Documents considered by the Committee on 21 July 2015 - European Scrutiny Contents

49 Inland waterways: freight

Committee's assessment Legally and politically important
Committee's decisionCleared from scrutiny
Document detailsProposal for a Council Decision to allow Austria, Belgium and Poland to participate in a convention about contract law for inland waterways freight
Legal baseArticles 2(1), 81(2) and 218(6) (a) TFEU; QMV

Document numbers


(36582), 17025/14 + ADD 1, COM(14) 721

Summary and Committee's conclusions

49.1 This proposal, now adopted, provides authorisation for Austria, Belgium and Poland to join ten other Member States (not including the UK) to accede to the Budapest Convention on the Carriage of Goods by Inland Waterways. Although the EU cannot itself accede, because the Convention is limited to state parties, its provisions on the choice of law applicable to contracts falling under the Convention is a matter of exclusive EU competence. Therefore these Member States require EU authorisation.

49.2 This matter does not have any significant UK policy implications, but does raise legal issues:

·  as to whether the UK opt-in is engaged; [ 362] and

·  the appropriate legal base.

49.3 Because the UK Government has sought to opt-in, the fact that the other Member States supported the Commission's contention that the UK opt-in is not engaged (and therefore the UK is automatically bound by the Decision) creates no practical difficulty. Having failed to secure recitals to the Decision which acknowledge that the UK's opt-in is engaged, we therefore support the Government's approach of abstaining and tabling a minute statement asserting that the UK opt-in is engaged whenever an EU legal instrument uses a legal base from Title V of part Three TFEU concerning the Area of Freedom, Security and Justice.

49.4 We remain unconvinced by the Minister's explanation as to why he considers Article 218 (6) TFEU to be an appropriate legal basis for the EU to authorise Member States to enter into an international agreement, when it cannot itself become a party. We consider that the judgment of the Court of Justice in case C-399/12 indicates otherwise. However, we note that no other Member State has questioned this legal base so litigation to resolve this issue is unlikely until a future similar case with sufficient interests at stake arises.

49.5 As the proposal has now been adopted we formally clear it from scrutiny.

Full details of the documents: Draft Council Decision authorising Austria, Belgium and Poland to ratify, or to accede to, the Budapest Convention on the Contract for the Carriage of Goods by Inland Waterways (CMNI): (36582), 17025/14 + ADD 1, COM(14) 721.


49.6 The Budapest Convention on the Contract for the Carriage of Goods by Inland Waterways (CMNI) is intended to harmonize contractual and navigational standards on inland waterways in European countries. Article 29 of the Convention contains provisions on the choice of law by the parties to a contract for carriage falling under the Convention. These provisions affect the rules laid down in Regulation 593/2008 on the law applicable to contractual obligations (the Rome I Regulation), and therefore this is a matter for which the EU has exclusive competence.[ 363] As a consequence Member States cannot now lawfully ratify or accede to this part of the Convention without EU authorization.

49.7 The proposed Decision to give such authorisation includes a legal basis found in Title V TFEU which would ordinarily engage the UK opt-in. However the Commission and the Council Legal Service take the view that as the UK has opted in to the Rome I Regulation giving rise to exclusive EU competence over this international agreement the opt-in no longer applies to any decision relating to it. The Government, with the support of our predecessor Committee, disagree and therefore sought recitals recognising that the UK opt-in is engaged.

49.8 The legal base issue involves Article 218(6) TFEU. This provision sets out the procedure for the Council to conclude an international agreement. The question is whether this also applies to any decision authorising Member States to enter into an international agreement. This matter has not been directly considered by the Court of Justice, but in case C-399/12, it decided that Article 218(9) TFEU — the procedure to establish an EU position with a body created by an international agreement — was an appropriate legal base for the EU to authorise Member States to take a position where the EU could not accede to the international agreement and therefore was not itself a member of the body. In doing so, at paragraph 54 of its judgment, it contrasted Article 218(9) with the preceding provisions of Article 218 which "have as their object the negotiation and conclusion of agreements by the European Union".

The Minister's letter of 8 July 2015

49.9 The Minister's letter confirms that the Decision was adopted at the Justice and Home Affairs Council of 15-16 June 2015, with the UK abstaining. On the issue of the legal base he indicates:

    "This Government is not persuaded that the Court would uphold a challenge to the use of Article 218(6) TFEU as the legal basis of the Council Decision. I maintain the view expressed by my predecessor (in his letter of 19 March 2015) that it is likely the Court would find that Article 218(6) has application in situations where the European Union is not a party to the agreement in question in cases where EU has exclusive external competence. I do not believe that the judgment of the Court of Justice of the European Union in Case C-399/12 contradicts that view. I consider the Court's comments in paragraph 54, although ambiguously phrased, are not so much concerned with distinguishing Article 218(9) from other paragraphs in article 218, but are focussed on rebutting the narrower argument made by the German government about interpreting Article 218(9) in light of other provisions in Article 218."

49.10 On the subject of the UK opt-in he reports:

    "As you will recall, the EU institutions do not accept that the UK Government has the right to engage its opt-in in cases when the Commission states it has exclusive competence, even though a Title V Justice and Home Affairs legal base is being used. Throughout negotiations we sought an amendment to the language of the recitals to the proposed Decision in order to reaffirm the UK's opt-in, but this has not been forthcoming.

    "At the JHA Council meeting the UK abstained from the vote because we did not consider that it would be appropriate to override the Parliamentary scrutiny reserve on a matter that has little importance to the UK. However, we tabled a Minute Statement reaffirming our position that we are entitled to use the opt-in whenever a Title V legal base is used. As you will know, this is consistent with the UK approach on such proposals where we are unable to secure the desired outcome."

Previous Committee Reports

Thirty-ninth Report HC 219-xxxvii (2014-15) chapter 7 (24 March 2015); Thirty-third Report HC 219-xxxii (2014-15), chapter 2 (11 February 2015); Twenty-ninth Report HC 219-xxviii (2014-15), chapter 5 (14 January 2015).

362   Protocol 21 on the Position of the United Kingdom and Ireland in Respect of the Area of Freedom, Security and Justice. Back

363   Article 3 (2) TFEU. Back

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