OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 22 September 2005 1( )

Case C-217/04

United Kingdom of Great Britain and Northern Ireland

v

European Parliament

and

Council of the European Union

(European Network and Information Security Agency (ENISA) – Annulment of Regulation (EC) No 460/2004 of the European Parliament and of the Council – Incorrect legal basis – Article 95(1) EC – Measure for the approximation of the provisions laid down by law, regulation or administrative action in Member States)

I – Introduction

1. Regulation (EC) No 460/2004 of the European Parliament and of the Council of 10 March 2004 establishing the European Network and Information Security Agency ( ) (‘the ENISA Regulation’) ( ) was based on Article 95 EC. The United Kingdom takes the view that Article 308 EC should have been taken as legal basis instead, and has therefore brought an action for annulment.

2. This case is of great importance for legislative practice, since the Community legislature has recently taken more often to setting up agencies no longer on the basis of Article 308 EC but on the basis of special competences in specific sectors. ( )

II – Legal context

3. The legal basis of the ENISA Regulation is the second sentence of Article 95(1) EC:

‘The Council shall, acting in accordance with the procedure referred to in Article 251 and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.’

4. The preamble to the ENISA Regulation explains why it is necessary to set up the Agency. Recital 3 in the preamble describes the problem:

‘The technical complexity of networks and information systems, the variety of products and services that are interconnected, and the huge number of private and public actors that bear their own responsibility risk undermining the smooth functioning of the Internal Market.’

5. The next recitals list the various relevant harmonising measures ( ) and refer to various measures that may be taken pursuant to those enactments. None of the measures cited refers to ENISA. Recital 10 in the preamble states, finally:

‘These internal market measures require different forms of technical and organisational applications by the Member States and the Commission. These are technically complex tasks with no single, self-evident solutions. The heterogeneous application of these requirements can lead to inefficient solutions and create obstacles to the internal market. This calls for the creation of a centre of expertise at European level providing guidance, advice, and when called upon, with assistance within its objectives, which may be relied upon by the European Parliament, the Commission or competent bodies appointed by the Member States. …’

6. This idea is developed further in the subsequent recitals. Recital 12 should be emphasised. According to that recital, ENISA is not to interfere with the competences of the national regulatory authorities, the European Regulators Group, the Communications Committee under Directive 2002/21, ( ) European standardisation bodies, and the data protection authorities.

7. The objectives of ENISA are specified in Articles 1 to 3 of the ENISA Regulation:

‘Article 1

Scope

1. For the purpose of ensuring a high and effective level of network and information security within the Community and in order to develop a culture of network and information security for the benefit of the citizens, consumers, enterprises and public sector organisations of the European Union, thus contributing to the smooth functioning of the internal market, a European Network and Information Security Agency is hereby established, hereinafter referred to as “the Agency”.

2. The Agency shall assist the Commission and the Member States, and in consequence cooperate with the business community, in order to help them to meet the requirements of network and information security, thereby ensuring the smooth functioning of the internal market, including those set out in present and future Community legislation, such as in the Directive 2002/21/EC.

3. …

Article 2

Objectives

1. The Agency shall enhance the capability of the Community, the Member States and, as a consequence, the business community to prevent, address and to respond to network and information security problems.

2. The Agency shall provide assistance and deliver advice to the Commission and the Member States on issues related to network and information security falling within its competencies as set out in this Regulation.

3. Building on national and Community efforts, the Agency shall develop a high level of expertise. The Agency shall use this expertise to stimulate broad cooperation between actors from the public and private sectors.

4. The Agency shall assist the Commission, where called upon, in the technical preparatory work for updating and developing Community legislation in the field of network and information security.’

8. Article 3 of the ENISA Regulation describes the tasks of ENISA. They fall within the fields of the collection of information (points (a), (g) and (i)), provision of advice (points (b), (e), (h) and (k)) and promotion of cooperation (points (c), (d), (e), (f) and (j)).

9. In Article 4 of the ENISA Regulation a number of terms are defined. Articles 5 to 28 then regulate organisational questions. Under Article 18, the agency is to have legal personality. Under Article 19, it is to have its own staff. Article 15 provides for a separate budget for the agency on the basis of contributions from the Commission and third countries. Article 20 places it under the protection of the Protocol on the Privileges and Immunities of the European Communities. Article 21 contains rules on liability which correspond to Article 288 EC.

10. The controlling and managing body of the agency is a Management Board, provided for in Article 6 of the ENISA Regulation, consisting of representatives of the Member States and the Commission and three other persons without the right to vote. The Management Board determines the work programme of the agency and, under Article 7, appoints the Executive Director. Finally, under Article 8, the agency is given a Permanent Stakeholders’ Group.

III – Forms of order sought by the parties

11. The United Kingdom claim that the Court should:

1. declare that Regulation (EC) No 460/2004 of the European Parliament and of the Council of 10 March 2004 establishing the European Network and Information Security Agency is invalid;

2. order the European Parliament and the Council of the European Union to pay the United Kingdom’s costs.

12. The Parliament and the Council contend that the Court should:

1. dismiss the application as unfounded;

2. order the United Kingdom to pay the costs.

13. The Council contends, in the alternative, that if the ENISA Regulation were to be annulled, its effects should be maintained.

14. Finland and the Commission have intervened in support of the Parliament and the Council and the forms of order sought by them.

IV – Legal assessment

A – Choice of legal basis

15. The United Kingdom contests the choice of legal basis for the ENISA Regulation.

16. It is settled case-law that the choice of legal basis for a Community legal act must rest on objective factors which are amenable to judicial review, including in particular the aim and content of the act. ( )

17. The Community legislature based the ENISA Regulation on Article 95(1) EC. Under that provision, measures are to be adopted for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.

18. Measures on the basis of Article 95(1) EC are intended to improve the conditions for the establishment and functioning of the internal market, but that provision does not confer on the Community legislature any general power to regulate the internal market. ( ) The Court has also stated that measures under Article 95(1) EC ‘must genuinely have that object, actually contributing to the elimination of obstacles to the free movement of goods or to the freedom to provide services, or to the removal of distortions of competition’. ( )

19. Consistent Community-wide measures to promote the security of networks and information systems may undoubtedly prevent the emergence of obstacles to the free movement of goods and services, simply by preventing divergent national measures. Thus, for example, the cross-frontier conclusion of transactions or their performance with the aid of networks and information systems presupposes identification procedures that function across borders, which require Community-wide coordination at least.

20. As all the parties other than the United Kingdom submit, ENISA will contribute to that aim by collecting information, providing a forum for discussion, and in certain cases advising the Community institutions or national bodies. Even the United Kingdom Government acknowledges that the setting up of ENISA was to be desired.

21. However, the United Kingdom criticises essentially, as in Case C‑66/04 ( ) concerning the regulation on smoke flavourings, ( ) that the establishment of ENISA is not a measure ‘for the approximation of the provisions laid down by law, regulation or administrative action in Member States’ within the meaning of Article 95(1) EC. It takes the view that such measures must be directed towards the laws of the Member States. That legal basis may not be used for measures which the Member States cannot – individually or together – themselves effect. A Community agency cannot be created by the simultaneous enactment of identical legislation in the Member States.

22. In my Opinion in Case C‑66/04 ( ) I have already shown that the wording of Article 95(1) EC, by mentioning the ‘approximation’ of laws, regulations and administrative action ‘in Member States’, calls for a reference by the Community measures to national law. Such a reference exists if, by means of provisions of Community law that are to be transposed, approximated national provisions come into being in all the Member States. But Community law with direct and superior effect such as a regulation, which displaces or prevents national law that diverges from it, also has that reference to national law. Purely Community measures which take effect alongside the law of a Member State without altering its normative content, on the other hand, do not in fact effect any approximation of the laws of the Member States. This was decided by the Court with respect, for instance, to new intellectual property rights which took effect alongside the existing national rights. ( )

23. In the view of Advocate General Stix-Hackl, that case-law is to be understood as meaning that it is not sufficient that a measure whose ‘essential characteristic’ is the ‘creation of something new’ has the aim of promoting the internal market. She therefore rejected the creation of new forms of companies such as the European cooperative society on the basis of Article 95(1) EC. ( )

24. Advocate General Stix-Hackl’s view must be accepted in the case of the creation of new kinds of companies, if they take their place alongside the kinds of companies in the individual States’ legal systems. In that case the necessary (approximating) reference to those legal systems is absent. It must be pointed out, however, that new things may be created even by way of the approximation of laws. Thus preventive approximation in anticipation of expected national measures ( ) in principle requires the creation of new provisions for which there is as yet no equivalent in the Member States. ( )

25. ‘Measures for ( ) the approximation of the provisions laid down by law, regulation or administrative action in Member States’ within the meaning of Article 95(1) EC are not confined, however, to measures which themselves approximate the laws of the Member States. As the institutions submit, measures which effect the approximation of the laws of the Member States only as a result of their application, for example by providing for procedures that bring about approximation not directly but in a multi-stage model with intermediate steps, also contribute to the approximation of laws. ( )

26. The ENISA Regulation contains on the one hand provisions which could represent such an intermediate step, namely the provisions on the tasks and powers of ENISA. However, it also regulates, on the other hand, the establishment and organisation of ENISA. The latter – quantitatively predominant – provisions manifestly do not contribute directly to the approximation of provisions of the Member States. The United Kingdom Government therefore insists that the establishment of an agency may in principle not be based on Article 95(1) EC.

27. At first sight it does indeed appear conceivable to attribute two different aims to the ENISA Regulation, namely the definition of certain tasks of ENISA on the one hand and the establishment of ENISA on the other. From that point of view, the legal basis would have to be chosen according to which of the two aims predominated. ( ) However, splitting the ENISA Regulation into two separate parts leads one astray. The establishment of ENISA cannot be separated from its tasks, but is a means to the end. The ENISA Regulation thus pursues only a single aim, which is to be derived above all from the provisions on the tasks of ENISA.

28. However, even if there is a single aim the question still arises whether the ENISA Regulation is an intermediate step on the way to the approximation of laws within the meaning of Article 95(1) EC. The regulation does not effect any approximation of laws. ENISA cannot itself adopt any provisions on the approximation of laws, nor does it take part in specific procedures for the adoption of such provisions. The contribution of the ENISA Regulation to the approximation of laws is therefore not immediately evident.

29. Nevertheless, in the opinion of the institutions and the Finnish Government, ENISA makes a contribution to approximation by collecting and distributing information, advising Community institutions and national regulatory bodies, and promoting cooperation between representatives of interests.

30. As the United Kingdom Government emphasised in particular at the hearing, the tasks of ENISA which relate to the cooperation of private actors and the provision of information for private users (Article 3(c), (e) and (i)) can scarcely, however, be regarded as an intermediate step to the approximation of the laws of the Member States.

31. Nevertheless, a contribution of ENISA to the approximation of laws by means of its other activities cannot entirely be excluded. In particular, the function given to ENISA of advising the Community institutions could also support their legislative activity and hence potentially the approximation of provisions of the Member States. In addition, under Article 3(k), ENISA can submit its own conclusions, orientations and advice on questions within its remit and thereby encourage approximation.

32. Moreover, it is conceivable that by its mere existence as a European discussion forum and specialist centre ENISA promotes the approximation of legislation of the Member States by the voluntary parallel action of national bodies. The Finnish Government stresses in this respect the expertise and independence which ENISA is intended to have and the responsibility of its management board for harmonising the work of the agency with the activities carried out by the Member States and at Community level. The United Kingdom’s criticism to the effect that ENISA’s independent advisory activity may in practice even increase the differences between the Member States if some of them follow ENISA’s advice and others do not is, by contrast, exaggerated.

33. These potential contributions of ENISA to the approximation of laws are not, however, sufficient for its establishment to be regarded as a measure for the approximation of the provisions laid down by law, regulation and administrative action in Member States.

34. That is because it is not predictable whether and in what form ENISA will contribute to the approximation of laws. That depends on all sorts of factors. In addition to ENISA’s work and findings, the cooperation of institutions, bodies of the Member States and representatives of interests is also necessary in particular. It is not therefore impossible that ENISA’s potential for the approximation of laws will in practice not be exhausted. Even where ENISA does contribute to the approximation of laws, the corresponding measures will not necessarily be based on Article 95(1) EC. Thus ENISA’s activity could lead to measures regulating the exercise of an occupation, which might have to be based on Article 47 EC.

35. In so far as Article 1(2) of the ENISA Regulation and the recitals in its preamble make a connection between ENISA and existing approximation measures, as the Parliament and the Council in particular stress, ENISA is not actually tied into the adoption of the implementing measures required under those measures. As the United Kingdom submits, on the one hand ENISA’s functions are materially much more extensive than the implementation of those directives, and on the other hand the implementation itself is not within the jurisdiction of ENISA but within that of the Commission and the authorities of the Member States. As regards the provision of advice, special structures were even created in connection with implementing those measures, namely the Communications Committee, ( ) the European Regulators Group, ( ) and in the field of data protection the working party on the protection of individuals with regard to the processing of personal data. ( )

36. The ENISA Regulation is therefore not so much an intermediate step on the way to the approximation of laws of the Member States as a step into the uncertain. ENISA was set up to ‘have in stock’, so to speak, in the expectation that it would produce useful results. That it will be of use (for the internal market) is not unlikely, but that is not enough to make the ENISA Regulation a measure for the approximation of laws.

37. The institutions that are parties to the proceedings, however, put forward a number of arguments as to why the establishment of ENISA may be based on Article 95(1) EC regardless of any contribution to the approximation of laws.

38. They point out to begin with that the establishment of ENISA will affect the powers of the Member States much less than, for instance, the adoption of approximating measures which have to be transposed for promoting the security of networks and information systems. Moreover, setting up ENISA is more sensible than approximation, since the need for approximating measures is at present still unclear. ENISA is a means of acquiring the corresponding knowledge.

39. That is indeed correct, but cannot lead to extending the scope of Article 95(1) EC to measures which do not serve the approximation of laws. ( ) That is forbidden by the principle of limited powers (Article 5 EC). If the legal basis does not cover the enactment of the measure, the Community may not – on the basis of that provision of the Treaty – enact it. It is immaterial that the planned measure has less of an effect on national competences than a genuinely approximating measure.

40. Moreover, it may be left open whether the Council’s argument is correct that the approximation of national administrative provisions also constitutes approximation within the meaning of Article 95(1) EC. ENISA’s contribution to this form of approximation is also not regulated specifically enough for its establishment to be regarded as an approximation measure.

41. The Commission in particular, however, citing the ‘true objective’ of Article 95 EC, understands the words ‘for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market’ as a whole as a formula for the appropriate elimination of obstacles to the internal market. However, the Commission’s view amounts to the general power for regulation of the internal market which has been rejected by the Court. ( ) It would deprive of all function the element of approximation of laws in Article 95(1) EC. That is compatible neither with the wording of that legal basis nor with its legislative history. In the negotiations on the Single European Act the Member States did not accept the Commission’s proposal for a legal basis for the adoption of all legal acts that serve to realise the internal market. ( ) Instead they agreed on the version of Article 95(1) EC that is essentially still in force today.

42. Nor can the Commission’s position be supported by reference to an opinion in legal writing deriving from the judgment in IHT Internationale Heiztechnik and Danziger. In that judgment the Court said that it ‘is for the Community legislature to [adopt legislation] under Article 100a of the EEC Treaty [now, after amendment, Article 95 EC], elimination of the obstacles arising from the territoriality of national trade marks being necessary for the establishment and functioning of the internal market’. ( )

43. From that it is deduced by some writers that Article 95(1) EC permits generally the elimination of obstacles that derive from differences between the legal systems of the Member States or from their territorially limited validity. ( ) The reference to the laws of the Member States would still have a function, namely that of a starting-point for an approximation which would not, however, exclude the result having no reference to the laws of the Member States. ( ) In particular, approximation measures which had no reference to the laws of the Member States but, for example, took effect alongside them would thus also be possible.

44. However, this view cannot be reconciled with the wording of Article 95(1) EC. The reference to the approximation of laws would be no more than meaningless legal rhetoric, since the territorial limitation of national law is necessarily always present.

45. This academic view also rests on a misunderstanding of the passage cited from IHT. What the Court said there relates only to the aim of establishing the common market, not the means to be used. There is no indication that the Court intended to allow measures which do not approximate the laws of the Member States. Rather, the Court has emphasised the necessity of approximation of laws, by declining in other judgments to base new legal forms on Article 95(1) EC when they take effect alongside the laws of the Member States. ( )

46. Finally, it may be left open whether the establishment of an agency with legal personality on the basis of Article 95(1) EC – or pursuant to other specific legal bases of the EC Treaty without recourse to Article 308 EC – is precluded by obstacles of principle. Although the Court put questions to that effect at the hearing, the parties have not discussed this point in detail in the present case. ( ) Since the ENISA Regulation does not adequately define ENISA’s contribution to the approximation of laws and none of the other views on the applicability of Article 95(1) prevails, the ENISA Regulation must in any event be annulled.

B – Limitation of the temporal effect of the judgment

47. The Council has submitted, in the alternative, that the legal effects of the ENISA Regulation should be maintained in the interests of legal certainty until it is re-enacted on the basis of another legal basis. The United Kingdom has specifically stated that it has no objections to such a limitation of the effects of the judgment.

48. When limiting the temporal effect of judgments, the Court bases itself on the principles of legal certainty and in particular the effects on third parties. ( )

49. The establishment in practice of ENISA is in full swing. ( ) To reverse the measures taken now, only to set up such an agency again in the near future, would not make sense. The staff already recruited would be affected particularly.

50. It is not certain, however, that readoption of the ENISA Regulation will be possible. The United Kingdom was admittedly the only Member State to vote against the ENISA Regulation, and that only because of the choice of legal basis. But the regulation was enacted before the latest expansion of the Union, the most recent elections to the European Parliament, and the start of the term of office of the present Commission. For that reason too, any forecast of the future intentions of the Community legislature is ruled out. The effects of the ENISA Regulation should therefore be maintained only until it is clear whether or not it will be re-enacted. Two budgetary years should suffice for this, since only a little over a year elapsed between the Commission’s proposal for the ENISA Regulation of 11 February 2003 ( ) and its adoption on 10 March 2004. That period would also make it possible to take into account, when deciding on the renewed adoption of the ENISA Regulation, the evaluation of the activity of ENISA which the Commission must, under Article 25 of the regulation, carry out by 17 March 2007.

V – Costs

51. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the other party’s pleadings. Since the United Kingdom has made an application within the meaning of Article 69(2) in the present case and will, according to the above considerations, be successful, the Parliament and the Council should be ordered to pay the costs.

52. Under Article 69(4) of the Rules of Procedure, institutions and Member States which intervene in a case are to bear their own costs. The Commission and the Republic of Finland must therefore bear their own costs.

VI – Conclusion

53. I therefore propose that the Court should:

(1) Annul Regulation (EC) No 460/2004 of the European Parliament and of the Council of 10 March 2004 establishing the European Network and Information Security Agency;

(2) Order the effects of the annulled regulation to be maintained until the entry into force of a regulation adopted on the correct legal basis, but not longer than the end of the second budgetary year after delivery of the judgment;

(3) Order the Parliament and the Council to pay the costs;

(4) Order the Commission and the Republic of Finland to bear their own costs.