The EU-Armenia Comprehensive and Enhanced Partnership Agreement (CEPA): Legal basis litigation 2.0
In April 2020 the European Commission challenged before the European Court of Justice (ECJ) two Council Decisions taken within the Partnership Council under the CEPA with Armenia. The implementation of the CEPA required the establishment of joint institutions such as the Partnership Council, the Partnership Committee, subcommittees and other bodies. The Council laid down procedural rules for the functioning of the joint bodies under the CEPA in two separate Decisions: the first one relates to Title II of the Agreement and covers Common Foreign and Security Policy (CFSP) aspects; the other one relates to the rest of the Agreement and covers TFEU-related matters respectively.
The Commission did not agree with the choice of legal bases of the CFSP-related Decision, notably the substantive legal basis of Article 37 TEU and the procedural legal basis of the second paragraph of Article 218(8) TFEU. Furthermore, according to the Commission, the Council was not allowed to split artificially a single act into two different parts with different centres of gravity.
The EU-Armenia CEPA is a mixed agreement, which governs the legal framework of the relations between the EU and its Member States of the one part and Armenia of the other part. This ambitious agreement was signed in November 2017 and provisionally entered into force in June 2018. The Council Decision on signing and provisional application of the Agreement finds its legal basis in Article 37 TEU, and Article 91, 100(2), 207 and 209 TFEU, in conjunction with Article 218(5) and (7) and the second paragraph of Article 218(8) TFEU.
According to the amended joint proposal of the Commission and the High Representative, the legal basis of the Council Decision on the EU position within the Partnership Council shall be determined pursuant to the centre of gravity of the agreement as a whole and should include Articles 91, 100(2), 207 and 209 TFEU in conjunction with Article 218(9) TFEU. The Council, however, modified the Commission’s proposal and embarked on two separate tracks – contested Decisions – each with a different legal basis.
Pleas in law and main arguments of the Commission
The Commission argues that since the CEPA is predominantly concerned with trade and development cooperation as well as trade in transport services, its CFSP reach is not sufficiently significant to require a substantive CFSP legal basis. The choice of a substantive legal basis has direct implications on the determination of voting rights in the Council. There is a parallelism of procedures in the EU: unanimous voting is foreseen when the international agreement covers the field for which unanimity is required for the adoption of an EU act. The Commission considers that the Council was wrong to rely on Article 37 TEU as the substantive legal basis and, consequently, wrong to vote by unanimity.
Furthermore, according to the Commission, the Council violated the Treaties when it adopted two separate decisions pursuant to Article 218(9) TFEU: one on CFSP and another one on TFEU-related matters of the Agreement. From the Commission’s perspective, the Union institutions are not allowed to split artificially a single act into different parts with different centres of gravity respectively. Conversely, this would lead to the circumvention of the requirement in Article 13(2) TEU which codifies the principle of interinstitutional balance. Furthermore, since the CEPA does not make a distinction between the working arrangements as applied to the bodies under Title II (CFSP) or under other Titles of the agreement, the Commission argues that the Council was wrong to adopt two separate decisions for the implementation of the Agreement at issue.
Centre of gravity test and international treaties making
The analysis of the arguments presented by the Commission suggests further integration or even ‘normalization’ of the CFSP into the EU legal order. The Commission does not refer to the fundamental division between CFSP and non-CFSP competences (Article 40 TEU), but applies the traditional centre of gravity test. This approach is in line with the settled case law of the CJEU where the Court clarified that it applies the general constitutional principle of institutional balance on the choice of a legal basis of an international agreement, including where a CFSP and non-CFSP legal basis dilemma is at issue.
The centre of gravity test was developed by the CJEU with regard to its internal decision-making. The recourse to a dual legal basis is only possible, where the legal measure simultaneously pursues multiple inseparably linked objectives without one of them being incidental to the other; and where the procedures are not mutually incompatible. In exceptional cases, the Court accepted the combination of different legal bases entailing incompatible procedures.
When it comes to international treaty-making, the centre of gravity test implies the assessment of the agreement in the light of some judicially verifiable criteria such as its aim, objectives and to some extent context (see Case C‑263/14 ‘EU-Tanzania Agreement’, para 49-51; Case C‑244/17 AG Kokott Opinion on ‘EU-Kazakhstan Agreement’, para 52). The AG Kokott stipulates that the centre of gravity test is precluded where a vertical division of competences between the EU and Member States is at issue (Case C‑244/17 AG Kokott Opinion on ‘EU-Kazakhstan Agreement’, para 59). If applied vertically, the centre of gravity test is believed to lead to the extension of the EU competences in violation of the principle of conferral. For instance, in its advisory Opinion on the EU-Singapore Agreement (paras 143-147), the ECJ did not have recourse to the centre of gravity test and relied, instead, on the integrationist nature of the Common Commercial Policy (CCP). In any case, the choice of a legal basis has consequences both for the divisions of powers between the EU institutions and between the EU and the Member States.
The practice shows that international treaties incorporated a wide range of legal bases, including the combination of CFSP and non-CFSP components (see Association Agreements with Ukraine, Georgia and Moldova). The combination of CFSP and non-CFSP legal bases is tolerated more easily with respect to international agreements, while excluded for the adoption of targeted restrictive measures or so-called smart sanctions. This is premised on the fact that Association/Partnership and Cooperation Agreements lay down a complex legal framework, which covers a wide range of areas and pursues simultaneously several objectives. This cross-sectoral overarching nature of international agreements makes them to some extent unfit for the traditional approach based on ‘main’ versus ‘incidental’ purposes delineation under the centre of gravity test.
EU-Kazakhstan Agreement litigation relevance
The ongoing legal basis litigation on the EU-Armenia agreement brings to mind the case on the Enhanced Partnership and Cooperation Agreement (EPCA) with Kazakhstan where for the first time a clarification was sought on the delimitation between CFSP and non-CFSP competences with respect to the EU’s position within the Cooperation Council. Both cases have three obvious similarities: first, they relate to the Council Decision on the positions to be adopted on the EU’s behalf in a body set up by an international agreement, pursuant to Article 218(9) TFEU; secondly, they illustrate an increasing tendency of the Council to include a CFSP legal basis in the EU’s treaty-making procedures and positions in joint bodies under international agreements; thirdly, they relate to the determination of voting procedures within the Council under Article 218(9) (qualified majority or unanimity).
The outcome of the litigation on the EU-Kazakhstan Agreement is of a particular relevance in the present case. There, the Court established that the procedural legal basis for the Council Decision shall be determined in accordance with the centre of gravity of the agreement as a whole. This means that if an agreement is predominantly concerned with trade and development cooperation, a CFSP component is not sufficient to require a separate legal basis. According to this logic, in most cases non-CFSP purposes will prevail, whereas CFSP objectives will be merely incidental. Is such an interpretation, however, compatible with the non-affectation clause of Article 40 TEU? According to Article 40 TEU, the implementation of the CFSP shall not affect the application of the procedures and the extent of the powers of the institutions laid down under TFEU and vice versa.
‘Absorption doctrine’ vs Article 40 TEU
The reasoning of the Court in the EU-Kazakhstan Agreement judgement suggests the application of the ‘absorption doctrine’ to an act covering both CFSP and non-CFSP elements. According to the ‘absorption doctrine’, the measure shall be adopted pursuant to the procedure corresponding to the main legal basis. In this context, the main legal basis absorbs ancillary ones. While this practice was used previously for the determination of the main legal basis of international agreements, it was not applied to the CFSP/non-CFSP delineation, to my knowledge. Furthermore, the ‘absorption doctrine’ was viewed as incompatible with the wording of Article 40 TEU, which precludes mutual encroachments between CFSP and non-CFSP procedures.
Most international agreements are predominantly concerned with trade and development cooperation (TFEU component). Accordingly, the CFSP component will rarely qualify as the main one. It seems that in the judgement on the EU-Kazakhstan Agreement the Court spelled out the application of the ‘sweeping logic’ to TFEU external policies. Does this mean that if an agreement pursues more TFEU related objectives from a qualitative and quantitative viewpoint, the TFEU component will always prevail? Applying such a ‘sweeping logic’ to TFEU elements can undermine the useful effect of the CFSP legal basis and make CFSP-related provisions nugatory and ancillary to other legal bases. And this is in a stark contradiction with the non-affectation clause of Article 40 TEU. This approach also overlooks the specificity of the CFSP purposes, which due to the nature of the CFSP competence will be less detailed than other TFEU-related external policies.
The Council adjusted its strategy accordingly in order to preserve the CFSP competence. This might be one of the reasons why, in contrast to the EU-Kazakhstan Agreement, the Council adopted two separate decisions (CFSP and non-CFSP one) for the implementation of the EU-Armenia Agreement.
Splitting the implementation Decision in two legal acts
It has been suggested to solve dual legal basis issues of the EU Treaty-making and the dichotomy between the CFSP and non-CFSP (Article 40 TEU) by splitting an act in two: one with a main or predominant CFSP component; the other with a main or predominant TFEU purpose. These suggestions related mainly to the Council Decisions on signing and provisional application of international agreements. Strikingly enough, the established practice to combine CFSP and TFEU legal bases for the decisions on signing and provisional application of international agreements has not been a subject of controversy so far (see Council Decision (EU) 2018/104 on the signing and provisional application of the CEPA with Armenia).
Splitting a legal act in two is not new to the EU Treaty-making and was used in the context of the Agreements containing JHA (Justice and Home Affairs) elements. When the Council adopts a decision on the signature and conclusion of international agreements which include JHA components, the Council usually opts for two separate decisions: one decision relating to the JHA provisions and another decision covering the other non-JHA provisions of the agreement. This ensures the compliance with different voting rights arrangements within the Council due to the UK and Ireland opt-out clause (Protocol 21). For instance, the Council proceeded by means of two separate Decisions in relation to the EU’s accession to the Protocol of 2002 to the Athens Convention relating to the Carriage of Passengers and Luggage by Sea.
However, the practice on splitting the Council Decision in two separate acts is not consistent. For instance, the Council adopted one Decision 2014/164/EU on the conclusion of the Protocol against the Illicit Manufacturing of and Trafficking in Firearms, Their Parts and Components and Ammunition. In response to this, the UK argued that the Council Decision should have been ‘split into two, to cover both the non-Title V, and the Title V, aspects of the Firearms Protocol’.
It would not be an exaggeration to say that the clarification by the ECJ on the question of the borderline between CFSP and non-CFSP legal bases will be timely and long awaited. The Court applied the centre of gravity test to the determination of procedures to follow in the judgement on the EU-Kazakhstan Agreement. This resulted in the ‘absorption’ of CFSP elements by the main TFEU component. Such a practice is in a stark contraction with the wording of Article 40 TEU, which precludes mutual encroachments between CFSP and non-CFSP procedures. While the centre of gravity test works for the EU’s internal decision-making, it does not come across as the best solution for international treaties, which traditionally have a wide range of purposes. The apparent unfitness of the centre of gravity test for the international treaty-making became particularly obvious with regard to the delineation between CFSP and non-CFSP procedures.
One possible solution to this dilemma is, indeed, to split the Council Decision in two: one with a main or predominant CFSP component; the other with a main or predominant TFEU purpose. The practice on splitting an act in two separate decisions is hardly new and was used in the context of the Agreements containing JHA (Justice and Home Affairs) elements. Embarking on two separate tracks procedure will ensure the non-affectation between CFSP and non-CFSP procedures and preserve the special status of the CFSP in the EU legal order. On the flip side, it will further compound the EU external action procedures. The present case might be an opportunity for the ECJ to set the tone for the future EU external action practice and to clarify the yet unclear intersection between the centre of gravity test and the non-affectation clause of Article 40 TEU.