61987CC0377_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
++++
Mr President,
Members of the Court,
1 . On the basis of Article 175 of the Treaty establishing the European Economic Community and Article 148 of the Treaty establishing the Atomic Energy Community,(1 )the European Parliament ( Case 377/87 ) and the Commission of the European Communities ( Case 383/87 ) have brought actions against the Council for a declaration that, in breach of the Treaty, it failed to present the draft budget for the financial year 1988 no later than 5 October 1987 .
2 . It is not in dispute that the Council did not forward the draft budget to the Parliament until 7 March 1988, even though Article 203 ( 4 ) of the Treaty provides that "the draft budget shall be placed before the European Parliament not later than 5 October of the year preceding that in which the budget is to be implemented ".
3 . Whilst these cases thus appear at first sight to be very simple, it is apparent on closer examination that in fact they raise several rather complex questions . Some of the questions arise directly from the positions adopted by the parties before the Court and others relate to the differing views which may be taken, in more general terms, of the nature and purpose of the proceedings for failure to act provided for by Article 175 of the Treaty .
4 . As regards the first set of questions, it is necessary to start by considering the objection of inadmissibility raised by the Council, which contends that the failure to establish a draft budget does not constitute a failure to act within the meaning of Article 175 ( see Part A of this Opinion ).
5 . Closely linked with that view are the substantive arguments relied upon by the Council in support of its contention that 5 October is not a mandatory time-limit requiring observance in all circumstances ( see Part B of this Opinion ).
6 . A further problem stems from the fact that the applicants did not confine themselves to the Council' s alleged failure to act as at 5 October 1987 but also devoted a large part of their observations to what should, in their view, have been the content of the draft budget for 1988 in order to satisfy the requirements of Article 199 of the Treaty .
7 . However, the latter point was most usefully clarified at the hearing . Whilst the observations of the applicants, and in particular the claim contained in the Commission' s application, might give the impression that they sought a finding by the Court that the Council had failed to fulfil its obligations under Article 199, the Agent for the Commission stated quite unequivocally that that was not the purpose of the action brought by the institution represented by him . As regards the Parliament, its Agent stated that the only finding sought from the Court was that the Council was guilty of a failure to act, in so far as it had omitted to present the draft budget no later than 5 October 1987 .
8 . If those statements had not been made, I would have had to suggest a finding, in the terms used by the Council on page 15 of its defence, that "it is only in relation to an established draft budget that it makes sense to ask whether it contains estimates of all revenue and expenditure and whether the revenue and expenditure shown there are in balance . In the absence of a draft budget, no question of the infringement of Article 199 can arise ".
9 . Although, since the hearing, that aspect of the two cases may therefore be regarded as disposed of, it is not possible wholly to avoid the problem of the content which the budget ought to have had because the Council seeks to rely in particular, as an excuse for its failure to act, on the fact that it was prevented, for reasons not imputable to it, from adopting a balanced draft budget in so far as the revenue actually available at that time was significantly lower than the expected expenditure for 1988 ( see Part C of this Opinion ).
10 . Another question arises from the fact that since the actions were brought the draft budget has been adopted and has been placed before the European Parliament . In such circumstances, do actions for a failure to act have any purpose? As this question was not raised by any party in either of the cases, I shall leave consideration of it until last ( Part D ), despite its importance .
11 . Before considering those various points, I should like to make a number of observations regarding Article 175 and the very specific type of failure to act with which the present cases are concerned .
12 . In my view, proceedings concerning a failure to act are intended to prevent an institution, which has wrongly failed to adopt an act or take a given measure, from evading permanently its responsibilities and escaping any judicial sanction by resorting to silence or by giving a procrastinating, evasive or insufficiently binding reply when called upon to act .
13 . The role of the Court of Justice in such proceedings is obviously not to find that an institution has refrained from acting, in so far as that is a precondition for the institution of proceedings, but rather to establish that such a failure to act constituted an infringement of the Treaty and thus to compel the institution concerned "to take the necessary measures to comply with the judgment of the Court of Justice" ( Article 176 ).
14 . In the present cases, the circumstances are special in that the obligation of the competent institution to adopt the requisite measure as soon as possible was not at any time in any doubt . It is a measure which must be adopted each year and which is indispensable for the functioning of the Community .
15 . In the preceding years, the Council always submitted a draft budget to the Parliament and even did so on each occasion well before 5 October .
16 . Moreover, it formally recognized that it was under an obligation to adopt the measure in question for 1988 as well ( see the letter from the President of the Council of 6 October 1987 and his statement to the Parliament of 13 October 1987 ).
17 . Before the Parliament and the Commission "called upon (( it )) to act", the Council had already made efforts to ensure that a draft budget would be adopted ( for example, the Council meetings of 23 July, 17 and 18 September and 1 October 1987 ).
18 . The President of the Council stated in writing, and also declared to the Parliament, that he wished to pursue his efforts to establish a draft budget as rapidly as possible within the terms of an overall decision on all aspects of what were known, for the sake of brevity, as "the Delors proposals", at the European Council in Copenhagen on 5 and 6 December 1987 .
19 . It is not therefore possible to say that in the present case there was inaction in the strict sense of the term, or that there was no response or else only an evasive response from the institution concerned .
20 . The finding made by the Court in paragraph 25 of its judgment of 22 May 1985 ( Case 13/83, the "Common Transport Policy" Case, (( 1985 )) ECR 1513, at 1590 ), namely that the Council had
"neither denied nor confirmed the alleged failure to act nor (( given )) an indication of the Council' s views as to the measures which, according to the Parliament, remained to be taken",
cannot be repeated in the context of the present cases .
21 . In his Opinion in that case ( 2 )Mr Advocate General Lenz took the view that there was a "definition of position" within the meaning of the second paragraph of Article 175 if the institution which had been called upon to act indicated "whether, when and how" it was going to discharge its obligation . As far as the present cases are concerned, the question might well be asked whether the Council, through the statement made by its President to the Parliament, in the presence of the Commission, did not in fact define its position on these three points .
22 . It is true that, after the failure of the European Council in Copenhagen and therefore before the actions were brought, uncertainty arose as to "when", that is to say regarding the date by which the obligation to establish a draft budget would in fact be fulfilled . The European Council nevertheless immediately arranged for a fresh meeting to deal with all the outstanding problems, namely the meeting on 11, 12 and 13 February 1988 in Brussels, at which, moreover, an agreement was actually reached .
23 . But, since the Council has not contended that it formally "defined its position" for the applicants, within the meaning of the second paragraph of Article 175, I do not need to dwell further on this question .
24 . The conclusion may in any event be drawn from the foregoing observations that the Court is not required to make any pronouncement concerning the Council' s obligation - as such - to present a draft budget ( an obligation which the defendant has never contested ) and that the central issue in these proceedings is the failure to comply with the time-limit of 5 October .
25 . Let us now consider the arguments relied upon by the Council in its defence .
A - The admissibility of the two actions
26 . The Council challenges the admissibility of both actions on the ground that it is not the absence of a draft budget but rather that of the budget itself for the financial year in question which might, in certain circumstances, justify a finding of a failure to act under Article 175 . The draft budget, which does not have to be published, merely marks a preparatory phase and it is only the declaration as to its final adoption by the President of the European Parliament, in accordance with Article 203 ( 7 ) of the Treaty, that "endows the budget with binding force vis-à-vis the institutions and the Member States ". ( 3 )
27 . That objection of inadmissibility must be rejected . The Court has held, in particular in its judgment of 23 April 1986 (" Les Verts"),(4 )that
"the general scheme of the Treaty is to make a direct action available against 'all measures adopted by the institutions ... which are intended to have legal effects' ".
28 . In my opinion, what is valid in the case of an action for a declaration that a measure is void, which comprises a review of the legality of the adoption of measures by institutions, is equally valid for an action for a failure to act, which comprises a review of the legality of the non-adoption of such measures .
29 . In fact, the Court has expressly recognized that
"In the system of legal remedies ... there is a close relationship between the right of action given in Article 173, which allows unlawful measures of the Council and the Commission to be declared void, and that based on Article 175, which may lead to a finding that the failure by the Council or Commission to adopt certain measures is contrary to the Treaty" ( 5 )
30 . The decisive criterion is therefore that of the legal effects . Thus, a "failure to act" within the meaning of Article 175 may be constituted by the non-adoption by the Council or by the Commission of an act or a measure, of whatever nature, form or description, which is capable of producing legal effects vis-à-vis third parties .
31 . The draft budget which the Council is obliged to establish by virtue of the last subparagraph of Article 203 ( 3 ) is such a measure .
32 . Initially, it produces specific legal effects vis-à-vis the European Parliament . Without receiving a draft budget from the Council, the Parliament cannot exercise the powers conferred upon it by Article 203 ( 4 ) to ( 8 ).
33 . In its "Budget" judgment of 3 July 1986 ( 6 )the Court expressly stated that
"If it were not possible to refer the acts of the budgetary authority for review by the Court, the institutions of which the authority is composed could encroach upon the powers of the Member States or of the other institutions or exceed the limits which have been set on their own powers ."
34 . The Court was thus prompted to consider the legality of a specific and isolated act adopted as part of the budgetary procedure by only one of the two arms of the budgetary authority, namely the European Parliament acting through its President .
35 . The same reasoning had already resulted in the Court' s upholding the principle that the European Parliament could be a defendant in proceedings for annulment brought under Article 173 . ( 7 )
36 . Just as the Court must be able to verify whether an institution is encroaching upon the powers of the other institutions or of the Member States by adopting certain measures, it should also be empowered to do so where an institution' s failure to act is liable to bring about the same result and hinder the exercise by the other institutions or the Member States of their respective powers .
37 . Moreover, the budgetary procedure is so arranged that the draft budget established by the Council, as is rightly emphasized by the Parliament, is a notional budget . According to the second sentence of the third subparagraph of Article 203 ( 4 ), the budget is deemed to be finally adopted if the European Parliament has not amended the draft budget or proposed any modifications thereto within 45 days .
38 . Failure to adopt the draft budget therefore certainly constitutes a failure to act on the part of the Council which may be the subject of an action under the first paragraph of Article 175 .
39 . However, it is also necessary to consider whether the Council was under an obligation to forward the draft budget no later than 5 October 1987, since only if that date is mandatory does the Council' s omission constitute an infringement of the Treaty which may be established by the Court on the basis of Article 175 . This question, which raises the problem of the nature of the date prescribed in Article 203 ( 4 ) is, however, a matter which goes to the substance of the case ( 8 )or, at least, is closely bound up with it . ( 9 )
B - The nature of the date 5 October
40 . Contrary to the view expressed by the European Parliament and the Commission that the date 5 October sets a time-limit which is mandatory, the Council puts forward several arguments to show that it is merely required "to use its best endeavours to establish a draft budget sufficiently early for completion of the procedure before the beginning of the financial year to be practicable ".
41 . In that regard, I would point out in the first place that in this case the Council did not succeed in fulfilling that obligation in the terms which it itself uses : at the beginning of the 1988 financial year the draft budget had not yet been established and the Parliament adopted the budget on a second reading only on 18 May 1988 .
42 . Furthermore, the argument that the time-table laid down for the establishment of a draft budget is merely indicative because it would be unrealistic to expect it to be regularly complied with goes against the precise and binding terms of Article 203 . Since the introduction of the new procedure by the Treaty of 22 July 1975 amending Certain Financial Provisions, the time-table has always been complied with, except in 1987 . In practice it even became apparent that the presentation of the draft budget should be brought forward in order to allow the two arms of the budgetary authority more time to complete their task . With effect from 1976 they in fact agreed, informally, upon a "pragmatic time-table" designed to ensure that the initial phases of the budgetary procedure were completed in advance of the dates envisaged in Article 203 . That accelerated time-table, by virtue of which the Council is to forward the draft budget to the Parliament before the summer holidays, has been observed for most of the financial years since 1976 . It appears from the reply which the Council gave to the question put to it by the Court in that connection that the Council itself had planned to establish the draft budget for 1988 by 23 or 24 July 1987 .
43 . Finally, the fact that the Treaty, by providing for the system of "provisional twelfths" in Article 204, itself acknowledges the possibility that the budget will not always be finally decided upon by the beginning of a financial year cannot in any way relieve the institutions involved in its preparation of the obligations incumbent upon them in the initial phases of the budgetary procedure and, in particular, cannot relieve the Council of its obligation to establish a draft budget no later than 5 October .
44 . Likewise, the fact that, pursuant to Article 203 ( 8 ), the Parliament may reject the draft budget and ask for a new draft to be submitted to it cannot release the Council from its obligation to prepare a draft within the prescribed time-limit . Moreover, the terms of that provision and also its place within the scheme of the budgetary procedure as a whole show that the European Parliament can avail itself of that power only under special conditions as to quorum and for important reasons, which relate in particular to the manner in which its amendments and proposed modifications are dealt with within the dialogue which, in accordance with paragraphs 4, 5 and 6 of Article 203, takes place between the two arms of the budgetary authority specifically on the basis of the draft budget established by the Council .
45 . Finally, whilst it is true that the legal consequences of exceeding the time-limit laid down in the latter paragraphs are expressly provided for, in so far as "the budget shall be deemed to be finally adopted" if one of the two arms of the budgetary authority does not express any views within the prescribed time-limit on the position adopted by the other arm at the preceding stage of the procedure, and whilst that is not the case as regards the time-limits laid down in paragraphs 2 and 3 and the first subparagraph of paragraph 4 of Article 203 for the various stages of the procedure which should lead to the establishment of the draft budget, it does not follow from that fact that those time-limits do not have to be respected . Quite the contrary : despite the fact that they are short, the time-limits applicable to the negotiations between the Council and the European Parliament are such that it is only where the date of 5 October is actually respected for the establishment of the draft budget that the budget can, unless it is rejected outright by the Parliament, be adopted before the beginning of the budgetary year to which it relates . It is precisely in order to ensure that the budget is adopted even if one of the two arms of the budgetary authority fails to observe a time-limit that "automatic sanctions" are provided for .
46 . Compliance with the time-limit of 5 October therefore constitutes a condition which is essential to the attainment of that objective .
47 . Moreover, it is difficult to imagine what the "automatic sanction" might be if that date were not met . In any event, to provide that the preliminary draft budget which the Commission must place before the Council before 1 September ( Article 203 ( 3 ) ) is to be deemed to constitute the draft budget if the Council does not meet the deadline of 5 October would amount to direct interference with the division of powers provided for by the Treaty with respect to budgetary matters, of which the underlying purpose is that the two-member team made up of the Council and the European Parliament should be the budgetary authority, entrusted with the adoption of the budget, whilst the Commission should be responsible for its implementation ( Article 205 ).
48 . All the arguments put forward by the Council in support of its contention that it is not obliged to establish and forward the draft budget by 5 October must therefore be rejected .
49 . It remains to be established whether the Council can plead the existence of any valid grounds which, in 1987, released it from its obligation to meet the date in question .
C - Can the Council plead the existence of valid grounds for its failure to meet the date?
50 . The Council maintains that it was objectively impossible for it to present, by the fateful date of 5 October 1987, a draft budget covering the totality of the expected expenditure for 1988 while at the same time ensuring that the revenue and expenditure would be in balance, as required by Article 199 .
51 . The parties are in agreement that the own resources available pursuant to the Council decision of 7 May 1985 on the Communities' system of own resources, ( 10 )which limits the maximum rate of revenue from VAT to 1.4%, were not in fact sufficient to cover all the "expected" expenditure for 1988, even if the more restrictive interpretation accorded to that term by the Council was adopted .
52 . In the "overview" accompanying the preliminary draft budget ( PDB ) which it forwarded to the Council on 15 June 1987, the Commission indicated that "the PDB would require a VAT rate of 1.7% if it was to be financed with own resources as presently constituted ". It therefore established the budget in accordance with the Community' s financing proposals for the period from 1988 to 1992, as set out in the documents COM(87 ) 100 final ( 11 )and 101 final,(12 )which involved in particular a review of the 1985 decision regarding own resources . It nevertheless took care to make clear that in the event of the Member States not adopting its proposals in due time, an intergovernmental agreement of ECU 5.75 billion would be needed to "fill the gap ".
53 . The Commission did not finally present its formal proposal for the increase of the Communities' own resources until 4 August 1987.(13 )
54 . That proposal was based on Article 201 of the Treaty which provides for the replacement of the financial contributions of Member States ( Article 200 ) by own resources . For its adoption a special procedure must be followed . Article 201 ( 3 ) provides that :
"After consulting the European Parliament on these proposals the Council may, acting unanimously, lay down the appropriate provisions, which it shall recommend to the Member States for adoption in accordance with their respective constitutional requirements ".
55 . In view of the date of presentation of the Commission' s proposal, it would have been impossible for the decision on new own resources to be ratified by the Member States in accordance with their respective constitutional requirements before 5 October 1987, even if the Council had been in a position to adopt it before that date .
56 . The Parliament itself did not give its opinion on that proposal until 18 November 1987 ( 14 )and the Economic and Social Committee did not give its opinion until 27 January 1988.(15 ) It is true that Article 201 does not provide for consultation of the Economic and Social Committee, but because of the importance of the decisions to be taken the Council considered such consultation to be desirable . It was therefore obliged to await the opinion of the Committee before adopting its decision .
57 . In those circumstances, the Council could legitimately claim with respect to the "revenue" side of the Commission' s preliminary draft, on the basis of which it was to establish the draft budget for 1988,(16 )that "there was no legal basis for it ".
58 . That statement has not actually been challenged by the applicants, but they nevertheless claim that in the absence of new own resources properly so called, the Council had other revenue at its disposal on the basis of which it could have drawn up a complete and balanced draft budget .
59 . According to the Parliament, the Council should have either mobilized "national contributions" under Article 200 of the Treaty or had recourse to Article 235 or else asked the Member States to pay "advances" to the Community, as was done in 1984 and 1985 .
60 . The Commission, for its part, merely criticizes the Council for not having adopted the latter solution which it itself had suggested, as we have seen, in the "overview" accompanying its preliminary draft budget .
61 . We must now therefore consider whether the Council would in fact have been in a position to balance the draft budget using revenue from either of those sources .
( a ) The "financial contributions of Member States" under Article 200 .
62 . Before the entry into force of the first decision on own resources of 21 April 1970,(17 )the EEC and EAEC budgets were essentially funded by "financial contributions of the Member States" according to the scale given in Article 200 of the EEC Treaty and Article 172 of the EAEC Treaty . As those articles have never been formally repealed, the Parliament maintains that they remain in force and are available to the Council for the purpose of balancing the budget to such extent as may be made necessary by a shortfall of own resources . To make use of that provision it is sufficient, in the Parliament' s view, for the Council to introduce percentages for the six non-original Member States of the Community, at the same time amending those laid down for the founding Member States . It could do so on the basis of Article 200 ( 3 ) which provides that "the scales may be modified by the Council, acting unanimously ".
63 . Even assuming that Article 200 is still in force, percentages for the new Member States could only be introduced by means of an amendment of the Treaty in accordance with the procedure provided for in Article 236 or by adjustments to the Treaty in connection with an accession agreement in accordance with Article 237 . Neither procedure has been followed .
64 . However, I share the view of the Council that the "financial contributions" have been definitively replaced by "own resources ".
65 . In the first place, Article 201 itself requires the Commission to "examine the conditions under which the financial contributions of Member States ... could be replaced by the Community' s own resources ".
66 . In the second place, the preamble to the Treaty of 22 April 1970 amending Certain Budgetary Provisions of the Treaties establishing the European Communities and of the Treaty establishing a Single Council and a Single Commission of the European Communities contains the following recitals :
"Considering that the Communities will have at their disposal their own resources in order to cover their total expenditure,
Considering that the replacement of financial contributions of Member States by the Communities' own resources requires a strengthening of the budgetary powers of the European Parliamen ".
67 . In addition, whilst it is true that the first decision on own resources, dated 21 April 1970, continued to envisage the coexistence of those two sources of financing "to ensure that the budget of the Communities is in balance", it did so, by virtue of Article 3 ( 2 ), only for the period from 1 January 1971 to 31 December 1974 . Article 4 ( 1 ) of that decision expressly provides that "from 1 January 1975, the budget of the Communities shall, irrespective of other revenue, be financed entirely from the Communities' own resources ".
68 . That provision must be compared with Article 200 itself, the first paragraph of which reads as follows :
"The budget revenue shall include, irrespective of any other revenue, financial contributions of Member States ..."
It cannot therefore be maintained that since 1970 the financial contributions have been placed under the heading of "other revenue ".
69 . The 1985 decision, which superseded that of 1970, reiterates that principle in the second paragraph of Article 1, after indicating in the first paragraph thereof that the Communities are to be allocated resources of their own in order to ensure that the budget is in balance .
70 . Moreover, the existence in the decisions on own resources of certain provisions which provided for ( Articles 3 ( 4 ) and 4 ( 6 ) of the 1979 decision ) or provide for ( Article 4 ( 2 ) of the 1985 decision, as amended by Article 29 of the Single European Act)(18 )the possibility of recourse to financial contributions from the Member States shows, a contrario, that such contributions are no longer available as normal sources of financing for the budget . Moreover, those provisions do not refer to the scale laid down in Article 200, which still relates only to the six founding Member States, but require a specific decision of the Council in that regard . That requirement of a specific decision is again emphasized by the fact that, since the amendment made to the 1985 decision by the Single Act, the procedure for the adoption of that scale differs from that contained in Article 200 ( 3 ) of the Treaty .
71 . Finally, the Parliament also claims that there is no presumption that a provision of a Treaty has lapsed . I do not challenge that principle, but I consider that a provision of a Treaty may be regarded as repealed where at a later date legislation is adopted, pursuant to another provision of the same Treaty and which is in conformity with the constitutional provisions of the Member States, incontestably designed to regulate the same subject-matter in a different way . That is the case here . The Council could not therefore have recourse to "national contributions" in order to balance the draft budget for the financial year 1988 .
( b ) Recourse to Article 235
72 . As far as Article 235 is concerned, suffice it to point out that, since Article 201 lays down a procedure for creating new own resources, there is no lacuna in the Treaty and parallel recourse to Article 235 is not possible . Furthermore, the Council could have acted on the basis of that provision only upon a proposal from the Commission and no such proposal was submitted to it .
( c ) The advances to be granted by the Member States
73 . A third method of bridging the gap between the own resources available pursuant to the 1985 decision and the "expected" expenditure would have been, according to the applicants, the provision by the Member States of non-reimbursable advances, paid on account of the amounts which would become due after the entry into force of the decision on the creation of additional own resources . In my opinion, the Council is right to emphasize that such a solution would only have been possible by virtue of an intergovernmental agreement in simplified form, that is to say by means of a measure falling outside the powers of the Council .
74 . It is true that the Member States have on two occasions in the past decided, at a Council meeting, to grant such advances to the Community . However, the representatives of the Member States acted in both cases as their plenipotentiaries and not as members of the Council .
75 . Article 5 of the Treaty does indeed, in my opinion, impose an obligation upon the Member States to grant advances to the Community whenever it becomes necessary to do so in order to ensure that the budget can be adopted in time, and without waiting until the future destiny of Community finances is settled by a long-term decision . The fact nevertheless remains that if one or more Member States were to refuse to comply with that requirement the responsibility for instituting Treaty-infringement proceedings against them on the basis of Article 169 of the Treaty would fall to the Commission . The Council could not be regarded as liable or be penalized by the Court for failing, as an institution, to ensure, by means of advances from the national budgets, that the Community budget was in balance .
76 . That conclusion necessarily follows from the fact that the Council is not an intergovernmental conference ( even though it sometimes behaves like one ) but an institution of the Community .
77 . It is true that it was recourse to advances which finally made possible the adoption of the draft budget for 1988 . The explanatory memorandum to that draft confirms, however, that what was concluded was in fact an intergovernmental agreement since a note at the foot of page 10 indicates that the validity of the undertaking given by the representatives of the governments meeting within the Council is subject to the completion of the requisite internal procedures .
78 . It was only when an agreement in principle on all of what were called, for the sake of brevity, "the Delors proposals" was reached in the Brussels European Council of 11 to 13 February 1988 that those of the Member States that had used their opposition to the grant of advances as a means of exerting pressure to obtain a solution to the outstanding problems which would be satisfactory to them dropped their objections .
79 . It follows from the foregoing observations ( sections ( a ), ( b ) and ( c ) ) that the Council, as an institution, was, at least until the European Council meeting of February 1988, unable to fulfil its obligation to present a draft budget in which the revenue and expenditure were in balance and which covered all the expenditure that, in the opinion of the Council itself, ought to be provided for .
80 . However, it may still be asked whether the very clear obligation imposed upon the Council to present no later than 5 October each year a draft budget in which revenue and expenditure are in balance should have prompted it to present before that date at least a draft budget in which the expenditure side was kept within the limits of the revenue available at that time .
81 . That is the question which must be considered now .
( d ) Should the Council have adopted a draft budget in which the expenditure was limited to the amount of the revenue?
82 . We have seen that the Council is obliged to meet the date of 5 October . Likewise, the second paragraph of Article 199 quite categorically prescribes that the revenue and expenditure shown in the budget must be in balance .
83 . Does the Treaty also absolutely require the budgetary authority to include in the budget all the expenditure which may be reasonably foreseen as necessary, or does it allow, or indeed require, that authority, where to do so is the only way of meeting the deadline of 5 October, to limit the level of expenditure to that of the revenue available, in the exceptional event of the ceiling of own resources being reached?
84 . Let us see what we may learn in that respect from the relevant provisions .
85 . Article 199 ( 1 ) of the Treaty provides as follows :
"All items of revenue and expenditure of the Community, including those relating to the European Social Fund, shall be included in estimates to be drawn up for each financial year and shall be shown in the budget ."
86 . Moreover, it is apparent from the first article of the Financial Regulation ( Official Journal 1977, L 356, p . 1 ) that
"The budget of the European Communities ... is the instrument which sets out forecasts of, and authorizes in advance, the expected revenue and expenditure of the Communities for each year ".
87 . It is true that the concept of "expected" expenditure leaves room for a certain margin of appraisal and that there is expenditure which in the opinion of the Parliament and of the Commission should be included in the budget for a given year, but which, in the Council' s opinion, is not justified or can be carried forward to a later year .
88 . It might also be argued that the term "expected" refers simultaneously to revenue and to expenditure and that, since the budget must without fail be in balance, the expenditure must therefore be adjusted to the revenue .
89 . In addition, we have seen that Article 199 provides expressly that all revenue and expenditure must be included in estimates and must be shown "in the budget", that is to say in a single budget .
90 . It clearly follows, as Mr Advocate General Mancini stated in his Opinion in Case 34/86, that "there is no 'expected' expenditure which the budgetary authority may not take into account".(19 ) The budgetary authority cannot therefore, in advance, cut down on the "expected" expenditure, whatever may be the exact meaning which should be attributed to that concept .
91 . Of course, if expenditure which was not expected before the beginning of the financial year were to be incurred during the year, a supplementary or amending budget would have to be adopted . But it follows from Article 1 ( 5 ) of the Financial Regulation that that is only possible "in the event of unavoidable, exceptional or unforeseen circumstances" arising during the budgetary year in which a budget has already been adopted . Moreover, the initiative in that regard belongs to the Commission which, as in the case of the general budget, must submit a supplementary or amending preliminary draft budget .
92 . It should also be noted that in the event of the Council presenting a draft budget characterized by a level of revenue determined ne variatur and by expenditure equivalent to the revenue, the European Parliament would find it impossible to make use of the right to increase non-compulsory expenditure conferred upon it by Article 203 .
93 . Finally, to decide that the date of presentation of the draft budget is more important than the "truthfulness" or "accuracy" of that document would be tantamount to attaching more importance to form, or a point of procedure, than to substance . I cannot see that that could have been the intention of the authors of the Treaty when they laid down a binding date for presentation of the draft budget .
94 . It is also not without interest to note that, for 1988, the difference between the own resources actually available and the expenditure ultimately considered necessary by the Council in its draft budget of 7 March 1988 is truly enormous and is considerably greater even than the deficit calculated by the Commission in June 1987 . The advances to be paid by the Member States in fact total ECU 7.6 thousand million, whereas the total amount of the draft budget is ECU 43.3 thousand million ( appropriations for payment ). That deficit far exceeds the sum of the appropriations envisaged for the Social and Regional Fund ( 5.9 million ). It is equivalent to almost one quarter of the EAGGF-Guarantee allocation . If the Council had wished to adjust expenditure to the available income it would therefore have had to make some extremely severe cuts and take considerable risks regarding the financing of the Community activities in the last quarter of 1988 .
95 . It is therefore wholly comprehensible that the European Parliament and the Commission attach the greatest importance to the completeness and accuracy of the budget . Let us remember in particular the Parliament' s resolution of 13 December 1984 in which it declared that a budget which did not cover 12 months of revenue and expenditure was not acceptable and that moreover an annual budget must incorporate the financial implications of the legislation in force and the decisions that had been taken ( Official Journal 1985, C 12, p . 90 ). For those reasons, the Parliament rejected the draft budget for 1985 .
96 . In a resolution passed on 8 July 1987 ( Official Journal 1987, C 246, p . 40 ), the Parliament also made it clear that "any budgetary decisions which do not cover completely the real financial requirements for 1987 and 1988 cannot be accepted ".
97 . There is therefore no shadow of a doubt that if the Council had presented by 5 October 1987 a draft budget that did not include all the expenditure which, at least in the opinion of that institution, would prove necessary during 1988, the Parliament would have rejected that draft budget . In those circumstances, the procedure prior to the entry into the force of the budget would also have been prolonged well beyond 1 January 1988 .
98 . In my opinion therefore it is must be concluded that the obligation to present a complete draft budget must take precedence over the obligation to present it before 5 October, in extreme situations where those two requirements cannot be reconciled .
99 . I consider therefore that it should be concluded that the Council infringed the Treaty by failing to present, no later than 5 October 1987, a draft budget in which the expenditure side was adjusted according to the available revenue .
100 . The Council is right, in my view, when it contends that it was faced with conflicting obligations since it was not in a position to present a draft budget which simultaneously fulfilled the following three conditions :
Presentation before 5 October 1987;
Inclusion of all expenditure which might be expected in 1988;
Balanced revenue and expenditure .
If the Council had sought to comply with any of those conditions, it would have automatically infringed at least one of the other two .
101 . The Parliament and the Commission consider, however, that it is not for the Court to consider the reasons underlying the Council' s conduct but merely to make a finding that the failure to comply with the time-limit of 5 October constitutes a breach of the Treaty . The two institutions rely upon paragraph 48 of the Court' s "Common Transport Policy" judgment of 22 May
1985,(20 )in which it was stated that :
"Article 175 takes no account of how difficult it may be for the institution in question to comply with the obligation ".
102 . In that case the Council had contended that objective difficulties of a geographical, economic and social nature stood in the way of rapid progress in implementation of the Common Transport Policy . The Court held that "objective difficulties" were irrelevant for the purposes of that action .
103 . In my opinion, the passage cited refers to difficulties which, by reason of the complexity of the matter in hand, the Council may experience in arriving, within that institution, at the qualified majority or unanimous vote necessary for the adoption of a decision . It does not mean that a difficulty of a legal nature, alien to its own decision-making process, cannot, in appropriate circumstances, be taken into account .
104 . Let us suppose for example that the Council were obliged to adopt a measure before a specified date, and that the opinion of the Parliament, which it was under an obligation to obtain, did not reach it before that date . Since the obtaining of the opinion of the Parliament is a precondition and an essential procedural requirement the non-observance of which would give rise to the nullity of the measure concerned, the Council would not be guilty of a failure to act . This, in my view, may be inferred from the judgments of the Court of 29 October 1980 in Cases 138/79 Roquette frères v Council ( (( 1980 )) ECR 3333, at p . 3360 ) and 139/79 Maizena v Council ( (( 1980 )) ECR 3393, at p . 3424 ) in which the Court declared void a Council Regulation which, in view of urgent circumstances, had been adopted without the prior opinion of the Parliament having been obtained .
105 . Likewise, the Council cannot be declared to have failed to act, on the ground that it did not fix the prices for a new milk marketing year by 1 April, if the Commission' s proposals, without which it cannot give a decision, have not reached it before that date .
106 . In the Court' s judgments of 15 January 1986 ( Case 52/84 Commission v Belgium ( (( 1986 )) ECR 89 ) and of 2 February 1988 ( Case 213/85 Commission v Netherlands ) it was conceded that the absolute impossibility of implementing a decision properly ( Case 52/84, paragraph 14 ) or the absolute impossibility of implementing a decision within the period notified ( Case 213/85, paragraph 22 ) is a defence which may be pleaded by a Member State in Treaty-infringement proceedings of the kind provided for in the second subparagraph of Article 93 ( 2 ) of the Treaty .
107 . In the present case, I believe that I have shown that the Council could not comply with the time-limit of 5 October unless it infringed either its concomitant obligation to present a complete and accurate draft budget or its obligation to present a balanced draft budget . Responsibility for that situation was attributable not to the Council but to those of the Member States which were not prepared, at that time, to grant "advances" to the Community .
108 . It was therefore, in my opinion, absolutely impossible for the Council to discharge its obligation regarding the time-limit for presentation of the budget . Having regard to the conflicting obligations incumbent upon it, there were legitimate reasons for its giving priority to compliance with its substantive obligations rather than to an obligation of a procedural nature .
109 . Let me repeat that, in the present proceedings, which have been brought against the Council as a Community institution, I am expressing a view only regarding the obligations of that institution . It is not for me to give an opinion on whether or not one, several or all of the Member States have failed to fulfil their obligations under Article 5 of the Treaty by not making "advances" available to the Community before 5 October 1987 .
110 . Once all the Member States, at the European Council held in Brussels from 11 to 13 February 1988, had indicated their agreement to grant such "advances", the Council adopted the draft budget for 1988 within a period which may be regarded as reasonable ( by 7 March 1988 ) and placed it before the Parliament .
111 . Having regard to all the foregoing considerations, my principal conclusion is that it was absolutely impossible for the Council to comply with its obligation to present the draft budget no later than 5 October 1987, and that its failure to act cannot therefore be regarded as an infringement of the Treaty .
112 . Since both actions explicitly refer to failure to comply with the time-limit of 5 October 1987, I am therefore obliged to propose that the Court should dismiss the actions as unfounded .
113 . In the event of the Court' s not agreeing with my reasoning, the actions should of course succeed, unless the Court reaches the conclusion that there is no longer any need to give a decision in view of the fact that the measure called for has been adopted in the mean time . That point therefore remains to be considered .
D - Is is still necessary for the Court to give a decision?
114 . The reply to that question depends largely upon on what view is taken concerning the purpose of proceedings to establish a failure to act .
115 . Are such proceedings designed to lead to a finding that inaction, even if remedied after the commencement of the proceedings, constituted an infringement of the Treaty and thus to issue a reprimand to the institution concerned? Or are actions for a failure to act designed solely to prompt the institution concerned to take action, so that the finding that the failure to act is unlawful merely constitutes, as it were, a means of exerting pressure to achieve that result?
116 . Certain passages of Article 175 may be invoked in support of the first view . The first paragraph of that article uses the expression "to have ... established" the fact that the failure to act was "in infringement of this Treaty" and the first paragraph of Article 176 refers to cases where the "failure to act has been declared contrary to this Treaty ".
117 . But, if that view were correct, the Court would be obliged in all cases to establish that the failure to act was unlawful, in particular in order to place on record for the benefit of the applicant the fact that it was by virtue of an obligation that the institution finally adopted the requested measure prior to the Court' s delivering judgment, and that it did not do so in a spirit of benevolence or in the exercise of a discretion .
118 . However, that is not the approach adopted in the previous decisions of the Court .
119 . In the three cases(21 )in which the measure called for was adopted after the action was brought and in which the applicant did not discontinue the proceedings, the Court found that the actions had become "devoid of purpose" and concluded that it was "no longer necessary to give a decision ". It is true that in those three cases the Court expressly observed either that the parties agreed in conceding that the action taken by the defendant institution might be regarded as "the positive outcome of the ... application" or that the applicants had obtained satisfaction, or else that the applicants had stated that the purpose of their action had been achieved . But if the true purpose of proceedings for a failure to act were to have objective infringements of Community law established, would not the Court nevertheless have been obliged to give a decision?
120 . Furthermore, where proceedings for failure to act are brought in respect of non-compliance with a time-limit, the judgment of the Court could not in any case achieve the result of retroactive observance of the deadline which was exceeded . Indeed, failure to comply with the time-limit is a precondition for the setting in motion of the entire procedure .
121 . Moreover, the procedure is so arranged that it may well happen that there will be no finding of an infringement of Community law, constituted by failure to comply with a time-limit . If the measure called for is adopted within a period of two months after the institution is "called upon to act", proceedings for a failure to act may not be brought ( second paragraph of Article 175 ).
122 . It should also be borne in mind that in the context of Treaty-infringement proceedings under Article 169, a Member State actually has a double time-limit ( reckoned from the date of the formal letter calling on it to submit its observations and from that of the reasoned opinion ) within which to remedy the infringement .
123 . In addition, the Commission usually discontinues its action where the infringement is brought to an end before the date of the hearing . This frequently occurs in particular in proceedings for a declaration that a directive has not been transposed into national law within the prescribed period .
124 . It may therefore be said that Community law seeks not so much to "condemn", at any price, Member States or institutions which have infringed any of its rules but rather to ensure that they bring their improper conduct to an end .
125 . The objection might certainly be raised that in proceedings under Article 169 the Court has nevertheless insisted on establishing an infringement in cases where the infringement was not brought to an end until after the expiry of the period laid down in the reasoned opinion and where the applicant has not discontinued the proceedings . But in such cases the Court has always felt the need to emphasize that
"pursuit of the action still has an object" which "may consist in particular in establishing the basis of the liability which a Member State could incur towards those who acquire rights as a result of its default".(22 )
126 . In the present case it seems to me to be hardly conceivable that either the Parliament or the Commission or an individual might seek damages from the Council because of its late presentation of the draft budget for 1988 .
127 . However, rather than drawing a parallel between proceedings for a failure to act and proceedings against a Member State for failure to fulfil a Treaty obligation, the Court tends to perceive a "kinship" between proceedings for a failure to act and proceedings for a declaration that a measure is void . In its "Common Transport Policy" judgment of 22 May 1985, the Court noted a "close relationship" between the two types of action . It concluded that
"in both cases the measures which are the subject of the action must be sufficiently defined to allow the Court to determine whether their adoption, or the failure to adopt them, is lawful" ( (( 1985 )) ECR 1513, at p . 1592, paragraph 36 ).
128 . In its judgment of 18 November 1970 in Case 15/70 Chevalley v Commission ( (( 1970 )) ECR 975, paragraph 6 ) it took the view that Articles 173 and 175 embodied one and the same remedy . It seems to me to be possible to infer from those statements that there is a similarity between the adoption of the measure called for, in proceedings for a failure to act, and the withdrawal of the contested measure, in proceedings for a declaration that a measure is void .
129 . As regards the hypothesis where, in the case of proceedings for the annulment of a measure, the contested measure has been withdrawn while the proceedings are pending, the Court has always taken the view that, by reason of their withdrawal, "the contested decisions have ... become inapplicable"(23 )and that "the action relates to a decision which can no longer have any adverse effect on the applicant company".(24 ) It inferred from this that the actions had become devoid of purpose and that there was no longer any need to give a decision . In other cases it declared that there was no need to give a decision by virtue of the fact that the applicant had achieved the desired outcome or had obtained full satisfaction.(25 )
130 . It may therefore be considered, by analogy, that the purpose of proceedings for a failure to act disappears as soon as the measure called for has been adopted and the applicant has thus obtained satisfaction .
131 . In any event, no general rule can be inferred from the previous decisions of the Court to the effect that an institution' s failure to act, which remains unremedied at the time when the proceedings are commenced, must without fail be the subject of a sanction even if the measure called for is adopted before the oral stage of the procedure has been reached .
132 . In the present case, if the Court shares my view, it will in any event feel that it is necessary to emphasize in the grounds of its judgment that the date of 5 October is a mandatory time-limit; thus, the position will be clarified for the future .
133 . In those circumstances I do not see any decisive reason which might prompt the Court to deviate in this case from the general trend of its previous decisions, as just outlined .
134 . The great majority of legal writers are also of the opinion that if an institution submits to the applicant' s claims by adopting the measure requested of it, even after the application has been lodged, the action becomes devoid of purpose.(26 )
135 . Since that happened in the present case, I propose that the Court, in the alternative - that is to say if it considers that there has been a failure to act within the meaning of Article 175 - should declare that there is no need to give a decision .
136 . On the basis of all the foregoing considerations, I therefore propose that the Court should :
Dismiss the objection of inadmissibility raised by the Council;
Find that, by virtue of the fact that it was absolutely impossible for the Council to discharge its obligation regarding the date for presentation of the draft budget without thereby failing to fulfil one or more other obligations, its failure to forward the draft budget for 1988 to the European Parliament no later than 5 October 1987 does not constitute an infringement of the Treaty; and accordingly dismiss the applications;
In the alternative, declare that there is no need to give a decision .
137 . Since the Council has failed in both its submissions ( objection of inadmissibility and its argument that the time-limit of 5 October is not mandatory ), I propose that each of the institutions should bear its own costs . This seems to me to be the correct decision, irrespective of which of the alternatives proposed above is adopted .