue of the procedure for granting MFA set out in Article 7 of the proposal for a framework regulation. In particular, the Parliament and the Council expressed their concern regarding insufficient political and democratic scrutiny of the decision-making process provided for in that article.

21In January 2013, the Commission put forward, for the purpose of the fourth tripartite meeting, a working document entitled ‘Landing zone on implementing acts, delegated acts and co-decision in the MFA Framework Regulation’, which was designed to reconcile the respective positions of the three institutions concerned on that issue and to address the concerns of the Parliament and the Council.

22The result of the negotiations which took place at the fourth tripartite meeting, on 30 January 2013, was that the Parliament and the Council were able to agree on a solution consisting, within the framework of the proposed regulation, in using the ordinary legislative procedure for the adoption of each decision granting MFA, in providing for a Commission implementing act for adoption of the memorandum of understanding with the beneficiary country and in delegating to the Commission the power to adopt certain acts connected with the MFA granted.

23At the fifth tripartite meeting, which was held on 27 February 2013, the representatives of the Parliament and the Council confirmed their intention to retain use of the ordinary legislative procedure for the adoption of each decision granting MFA. The representative of the Commission stated that, as such an approach distorted the proposal for a framework regulation, the Commission could envisage withdrawing that proposal.

24The replacement of implementing power of the Commission with the ordinary legislative procedure for the purpose of the adoption of decisions granting MFA was agreed in principle between the Parliament and the Council, an agreement which was expressed at the 6th tripartite meeting on 25 April 2013. On that occasion, the representative of the Commission officially indicated the latter’s disagreement with that approach, stating that the Commission might consider withdrawing the proposal for a framework regulation if use of the ordinary legislative procedure were retained for the adoption of each decision granting MFA, since, according to the Commission, such an alteration would distort that proposal and give rise to significant constitutional problems.

25In a letter to Mr Rehn, the Vice-President of the Commission, dated 6 May 2013, the Chairman of Coreper, while deeply regretting the announcement made by the representative of the Commission at the sixth tripartite meeting, requested the Commission to reconsider its position, having regard, in particular, to the fact that agreement between the Parliament and the Council appeared very close.

26By letter of 8 May 2013, Mr Rehn informed the President of the Parliament and the President of the Council that, at its 2045th meeting, the College of Commissioners had decided, in accordance with Article 293(2) TFEU, to withdraw the proposal for a framework regulation.

Forms of order sought and procedure before the Court

27The Council claims that the Court should annul the contested decision and order the Commission to pay the costs.

28The Commission contends that the Court should dismiss the action as unfounded and order the Council to pay the costs.

29The Czech Republic, the Federal Republic of Germany, the Kingdom of Spain, the French Republic, the Italian Republic, the Kingdom of the Netherlands, the Slovak Republic, the Republic of Finland, the Kingdom of Sweden and the United Kingdom of Great Britain and Northern Ireland were granted leave to intervene in support of the form of order sought by the Council.

The action

30The Council sets out three pleas in law in support of its action. The first plea alleges infringement of the principle of conferral of powers laid down in Article 13(2) TEU and of the principle of institutional balance. The second plea alleges infringement of the principle of sincere cooperation laid down in Article 13(2) TEU. The third plea alleges infringement of the obligation to state reasons, laid down in the second paragraph of Article 296 TFEU.

Arguments of the parties

31In the context of the first plea, the Council and all the intervening Member States contend that the Commission infringed, in this instance, the principle of conferral of powers which is laid down in Article 13(2) TEU, a principle that reflects the principle of institutional balance.

32In the first place, the Council and those Member States submit, by way of general considerations, that the Treaties do not confer upon the Commission a general prerogative to withdraw proposals that it has submitted to the EU legislature.

33In this connection, they contend, first, that the Commission cannot derive from its right of legislative initiative enshrined in Article 17(2) TEU a symmetrical right to withdraw a proposal if it in its discretion thinks fit.

34The Commission’s right of withdrawal must be limited to objective circumstances, such as where the legislative proposal has been rendered obsolete or pointless by the passage of time or by the emergence of new circumstances or of data, where a lack of notable progress in the legislative procedure for a considerable time presages failure, or where there is a common strategy shared with the EU legislature in a spirit of sincere cooperation and of observance of the institutional balance.

35Second, the Commission cannot be recognised as having a general prerogative of withdrawal on the basis of Article 293 TFEU. Recognition of such a prerogative would, on the contrary, effectively render redundant the Council’s right, laid down in Article 293(1) TFEU, to amend the Commission’s proposal within the limits of its subject-matter and objective.

36Third, recognition that the Commission has a discretion enabling it to withdraw a legislative proposal whenever it disagrees with the amendments agreed between the co-legislators or is not satisfied with the final outcome of negotiations would amount to granting it an unjustified means of exerting pressure on the conduct of legislative work and a right of veto over legislative action, on the basis of considerations of political expediency.

37Fourth, according to the Council and the Federal Republic of Germany, to recognise that the Commission has such a discretion to withdraw proposals would be contrary to the principle of democracy which, as provided in Article 10(1) and (2) TEU, finds expression in the Parliament and in the fact that the members of the Council belong to governments politically accountable to national parliaments.

38Following those general considerations, the Council and the intervening Member States contend, in the second place, that, in adopting the contested decision, the Commission prevented the Parliament and the Council from exercising their legislative prerogatives by opposing, without an objective reason and on the basis of considerations of pure political expediency, the compromise which they were preparing to finalise.

39In this connection, the Council and those Member States contend, first, that an alleged distortion of the legislative proposal, alleged serious interference with the institutional balance or alleged manifest unlawfulness of the act envisaged by the co-legislators does not authorise the Commission to withdraw its proposal.

40In the alternative, the Council and those Member States maintain, second, that in any event none of those circumstances arose in this instance.

41In that regard, the Council and the intervening Member States maintain, so far as concerns the alleged distortion of the legislative proposal, that such distortion is conceivable only where the legislature intends to deviate from the proposal’s scope, subject-matter or objective. However, that was not so in this instance, as the compromise between the Parliament and the Council did not deprive the proposal for a framework regulation of its practical effect and raison d’être or jeopardise attainment of the objectives pursued.

42The element of the proposal for a framework regulation relating to the procedure for granting MFA was secondary and instrumental in scope, and therefore did not constitute the keystone of the proposal, without which its other elements would have lost their meaning. The objective of that compromise consisted, at most, in remedying the defect in the proposal for a framework regulation, a proposal which, by transferring an implementing decision-making power to the Commission, would have compromised the powers which Articles 209 TFEU and 212 TFEU reserve for the EU legislature in the matter of MFA, given the political dimension of that matter.

43The Council, the Federal Republic of Germany, the French Republic, the Kingdom of Sweden and the United Kingdom further contend that the compromise envisaged by the Parliament and the Council likewise did not jeopardise the general objective pursued by the proposal for a framework regulation, consisting in the rationalisation of the procedure for granting MFA by formalising and clarifying the rules relating to the implementation of MFA, with a view to reinforcing the transparency and predictability of that instrument.

44As regards the objective of coherence that is also assigned to the envisaged framework regulation, the French Republic observes that MFA cannot be equated with the other EU instruments relating to financial assistance, referred to in the preamble to the proposal for a regulation. Consequently, it was not necessary to bring the procedures applicable in respect of MFA into line with those applicable in the context of those other instruments.

45So far as concerns the risk of serious interference with the institutional balance, the Council, the Federal Republic of Germany, the Italian Republic, the Republic of Finland and the United Kingdom contend that such a risk was precluded in this instance, in the light, in particular, of the completeness of the system of legal remedies and the procedures for judicial review of EU legislative measures.

46The French Republic and the Kingdom of Sweden further submit that the compromise reached by the co-legislators was such as to preserve the Commission’s freedom, in the event of a request that MFA be granted, to decide whether it was expedient to submit a proposal for the grant of such assistance to the EU legislature and, as the case may be, to determine its amount and to implement and monitor it.

47In the context of the second plea relied upon, the Council and all the intervening Member States submit that in this instance the Commission infringed the principle of sincere cooperation laid down in Article 13(2) TEU.

48They complain that the Commission did not express any reservation or give any warning when, in December 2011 and May 2012 respectively, the co-legislators adopted their positions on the proposal for a framework regulation. They also complain that the Commission failed to inform the co-legislators in good time of its intention to withdraw the proposal for a framework regulation and thereby prevented them from avoiding the planned withdrawal by amending their common approach. They contend, moreover, that the Commission rushed to withdraw that proposal on the very day that the Parliament and the Council were preparing to finalise an agreement which would have led to the adoption of an act that did not suit it.

49The Commission’s failure to observe the principle of sincere cooperation is aggravated by the fact that it did not exhaust the procedural means provided for in Articles 3(2) and 11(1) of the Council’s Rules of Procedure annexed to the Council Decision of 1 December 2009 adopting the Council’s Rules of Procedure (OJ 2009 L 325, p. 35), in order to determine whether the unanimity required by Article 293(1) TFEU to amend the proposal for a framework regulation was attained in this instance.

50The Italian Republic and the United Kingdom add that the Commission ruled out from the outset any discussion and any negotiation with the co-legislators on the content of Article 7 of the proposal for a framework regulation, whereas the co-legislators shared a common approach in that regard.

51In the context of the third plea, the Council and all the intervening Member States submit that a decision withdrawing a legislative proposal is an act amenable to judicial review and must, consequently, comply with the requirement to state reasons that is laid down in the second paragraph of Article 296 TFEU.

52However, the letter of 8 May 2013 by which the Vice-President of the Commission informed the President of the Parliament and the President of the Council of the contested decision contains nothing relating to the grounds for that decision. Those grounds appear only in internal Commission documents, with which the Council did not become acquainted until the present judicial proceedings.

53That complete failure to state reasons confirms the arbitrariness of the contested decision.

54In response to the first plea, the Commission states, in the first place, that withdrawal of a legislative proposal, like the submission or alteration of such a proposal, is one of the expressions of its right of initiative in the general interest of the European Union, which is laid down in the first sentence of Article 17(1) TEU. That right of withdrawal is one of the means by which the Commission discharges the responsibilities that are conferred upon it by the Treaties in procedures leading to the adoption of EU acts.

55Consequently, just as it is for the Commission alone to decide whether or not to submit a legislative proposal or whether or not to alter its initial proposal or a proposal that has already been altered, it is for the Commission alone, where its proposal has not yet been adopted, to decide whether to maintain the proposal or to withdraw it.

56In this instance, the Commission adopted the contested decision not in the light of considerations of expediency or political choice the upholding of which it allegedly sought by usurping a role as ‘third branch’ of the EU legislature, but on the ground that the act which the co-legislators were minded to adopt constituted a distortion of its proposal for a framework regulation and involved serious interference with the institutional balance, on account of the agreement in principle of the Parliament and the Council to replace, in Article 7 of that proposal, the conferral of an implementing power on the Commission with use of the ordinary legislative procedure for the purpose of the adoption of each decision granting MFA.

57The Commission disputes, in the second place, the fact that the contested decision infringed the principle of conferral of powers and the principle of institutional balance.

58In that regard, it submits that the powers of the EU legislature do not include the unfettered power to adopt an act which would fundamentally change the sense of its proposal or remove the proposal’s raison d’être.

59The Commission further submits that the contested decision did not in any way fail to have regard to Article 293(1) TFEU and could legitimately be founded on Article 293(2) TFEU, a provision which is an illustration of the general responsibility owed by it in the course of the ordinary legislative procedure.

60Finally, the Commission contests the argument that that decision affected the principle of democracy, stating that, like the other EU institutions, it has a democratic legitimacy of its own.

61In response to the second plea, the Commission, recalling the events concerning the work that preceded the adoption of the contested decision, contends that the Council’s two allegations against it, concerning an alleged infringement of the principle of sincere cooperation, are unfounded.

62In response to the third plea, the Commission contends that the contested decision is an internal procedural decision, to which the obligation to state reasons, laid down by Article 296 TFEU, is not applicable. It adds that, in any event, it complied fully with its duty to inform the Parliament and the Council of the adoption of the contested decision and of the grounds for it. Those grounds were in fact constantly repeated by the representatives of the Commission at the various meetings of the Council’s Working Party of Financial Counsellors and at the tripartite meetings that were held between 26 February and 7 May 2013.

Findings of the Court

63By its three pleas, which it is appropriate to examine together, the Council, supported by the intervening Member States, submits that the contested decision was adopted in breach of Article 13(2) TEU and the second paragraph of Article 296 TFEU.

64Under Article 13(2) TEU, each EU institution is to act within the limits of the powers conferred on it in the Treaties, and in conformity with the procedures, conditions and objectives set out in them. That provision reflects the principle of institutional balance, characteristic of the institutional structure of the European Union (see judgment in Meroni v High Authority, 9/56, EU:C:1958:7, p. 152), a principle which requires that each of the institutions must exercise its powers with due regard for the powers of the other institutions (see, to this effect, judgments in Parliament v Council, C‑70/88, EU:C:1990:217, paragraph 22, and Parliament v Council, C‑133/06, EU:C:2008:257, paragraph 57).

65Article 13(2) TEU provides, in addition, that the EU institutions are to practice mutual sincere cooperation.

66The second paragraph of Article 296 TFEU provides, in particular, that legal acts of the European Union are to state the reasons on which they are based.

67The line of argument of the Council and the intervening Member States consists, essentially, in the contention that, in withdrawing the proposal for a framework regulation by the contested decision, the Commission exceeded the powers conferred upon it by the Treaties and, in so doing, undermined the institutional balance, as the Treaties do not give it the power to withdraw a legislative proposal in circumstances such as those here. The Commission is also said to have infringed the principle of sincere cooperation. Furthermore, the contested decision is vitiated by a failure to state reasons.

68In that regard, it should be noted that, by virtue of Article 17(2) TEU, EU legislative acts may be adopted only ‘on the basis of a Commission proposal’, except in the situation, irrelevant to the present case, where the Treaties provide otherwise.

69Likewise, the ordinary legislative procedure, referred to by Articles 209 TFEU and 212 TFEU which were the legal basis cited in the proposal for a framework regulation, consists, as provided by Article 289 TFEU, in the joint adoption by the Parliament and the Council of a regulation, directive or decision ‘on a proposal from the Commission’.

70The power of legislative initiative accorded to the Commission by Articles 17(2) TEU and 289 TFEU means that it is for the Commission to decide whether or not to submit a proposal for a legislative act, except in the situation, not material to the present case, where it would be obliged under EU law to submit such a proposal. By virtue of that power, if a proposal for a legislative act is submitted it is also for the Commission, which, in accordance with Article 17(1) TEU, is to promote the general interest of the European Union and take appropriate initiatives to that end, to determine the subject-matter, objective and content of that proposal.

71Article 293 TFEU couples that power of legislative initiative with a twofold safeguard.

72First, Article 293(1) TFEU provides that, except in the cases referred to in the provisions of the FEU Treaty mentioned by it, where, pursuant to the Treaties, the Council acts on a proposal from the Commission, it may amend that proposal only by acting unanimously.

73Second, Article 293(2) TFEU states that, as long as the Council has not acted, the Commission may alter its proposal at any time during the procedures leading to the adoption of an EU act.

74It follows from Article 17(2) TEU in conjunction with Articles 289 TFEU and 293 TFEU that, contrary to the contentions of the Council and certain intervening Member States, the Commission’s power under the ordinary legislative procedure does not come down to submitting a proposal and, subsequently, promoting contact and seeking to reconcile the positions of the Parliament and the Council. Just as it is, as a rule, for the Commission to decide whether or not to submit a legislative proposal and, as the case may be, to determine its subject-matter, objective and content, the Commission has the power, as long as the Council has not acted, to alter its proposal or even, if need be, withdraw it. The very existence of that power of withdrawal is indeed not contested in the present case, only its scope and limits being under discussion. Furthermore, it is common ground that the Council had not yet acted in respect of the proposal for a framework regulation when the Commission decided to withdraw it.

75The power of withdrawal which the Commission derives from the provisions mentioned in the preceding paragraph of the present judgment cannot, however, confer upon that institution a right of veto in the conduct of the legislative process, a right which would be contrary to the principles of conferral of powers and institutional balance.

76Consequently, if the Commission, after submitting a proposal under the ordinary legislative procedure, decides to withdraw that proposal, it must state to the Parliament and the Council the grounds for the withdrawal, which, in the event of challenge, have to be supported by cogent evidence or arguments.

77It must be noted in this connection that a decision to withdraw a proposal taken in circumstances such as those in this instance constitutes an act against which an action for annulment may be brought given that, by bringing the legislative procedure initiated by the submission of the Commission’s proposal to an end, such a decision prevents the Parliament and the Council from exercising, as they would have intended, their legislative functions under Articles 14(1) TEU and 16(1) TEU.

78The judicial review which the Court must be able to carry out if, as in this instance, an action for annulment is brought consequently justifies the requirement that a decision such as the contested decision be taken in compliance with the obligation to state reasons (see, to this effect, judgment in Commission v Council, C‑370/07, EU:C:2009:590, paragraph 42).

79In accordance with settled case-law, the question whether the statement of reasons for a decision meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context (see, to this effect, judgments in Delacre and Others v Commission, C‑350/88, EU:C:1990:71, paragraph 16 and the case-law cited, and Council v Bamba, C‑417/11 P, EU:C:2012:718, paragraph 53 and the case-law cited). In particular, the reasons given for a measure adversely affecting persons are sufficient if that measure was adopted in a context which was known to them (see, to this effect, judgment in Council v Bamba, C‑417/11 P, EU:C:2012:718, paragraph 54 and the case-law cited).

80In this instance, it is admittedly true, as the Council and certain intervening Member States point out, that, apart from a statement designating Article 293(2) TFEU as the basis for the contested decision, the letter of 8 May 2013 by which the Vice-President of the Commission informed the President of the Parliament and the President of the Council of the adoption of that decision is silent as to the grounds for the latter. However, it is clear from the documents before the Court that, at the meetings of the Council’s Working Party of Financial Counsellors of 26 February and 9 April 2013 and at the tripartite meetings of 27 February and 25 April 2013, the Commission stated that it could envisage withdrawing the proposal for a framework regulation on the ground that the alteration planned by the Parliament and the Council, so far as concerns Article 7 of the proposal, distorted the latter to the point of depriving it of its raison d’être, in a manner contrary to the various objectives pursued by the proposal.

81It must therefore be held that the grounds for the contested decision were brought sufficiently to the attention of the Parliament and the Council.

82As regards the substance, grounds such as those invoked in this instance by the Commission are capable of justifying the withdrawal of a proposal for a legislative act.

83It must be accepted that, where an amendment planned by the Parliament and the Council distorts the proposal for a legislative act in a manner which prevents achievement of the objectives pursued by the proposal and which, therefore, deprives it of its raison d’être, the Commission is entitled to withdraw it. It may, however, do so only after having due regard, in the spirit of sincere cooperation which, pursuant to Article 13(2) TEU, must govern relations between EU institutions in the context of the ordinary legislative procedure (see, to this effect, judgment in Parliament v Council, C‑65/93, EU:C:1995:91, paragraph 23), to the concerns of the Parliament and the Council underlying their intention to amend that proposal.

84It is therefore necessary, first, to determine whether the arguments put forward by the Commission in this instance support the grounds relied upon by it in support of the contested decision.

85As stated in recitals 2 and 8 in its preamble, the principal objective of the proposal for a framework regulation was to provide EU policy concerning MFA with a framework enabling such assistance to be made available expeditiously and an end to be put to the delays, harmful to that policy’s effectiveness, that result from the taking of decisions, by the Parliament and the Council jointly, in respect of each case where MFA is granted.

86As is apparent from recital 4 in the preamble to the proposal for a framework regulation, the Commission was seeking, by its legislative initiative, to act upon a resolution of the Parliament of 3 June 2003 in which the latter had called for a framework regulation for MFA, intended, in particular, to accelerate the decision-making process in that regard.

87According to recitals 4 and 6 to 8 in its preamble, the proposal for a framework regulation also had the objectives of improving the transparency of EU policy concerning MFA, in particular as regards conditions for the grant of such assistance, and of ensuring the coherence of that policy with the other EU external assistance policies, which are governed by framework regulations conferring implementing powers on the Commission.

88With a view to attaining those various objectives, the purpose of the proposal for a framework regulation was, as is apparent from paragraphs 5 to 9 of the present judgment, that the Parliament and the Council should adopt, on the basis of Articles 209 TFEU and 212 TFEU, a legislative framework for EU policy concerning MFA, which would have specified the countries eligible for such assistance, its form, the manner in which it was to be financed and the various conditions for its grant; those conditions related, in particular, to respect for democratic mechanisms, implementation of structural economic reforms and of measures to improve the management of public finances, and application of the principles regarding open, rules-based and fair trade.

89In that context, Article 7 of the proposal for a framework regulation provided for the grant to the Commission of an implementing power to adopt, within the limits and under the conditions laid down by the proposed legislative framework, the decisions granting MFA and the memoranda of understanding required to be concluded with the countries receiving such assistance.

90As the Commission has rightly submitted, the amendment which the Parliament and the Council were planning to make to Article 7, by substituting, in Article 7(2), the ordinary legislative procedure for the Commission’s implementing power as regards the adoption of each decision granting MFA, would have distorted an essential element of the proposal for a framework regulation in a manner irreconcilable with the objective pursued by that proposal of improving the effectiveness of EU policy concerning MFA.

91Such an amendment would have entailed keeping the process whereby MFA is granted, on a case by case basis, by the Parliament and the Council under the ordinary legislative procedure, whereas the principal objective of the proposal for a framework regulation sought specifically, by means of a legislative framework governing the conditions for implementing EU policy concerning MFA, to bring that decision-making process to an end, with a view to speeding up decision-taking and to improving, in that way, the effectiveness of that policy.

92As the Commission indicated, according to the documents before the Court, at the meeting of the Council’s Working Party of Financial Counsellors on 26 February 2013, the detailed rules inherent in the ordinary legislative procedure inevitably result in a decision-making process spread over a number of months, a situation which is such as to complicate the coordination of MFA with the grant of resources by the IMF or other multilateral financial institutions, which are resources that — as was stated in Articles 1(3) and 6(2) of the proposal for a framework regulation and recital 13 in its preamble — MFA is designed to complement.

93Furthermore, the amendment planned by the Parliament and the Council would have run counter to achievement of the objective pursued by the proposal for a framework regulation consisting, in the interest of coherence, in bringing the procedure for grant of MFA into line with the procedure applicable to the other EU financial instruments relating to external assistance.

94It follows from the analysis set out in paragraphs 85 to 93 of the present judgment that the Commission was entitled to consider that the amendment planned by the Parliament and the Council so far as concerns Article 7 of the proposal for a framework regulation was liable to distort that proposal, on the essential issue of the procedure for granting MFA, in a way which would have prevented the objectives pursued by the Commission through the proposal from being achieved and which, therefore, would have deprived the proposal of its raison d’être.

95Consequently, the decision of the Commission to withdraw the proposal for a framework regulation in the light of such considerations did not infringe the principle of conferral of powers or the principle of institutional balance, laid down in Article 13(2) TEU.

96As to the line of argument alleging an infringement of the principle of democracy laid down in Article 10(1) and (2) TEU, it is apparent from Article 17(2) TEU, read in conjunction with Articles 289 TFEU and 293 TFEU, that the Commission has the power not only to submit a legislative proposal but also, provided that the Council has not yet acted, to alter its proposal or even, if need be, withdraw it. Since that power of the Commission to withdraw a proposal is inseparable from the right of initiative with which that institution is vested and its exercise is circumscribed by the provisions of the abovementioned articles of the FEU Treaty, there can be no question, in this instance, of an infringement of that principle. Accordingly, this line of argument must be rejected as unfounded.

97It is necessary, second, to examine, in the light of the complaints set out by the Council and the intervening Member States, whether the withdrawal decided upon by the Commission on 8 May 2013 was in compliance with the principle of sincere cooperation which is also laid down in Article 13(2) TEU.

98In that regard, it must be stated, generally, that the Commission did not withdraw the proposal for a framework regulation until it became apparent that the Council and the Parliament were minded to amend that proposal in a way contrary to the objectives pursued by it.

99In particular, it is clear from the documents before the Court that the Council and the Parliament initially expressed different views on the question, which Article 7 of the proposal for a framework regulation concerns, of the decision-making procedure for granting MFA. In a ‘general approach’ approved by Coreper on 15 December 2011, the Council had proposed, in that regard, that the ordinary legislative procedure be retained, whilst, in a report approved on 24 May 2012, the Parliament had recommended a solution based on the use of delegated acts.

100Since there was no consensus between the co-legislators in respect of retaining the ordinary legislative procedure for the adoption of each decision granting MFA, the Commission cannot be reproached for not having already mentioned at that time the possibility that the proposal for a framework regulation would be withdrawn.

101As shown by the working document, referred to in paragraph 21 of the present judgment, which was put forward in January 2013, and which the Commission drafted with a view to the tripartite meeting of 30 January 2013, it is clear that, faced with the common concern of the Parliament and the Council that the decision-making process for granting MFA that was laid down in Article 7 of the proposal for a framework regulation involved insufficient political and democratic scrutiny, the Commission, on the contrary, strove to reconcile the respective positions of the institutions concerned.

102That document proposed a compromise solution based, in essence, on the combination of the following elements: a detailed framework regulation, as envisaged by the proposal for a framework regulation, defining the conditions, including political conditions, for granting MFA; mechanisms for informal consultation of the Parliament and the Member States on the draft implementing acts of the Commission relating to the grant of MFA; use of a limited number of delegated acts, in this instance four, intended to amend or supplement certain non-essential elements of the legislative framework, concerning, in particular, the list of countries eligible for MFA and the criteria for selecting the financial instrument (grant or loan); selective use of comitology; various evaluation mechanisms; and reports to the Parliament and the Council.

103Contrary to the assertions of certain intervening Member States, the Commission, far from ruling out any discussion on the procedure for granting MFA, thereby sought to reach a solution which, while safeguarding the objectives pursued by the proposal for a framework regulation in respect of MFA, sought to take the concern of the Parliament and the Council into account.

104As soon as it became apparent, as from the fourth tripartite meeting which was held on 30 January 2013, that the Parliament and the Council had a common intention to retain the ordinary legislative procedure for the purpose of the adoption of each decision granting MFA, the Commission, as is attested by the documents before the Court, mentioned, at the meeting of the Council’s Working Party of Financial Counsellors of 26 February 2013 and at the fifth tripartite meeting held on 27 February 2013, the possibility of withdrawal of the proposal for a framework regulation and the grounds for the contemplated withdrawal. It did likewise at the meeting of the Council’s Working Party of Financial Counsellors of 9 April 2013 and at the sixth tripartite meeting held on 25 April 2013. Both the documents relating to the tripartite meeting of 27 February 2013 and the letter which the Chairman of Coreper sent to the Vice-President of the Commission on 6 May 2013 following the tripartite meeting of 25 April 2013 show that the co-legislators clearly perceived those warnings from the Commission.

105The argument that the Commission’s announcement of its intention to withdraw the proposal for a framework regulation was belated is therefore unfounded.

106Furthermore, in the circumstances noted in paragraph 104 of the present judgment, and in the absence of anything in the documents before the Court showing that the Parliament and the Council might have foregone amending Article 7 of the proposal for a framework regulation, neither the fact that the Commission did not make use of the power, provided for in Articles 3(2) and 11(1) of the Council’s Rules of Procedure, to request a vote of the Council on that proposal nor the fact that the contested decision was adopted on the very day that the Parliament and the Council were allegedly on the verge of formalising their agreement on the proposal can be regarded as amounting to a breach by the Commission of the principle of sincere cooperation.

107It follows from all the foregoing considerations that the adoption by the Commission of the contested decision did not infringe the principle of conferral of powers, the principle of institutional balance or the principle of sincere cooperation, laid down in Article 13(2) TEU, or the principle of democracy enshrined in Article 10(1) and (2) TEU. Furthermore, the Commission satisfied in this instance the obligation to state reasons, laid down in the second paragraph of Article 296 TFEU.

108The three pleas relied upon by the Council in support of its action must, therefore, be rejected as unfounded.

109It follows that the action must be dismissed.

Costs

110Under Article 138(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has applied for costs and the Council has been unsuccessful, the latter must be ordered to pay the costs. In accordance with Article 140(1) of the Rules of Procedure, under which the Member States which have intervened in the proceedings are to bear their own costs, the Czech Republic, the Federal Republic of Germany, the Kingdom of Spain, the French Republic, the Italian Republic, the Kingdom of the Netherlands, the Slovak Republic, the Republic of Finland, the Kingdom of Sweden and the United Kingdom must be ordered to bear their own costs.

Operative part

On those grounds, the Court (Grand Chamber) hereby:

1.Dismisses the action;

2.Orders the Council of the European Union to pay the costs;

3.Orders the Czech Republic, the Federal Republic of Germany, the Kingdom of Spain, the French Republic, the Italian Republic, the Kingdom of the Netherlands, the Slovak Republic, the Republic of Finland, the Kingdom of Sweden and the United Kingdom of Great Britain and Northern Ireland to bear their own costs.