C-377/87

3. Whilst these cases thus appear at first sight to be very simple, it is apparent on 7. However, the latter point was most closer examination that in fact they raise usefully clarified at the hearing. Whilst the several rather complex questions. Some of observations of the applicants, and in the questions arise directly from the particular the claim contained in the positions adopted by the parties before the Commission's application, might give the Court and others relate to the differing impression that they sought a finding by the views which may be taken, in more general Court that the Council had failed to fulfil its terms, of the nature and purpose of the obligations under Article 199, the Agent for proceedings for failure to act provided for the Commission stated quite unequivocally by Article 175 of the Treaty. that that was not the purpose of the action brought by the institution represented by * Translated from the French. him. As regards the Parliament, its Agent 1 — In order to avoid complications, I shall refer hereinafter only to the Articles of the EEC Treaty and not to the stated that the only finding sought from the corresponding articles of the EAEC Treaty. Court was that the Council was guilty of a

PARLIAMENT v COUNCIL

failure to act, in so far as it had omitted to specific type of failure to act with which the present the draft budget no later than 5 present cases are concerned. October 1987.

OPINION OF MR MISCHO — CASE 377/87

17. Before the Parliament and the Article 175 if the institution which had been Commission 'called upon [it] to act', the called upon to act indicated 'whether, when Council had already made efforts to ensure and how' it was going to discharge its obli­ that a draft budget would be adopted (for gation. As far as the present cases are example, the Council meetings of 23 July, concerned, the question might well be asked 17 and 18 September and 1 October 1987). whether the Council, through the statement made by its President to the Parliament, in the presence of the Commission, did not in 18. The President of the Council stated in fact define its position on these three points. writing, and also declared to the Parliament, that he wished to pursue his efforts to establish a draft budget as rapidly as possible within the terms of an overall 22. It is true that, after the failure of the decision on all aspects of what were known, European Council in Copenhagen and for the sake of brevity, as 'the Delors therefore before the actions were brought, proposals', at the European Council in uncertainty arose as to 'when', that is to say Copenhagen on 5 and 6 December 1987. regarding the date by which the obligation to establish a draft budget would in fact be fulfilled. The European Council nevertheless 19. It is not therefore possible to say that in immediately arranged for a fresh meeting to the present case there was inaction in the deal with all the outstanding problems, strict sense of the term, or that there was no namely the meeting on 11, 12 and 13 response or else only an evasive response February 1988 in Brussels, at which, from the institution concerned. moreover, an agreement was actually reached.

A — The admissibility of the two actions 'In the system of legal remedies ... there is a close relationship between the right of action given in Article 173, which allows 26. The Council challenges the admissibility unlawful measures of the Council and the of both actions on the ground that it is not Commission to be declared void, and that the absence of a draft budget but rather that based on Article 175, which may lead to a of the budget itself for the financial year in finding that the failure by the Council or question which might, in certain circum­ Commission to adopt certain measures is stances, justify a finding of a failure to act contrary to the Treaty'. 5 under Article 175. The draft budget, which does not have to be published, merely marks a preparatory phase and it is only the 30. The decisive criterion is therefore that declaration as to its final adoption by the of the legal effects. Thus, a 'failure to act' President of the European Parliament, in within the meaning of Article 175 may be accordance with Article 203 (7) of the constituted by the non-adoption by the Treaty, that 'endows the budget with Council or by the Commission of an act or binding force vis-à-vis the institutions and a measure, of whatever nature, form or the Member States'. 3 description, which is capable of producing legal effects vis-à-vis third parties.

27. That objection of inadmissibility must be rejected. The Court has held, in 31. The draft budget which the Council is particular in its judgment of 23 April 1986 obliged to establish by virtue of the last ('Les Verts'), 4that subparagraph of Article 203 (3) is such a measure.

other institutions or exceed the limits which 38. Failure to adopt the draft budget have been set on their own powers.' therefore certainly constitutes a failure to act on the part of the Council which may be the subject of an action under the first paragraph of Article 175. 34. The Court was thus prompted to consider the legality of a specific and isolated act adopted as part of the 39. However, it is also necessary to budgetary procedure by only one of the two consider whether the Council was under an arms of the budgetary authority, namely the obligation to forward the draft budget no European Parliament acting through its later than 5 October 1987, since only if that President. date is mandatory does the Council's omission constitute an infringement of the Treaty which may be established by the Court on the basis of Article 175. This question, which raises the problem of the 35. The same reasoning had already nature of the date prescribed in Article resulted in the Court's upholding the 203 (4) is, however, a matter which goes to principle that the European Parliament the substance of the case 8 or, at least, is could be a defendant in proceedings for closely bound up with it. 9 annulment brought under Article 173. 7

B — The nature of the date 5 October 36. Just as the Court must be able to verify whether an institution is encroaching upon the powers of the other institutions or of the 40. Contrary to the view expressed by the Member States by adopting certain European Parliament and the Commission measures, it should also be empowered to that the date 5 October sets a time-limit do so where an institution's failure to act is which is mandatory, the Council puts liable to bring about the same result and forward several arguments to show that it is hinder the exercise by the other institutions merely required 'to use its best endeavours or the Member States of their respective to establish a draft budget sufficiently early powers. for completion of the procedure before the beginning of the financial year to be prac­ ticable'.

and the Parliament adopted the budget on a the draft budget and ask for a new draft to second reading only on 18 May 1988. be submitted to it cannot release the Council from its obligation to prepare a 42. Furthermore, the argument that the draft within the prescribed time-limit. timetable laid down for the establishment of Moreover, the terms of that provision and a draft budget is merely indicative because it also its place within the scheme of the would be unrealistic to expect it to be budgetary procedure as a whole show that regularly complied with goes against the the European Parliament can avail itself of precise and binding terms of Article 203. that power only under special conditions as Since the introduction of the new procedure to quorum and for important reasons, which by the Treaty of 22 July 1975 amending relate in particular to the manner in which certain financial provisions, the timetable its amendments and proposed modifications has always been complied with, except in are dealt with within the dialogue which, in

203. That accelerated timetable, by virtue of 45. Finally, whilst it is true that the legal which the Council is to forward the draft consequences of exceeding the time-limit budget to the Parliament before the summer laid down in the latter paragraphs are holidays, has been observed for most of the expressly provided for, in so far as 'the financial years since 1976. It appears from budget shall be deemed to be finally the reply which the Council gave to the adopted' if one of the two arms of the question put to it by the Court in that budgetary authority does not express any connection that the Council itself had views within the prescribed time-limit on the planned to establish the draft budget for position adopted by the other arm at the 1988 by 23 or 24 July 1987. preceding stage of the procedure, and whilst that is not the case as regards the time-limits

44. Likewise, the fact that, pursuant to Parliament, be adopted before the beginning Article 203 (8), the Parliament may reject of the budgetary year to which it relates. It

51. The parties are in agreement that the 47. Moreover, it is difficult to imagine what own resources available pursuant to the the 'automatic sanction' might be if that Council decision of 7 May 1985 on the date were not met. In any event, to provide 10 Communities' system of own resources, that the preliminary draft budget which the which limits the maximum rate of revenue Commission must place before the Council from VAT to 1.4%, were not in fact before 1 September (Article 203 (3)) is to sufficient to cover all the 'expected' expen­ be deemed to constitute the draft budget if diture for 1988, even if the more restrictive the Council does not meet the deadline of 5 interpretation accorded to that term by the October would amount to direct inter­ Council was adopted. ference with the division of powers provided for by the Treaty with respect to budgetary matters, of which the underlying purpose is that the two-member team made up of the Council and the European Parliament should be the budgetary authority, entrusted with the adoption of the budget, whilst the 52. In the 'overview' accompanying the Commission should be responsible for its preliminary draft budget (PDB) which it implementation (Article 205). forwarded to the Council on 15 June 1987, the Commission indicated that 'the PDB would require a VAT rate of 1.7% if it was 48. All the arguments put forward by the to be financed with own resources as Council in support of its contention that it is presently constituted'. It therefore estab­ not obliged to establish and forward the lished the budget in accordance with the draft budget by 5 October must therefore be Community's financing proposals for the rejected. period from 1988 to 1992, as set out in the 11 documents COM(87) 100 final and 101 2 49. It remains to be established whether the final, 1 which involved in particular a Council can plead the existence of any valid review of the 1985 decision regarding own grounds which, in 1987, released it from its resources. It nevertheless took care to make obligation to meet the date in question. clear that in the event of the Member States

not adopting its proposals in due time, an Economic and Social Committee, but intergovernmental agreement of ECU 5.75 because of the importance of the decisions billion would be needed to 'fill the gap'. to be taken the Council considered such consultation to be desirable. It was therefore obliged to await the opinion of the 53. The Commission did not finally present Committee before adopting its decision. its formal proposal for the increase of the Communities' own resources until 4 August 1987. 13 57. In those circumstances, the Council could legitimately claim with respect to the 'revenue' side of the Commission's 54. That proposal was based on Article 201 preliminary draft, on the basis of which it 16 of the Treaty which provides for the was to establish the draft budget for 1988, replacement of the financial contributions of that 'there was no legal basis for it'. Member States (Article 200) by own resources. For its adoption a special procedure must be followed. Article 201 (3) 58. That statement has not actually been provides that: challenged by the applicants, but they nevertheless claim that in the absence of new own resources properly so called, the 'After consulting the European Parliament Council had other revenue at its disposal on on these proposals the Council may, acting the basis of which it could have drawn up a unanimously, lay down the appropriate complete and balanced draft budget. provisions, which it shall recommend to the Member States for adoption in accordance with their respective constitutional 59. According to the Parliament, the requirements'. Council should have either mobilized 'national contributions' under Article 200 of the Treaty or had recourse to Article 235 or 55. In view of the date of presentation of else asked the Member States to pay the Commission's proposal, it would have 'advances' to the Community, as was done been impossible for the decision on new in 1984 and 1985. own resources to be ratified by the Member States in accordance with their respective constitutional requirements before 5 60. The Commission, for its part, merely October 1987, even if the Council had been criticizes the Council for not having in a position to adopt it before that date. adopted the latter solution which it itself had suggested, as we have seen, in the 'overview' accompanying its preliminary 56. The Parliament itself did not give its draft budget. opinion on that proposal until 18 November 14 1987 and the Economic and Social Committee did not give its opinion until 27 61. We must now therefore consider 15 January 1988. It is true that Article 201 whether the Council would in fact have does not provide for consultation of the been in a position to balance the draft budget using revenue from either of those 13 — Proposal for a Council decision on the system of the Communities' own resources (COM(87) 420 final), sources. published in Official Journal 1987, C 241, p. 3. 14 — Resolution on the future financing of the European 16 — See the statement made by the President in office of the Community (Official Journal 1987, C 345, p. 43). Council (Budget) to the European Parliament on 13 15 — Official Journal 1988, C 80, p. 14. October 1987.

Considering that the replacement of financial contributions of Member States by 63. Even assuming that Article 200 is still in the Communities' own resources requires a force, percentages for the new Member strengthening of the budgetary powers of States could only be introduced by means of the European Parliament'. an amendment of the Treaty in accordance with the procedure provided for in Article 236 or by adjustments to the Treaty in connection with an accession agreement in accordance with Article 237. Neither 67. In addition, whilst it is true that the first procedure has been followed. decision on own resources, dated 21 April 1970, continued to envisage the coexistence of those two sources of financing 'to ensure that the budget of the Communities is in 64. However, I share the view of the balance', it did so, by virtue of Article 3 (2), Council that the 'financial contributions' only for the period from 1 January 1971 to have been definitively replaced by 'own 31 December 1974. Article 4 (1) of that resources'. decision expressly provides that 'from 1 January 1975, the budget of the 17 — Council decision of 21 April 1970 on the replacement of Communities shall, irrespective of other financial contributions from Member States by the revenue, be financed entirely from the Communities' own resources (Official Journal, English Special Edition 1970 (I), p. 224). Communities' own resources'.

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68. That provision must be compared with for the adoption of that scale differs from Article 200 itself, the first paragraph of that contained in Article 200 (3) of the which reads as follows: Treaty.

72. As far as Article 235 is concerned, suffice it to point out that, since Article 201 70. Moreover, the existence in the decisions lays down a procedure for creating new on own resources of certain provisions own resources, there is no lacuna in the which provided for (Articles 3 (4) and 4 (6) Treaty and parallel recourse to Article 235 of the 1979 decision) or provide for (Article is not possible. Furthermore, the Council 4 (2) of the 1985 decision, as amended by could have acted on the basis of that 8 Article 29 of the Single European Act) 1 the provision only upon a proposal from the Commission and no such proposal was possibility of recourse to financial contri­ submitted to it. butions from the Member States shows, a contrario, that such contributions are no longer available as normal sources of financing for the budget. Moreover, those (c) The advances to be granted by the provisions do not refer to the scale laid Member States down in Article 200, which still relates only to the six founding Member States, but require a specific decision of the Council in that regard. That requirement of a specific 73. A third method of bridging the gap decision is again emphasized by the fact between the own resources available that, since the amendment made to the 1985 pursuant to the 1985 decision and the decision by the Single Act, the procedure 'expected' expenditure would have been, according to the applicants, the provision by 18 — Official Journal 1987, L 169. the Member States of non-reimbursable

OPINION OF MR MISCHO — CASE 377/87

74. It is true that the Member States have on two occasions in the past decided, at a 78. It was only when an agreement in Council meeting, to grant such advances to principle on all of what were called, for the the Community. However, the represen­ sake of brevity, 'the Delors proposals' was tatives of the Member States acted in both reached in the Brussels European Council of cases as their plenipotentiaries and not as 11 to 13 February 1988 that those of the members of the Council. Member States that had used their oppo­ sition to the grant of advances as a means of exerting pressure to obtain a solution to the outstanding problems which would be satis­ 75. Article 5 of the Treaty does indeed, in factory to them dropped their objections. my opinion, impose an obligation upon the Member States to grant advances to the Community whenever it becomes necessary 79. It follows from the foregoing obser­ to do so in order to ensure that the budget vations (sections (a), (b) and (c)) that the can be adopted in time, and without waiting Council, as an institution, was, at least until until the future destiny of Community the European Council meeting of February finances is settled by a long-term decision. 1988, unable to fulfil its obligation to The fact nevertheless remains that if one or present a draft budget in which the revenue more Member States were to refuse to and expenditure were in balance and which comply with that requirement the responsi­ covered all the expenditure that, in the bility for instituting Treaty-infringement opinion of the Council itself, ought to be proceedings against them on the basis of provided for. Article 169 of the Treaty would fall to the Commission. The Council could not be regarded as liable or be penalized by the 80. However, it may still be asked whether Court for failing, as an institution, to the very clear obligation imposed upon the ensure, by means of advances from the Council to present no later than 5 October national budgets, that the Community each year a draft budget in which revenue budget was in balance. and expenditure are in balance should have prompted it to present before that date at least a draft budget in which the expen­ diture side was kept within the limits of the 76. That conclusion necessarily follows revenue available at that time. from the fact that the Council is not an intergovernmental conference (even though it sometimes behaves like one) but an 81. That is the question which must be institution of the Community. considered now.

90. It clearly follows, as Mr Advocate 'All items of revenue and expenditure of the General Mancini stated in his Opinion in Community, including those relating to the Case 34/86, that 'there is no "expected" European Social Fund, shall be included in expenditure which the budgetary authority estimates to be drawn up for each financial 19 may not take into account'. The year and shall be shown in the budget.' budgetary authority cannot therefore, in advance, cut down on the 'expected' expen­ diture, whatever may be the exact meaning 86. Moreover, it is apparent from the first which should be attributed to that concept. article of the Financial Regulation (Official Journal 1977, L 356, p. 1) that

91. Of course, if expenditure which was not expected before the beginning of the 'The budget of the European financial year were to be incurred during Communities ... is the instrument which sets out forecasts of, and authorizes in 19 — Opinion of 2 June 1986 [1986] ECR 2181.

OPINION OF MR MISCHO — CASE 377/87

95. It is therefore wholly comprehensible 92. It should also be noted that in the event that the European Parliament and the of the Council presenting a draft budget Commission attach the greatest importance characterized by a level of revenue to the completeness and accuracy of the determined ne variatur and by expenditure budget. Let us remember in particular the equivalent to the revenue, the European Parliament's resolution of 13 December Parliament would' find it impossible to make 1984 in which it declared that a budget use of the right to increase non-compulsory which did not cover 12 months of revenue expenditure conferred upon it by Article and expenditure was not acceptable and that 203. moreover an annual budget must incor­ porate the financial implications of the legis­ lation in force and the decisions that had 93. Finally, to decide that the date of pres­ been taken (Official Journal 1985, C 12, p. entation of the draft budget is more 90). For those reasons, the Parliament important than the 'truthfulness' or rejected the draft budget for 1985. 'accuracy' of that document would be tantamount to attaching more importance to form, or a point of procedure, than to substance. I cannot see that that could have 96. In a resolution passed on 8 July 1987 been the intention of the authors of the (Official Journal 1987, C 246, p. 40), the Treaty when they laid down a binding date Parliament also made it clear that 'any for presentation of ¡the draft budget. budgetary decisions which do not cover completely the real financial requirements for 1987 and 1988 cannot be accepted'. 94. It is also.not without interest to note that, for 1988,. the difference between the own resources actually available and the expenditure ultimately considered necessary by the Council in its draft budget of 7 97. There is therefore no shadow of a March 1988 is truly enormous and is doubt that if the Council had presented by 5 considerably greater even than the deficit October 1987 a draft budget that did not calculated by the Commission in June 1987. include all the expenditure which, at least in The advances to be paid by the Member the opinion of that institution, would prove States in fact total ECU 7.6 thousand necessary during 1988, the Parliament million, whereas the total amount of the would have rejected that draft budget. In draft budget is ECU 43.3 thousand million those circumstances, the procedure prior to

99. I consider therefore that it should be concluded that the Council infringed the Treaty by failing to present, no later than 5 102. In that case the Council had contended October 1987, a draft budget in which the that objective difficulties of a geographical, expenditure side was adjusted according to economic and social nature stood in the way the available revenue. of rapid progress in implementation of the common transport policy. The Court held that Objective difficulties' were irrelevant 100. The Council is right, in my view, when for the purposes of that action. it contends that it was faced with conflicting obligations since it was not in a position to present a draft budget which simultaneously fulfilled the following three conditions: 103. In my opinion, the passage cited refers to difficulties which, by reason of the complexity of the matter in hand, the Council may experience in arriving, within Presentation before 5 October 1987; that institution, at the qualified majority or unanimous vote necessary for the adoption of a decision. It does not mean that a Inclusion of all expenditure which might be difficulty of a legal nature, alien to its own expected in 1988; decision-making process, cannot, in appro­ priate circumstances, be taken into account.

Balanced revenue and expenditure.

104. Let us suppose for example that the Council were obliged to adopt a measure If the Council had sought to comply with before a specified date, and that the opinion any of those conditions, it would have auto­ of the Parliament, which it was under an matically infringed at least one of the other obligation to obtain, did not reach it before two. that date. Since the obtaining of the opinion of the Parliament is a precondition and an essential procedural requirement the 101. The Parliament and the Commission non-observance of which would give rise to consider, however, that it is not for the 20 — Case 13/83 European Parliament v Council [1985] ECR Court to consider the reasons underlying 1513, at p. 1596.

the nullity of the measure concerned, the that situation was attributable not to the Council would not be guilty of a failure to Council but to those of the Member States act. This, in my view, may be inferred from which were not prepared, at that time, to the judgments of the Court of 29 October grant 'advances' to the Community. 1980 in Cases 138/79 (Roquette frères v Council [1980] ECR 3333, at p. 3360) and 139/79 (Maizena v Council [1980] ECR 108. It was therefore, in my opinion, abso­ 3393, at p. 3424) in which the Court lutely impossible for the Council to declared void a Council Regulation which, discharge its obligation regarding the in view of urgent circumstances, had been time-limit for presentation of the budget. adopted without the prior opinion of the Having regard to the conflicting obligations Parliament having been obtained. incumbent upon it, there were legitimate reasons for its giving priority to compliance with its substantive obligations rather than to an obligation of a procedural nature. 105. Likewise, the Council cannot be declared to have failed to act, on the ground that it did not fix the prices for a new milk marketing year by 1 April, if the 109. Let me repeat that, in the present Commission's proposals, without which it proceedings, which have been brought cannot give a decision, have not reached it against the Council as a Community before that date. institution, I am expressing a view only regarding the obligations of that institution. It is not for me to give an opinion on whether or not one, several or all of the 106. In the Court's judgments of 15 January Member States have failed to fulfil their 1986 (Case 52/84 Commission v Belgium obligations under Article 5 of the Treaty by [1986] ECR 89) and of 2 February 1988 not making 'advances' available to the (Case 213/85 Commission v Netherlands Community before 5 October 1987. [1988] ECR 281) it was conceded that the absolute impossibility of implementing a decision properly (Case 52/84, paragraph 110. Once all the Member States, at the 14) or the absolute impossibility of European Council held in Brussels from 11 implementing a decision within the period to 13 February 1988, had indicated their notified (Case 213/85, paragraph 22) is a agreement to grant such 'advances', the defence which may be pleaded by a Member Council adopted the draft budget for 1988 State in Treaty-infringement proceedings of within a period which may be regarded as the kind provided for in the second reasonable (by 7 March 1988) and placed it subparagraph of Article 93 (2) of the before the Parliament. Treaty.

112. Since both actions explicitly refer to 117. But, if that view were correct, the failure to comply with the time-limit of 5 Court would be obliged in all cases to October 1987, I am therefore obliged to establish that the failure to act was propose that the Court should dismiss the unlawful, in particular in order to place on actions as unfounded. record for the benefit of the applicant the fact that it was by virtue of an obligation that the institution finally adopted the 113. In the event of the Court's not requested measure prior to the Court's agreeing with my reasoning, the actions delivering judgment, and that it did not do should of course succeed, unless the Court so in a spirit of benevolence or in the reaches the conclusion that there is no exercise of a discretion. longer any need to give a decision in view of the fact that the measure called for has been adopted in the mean time. That point 118. However, that is not the approach adopted in the previous decisions of the therefore remains to be considered. Court.

OPINION OF MR MISCHO — CASE 377/87

Indeed, failure to comply with the time-limit down in the reasoned opinion and where is a precondition for the setting in motion of the applicant has not discontinued the the entire procedure. proceedings. But in such cases the Court has always felt the need to emphasize that

PARLIAMENT v COUNCIL

withdrawal of the contested measure, ir the time when the proceedings are proceedings for a declaration that a measure commenced, must without fail be the subject is void. of a sanction even if the measure called for is adopted before the oral stage of the procedure has been reached.

129. As regards the hypothesis where, in the case of proceedings for the annulment of a measure, the contested measure has been withdrawn while the proceedings are 132. In the present case, if the Court shares pending, the Court has always taken the my view, it will in any event feel that it is view that, by reason of their withdrawal, necessary to emphasize in the grounds of its 'the contested decisions have ... become judgment that the date of 5 October is a 23 inapplicable' and that 'the action relates to mandatory time-limit; thus, the position will a decision which can no longer have any be clarified for the future. 24 adverse effect on the applicant company'. It inferred from this that the actions had become devoid of purpose and that there was no longer any need to give a decision. In other cases it declared that there was no 133. In those circumstances I do not see any need to give a decision by virtue of the fact decisive reason which might prompt the that the applicant had achieved the desired Court to deviate in this case from the 25 outcome or had obtained full satisfaction. general trend of its previous decisions, as just outlined.

130. It may therefore be considered, by analogy, that the purpose of proceedings for a failure to act disappears as soon as the 134. The great majority of legal writers are measure called for has been adopted and the also of the opinion that if an institution applicant has thus obtained satisfaction. submits to the applicant's claims by adopting the measure requested of it, even after the application has been lodged, the action 26 becomes devoid of purpose.

OPINION OF MR MISCHO — CASE 377/87

136. On the basis of all the foregoing considerations, I therefore propose that the Court should:

Dismiss the objection of inadmissibility raised by the Council;

Find that, by virtue of the fact that it was absolutely impossible for the Council to discharge its obligation regarding the date for presentation of the draft budget without thereby failing to fulfil one or more other obligations, its failure to forward the draft budget for 1988 to the European Parliament no later than 5 October 1987 does not constitute an infringement of the Treaty; and accordingly dismiss the applications;

In the alternative, declare that there is no need to give a decision.

137. Since the Council has failed in both its submissions (objection of inadmissi­ bility and its argument that the time-limit of 5 October is not mandatory), I propose that each of the institutions should bear its own costs. This seems to me to be the correct decision, irrespective of which of the alternatives proposed above is adopted.