Case C-27/04

Commission of the European Communities

v

Council of the European Union

(Action for annulment – Article 104 EC – Regulation (EC) No 1467/97 – Stability and Growth Pact – Excessive government deficits – Council decisions under Article 104(8) and (9) EC – Required majority not achieved – Decisions not adopted – Action challenging ‘decisions not to adopt the formal instruments contained in the Commission’s recommendations’ – Inadmissible – Action challenging ‘Council conclusions’)

Summary of the Judgment

1. Actions for annulment – Actionable measures – Failure of the Council to adopt a decision following a recommendation from the Commission – Required majority not achieved – Inadmissible

(Arts 104(8) and (9) EC and 230 EC)

2. Actions for annulment – Actionable measures – Measures having binding legal effects – Council conclusions holding excessive deficit procedures in abeyance and modifying the Commission’s recommendations – Admissible

(Arts 104(7) and (9) EC and 230 EC)

3. Economic and monetary policy – Excessive deficit procedure – Council’s discretion – Limits

(Art. 104 EC; Council Regulation No 1467/97)

4. Economic and monetary policy – Excessive deficit procedure – Council decision holding the procedure in abeyance – Effects – Restriction of the Council’s powers conferred by Article 104(9) EC – Unlawful

(Art. 104(7) and (9) EC; Council Regulation No 1467/97, Art. 9)

5. Economic and monetary policy – Excessive deficit procedure – Commission’s right of initiative – Modification of recommendations previously adopted by the Council – Conditions – Fresh recommendation from the Commission – Compliance with the voting rules required by Article 104(7) EC

(Art. 104(7), (9) and (13) EC)

1. Failure by the Council to adopt acts provided for in Article 104(8) and (9) EC that are recommended by the Commission cannot be regarded as giving rise to acts open to challenge for the purposes of Article 230 EC. Where the Commission recommends to the Council that it adopt decisions under Article 104(8) and (9) EC and the required majority is not achieved within the Council, no decision is taken for the purposes of that provision.

(see paras 29, 31, 34)

2. The Council’s conclusions – under which it agreed to hold the excessive deficit procedure in abeyance for the time being and declared itself ready to take a decision under Article 104(9) EC if it were to appear that the Member State concerned was not complying with the commitments which it had entered into, set out in the conclusions – are designed to have legal effects, at the very least inasmuch as they hold the ongoing excessive deficit procedure in abeyance and in reality modify the recommendations previously adopted by the Council under Article 104(7) EC. The Council thus renders any decision to be taken under Article 104(9) EC conditional on an assessment which will no longer have the content of the recommendations adopted under Article 104(7) EC as its frame of reference, but the unilateral commitments of the Member State concerned.

(see paras 46, 48, 50)

3. It follows from the wording and broad logic of the system, established by the Treaty, governing the excessive deficit procedure that the Council cannot break free from the rules laid down by Article 104 EC and those which it set for itself in Regulation No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure. Thus, it cannot have recourse to an alternative procedure, for example in order to adopt a measure which would not be the very decision envisaged at a given stage of the excessive deficit procedure or which would be adopted in conditions different from those required by the applicable provisions.

(see para. 81)

4. By its conclusions, which state that it ‘agrees to hold the Excessive Deficit Procedure for [the Member State concerned] in abeyance ...’ and ‘stands ready to take a decision under Article 104(9) EC, on the basis of the Commission Recommendation, should [that Member State] fail to act in accordance with the commitments set out in these conclusions …’, the Council does not simply record that the excessive deficit procedure is de facto held in abeyance because it has not been possible to adopt a decision recommended by the Commission, an inability which could be remedied at any time. Such a decision to hold the procedure in abeyance infringes Article 104 EC and Article 9 of Regulation No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure.

In so far as those conclusions make holding the procedure in abeyance conditional upon compliance by the Member State concerned with its commitments, they restrict the Council’s power to give notice under Article 104(9) EC on the basis of the Commission’s earlier recommendation, so long as the commitments are considered to be complied with. In so doing, the conclusions provide, in addition, that the Council’s assessment for the purposes of a decision to give notice, that is to say for the purposes of pursuing the excessive deficit procedure, will no longer have as its frame of reference the content of the recommendations already made under Article 104(7) EC to the Member State concerned, but unilateral commitments of that Member State.

(see paras 87-89)

5. Where the Council has adopted recommendations under Article 104(7) EC, it cannot subsequently modify them without a fresh recommendation from the Commission since the latter has a right of initiative in the excessive deficit procedure. In accordance with Article 104(13) EC, recommendations under Article 104(7) EC may be adopted only on a recommendation from the Commission.

A decision to adopt Council recommendations different from those adopted previously under Article 104(7) EC is unlawful where it is taken, first, without the recommendations having been preceded by Commission recommendations seeking the adoption of Council recommendations on the basis of that provision and, second, in accordance with the voting rules prescribed for Council decisions under Article 104(9) EC, that is to say with only Member States in the euro area taking part in the vote.

(see paras 91-92, 94-96)