Financial Services Regulation |  Dec 03, 2015

The Layman’s Guide to the European Institutions

Ever since the horror that was the Second World War, Europe has reorganised itself into a democratic union of states, which has proved to be economically beneficial for all involved. However, the aim of the European institutions is not only economic advancement, but also political representation and civil rights. Here the aim is to differentiate between the various courts and institutions found in Europe, which can be quite a conundrum.

The European Council and the Council of Europe

The Council of Europe’s main principles are democracy, human rights and the rule of law. Although it is entirely separate from the European Union, no member has ever joined the EU without first being a member of the Council of Europe (CoE). The CoE advocates for the protection of free speech, equality and the protection of minorities.

Its most important task is promulgating important conventions – chief amongst which is the Convention on Human Rights which was ratified by 47 countries. Other notable achievements of the Council of Europe include the Convention on Cybercrime, the Convention on the Prevention of Terrorism and the Convention against Corruption and Organized Crime.

On the other hand, the European Council is an institution which is part of the European Union (EU). It establishes the general political direction of the EU, while defining its priorities at any point in time. EU member state leaders meet and form the European Council and also decide on issues regarding the EU’s common foreign and security policy.  The idea behind the European Council was to establish a platform whereby heads of government can meet in an informal way so as to exchange ideas and to break any deadlocks that may arise. To encourage this, there is very limited access to the sessions. Nevertheless, whether or not these meetings have managed to retain their “informality” is still up for debate.

Legally binding decisions are not taken by the Council, however it does take certain decisions with respect to policy development. Although originally the idea was for the European Council to work at a general level, many a time it works on very specific internal policy issues. This is because national leaders have the authority to deal with very sensitive issues, and there is now an expectation that important policy matters are to be determined by the European Council.

The specific roles of the European Council are not very clear and they tend to vary throughout the years – however many say it concerns itself with “very high politics”. Recently, the Council of Ministers has lost much of its traction to the European Council. The Council of Ministers is the other legislative body of the EU, and is made up of ministers from member states who represent their government. The ministers differ depending on the topics under discussion. Nowadays, major issues tend to go through the Council first, as opposed to the Council of Ministers.

The European Parliament in Strasbourg, the European Parliament in Brussels.

It must be said that the European Parliament has very limited power over Commission, the Council of Ministers and the European Council. Much like any democratic parliament, the European Parliament is the law making body of the EU. Apart from passing EU laws, it also decides on enlargements and agreements. It supervises many of the other institutions and approves the Commission’s representatives. Together with the Council, it also establishes the EU’s budget.

The work of the Parliament can be divided into two main phases: the Committee phase, which is proposing, discussing and preparing legislation, and the Plenary phase, whereby MEPs vote on the proposed legislation.

There are two buildings where the European Parliament convenes: one in Brussels and one in Strasbourg. The Strasbourg seat was built as a symbol of reconciliation between France and Germany. The plenary sessions are held in Strasbourg – meaning that all the important votes are taken there. On the other hand, the Brussels EP is where the working groups and the committee meetings are held.

The fact that there are 2 European parliaments has been a thorn in many parliamentarians’ sides for years now. Dubbed the “travelling circus”, members, translators, officials and documents travel monthly from Brussels to Strasbourg for 4 days and back again. This move is costing the European taxpayer €114 million yearly.

Unfortunately, the EP is legally bound by the Treaty on the Functioning of the European Union to hold 12 plenary sessions a year at its Strasbourg seat. Since France has the power of the veto, any move by parliamentarians to close the Strasbourg seat will end in vain. The “travelling circus” brings over €100 million annually to the French coffers.

The European Commission

The European Commission proposes legislation and enforces European law, together with the Court of Justice of the European Union. It also manages and implements the EU budget, and negotiates on behalf of the European Union with other countries, such as with regards to trade agreements.

Each member state elects a commissioner, which is usually a minister or former minister – this is subject to the approval of the European Parliament. They must be impartial and independent and they should not push their country’s political agenda.

Each Commissioner has specific areas of responsibility – “portfolios” – ranging from Environment, to Competition and Fishing. Member States usually lobby so that their Commissioner has a portfolio in an area which is of particular importance to that member state.

The President of the Commission, currently Jean Claude Juncker, allocates the Commissioners’ portfolios and gives the general direction to the Commission. Juncker has been criticised for having a dated mentality with regards to the direction that Europe should be headed in. A professed federalist at heart, his views are widely regarded as obsolete. Controversially, he has also suggested that Europe needs its own army if it is to be taken seriously from an international perspective. On the whole, his outlook on the current European situation is considered to be very negative.

The Commission develops policy and has certain rule making powers. It also has the role of managing EU finances and ensuring that the policies are actually implemented by EU member states. There has been much debate centred around the question of whether an institution which is not elected should have such extensive powers.

In recent years, the authority of the Commission has significantly diminished and has lost its popularity, while the influence of the European Parliament and the European Council has increased.  Its powers have been restrained by the Lisbon Treaty, wherein some powers it used to have, have now been passed on to another body: the European External Action Service.

The Court of Justice

Article 19 of the Treaty on the European Union states that: “The Court of Justice of the European Union… shall ensure that in the interpretation and application of the Treaties the law is observed”. Although EU law tackles various different fields, the most prominent of these has always been that of economic activity.

Three separate courts constitute the Court of Justice (CJEU): the Court of Justice, the General Court (which was formerly known as the Court of First Instance), and the European Union Civil Service Tribunal. The CJEU deals with cases which are of more importance, whilst the General Court deals with run of the mill cases. Located in Luxembourg, they are not to be confused with the European Court of Human Rights, which is the court of the Council of Europe, situated in Strasbourg.

One judge from each member state sits on the Court of Justice, along with nine Advocates General. The CJEU deals with matters of interpretation of EU law, also known as preliminary rulings. National courts request a preliminary ruling when they are in doubt as to the way an EU law must be interpreted. These rulings therefore encourage the uniform interpretation and application of EU law. The CJEU also hears infringement proceedings whereby member states or the European Commission take national governments to Court if they fail to abide by EU laws.

Many landmark decisions have emanated from infringement proceedings and strengthened EU law, such as Van Gend En Loos. In Francovich and Bonifaci v. Italy, the Court held that individuals are entitled to financial compensation if a member state fails to implement an EU law within the required deadline, and such an individual suffers as a result. In Commission v. Council the CJEU reinforced the EU’s powers by ruling that in some circumstances criminal law sanctions could be used for offences against EU law. The principle of “mutual recognition” emanated from Cassis de Dijon. This principle states that a product lawfully produced in one member state must be accepted in another member state.

The CJEU also has the power to invalidate EU legal acts if it deems that they go against a treaty or fundamental EU rights.  Although some consider the CJEU’s powers to be too wide, it has been of pivotal importance in shining a light on provisions of EU law which might otherwise remain unclear.

The European Court of Human Rights

Contrary to popular belief, the European Court of Human Rights (ECHR) is in no way associated with the European Union. The ECHR tries cases which are in violation of the European Convention of Human Rights. It cannot, however, take up a case voluntarily. The party which is submitting the complaint does not necessarily have to be a citizen of a signatory state. Thus far, 47 states have ratified the Convention. When the Court receives an application, it allocates a formation of judges of which there are 4, ranging from a single judge who can rule on the admissibility of an application to a grand chamber which is composed of 17 judges and rules on cases which involve an important or novel question of law. In a means to guarantee impartiality, a single judge is not allowed to examine applications hailing from the state he/she was elected from.

However, since there are 47 contracting states to this Convention, the number of people which fall into its remit amount to 800 million. This means that there is a huge number of applications flooding the Court every year, and this number is growing steadily. This has been a point of contention for many, as some say that the impossible workload makes the ECHR unable to fulfil its human rights obligations. Schermers has described the workload as ‘an iceberg: only a little tip is known to the outside world, the great mass remains hidden underwater’.

90% of cases going to the ECHR are “manifestly ill-founded” cases which never see the light of day. The Court is continuously trying to solve 3 recurring problems: filtering out the manifestly ill-founded applications, dealing with the high number of repetitive cases and also the unbalanced nature of the cases – in which 60% are lodged against the same 5 state parties. Although there have been attempts at streamlining the system, such as the aforementioned variations in panels of judges dealing with different types of applications, the ECHR is largely a victim of its own success.

A Pacific Era

Since 1945, Europe has enjoyed an unprecedented time of 70 years of peacetime. It can be said that these various institutions have played a major role guaranteeing this pacific era. After centuries of the European countries waging war against one another, Europe has finally learnt how to settle its disagreements in a peaceful and cordial manner, without putting European lives at stake.    However, this time of relative peace must not be taken for granted. The institutions collectively could be seen as a machine which needs to be well oiled and looked after, as if it becomes faulty it could stop working entirely. These institutions have ensured that the EU remains as transparent as possible, while the Courts have guaranteed that the European member states are held accountable for their actions.

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