Documents considered by the Committee on 18 March 2015 - European Scrutiny Contents


8 Extra-territorial effects of legislation from third countries

Committee's assessment Legally important
Committee's decisionNot cleared from scrutiny
Document detailsDraft Regulation on protection against the effects of extra-territorial legislation from third countries (recast)
Legal baseArticles 64, 207(2) and 352 TFEU; co-decision; unanimity
Departments

Document numbers

Business, Innovation and Skills

(36669), 6237/15 + ADD 1, COM(15) 48

Summary and Committee's conclusions

8.1 This document proposes to consolidate Regulation (EC) 2271/96 and its subsequent amendments. The aim of that Regulation is to protect the economic and/or financial interests of natural or legal persons[12] against the effects of the extra-territorial application of legislation. The laws in question are specified in the Annex to the Regulation. The protection concerns international trade and/or the movement of capital and related commercial activities between the EU and third countries.

8.2 Any persons whose economic and financial interests are affected by foreign legislation person must inform the Commission accordingly within 30 days from the date on which it obtained such information.

8.3 Persons protected by the Regulation do not have to comply with any requirement or prohibition based on the specified third country laws. However authorisation may be granted where full or partial non-compliance with such foreign laws, including the requests of foreign courts, would cause serious damage to the person concerned. The Commission sets those criteria through implementing acts. The Member States determine the sanctions to be imposed in the event of breach of any relevant provisions of the Regulation.

8.4 The current document is a recast, as opposed to a consolidation of the existing Regulation, because the Commission has proposed that it establish authorisation criteria by delegated powers instead.

8.5 This proposal is jointly based on Articles 64, 207(2) and 352 TFEU. Likewise, the Regulation was based on the predecessor to Article 352 TFEU, namely Article 235 TEC. Section 8 of the EU Act 2011 requires the UK to introduce primary legislation for any Article 352 measure before the UK can vote in favour or otherwise support it, unless one of several exemptions applies.

8.6 The Government now provides an Explanatory Memorandum on the document. It considers that the UK's JHA opt-in applies to the document (despite the absence of a Title V legal base), is minded to opt-in and also notes that the document comes within the scope of the EU Act 2011.

8.7 It is well-established that we do not agree with the Government asserting that the JHA opt-in protocol applies to a measure in the absence of a Title V legal base. However, we note the Government's position that it is minded to opt into the measure on the grounds of national interest and because the measure does not impose any additional JHA obligations. We note that the Government assesses the JHA content (specifically, but not limited to Article 6) to be "incidental" to the "predominant purpose" of the measure. Applying the Government's own analysis, we understand that this would mean that should the Government not "opt in", it would not consider itself bound by that JHA content. We ask the Minister whether, that potential legal difficulty will be a factor it takes into account in its final opt-in decision and whether there are other arguments against participation which the Government may consider.

8.8 We also note that the Government is continuing to reflect on whether the EU Act 2011 will apply in this situation. We infer that it may be considering the exemption set out in Section 8(6)(e) of the Act which applies where the purpose of a measure is "to consolidate existing measures adopted under that Article without any change of substance". We would ask the Minister in due course to confirm whether that is the case and what Government lawyers have concluded as to the availability of the exemption.

8.9 We continue to hold the proposal under scrutiny, pending the Minister's responses.

Full details of the document: Proposal for a Regulation of the European Parliament and of the Council protecting against the effects of the extra-territorial application of legislation adopted by a third country and actions based thereon or resulting therefrom (recast): (36669), 6237/15 + ADD 1, COM(15) 48.

The Government's view

8.10 In his Explanatory Memorandum of 4 March, the Minister of State for Trade and Investment (Lord Livingston of Parkhead) says of the proposal in general:

    "The government strongly supports consolidation measures. We believe that the proposal does not contain any new and/or substantive material and therefore does not change the measure in substance and can therefore be supported."

8.11 On the question of the application of the opt-in protocol, the Minister comments:

    "We consider that, at least, Article 6 of the proposal amounts to JHA content which would trigger the UK's opt-in. Article 6 provides for the Brussels 1 (recast) Regulation to apply to proceedings brought under that Article. We consider the JHA content in this measure to be incidental to the predominant purpose of the measure.

    "The Government is committed to taking all opt-in decisions on a case-by-case basis, putting the national interest at the heart of the decision making process. In relation to this measure, given that this is a recast of an existing measure which does not add any new JHA obligations, with which the Government is content, the Government is minded to opt in."

8.12 On the issue of the application of the EU Act 2011, the Minister comments:

    "The Government is considering the implications of the proposed Treaty base and will provide further information on our position in due course."

8.13 On the question of the proposed switch from the use of implementing powers under the original Regulation to delegated powers under the current document the Minister says:

    "The new comitology procedure, empowering the Commission to adopt delegated acts, does not have anything in it that could be considered to be new and/or substantive material and therefore does not change the measure in substance."

Previous Committee Reports

None.



12   The Regulation protects any natural person being a resident in the EU and a Member State national; any legal person incorporated within the EU Member State nationals established outside the EU and to shipping companies established outside the EU and controlled by nationals of a Member State, if their vessels are duly registered with a Member State; natural persons being a resident in EU, unless that person is in the country of which he is a national; and any other natural person within the EU, including its territorial waters and air space and in any aircraft or on any vessel under the jurisdiction or control of a Member State, acting in a professional capacity. Back


 
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