Council of theEuropean Union
Brussels, 15 October 2019
(OR. en)13116/19
Interinstitutional File:
2018/0213(COD)

LIMITEJUR 591
EUROGROUP 10
ECOFIN 873
UEM 301
CODEC 1481
CADREFIN 343

CONTRIBUTION OF THE LEGAL SERVICE1
To:

Eurogroup in inclusive format

Subject:

Budgetary instrument for convergence and competitiveness: examinationof the legal status, relationship and effects of the enabling clause and theintergovernmental agreement.

I.

INTRODUCTION

1.

The term sheet on the Budgetary Instrument for convergence and competitiveness (BICC), as
endorsed by the Eurogroup (inclusive format) on 9 October 2019, contains, amongst others,
the following text regarding the financing of the instrument.
“Discussions on an IGA, whose legal status will be explained in an annex to the summing up
letter by the Council Legal Service, will continue at the level of the EWG. The EWG should
submit a report covering the need, the content, modalities and the size of an IGA in due timeto allow for a final decision in the context of the MFF.
An enabling clause to be included in the Regulation based on Art 175”

1This document contains legal advice protected under Article 4(2) of Regulation (EC) No
1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding publicaccess to European Parliament, Council and Commission documents, and not released by
the Council of the European Union to the public. The Council reserves all its rights in law asregards any unauthorised publication.

13116/19

1JUR

LIMITEEN2.

In the course of the meeting of the Eurogroup (inclusive format) of 9 October 2019, theCouncil Legal Service (CLS) was invited to clarify the legal status, the relationship and theeffects of the enabling clause as well as of the Intergovernmental Agreement (IGA) to whichreference is made in the term sheet. The Council Legal Service was further requested by thePresident of the Eurogroup to reflect its oral intervention in writing (as also recalled in theterm sheet). This contribution follows up on that request.

II.

LEGAL ANALYSIS

3.

The purpose of the enabling clause that is to be introduced in the envisaged BICC Regulation
is to authorise additional contributions by Member States to the budget of the Union andearmark them to finance expenditure arising from the BICC. Such additional contributions
would be provided as external assigned revenue, as an exception to the budgetary principle ofuniversality under Article 20 of the Financial Regulation, according to which all revenues
finance indistinctly all items of expenditure. That exception should therefore be formulated by
way of derogation to the principle of universality, a possibility which is open to the discretionof the EU legislator, as shown by the existing categories of external and internal assigned
revenue referred to in Article 21 of the Financial Regulation itself.

13116/192
JUR

LIMITEEN4.

However, the EU Treaties or an act of EU secondary law (as the BICC Regulation) cannot
legally oblige Member States to conclude the IGA referred to in the term sheet, or compel
them to contribute to the budget of the Union beyond the framework of their financial
obligations as defined by the own resources system. Therefore, the enabling clause cannot be
the basis for the negotiation, signature and conclusion of an IGA where Member States would
legally commit to pool and to allocate external revenues to the BICC. The Member States, assubject of international public law, are free to decide to negotiate, sign and conclude theIGA2.

5.

Member States’ consent to be bound by the provisions of the IGA depends therefore on theirnational constitutional requirements3.

23

See opinion of the Council Legal Service (document 5347/19) on the proposal on theEuropean Investment Stabilisation Function where the Council Legal Service concluded that
“Union Law may not impose an obligation on a Member State to conclude an [IGA] ”. That
opinion also underlined that “Article 175(3) TFEU (...) may not be used to compel, directly
or indirectly, Member State to make further contributions to the Union beyond the system ofOwn Resource Decision.” (para.61).
Even if, in the past, intergovernmental treaties in the field of the Economic and Monetary
Union (such as the ESM Treaty, the Treaty on Stability, Convergence and Competitiveness,or the IGA on the transfer of contributions to the Single Resolution Fund) have beenconcluded by all euro area Member States, this fact is a consequence of a wish to maintain
political coherence, rather than of a legal obligation that would stem from the EU Treaties orsecondary law.

13116/193JURLIMITEEN