13 Bilateral Agreements
| (30334)
5147/09
COM(08) 893
| Draft Regulation establishing a procedure for the negotiation and conclusion of bilateral agreements between Member States and third countries concerning sectoral matters and covering applicable law in contractual and non-contractual obligations
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| Legal base | Articles 61, 65 and 67(5) EC Treaty; unanimity; consultation.
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| Department | Ministry of Justice
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| Basis of consideration | Minister's letter of 18 March 2009
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| Previous Committee Report | HC 19-vii (2008-09), chapter 5 (11 February 2009)
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| To be discussed in Council | 6/7 April 2009 (possibly), June 2009 JHA Council (probably)
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| Committee's assessment | Legally and politically important
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| Committee's decision | Cleared.
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Background
13.1 The external competence of the Community is its capacity
to act separately from its Member States internationally, in particular
to negotiate and conclude binding international agreements and
to belong to, and participate in, international organisations.
The Community's external competence may be either exclusive or
shared. Where the Community has exclusive external competence,
Member States have no further power to act internationally in
respect of that subject-matter. The European Court of Justice
has established that the Community's external competence will
normally be exclusive if, inter alia, an agreement falls into
an area of law which, internally, is already largely covered by
Community rather than national law, or if the effectiveness or
purpose of Community's internal rules may be adversely affected
or undermined by an international agreement concluded by Member
States. The Community's external competence may thus be exclusive
in areas of law where it only has shared internal competence.
The document
13.2 The purpose of this proposal is to establish a procedure
to enable Member States in future to negotiate and conclude bilateral
agreements with third countries in certain areas of the choice
of law concerning non-contractual and contractual obligations.
Subject to the satisfaction of certain conditions, this procedure
would enable the Commission to authorise such negotiations and
their conclusion.
13.3 These subject areas have recently been covered
by Community legislation, respectively EC Regulation No. 864/2007
("Rome II") and EC Regulation No. 593/2008 ("Rome
I"). The consequence of this Community legislation is to
establish exclusive external Community competence in these areas.
This has had the result that in principle Member States are prevented
from entering into bilateral agreements which fall within the
scope of this legislation. Concerns were raised by some Member
States during the negotiations on Rome II that the consequent
extension of external competence in this area might prove too
restrictive in some circumstances, for example in the context
of cross-border infrastructure projects involving third countries,
such as airports or tunnels, where it might be desirable to put
in place special choice of law regimes which departed from the
terms of the relevant Community legislation.
The Government's view
13.4 In his Explanatory Memorandum of 22 January
2009 the Parliamentary Under-Secretary at the Ministry of Justice
(Lord Bach) outlines the Government's position in the following
terms:
"The Government is in principle supportive of
the underlying aim of this proposal which is to introduce some
degree of flexibility into the rigidity of the doctrine of external
Community competence. The effect of this doctrine is generally
to prevent individual Member States from entering into bilateral
agreements with third countries in those areas that are subject
to such competence. This is likely to be particularly problematic
for those Member States, such as the United Kingdom, which have
a significant number of bilateral agreements with third countries
with which they have important historical and cultural links.
The problem will be acute in those cases where the Community as
a whole has no sufficient interest in entering into an agreement
with a particular third country.
"While the Government welcomes the proposal,
as the United Kingdom does not have bilateral agreements in the
area of choice of law there will be limited value for us as it
stands. The value of the proposal would be increased if the scope
was extended to the recognition and enforcement of judgments.
This is an area where the United Kingdom has many bilateral agreements,
mostly with Commonwealth countries, in accordance with the Administration
of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement)
Act 1933. In the light of this the Government will seek to widen
the scope of the proposal during the course of the negotiations.
"Article 4 lays down the conditions under which
the Commission may authorise a Member State to pursue negotiations
with a third country. One of these conditions is likely to be
of particular importance. This is the requirement under Article
4(2)(b) that the proposed agreement should be 'of limited
impact on the uniform and consistent application of the Community
rules in place and on the proper functioning of the system established
by those rules'. The Government will seek clarification of the
meaning of 'limited' in this context. If what is meant here is
any impact that is of more than minimal significance then that
would be likely to diminish significantly the utility of this
proposal. On the other hand, if it is intended that only agreements
which would clearly have a significant impact on the acquis
communautaire should be excluded from the proposed procedure,
then the utility of the proposal would be correspondingly increased."
13.5 When we originally looked at this proposal
we expressed support for the Government's initial assessment of
the proposal which would allow Member States to retain shared
external competence in the area of choice of law concerning contractual
and non-contractual obligations. We asked the Minister if the
Government intended to 'opt in' to the proposal. We also expressed
some concern about the imprecise description of some of the conditions
attached to the exercise of Member State competence in this area.
We asked the Minister to seek an appropriate clarification of
the meaning of "limited" in Art 4(2)(b) which seeks
to ensure compatibility of any bilateral agreement with the functioning
of the intra-EU and EEA conflict of laws rules. Finally, we supported
the Minister in his suggestion that possible ways of extending
the proposal to the recognition and enforcement of judgments should
be explored in future negotiations.
The Minister's Letter
13.6 The Minister has now replied and in his
letter of 18 March 2009, which covers both this and a related
proposal (5146/09, COM(08) 894). He writes as follows:
"I am writing to respond to the points made
in the Committee's report on the above proposals, to update you
on progress on them and to inform you of the possible next steps.
Negotiations on the proposals are moving quickly, and the Presidency
is planning to bring them forward for political agreement as early
as the next JHA Council meeting on 7-8 April. As such, I am also
seeking your agreement to release them from formal scrutiny.
"You are aware of the content of these proposals
and the Government's position on them from earlier correspondence
and the Explanatory Memoranda. In short, both proposals seek to
establish a mechanism whereby Member States could enter into agreements
with third (i.e. non-EU) countries on certain matters where there
is external Community competence but no existing or foreseen Community
level agreement with the country in question. It seeks to provide
a system which allows the Commission to oversee any such agreements
to ensure that these do not disrupt the proper functioning of
established Community law (the acquis Communautaire). There are
two proposals, one for certain civil law matters and one for family
law matters, each reflecting the different Treaty bases and procedures
applicable. As each proposal essentially establishes the same
mechanism, I propose to consider these as a pair for the purposes
of this letter so the comments below apply to both proposals unless
stated specifically otherwise.
"The Government is broadly supportive of the
principle underlying these proposals since they offer the prospect
of injecting some flexibility into the application of the doctrine
of external competence, which has become potentially more restrictive
as the Community has legislated in more areas of civil and family
law. I have noted that the Committee broadly supports that view.
The proposals are largely uncontroversial and do not give rise
to any issues of major concern. Our main point has been to ensure
the proposals deliver the aim of providing legal certainty and
being of practical use to the Member States whilst ensuring that
the acquis is suitably protected.
"There have been several Working Group meetings
of officials to discuss the texts. The most recent, on 9/10 March,
produced new Presidency texts and there has been a brief first
reading of these. I enclose copies of those texts. Overall good
progress was made on all the UK's points, most notably the concern
we had about the wide discretion allowed to the Commission to
determine the outcome of the process has more or less been resolved.
You will see that the conditions under which the Commission must
determine a request are now clearer (see Article 4), including
an amendment to the earlier provision which gave rise to some
concern, which was also noted and shared by the Committee in its
report, about its ambiguity and how it might be applied, namely
it provided that even only a 'limited' impact on Community law
could provide a basis for the Commission to decline to authorise.
It has now been clarified that the agreement would have to 'undermine'
the proper functioning of Community law.
"Your Committee supported, as does the Government,
an extension of the scope of the proposal dealing with choice
law issues to cover the recognition and enforcement of judgments
in civil and commercial matters. At the last meeting of the Working
Group in Brussels our delegation urged such an extension in order
to ensure that the proposal would be of practical utility for
the United Kingdom. This reflected the many agreements of this
kind which we have with Commonwealth countries. Unfortunately
the Commission was strongly opposed to an extension of this kind.
The basis of the reasoning behind this position was not entirely
clear. It appears not to be based on technical legal objections
but on broader political considerations relating to the importance
of the Brussels I Regulation. Equally unfortunate was the lack
of any general support for the UK's position on this issue among
the other Member States. Although we will continue to advocate
such an extension of scope, in particular in the European Parliament,
it must now be unlikely that it will be included within the finally
agreed instruments.
"Overall, whilst I regret that it now looks
unlikely that the proposal will be extended in scope to make it
of use to the UK I consider that neither proposal contains anything
objectionable. The remaining points are minor and should be successfully
negotiated. As such, we remain supportive of the principle of
seeking flexibility in the application of the external competence
doctrine. I would hope that with the experience of the use of
this limited proposal, if that is how it emerges, the Commission
might be more persuaded (and other Member States perhaps more
determined) to extend the scope at the formal review stage, anticipated
for 5 years after adoption.
"Your Committee asked whether the Government
intended to opt in to the proposal/s under our Title IV Protocol.
The Government is minded to opt in to both proposals, though a
decision on this has not yet been taken. We are due to declare
our position on that by 16 April, though if it comes before Council
prior to then we would hope to be able to make our position clear
then. I note that you have not previously objected to this course
of action and infer from your general comments that your Committee
would agree with that.
"As I noted above, it seems probable that the
Czech Presidency will seek political agreement on these proposals
from the JHA Council on 6/7 April. In the light of this tight
timescale I would be grateful if your Committee would clear them
from scrutiny in time for that meeting. In view of the improbability
that the recognition and enforcement of judgments in civil and
commercial matters will be brought within scope these proposals
are unlikely to be of much practical utility for the UK. On the
other hand the detailed terms of the procedure envisaged under
these proposals have certainly been improved in various ways and
should provide a reasonably satisfactory precedent in the event
that a decision is taken in later years to extend scope in a way
which could be useful for us."
Conclusion
13.7 We thank the Minister for his detailed
reply. We welcome the changes to the original text of the proposal,
in particular the amendment to the conditions attached to the
exercise of Member States' competence in this area, which further
limits the Commission's power not to authorise Member States to
enter into bilateral agreements.
13.8 On the understanding that the final text
will contain the promised safeguards which reflect these amendments
and the Minister's assurances, we are happy to clear the proposal
from scrutiny and support the Government's intention to "opt
in" to the proposal on the grounds that it limits rather
than extends the Community's exclusive external competence in
matrimonial matters.
13.9 We welcome the Government's "opt
in" in part because it also clarifies that the United Kingdom
regards the conclusion of bilateral agreements covering applicable
law in contractual and non-contractual matters as falling within
the "opt in" Protocol arrangements and that UK participation
in purely intra-EU measures in the field does not deprive the
Government of its separate "opt in" in relation to external
agreements in contractual and non-contractual matters.
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