C-204/86

GREECE v COUNCIL

OPINION O F M R ADVOCATE GENERAL MANCINI delivered o n 25 M a y 1 9 8 8 *

* Translated from the Italian.

OPINION OF MR MANCINI — CASE 204/86

The Council of Foreign Ministers European units of account made available to approved that proposal on 17 February Turkey by the Community'; (b) 'Turkey 1986. Only Greece was against the shall refer direct to the Commission with proposal; it opposed the resumption of regard to the submission of specific projects. cooperation and, in particular, of financial The Commission shall examine such aid which, in the Greek Minister's view, projects in the light of the criteria for the could be interpreted as implicit approval of use of exceptional aid indicated to the Asso- Turkish domestic policies. ciation Council by the Community dele- gation'; (c) 'The Community shall inform Turkey of the action taken on its requests'; (d) 'The Association Committee shall Thus we come to the contested transfer. monitor the implementation of the aid'; The general budget for 1986 contained no (e) 'It shall meet to this effect at the request entry of commitment appropriations in of either party'. respect of financial cooperation with Turkey under the heading corresponding to special

completed. The Foreign Ministers issued a possible to use them for other purposes. communiqué expressing their concern (Doc. SEC(86) 594 final, 11.4.1986). (Brussels, 15 September), which the Community followed up by a series of political initiatives, including the decision to postpone the conclusion and entry into That was the reason for the Commission's force of the Fourth Financial Protocol. proposal of 17 April 1986 to the budgetary Moreover, at its meeting on 7 and 8 authority to transfer the ECU 10 million December 1981 the Council decided, directly to Chapter 96, Item 9632 (Doc. following informal discussions (the matter 6395/86 final 149 R, 22.4.1986).

Article 203 (9) of the EEC Treaty, confers

the power of decision on the Council, which course of the written procedure and during must first consult the Parliament. the hearing. Two of those issues relate to the admissibility of the action as a whole and are based (a) on the impossibility of The budgetary authorities reacted in challenging the transfer of appropriations different ways. On 19 May 1986, after and (b) on the difference between the consulting the Political Affairs Committee, respective supervisory powers of the Court the Parliament — or more precisely the of Justice and the Court of Auditors with Committee on Budgets, which is authorized regard to budgetary measures.

3. In support of its application for the third parties or whether it should be annulment of the relevant measure, Greece regarded as an internal measure and, advances essentially three submissions. The therefore, as not being subject to judicial first is based on an objection of illegality review. The question whether budgetary under Article 184 of the EEC Treaty, which measures are amenable to review is an area is directed against the classification as in which the judgments of the Court have compulsory expenditure (CE) of the special provided solutions some of which I agree aid to Turkey provided for in the 1982 with, whereas others are not convincing.

The third submission is wider in Case 296/83 Les Verts v Parliament [1984] scope: Greece maintains that the ECR 3335, and Case 297/83 Les Verts v Community institutions could not unblock Council [1984] ECR 3339; the judgment of the special aid without being in breach of 23 April 1986 in Case 294/83 Les Verts v the international obligation flowing from Parliament [1986] ECR 1339, and the Resolution N o 541 (1983) of the Security judgment of 25 February 1988 in Case Council of the United Nations requiring 190/84 Les Verts v Parliament [1988] ECR Contracting States not to recognize any 1017) and on the other hand, to the Cypriot State other than the Republic of judgment of 3 July 1986 by which the Court Cyprus. settled the constitutional dispute which had developed between the Council and the Parliament regarding the budget for the Before examining the submissions in more 1986 financial year (Case 34/86 Council v detail, we should first of all analyse the Parliament [1986] ECR 2155). procedural issues which emerged in the

There are very many different types of Parliament is more developed and budgetary measures. First of all, there are: completely convincing. The Court stated (a) measures, corresponding to the seven that 'once the President of the Parliament stages provided for by Article 203 of the has made the declaration . . . the budget EEC Treaty, which constitute the adoption ranks among the acts which are capable of procedure of the Community budget. Then producing legal effects vis-à-vis third parties there are the measures for implementing the (in so far as it) endows the budget with

Moreover, which appear in the general budget. the same paragraph ends with the words 'the Treaty does not, moreover, contain any Measures of type (a) were at issue both in provision which excludes the bringing of the the cases brought by 'Les Verts' which were action for annulment against acts of a the subject of the orders of 26 September budgetary nature' (paragraph 12). 1984, and in the dispute between the Council and the Parliament which was In Case 294/83 Les Verts v Council the resolved by the judgment of 3 July 1986. Court was called upon to give a decision on The orders declared the actions inad- measures falling within category (b).

I would concerned by the steps in that procedure', also point out that that judgment although such a person may be directly recognized the possibility of bringing an concerned 'by the measures taken to action 'against the individual decisions implement the budget'. It appears to me that refusing to reimburse sums greater than that approach is correct in so far as it refers those provided for' (paragraph 36 of the to the measure by which the President of decision). the Parliament declares that the budget has been finally adopted.

GREECE v COUNCIL

The problem does not appear to me to be In other words, we can conclude that since difficult to resolve. As I maintained in my transfers of appropriations are ascribable to Opinion in Case 34/86 Council v the budgetary authority and capable of Parliament, the budget which results from giving rise to legal effects (but therefore also the Parliament's final reading is a simple subject to the risks which the Court high- accounting document and therefore has no lighted so clearly in paragraph 12 of the legal effect. It becomes binding on promul- judgment of 3 July 1986 in Council v gation by the President. It is therefore Parliament), they are subject to review by evident that in order to obtain the complete the Court. Nor can it be argued that it is annulment of the budget, the action must not the transfer as such which can be be directed against that promulgation. contested but rather the measure by which it However, it is also obvious that it is not was implemented. That objection was raised necessary to challenge the act of the by the Parliament in Case 34/86 in relation President and bring an action against the to the budget as a whole. The judgment

OPINION OF MR MANCINI — CASE 204/86

5. The second procedural problem which of review of the Court of Auditors is emerged during the hearing concerns the confined to supervising 'l'observation des scope of the jurisdiction of the Court of règles de la comptabilité publique dans Justice and the Court of Auditors to review l'exécution du budget communautaire' budgetary measures. On a general level, this (Sacchettini: 'Dispositions financières' in Le subject has been studied above all by French droit de la Communauté économique euro-

It is therefore clear that likewise contained in the Treaties or in the Financial 'la violation des règles budgétaires et comp- Regulation are complied with, but also any tables ne peut, sans texte formel contraire, provision belonging to the Community legal être invoquée à l'appui d'un recours pour order in so far as it has an effect on expen- excès de pouvoir' (Odent: Contentieux diture. How then is it possible to distinguish administratif, Paris, 1981, Vol. VI, p. 1923). between that power of review and that of the Court of Justice? The question has already been raised before the Court of Justice, only to be immediately

Unlike only has power to examine the legality of the power of review of the Court of expenditure with reference to the budget Auditors, the power of review of the Court and the secondary provision on which the of Justice is characterized by the binding expenditure is based (commonly called effect and final nature of the judgment. "the basic measure"). Its review is Moreover, whereas the intervention of the thus . . . distinct from that exercised by the Court of Justice presupposes the existence Court of Justice, which concerns the legality of a claim or, in any event, of a dispute, of the basic measure' (paragraph 28). that of the Court of Auditors does not.

Thus, in concrete terms, the work of the 184 — it is stated in paragraph 39 of the Court of Justice consists in the specific and decision — '(confers) upon any party to individual consideration of measures or proceedings the right to challenge . . . the relations which are in dispute: that of the validity of . . . acts of the institutions . . . Court of Auditors consists in the systematic which form the legal basis of the decision and general examination of the activity of which is being attacked, if that party was management (see Palmieri: La Corte dei not entitled under Article 173 of the Treaty conti delle Comunità europee, Padua, 1983, to bring a direct action challenging those p. 78, No 26; Goletti: 'La Corte dei conti acts'. delle Comunità europee nel quadro normativo comunitario', in Foro amminis- trativo, 1986, p. 2948 et seq.). The second argument turns on the special characteristics of the budget and particularly on the fact that it is indivisible and annual

a transfer. The Council advances two budget which is used to calculate the arguments in support of that claim. maximum rate of non-compulsory expen- diture for the following financial year. That is not all. The classification of expenditure The first is based on the theory, supported forms an integral part of the budgetary by an authoritative body of juristic opinion, procedure and may not be called into that an objection of illegality may not be question in a dispute concerning the legality raised by Member States (Bebr: 'Judicial of a transfer. As the Court stated in the remedy of private parties against normative judgment in Case 34/86 Council v acts of the European Communities: the role Parliament 'the problems regarding the of the exception of illegality', in Common delimitation of non-compulsory expenditure Market Law Review 1966-67, pp. 11 to 13, in relation to compulsory expenditure are and Development of judicial control of the the subject of an inter-institutional concil- European Communities, The Hague, 1981, iation procedure set up by the Joint p. 195; Joliet: Le droit institutionnel des Declaration [of 30 June 1982] of the Communautés européennes — Le contentieux, European Parliament, the Council and the Liège, 1981, p. 134 et seq.). The Member Commission . . . and . . . they are capable of States may contest directly, within the being resolved in that context' (paragraph time-limit laid down in Article 173, any 50). measure of a binding nature and, in so far as they participate in the preparation of those measures, they have a political The arguments which I have just influence within the Council which justifies summarized cannot be accepted.

OPINION OF MR MANCINI — CASE 204/86

In that droit européen, 1978, p. 411 et seq.; Wael- case too, the Court avoided the question broeck: 'Article 184', in Le droit de la and it fell to the Advocate General, Sir Communauté économique européenne, Gordon Slynn, to refute the Commission's Brussels, 1983, Vol. 10, Part I, p. 359 et argument. He stated that the Member State seq.). Indeed, Article 184 provides that 'does not have to show that there was a 'notwithstanding the expiry of the period good reason why it did not act in time laid down in the third paragraph of Article under Article 173, or that it was taken by 173, any party may . . . invoke . . . the inap- surprise by the application or effect of an plicability of that regulation' (my emphasis). act of the Council or Commission, before it It should be added that that theory is can rely on Article 1 8 4 . . . this limitation, largely confirmed by the judgments of the which the Commission seeks to introduce, is Court and the Opinions of its Advocates not to be found in the provisions of the

Indeed between pertaining to a general regulation often do the end of 1981 and the beginning of 1986, not clearly emerge until the regulation is aid to Turkey was blocked due to applied to a particular case' (p. 414 et seq.). the 'freezing' of relations between the

The arguments which the Council bases on 7. I come now to the substance of the case. certain characteristics of the Community In its first submission Greece argues that the budget are equally weak. The first criticism Council of the Community had no power to to which they are open is that they decide on the contested transfer. The contradict the line adopted by the Council transfer must be regarded as a mixed in Case 34/86 Council v Parliament. In that transfer, since the expenditure fixed under case the Council asked the Court to annul the original item (Item 9631 of Chapter the budget for the 1986 financial year to the 100) was compulsory and that provided for extent that the appropriations for by the new item (Item 9632 of Chapter 96) commitments and the appropriations for is non-compulsory. Consequently, the payments exceeded the rate of increase transfer should have been carried out on the which the Council had approved and basis of the fourth and fifth subparagraphs proposed to the Parliament. The Court of Article 21 (2) of the Financial Regu- rejected that claim on the ground that to lation, according to which mixed transfers have upheld it would have rendered are to be deemed to be approved only if definitive the budget modified by the neither budgetary authority has taken a Council at its second reading. The Court decision to the contrary within six weeks of observed, in addition, that the intervention the date on which the two institutions of the Court in negotiations reserved to the received the proposal made by the two budgetary authorities would upset the Commission. In this case, the Parliament institutional balance laid down by the rejected the proposal; as a result, it must be Treaty. held that the transfer could not take place.

The Greek Government goes on to state 'on measures and procedures required for that the Council's response is to maintain the implementation of the Agreement estab- that the new item (Special aid for Turkey) lishing an Association between the has been listed as compulsory expenditure in European Economic Community and every budget since the 1982 financial year Turkey' {Collection of the Agreements and in the annex to the 'Joint Declaration concluded by the European Community, Vol. on various measures to improve the 3, p. 571).

until 1977. It was decided on unilaterally by respect. According to the first (Sopwith: the Council and constitutes simply 'a 'Legal aspects of the Community budget', in gesture of goodwill', as can be seen from Common Market Law Review, 1980, p. 328; the Community's declaration of 10 May Ehlermann and Minch: 'Conflicts between 1979 (in which it is said that the Community institutions within the 'Communauté est prête à envisager' the budgetary procedure.

Yet, in The Greek Government maintains that the this case, none of the three conditions Council's argument that the legal basis for appears to be fulfilled. As we have seen, the the aid is Decision No 2/80 of the Asso- decision of the Council did not result in ciation Council, to which I have already legal measures and the unilateral nature of referred, is also unfounded. There are two the Community's offer precludes the reasons for this. In order to be defined as existence of binding commitments. 'compulsory' expenditure must result from the Treaty or 'from acts adopted in accordance therewith' (first subparagraph of According to other writers, on the other Article 203 (4)).

decisions of the Council of Ministers (see l'Europe, Brussels, 1980, p. 49; D a n k e n : Article 2 (1) of Agreement 64/737 'The Joint Declaration by the Community concluded on 12 September 1963 between institutions of 30 June 1982 on the the representatives of the Governments of Community budgetary procedure', in the Member States meeting in the Council Common Market Law Review, 1983,

8. The argument developed by the Council, and followed to a large extent by the Commission, takes the opposite view. The Council first observes that the budgetary External obligations — and the special aid authorities and the Commission have never to Turkey undoubtedly constitutes such an had any doubts about the classification as obligation — may be entered into by a body compulsory expenditure of the original item possessing legal personality under interna- or of the item to which the appropriations tional law even on the basis of unilateral were transferred. That is shown by: (a) the commitments (see the nuclear tests case, proposal made by the Commission Australia v France, judgment of 20 concerning the contested transfer; (b) the December 1974 of the International Court opinion of the Parliament which, although it of Justice, ICJ 1974, p. 253, paragraph 43). rejected the proposal, does not contain any In this case, however, there is no need to objections with regard to the nature of the resort to that approach. It is true that the expenditure; (c) the fact that the agenda for origin of the aid was not the financial the discussions between the Parliament, the protocols. But it is a fact that the Council and the Commission which opened Community's offer of May 1975 was on 3 October 1986 makes not the slightest accepted by Turkey and the agreement thus mention of the desirability of reclassifying reached was incorporated into Decision the aid to Turkey. 2/80, which has already been cited several times. The fact is also that, despite its title, that measure is undeniably contractual in Then there is the declaration of 30 June nature or, in any event, forms part of the 1982 in which the three institutions declared contractual fabric of the EEC-Turkey Asso- that they consider compulsory expenditure ciation and therefore enters into the to be 'such expenditure as the budgetary Community system by way of the authority is obliged to enter in the budget to provision — Article 238 of the Treaty — on enable the Community to meet its obli- which the Association is based.

Those detailed rules or conditions did not, Article 203 (4) deals, in fact, only with in fact, confer on the Community compulsory expenditure and defines it as institutions any power to fix the level of expenditure 'necessarily resulting from this appropriations to be entered into the budget Treaty or from acts adopted in accordance and the 'freeze' in relations between the therewith'. Consequently the concept of EEC and Turkey did not give rise to legal non-compulsory expenditure is defined by measures or call into question the existence implication and by way of contrast with of obligations on the part of the compulsory expenditure. However, in order Community. Indeed, between 1981 and to be entered in the budget, even 1986 payments were made in respect of non-compulsory expenditure must be based Item 9632 and it was only the entering of on a provision of primary or derived law. commitment appropriations that was inter- That means that it is possible to establish rupted. That explains, moreover, why the the category of expenditure involved only resumption in relations between the parties by analysing the basic provision and, in and the payment of the contested aid were particular, the degree to which it is binding not confirmed by means of a formal on the institution which is called on to carry instrument. out the payment. If it is considered as a result of that examination that the authority 9. What is to be made of those arguments? in question has a non-discretionary power, In order to express an opinion on their then the expenditure is compulsory; if, on validity one must first clarify the concepts the other hand, it is found that the payment of compulsory expenditure and non- of the sums in question is the subject of a compulsory expenditure. The distinction discretionary power of the institution, the was first incorporated in Article 203 (4) of expenditure is non-compulsory (Sacchettini, the Treaty by the Treaty of 22 April 1970 op. cit., p. 151 et seq.). amending certain Budgetary Provisions, and has been applied since the 1975 financial As we have seen in section 8, the Joint year. It aims at reconciling the requirement Declaration, in defining the two categories to increase the budgetary powers of the of expenditure, does not depart from the Parliament and the need to prevent those method followed by Article 203 (4). powers from being exercised so as to However, it contains two new factors: it exercise an influence after the event on expressly states that compulsory expenditure decisions of the Council. However, it is may also be the result of external obli- undeniable that, far from achieving the gations, and classes the budgetary items

I am convinced, however, that it is not absolutely necessary to go deeper into the question of the status of the Joint Declaration in the Community's legal order. 10. Greece considers the special aid to be a Personally, I share the view that documents mere 'gesture of goodwill' because it was of that type: (a) have their legal basis in decided upon unilaterally by the Council Article 5 of the EEC Treaty and Article 15 and because it cannot be fitted into the of the Merger Treaty; (b) express the contractual fabric of EEC-Turkish relations general principle according to which and has never been transposed into the Community institutions are bound by a duty Community legal order. For their part, the of mutual loyalty and cooperation; (c) may, Council and the Commission maintain that if the obligations which result from them are the aid is based on an obligation of a sufficiently precise and unconditional, contractual nature because it is the result of achieve the status of measures intended to an offer by the Community which Turkey implement the Treaty and render any accepted and because it is confirmed by derived provisions conflicting with them Decision N o 2/80 which, despite its title, subject to annulment (as regards the first must be considered to be a proper interna- two points, the following authors should be tional agreement. Let me say straight away added to those mentioned by the Council. that both those arguments appear to me to Vesterdorf: Europaparlamentet og Europæisk be unacceptable: the applicant State denies Integration, Copenhagen, 1983, p. 249 et the Community a power — the power to seq., and Bieber: 'The settlement of institu- enter into a commitment unilat- tional conflicts on the basis of Article 4 of erally— which it must be recognized as the EEC Treaty', in Common Market Law having, and the two institutions have inter- Review, 1984, p. 521; as regards the third preted the situation in question in a way point, see Michel Waelbroeck and Denis which distorts its essential features. Waelbroeck: Les 'déclarations communes' en tant qu'instruments d'un accroissement des compétences du Parlement européeen, a paper contributed to the seminar 'Le Parlement européen dans l'évolution institu- Of course, a contractual interpretation of tionnelle', Brussels, 24 to 26 September the events which culminated in Decision N o 1986, in publication). 2/80 cannot be completely ruled out; it

would perhaps be sufficient to reverse the scope and also applies to international Council's approach by regarding the bodies in so far as they possess legal Community's 'offer' as acceptance of the personality (see Sicault: 'Du caractère obli- request for financial aid made by Turkey in gatoire des engagements unilatéraux en October 1978 (section 2 above) and then to droit international public', in Revue générale argue that Decision N o 2/80, the unilateral de droit international public, 1979, p. 633 et nature of which is not in doubt, ratified the seq.). agreement thus reached but did not change

Journal 1987, L 86, pp. 879 and 885). On the other hand, as a manifestation of the power to enter into obligations unilaterally, There is no doubt that in international law that decision is based on the norm — which promissory declarations are binding. is unwritten but universally recognized and Giacinto Bosco made that assertion 50 years primary in nature — which confers on the ago, basing his argument — which at the Community legal personality in interna- time was both original and heretical — on tional law. The special aid to Turkey was the power of States to enter into unilateral therefore classed as compulsory expenditure commitments — a power which is derived and it remained so in the financial years from a general norm relating to law-making following the year in which it was first and based on intention on the part of the entered in the budget (1982), since it States (see 'Il fondamento giuridico del certainly cannot be considered that the valore obbligatorio del diritto interna- 'freeze' in relations between the Community zionale', in Rivista di diritto pubblico, 1938, and Turkey was capable of changing the p. 626 et seq.). Subsequently that view has nature of the aid. been taken by an increasing number of

Nor can it be the judgment cited above concerning French argued — although there is at this stage nuclear tests in Polynesia. What is more, it very little advantage to be gained from so is clear that the rule goes beyond its original doing — that the absence of measures to

transpose the decision into Community law the commitment which they represent. is of any importance. The Council's Chapter 100 is not a budgetary heading argument with regard to that point seems to against which expenditure may be charged. me to be correct: if Article 2 (1) of Rather, it is a reserve made up of sums Agreement 64/737 is read carefully it earmarked for certain purposes and entered appears that only decisions which could not ' in the budget in case an institution has to otherwise be applied must be transposed make expenditure of an uncertain amount into Community law. It is clear that there is for an activity whose legal basis has not no such requirement for transposition in this been completely defined.

another kind. The appropriations in Chapter 100 are, in fact, 'individualized' and, therefore, bound by the corresponding Let us now turn to the claim relating to 'remarks', and for that reason they can be misuse of powers. Greece, as the Council transferred only if the basic measure relating and the Commission correctly observe, fails to the original heading has been adopted to take account of the fact that the transfer and the transfer is made to the corre- breaks down into two stages with distinct sponding item. However, in this case: characteristics and implications: the first (a) the basic measure for Item 9631 — t h a t stage is the authorization given by the is to say the Fourth Financial budgetary authorities; the second, which Protocol — was never adopted; and (b) the corresponds to the implementation of the transfer was made to a different item, and expenditure, takes the concrete form of the the special aid was precisely that. actual transfer of the appropriations between different chapters or within a single chapter and is carried out by the The misuse of procedure also relates to the

OPINION OF MR MANCINI — CASE 204/86

binding. The corresponding appropriations entry' (paragraph 5) — that the direct may be used only by means of a transfer transfers are completely lawful. and the transfer has a particular purpose, which is to modify during the financial year the expenditure estimate and authorization whenever it proves impossible to adopt the basic measure for a particular appropriation or whenever implementation of a certain action is faster or slower than anticipated It should be added that: (a) from the point and hence a given item is increased at the of view of the powers conferred on the expense of another whose prospects of budgetary authority or within the sphere of being used appear more remote or less competence of the Member States, it makes

Greece argues that in paragraph 7 of its operative part Resolution No 541 (1983), adopted on 18 We can thus conclude that the line followed November 1983 by the Security Council of by the Council was correct. Exercising the the United Nations, 'calls upon all States powers vested in it, the Council modified not to recognize any Cypriot State other certain original allocations in the light of than the Republic of Cyprus'. By recog- factors which arose after the adoption of nizing 'the Turkish Republic of North the budget, thereby ensuring that the appro- Cyprus', the Turkish Government is in priations would be used in a rational way. breach of that obligation. Consequently, the Community cannot grant it the special aid without ignoring that breach and thereby

GREECE v COUNCIL

That argument must be rejected because it is mendation. Consequently, the States to based on a false premise. It is manifest from which the declaration is addressed are not the wording of the operative part and from bound to comply with paragraph 7 of the the debates and the declarations of vote resolution or to infer from the fact that prior to the adoption of Resolution No 541 paragraph 7 was not complied with the (see summary in La Communità Interna- consequences which Greece claims they zionale, 1984, pp. 308 to 314) that the should infer (in general see Conforti: Le resolution does not constitute a 'decision' Nazioni Unite, Fourth Edition, Padua, and is therefore not a binding measure, but 1986, pp. 185 et seq., 265 et seq.). a measure in the nature of a mere recom-

14. In view of the foregoing, I propose that the Court should dismiss the action brought by the Hellenic Republic on 4 August 1986 against the Council of the European Communities.

The unsuccessful party should be ordered to pay the costs, including the costs of the intervener.