Examination of Witnesses (Questions 160-179)
RT HON.
DAVID MILIBAND
MP AND MATTHEW
RYCROFT CMG
17 JUNE 2009
Q160 Mr. Horam: Okay. Looking
at these draft conclusions—which, of course, as you were
right to point out, may change—we see that they say that
the financial crisis has clearly demonstrated the need to improve
the regulation and supervision of financial institutions both
in Europe and globally. It does not say much more. What is Europe
adding to what we are already doing as a UK Government in terms
of financial regulation and so forth? Is it adding anything?
David Miliband: We covered this
in some detail yesterday, where there was quite a lot of common-ish
ground across the House of Commons, both about regulation and
about supervision, which are obviously separate issues. On the
regulatory front, I think that the Icesave experience—I
understand that Iceland is outside the EU, but it none the less
makes the point—of a bank that was regulated according to
the rules of one country and operating in another, shows the dangers
that can occur if regulations are not aligned across countries
in a world of free capital movement. There is a regulatory issue
to do with how different regulatory systems are aligned across
countries. The EU is such a large a market now that it sets a
benchmark in a number of areas for regulation. Secondly, there
is a supervisory issue. Without wishing to become too detailed
about it, there is obviously a macro-supervisory issue and a micro-supervisory
issue. The macro-supervisory issue is to do with systemic risk.
That is why the European Union Committee led by M. de Larosie"re
recommended the creation of a European systemic risk—
Q161 Mr. Horam: This is the de
Larosie"re report?
David Miliband: Yes. One of the
recommendations of the report was the creation of a European systemic
risk board, which was originally called a council. That is a good
thing and it is at the macro level. It recognises that one of
the lessons of the financial crisis is that it is important not
only to look at the sustainability and risk associated with individual
institutions, we also have to look at systemic risk. To do that
across the EU is sensible. There is a micro-supervisory aspect
to this which is to do with the inner workings and interstices
of individual firms. That micro-prudential supervision—it
is often called that—falls in our country to the Financial
Services Authority, which is charged by Parliament to do its work.
It and its decisions also obviously have a relationship to British
firms.
Mr. Horam: So not much of a role for
the European Union in that area?
David Miliband: On the micro-supervisory
side, I think that that is much more appropriately done at a national
level, although inevitably, if you are going to look at macro
risk, you are going to want to have some knowledge and understanding
and transparency of what is happening at the micro level.
Q162 Mr. Horam: A second question
on the draft conclusions is that there is quite a lot of space
devoted to climate change, but we are in some difficulty on climate
change, aren't we, because of Poland and so forth making the point
that in this particular period it is extremely difficult to commit
to this kind of target. Is that the case, or are you more optimistic?
David Miliband: I would not describe
it in quite the way that you do. It is certainly true that there
are two issues, really. One is to do with the relative ambition
of the European Union's proposals and whether they are appropriate
for a time of economic downturn, or as appropriate as they were
when they were signed up to in March 2007, and that is a question
of whether Europe should have a 20% target for reductions by 2020.
Of course, the irony is that a recession reduces emissions, but
leave that to one side for a moment. Questions are being asked
about the ambition. I would not want to put one particular country
in the dock. There is then a second issue, which is to do with
this question of climate financing, and that is to do with what
flows should go from the industrialised countries to the developing
world to help them pay for climate change adaptation and mitigation.
Q163 Mr. Horam: It was the first
one I was concerned about, because surely if Poland is in difficulties
about that, we won't actually subscribe to the first one.
David Miliband: That is not what
is being discussed at the moment. The question of the 20-20 targets—20%
reduction on 1990 levels by 2020—has been gone through,
it has been confirmed. That is the European negotiating position
in the Copenhagen talks. There is a second issue, which in the
end may be the difference between success and failure, which is
the extent to which the developed world, the industrialised countries,
are willing to subsidise low-carbon energy and other development
in the developing world, and that will be done—sorry, I
can given the details if you want. No.
Q164 Mr. Heathcoat-Amory: Secretary
of State, your memorandum to us says that the Irish are to be
given legal guarantees about their concerns. The Irish Times
has got hold of the proposed text, and it is clear that the European
Council is to make a decision about certain matters. How can a
decision be of the same status in international law as the EU
treaty? A decision can be changed. Another Council may make a
different decision. So if they are going to be given legal guarantees,
how does that square with the fact that it is now being downgraded
to a decision?
David Miliband: A decision is
legally binding in international law. A decision, for as long
as it lasts, is justiciable in front of the European Court of
Justice, so that is the reason that all countries recognise that
a decision of the European Council is legally binding in international
law. That has been tested many times, but as we mentioned in the
House of Commons yesterday, the Danish example of 1992 involved
a decision, and that decision has legal force. So I don't think
there is any doubt in the legal fraternity that a decision does
have legal consequences and is legally binding in international
law.
Q165 Mr. Heathcoat-Amory: So if
the British Government make other decisions around the world about
their foreign policy which are not debated in the House and are
not called treaties, they are internationally binding in exactly
the same way, are they?
David Miliband: You said "around
the world". Let us stick within the European Union. If we
have an agreement with a third country, that would not necessarily
be a memorandum of understanding with another country or legally
binding in the same way. But within the European Union, when the
27 take a decision, that has legal force.
Q166 Mr. Heathcoat-Amory: Can
you show me in the treaties where it says that a decision has
the same status as the treaties themselves?
David Miliband: I can say that
there has been long-standing practice in this area. I am surprised
that this is being questioned, because in December, when the European
Council concluded its work, it talked about legal guarantees.
There are different ways of doing that, but a decision is a legally
binding factor in international law. It is justiciable by the
ECJ. It is obviously a freestanding text in international law.
It interprets and clarifies treaties. I have never heard it questioned
that it is not—
Q167 Mr. Heathcoat-Amory: So a
decision is what we say it is. I find that very unconvincing.
David Miliband: I'm sorry, but
it is registered at the UN, in the case of the 1992 Danish decision.
It is obviously there for the ECJ and domestic courts to take
into account in interpreting EU treaties. It is not part of primary
law in the way that a treaty is, but it is there as a decision
of the European Council that provides a basis for the ECJ to make
its judgments. It is there to interpret the treaty and that is
what a decision does. I am happy to write to the Committee
with more details about the international status.
Q168 Mr. Heathcoat-Amory: That
would be helpful. Since you mentioned the ECJ, one of the concerns
of the Irish is how the charter of fundamental rights, which of
course becomes treaty law, will be applied to the Irish right
to life, protection of the family and certain educational rights
in their constitution. How can a decision of the Council bind
future decisions of the ECJ? As you know, the European Court has
already considered the Irish abortion law. In fact, it did not
strike that law down, but it might do so next time. So how can
a decision tell the Court that all future decisions are not to
be binding? In other words, it is controlling the future discretion
of an EU institution when that Court is not party to the decision.
David Miliband: It is not quite
right to say that it is controlling future decisions. What it
is doing is explaining the treaty. If you look back to the December
European Council, the conclusions of that Council were very clear;
they were conclusions rather than a decision, but none the less
they were very clear. In respect of the particular point that
you raised, the legal guarantee would cover "a guarantee
that the provisions of the Irish Constitution in relation to the
right to life, education and the family are not in any way affected
by the fact that the Treaty of Lisbon attributes legal status
to the EU Charter of Fundamental Rights or by the justice and
home affairs provisions of the said Treaty." If you remember
the discussions that we had during the passage of the Lisbon Treaty,
we went over this issue many times. The Irish Government wanted
a decision—a legal guarantee from the European Union and
the European Council—to make this absolutely clear. As you
can see from the fact that the word "not" is in the
middle of that passage—"are not in any way affected"—that
decision, or guarantee, is designed to provide an extra degree
of clarity that perhaps was not there from the interstices of
the 200-page Lisbon Treaty.
Q169 Mr. Heathcoat-Amory: You
agree that the CFR will, for the first time under the Lisbon Treaty,
attain treaty law status? In other words, it will be superior
to national law.
David Miliband: Subject to the
protocol that we have in our country, for example.
Q170 Mr. Heathcoat-Amory: That
is axiomatic; it is superior to national law because it would
be treaty law. I think that that is common between us. Therefore,
any judgments of the Court interpreting the charter will, by definition,
override national Irish law. So I don't understand how a decision
of the Council can bind the Court in its future judgments when
it returns, for instance, to the case of the Irish ban on abortion,
or protection of the family, or anything else under Irish law.
How can a decision today instruct a court not to do things, particularly
when that court is not party to that decision? I think we are
in a fantasy world, whereby we hope that that won't happen. However,
I am just interested to know how you think that that amounts to
a legal guarantee.
David Miliband: There is neither
fantasy nor instructions to the European Court of Justice. We
have an Irish constitution and a Lisbon Treaty that is being added
to the corpus of European law. We have been clear all along—and
the Irish Government have been clear all along—that the
Lisbon Treaty does not affect the fundamentals of the Irish constitution
as it relates, for example, to abortion and the right to life.
However, they felt it would be useful for the Irish people to
have a reiteration of that fact through a decision. That decision,
again, is justiciable in respect of the European Court of Justice,
is usable by the European Court of Justice, can be referred to
by the European Court of Justice and can provide interpretive
clarity for the European Court of Justice. That does not mean
it is an instruction to the European Court of Justice. It is there
and it is legally part of international law and practice in that
way. It is therefore helpful to any concerns that might exist
about what the ECJ might do, but it is also there as a help to
the ECJ should it ever be concerned about what was meant in the
Lisbon Treaty.
Q171 Mr. Heathcoat-Amory: Let
us be clear about this. If the court returns to the issue of SPUC
v. Grogan, which examined the Irish constitutional ban
on abortion, and was minded to make a different decision—despite
the fact that the charter would by now have treaty law status—it
would be prevented from finding in contradiction to the Irish
constitution because of the decision to be taken tomorrow by the
European Council. In other words, this Council decision will bind
future court decisions as they touch on the Irish constitution.
If that is not the case, they are not getting the legal guarantees
that have been promised.
David Miliband: I'm afraid I lost
the beginning of your sentence by the time you got to the end
of it.[2]
Q172 Mr. Heathcoat-Amory: Can
you clarify a simple point?
David Miliband: I don't think
I could be clearer than to say there is not the slightest shadow
of a doubt on my part or on the part of the Irish Government or
other members of the European Union that the Lisbon Treaty does
not affect the Irish constitution in respect of its provisions
on the right of life, education and the family. A decision of
the European Council will hopefully be taken tomorrow or on Friday
and that will then be added to the international body of understanding
about what the Lisbon Treaty means. I believe the Lisbon Treaty
is clear: the Irish constitution is not affected in respect of
the right to life. This decision will reconfirm that fact, as
I read out earlier. The texts that are now being circulated reinforce
that point. The original question you asked me was whether or
not this decision was worthless because it could have no legal
consequence. I said to you, no: a decision does have legal consequence;
look at the example of Denmark 1992. Now, you are somehow saying
that there is another argument not that it is worthless but that
it is almost overriding everything else. All I am saying to you
is that it provides a clear interpretation of what the Lisbon
Treaty says.
Sir Menzies Campbell: I am having some
difficulty following that, Secretary of State.
David Miliband: You are the QC
here.
Q173 Sir Menzies Campbell: That
does not always mean we bring a shaft of illumination to the proceedings.
Do I understand you to have said that the decision is essentially
a contractual agreement between the parties to that decision,
which provides what they understand to be the proper interpretation
of another instrument, which in this case is the Treaty of Lisbon?
David Miliband: When I said that
it was an interpretation, yes. But it is more than me giving my
interpretation in front of this Select Committee; it is a decision
that is binding in international law.
Q174 Sir Menzies Campbell: Because
they have agreed formally as to what they believe the contents
of the Lisbon Treaty involves and because they have agreed it,
the ECJ recognises it and recognises that it is bound by the terms
of that agreement. Is that what I understand you to say?
David Miliband: It would
help the ECJ. If the ECJ were seeking to interpret the treaties,
this would help them do it. The decision has international legal
status.
Q175 Sir Menzies Campbell: I suppose
you are familiar with the domestic statutory language, which we
sometimes use, including the words, "for the avoidance of
doubt". We frequently see that in statutes for a variety
of reasons. To my eye, this looks as if it is provided for the
avoidance of doubt.
David Miliband: It is certainly
a widespread view that it would help if there was an avoidance
of doubt. If anyone was in any doubt on reading the Lisbon Treaty,
they should not be in any doubt on reading this decision.
Q176 Sir Menzies Campbell: Because
that is what the parties to the Lisbon Treaty have agreed in relation
to the Lisbon Treaty.
David Miliband: Yes, and it is
important in this context. The European Council conclusions said
that they would frame a guarantee that the provisions in the Irish
constitution were not affected. A formal decision of the EC has
a different status to this document, which was the December conclusions.
Ms Stuart: This indulgence by
the lawyers is, in other words, a kind of super Pepper v.
Hart decision on statutory interpretation.
Sir Menzies Campbell: No, Pepper
v. Hart only applies where there is inherent ambiguity.
Ms Stuart: Sorry, we will pursue
this another time.
Q177 Mr. Keetch: Is the British
Foreign Secretary still responsible for Ireland? I thought that
we were not responsible for Ireland any more.
Andrew Mackinlay: No, but he should tell
us what the Irish Foreign Minister would think.
Chairman: We are going to take
questions from Gisela Stuart now. If my colleagues can restrain
themselves, we might be able to get through the rest of the issues
that we want to talk about.
Q178 Ms Stuart: We are still with
the Lisbon Treaty. The major hurdle is the Irish referendum. If
the Irish ratify, we really are into the territory of implementation
of the provisions of the Lisbon Treaty. It is not something that
is hitting the Government by surprise. We have known about it,
and about lots of provisions to come, for some time. I sat on
the European Committee discussing the External Action Service.
All hon. Members who went through the deferred Division Lobby
today voted either yes or no on the External Action Service. Will
the Foreign Secretary explain a little bit more and say precisely
what we are doing in preparation for the provisions and the implementation
of the Lisbon Treaty on areas such as the External Action Service?
David Miliband: After the December
European Council, which, following representations from the Irish
Government, commissioned further work to deliver the legal guarantees,
the Government made it clear on 28 January that we were honour
bound to prepare for the implementation of the Lisbon Treaty and
to prepare for its non-implementation. That is what we have been
doing since then. Obviously, if the Irish have a referendum and
vote no, the Lisbon Treaty falls and we live under Nice. It was
alleged yesterday by the spokesman for the Conservative party
that, somehow, there was no clarity about what would happen if
Lisbon did not go through. There is clarity: if Lisbon does not
go through, Europe lives under the Nice treaty. There is not the
slightest shadow of a doubt about it. There is nothing ruled in
and nothing ruled out. We would live under Nice. If Lisbon goes
through, we live under Lisbon. We are preparing for both scenarios.
Under the former scenario, if we live under
Nice, we will have to confront the question of how to reduce the
number of Commissioners, which is a provision under Nice, but
which is unfinished. There will have to be a reduction of at least
one in the number of Commissioners, starting in November 2009.
If Lisbon goes through, we will have to appoint the new posts
quickly, including the High Representative for Foreign Policy
and others, which have been in the news. The preparations are
in train for that and for other aspects of the Lisbon Treaty.
One important thing for you and for us is that
the different parts of the Commission bureaucracy would be merged
together and, under the High Representative, the international
postings of the EU would no longer be divided between Council
and Commission. Those are the sorts of things that we are preparing
for, but for those of a suspicious mind—not that I include
you in this—it is important that we prepare both for the
decision to ratify Lisbon and not to.
Q179 Ms Stuart: Does that preparation
also include a list of the things that can be done which are contained
in the Lisbon Treaty, irrespective of whether the treaty gets
ratified or not?
David Miliband: I have not seen
that list. That piece of paper has not crossed my desk. We are
trying to do an appropriate degree of preparation without taking
anything for granted.
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