Proposal for a Council Regulation on the establishment of the GALILEO Joint Undertaking
Date: 2001-06-20
Institutions: European Commission
Subjects: European Commission, European Space Agency, administrative structures, company structure, corporate finance, joint venture, legal status, satellite communications

25.9.2001

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Official Journal of the European Communities

C 270 E/119

Proposal for a Council Regulation on the establishment of the Galileo Joint Undertaking

(2001/C 270 E/17)

COM(2001) 336 final (cid:151) 2001/0136(CNS)

(Submitted by the Commission on 22 June 2001)

THE COUNCIL OF THE EUROPEAN UNION,

(7) The first research contracts and feasibility studies were
funded under the 4th and 5th framework programmes
for research and development.

Having regard to the Treaty establishing the European
Community and in particular Article 171 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of
Committee,

the Economic and Social

Whereas:

(1) On 13 January 1999 the European Parliament adopted a
Resolution on the Commission Communication to the
Council and the European Parliament (cid:145)Towards a trans-
European positioning and navigation network(cid:146) comprising
a (cid:145)A European strategy for a Global Navigation Satellite
System (GNSS)(cid:146) (COM(98) 29 final, 21 January 1998).

(2) On 10 February 1999 the Commission adopted a
Communication (cid:145)Galileo (cid:151) involving European in a new
generation of satellite navigation services(cid:146)
(COM(99) 54
final, 10 February 1999).

(3) The conclusions of the European Council meetings held in
Cologne (3 and 4 June 1999), Feira (19 and 20 June
2000), Nice (7 to 11 December 2000), and Stockholm
(23 and 24 March 2001) make reference to Galileo.

(4) On 19 July 1999 the Council adopted a Resolution on
involving Europe in the new generation of satellite navi-
gation services (cid:151) Galileo (cid:151) Definition phase (OJ C 221,
3.8.1999, p. 1).

(5) On 22 November 2000 the Commission adopted a
Communication to the European Parliament and the
Council on Galileo (COM(2000) 750 final, 22 November
2000).

(6) The Council adopted a resolution on Galileo on 5 April

2001.

to the

appropriations

(8) The technological development phase was funded from
trans-European
the
assigned
transport networks on the basis of Article 4(g) of the
Decision of the Council and of the European Parliament
of 23 July 1996 (1), which provides for the possibility of
funding for research and development, and Article 17 of
Council Regulation (EC) No 2236/95 of 18 September
1995 laying down general
the granting of
Community financial aid in the field of trans-European
networks (2).

rules for

(9) At the beginning of 2001, the management of the Galileo
satellite navigation programme entered its development
phase aimed at verifying and testing the assumptions
in particular with
made during the definition phase,
regard to the various components of the architecture of
the system (3).

(10) The development phase will be

the
deployment phase
consisting in the production of
satellites and terrestrial components, satellite launching
and the installation of terrestrial stations and equipment
in order to enable the system to be operational in 2008.

followed by

(11) Taking into account the number of players who will need
to be involved in this process, and the financial resources
and technical expertise needed, it is vital to set up a legal
entity capable of ensuring the coordinated management of
the funds assigned to the Galileo programme during its
development phase.

(12) The Stockholm European Council noted that (cid:145)the private
sector is ready to supplement the public budgets for the
development phase(cid:146). The representatives of
the main
industries concerned signed a Memorandum of Under-
standing in March 2001 whereby they committed them-
selves to indicating their contribution to the total amount
of EUR 200 million for the development phase of Galileo
by subscribing to the capital of the Joint Undertaking or
contributing in some other form (cid:151).

(1) Decision No 1692/96/EC of the European Parliament and of the
Council of 23 July 1996 on Community guidelines for the devel-
the trans-European transport network (OJ L 228,
opment of
9.9.1996).

(2) OJ L 228, 23.9.1995.
(3) The results of the definition phase are set out in the Commission
Communication to the European Parliament and the Council on
Galileo (COM(2000) 750 final, 22 November 2000).

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(13) That it why it is necessary to set up a Joint Undertaking
under Article 171 of the Treaty establishing the European
Community, since the Galileo involves a major research
and development component which justifies and will
funds assigned to the
continue to justify the use of
research and development
In
addition, this programme will make it possible to make
considerable progress in the development of satellite navi-
gation technologies.

framework programmes.

(14) The Joint Undertaking’s main task will be to successfully
complete the development of
the Galileo programme
during its development phase by combining public and
private sector funding; in addition, it will make it possible
to ensure the management of major demonstration
projects,

Its seat shall be located in Brussels.

Article 2

The Joint Undertaking shall have legal personality. In all the
Member States of the European Community, it shall enjoy the
most extensive legal capacity accorded to legal persons under
the laws of
in particular, acquire or
It may,
dispose of movable and immovable property and be a party
to legal proceedings.

those States.

Article 3

The Statutes of the Galileo Joint Undertaking, annexed to this
Regulation, are hereby adopted.

HAS ADOPTED THIS REGULATION:

Article 4

Article 1

The Protocol on Privileges and Immunities shall apply to the
Joint Undertaking

For the implementation of the Galileo satellite radionavigation
there shall be established a Joint Undertaking
programme,
within the meaning of Article 171 of the Treaty establishing
the European Community for a period of four years.

Its aim shall be to ensure a single management structure for the
research, development and demonstration phase of the Galileo
programme, and to this end mobilise the funds assigned to this
programme.

Article 5

This Regulation shall enter into force on the [. . .] day following
that of its publication in the Official Journal of
the European
Communities.

This Regulation shall be binding in its entirety and directly
applicable in all Member States.

ANNEX

STATUTES OF THE GALILEO JOINT UNDERTAKING

Article 1

1. The name of the Joint Undertaking shall be:

(cid:145)Galileo Joint Under-

taking(cid:146).

2. Its seat shall be located in Brussels.

3. (a) The following shall be founding members of the Joint Under-

taking:

(cid:151) the European Community represented by the European
Commission, which will bring in a maximum of EUR 520
million;

(cid:151) the European Space Agency, which will bring in a maximum
of EUR 550 million, of which EUR 50 million in cash and
EUR 500 million in kind in accordance with the third indent
of Article 3;

(b) The following may become members of the Joint Undertaking

(cid:151) the European Investment Bank;

reduced to EUR 1 million for undertakings subscribing indi-
vidually or collectively which may be regarded as small and
medium-sized enterprises within the meaning of
the
Commission Recommendation of 3 April 1996 concerning
the definition of small and medium-sized enterprises (1).

4. Its capital shall be made up of assets brought in by its members.
Assets in kind may be brought in. They shall be the subject of an
evaluation of their value and their utility to the carrying-out of the
activities of the joint undertaking.

The founding members shall subscribe their shares of the capital to
the extent of the amounts indicated in their respective commitments
of . . .: for the European Community: EUR . . .; for the European
Space Agency: EUR . . .

Immediately after they have subscribed their shares, the founding
members shall invite the other members mentioned in paragraph
3(b) to subscribe their shares within a period of 30 days. Private
undertakings need subscribe only EUR 5 million and EUR 250 000
respectively if the balance is subscribed before 31 December 2002.

(cid:151) any undertaking which subscribes a minimum of EUR 20
million to the Joint Undertaking. That amount shall be

(1) OJ L 107, 30.4.1996.

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The Administrative Board shall decide upon the amounts of this
capital which should be released in proportion to the share of the
capital subscribed by each member.

the Joint Undertaking which fails to meet

its
Any member of
commitments concerning the bringing-in of assets in kind or
which does nor release the amount due within the prescribed time-
limits shall be disqualified from voting in the Administrative Board
until such time as its obligations have been met.

European Space Agency will be responsible for administering them
in accordance with procedures to be set out in the agreement to be
concluded with the Joint Undertaking and based on the principles
of non-discrimination, transparency and fair distribution of work,
taking into account the Community character of the programme.
those
The Joint Undertaking will supervise the carrying-out of
activities and shall reserve the right
to propose any necessary
adjustments in the light of developments occurring during the
development phase;

Article 2

The object of the Joint Undertaking shall be to set up a European
satellite radionavigation system.

1. It will oversee the implementation of the programme development

phase and prepare the deployment phase.

2. It will, through the European Space Agency in accordance with
Article 3 of these Statutes,
launch the research and development
activities needed to successfully complete the phase of development
and coordination of national activities in this area; it will, through
the European Space Agency in accordance with Article 3 of these
Statutes, launch a first series of satellites to finalise the technological
developments
that have occurred and ensuring the large-scale
demonstration of the capabilities and reliability of the system.

3. It will mobilise the public and private sector funds needed and set
up the management structures for the various successive phases of
the programme:

(cid:151) It will draw up a business plan covering all the phases of the
programme on the basis of data to be supplied by the European
Commission concerning the services that can be offered by
Galileo, the revenue that they may generate and the necessary
it shall ensure that private under-
accompanying measures;
takings which have participated in the Joint Undertaking
enjoy preferential
the
entity which will be responsible for
the deployment and
operation of the navigation system.

in becoming members of

treatment

(cid:151) On that basis, it will contact the private sector, in the way that
it considers to be the most appropriate, in order to draw up
before the end of 2002 an overall plan for the financing of the
for
programme
financial participation by the private
sector during the
deployment phase.

including in particular

the arrangements

(cid:151) the European Commission shall have the right to ensure that the
financial interests of the Community are protected by carrying out
effective controls. Should the Commission discover any irregu-
larities,
to reduce or suspend any
to the Joint Undertaking. The reduced or
subsequent payment
suspended amount shall be equivalent to the amount of the irregu-
larities actually discovered by the Commission. Any disputes shall
be settled on the basis of the provisions of the agreement;

reserve the right

it shall

(cid:151) the procedures for carrying out the Galileo programme are defined,
and in particular, the activities launched by the European Space
Agency relating to the programme and financed from funds not
assigned to the Joint Undertaking.

Article 4

Without prejudice to Article 3, the Joint Undertaking may, following an
invitation to tender, conclude a contract for the provision of services
with private undertakings or a consortium of private undertakings, in
particular to carry out the activities provided for in Article 2(3).

The Joint Undertaking shall ensure that the contract provides for the
right of the Commission to carry out, on behalf of the Joint Under-
taking, controls in order to ensure that the financial interests of the
Community are protected and, in the event of the detection of irregu-
larities, to impose dissuasive and proportionate penalties.

Article 5

The Joint Undertaking shall have legal personality. In all the Member
States of the European Community, it shall enjoy the most extensive
legal capacity accorded to legal persons under the laws of those States.
It may, in particular, acquire or dispose of movable and immovable
property and be a party to legal proceedings.

On the basis of these elements, it will prepare the establishment of
the structure or structures which will, on the one hand, take respon-
sibility for implementing the programme deployment phase and, on
the other, ensure the maintenance of the system.

Article 6

The Joint Undertaking shall own all the tangible and intangible assets
created or transferred to it for the development phase of the Galileo
programme.

Article 3

The Joint Undertaking shall conclude with the European Space Agency
an agreement by which:

(cid:151) it entrusts to it the carrying-out of the activities required during
the development phase with regard to the space segment and the
earth segment associated with the system, and to that end it shall
for that phase. The
make available the funds at

its disposal

Article 7

The bodies of the Joint Undertaking shall be the Administrative

1.
Board, the Executive Committee and the Director.

The Administrative Board may seek the advice of an Advisory

2.
Committee.

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Article 8

1. Composition of the Administrative Board, voting rights

(a) The Administrative Board shall be composed of the members of

the Joint Undertaking.

(b) Unless otherwise provided in these Statutes, decisions of the
Administrative Board shall be adopted by a simple majority of
the votes cast. The Commission and the European Space Agency
shall each have 30 votes. The other Members of the Joint Under-
taking shall have a number of votes in proportion to the share
of the capital subscribed by them.

(c) The provisions of subparagraph (b) of this paragraph shall apply
only from the date of admission of the first new member. Until
that date, all decisions of the Administrative Board shall be
taken unanimously.

2. Functions of the Administrative Board

(a) The Administrative Board shall take the decisions necessary for
implementing the programme and exercise overall supervision
of the execution of the programme.

(b) In particular, the Administrative Board shall:

(cid:151) nominate the Director and approve the organisation chart;

one-third of the members of the Administrative Board repre-
senting at least 30 % of the voting rights or its Chairman or the
Director. The meeting shall normally take place at the seat of
the Joint Undertaking. The Administrative Board shall elect its
Chairman from among its members. Unless otherwise decided
in particular cases, a representative of the Executive Committee
and the Director shall participate in the meetings.

(2) The Administrative Board shall adopt its rules of procedure.

Article 9

1. Composition of the Executive Committee, voting rights

(cid:151) The Executive Committee shall be composed of a representative
of the European Commission, a representative of the European
Space Agency, and a representative designated by the Adminis-
trative Board; it shall meet in the presence of the Director.

(cid:151) Decisions of the Executive Committee shall be taken unani-

mously.

2. Functions of the Executive Committee

The Executive Committee shall assist the Administrative Board in
the preparation of its decisions and shall undertake any other tasks
which the Administrative Board may entrust to it.

(cid:151) adopt the financial regulations of the Joint Undertaking in

The Executive Committee shall in particular:

accordance with Article 14(4);

(cid:151) in accordance with Article 13, approve the annual budget,
including the staff establishment plan, the development plan
for the programme development phase, and the programme
cost estimates;

(cid:151) approve the annual accounts and balance sheet;

(cid:151) decide on any acquisition, sale and mortgaging of land and
other titles to real property, as well as on the giving of any
sureties or guarantees, the taking-out of shares in other
undertakings or
institutions, and on any granting or
taking of loans;

(cid:151) approve, by a majority of 75 % of the votes, any proposal
involving a significant change in the implementation of the
Galileo programme;

(cid:151) adopt

the annual reports on the current status of

the
situation referred to in

programme and its
Article 15(2);

financial

(cid:151) exercise such other powers and perform such other
functions, including the establishment of subsidiary bodies,
as may be necessary for the purposes of the programme.

(cid:151) adopt the terms of reference of the Executive Committee.

(cid:151) advise the Administrative Board and the Director on the status

of the programme on the basis of regular reports;

(cid:151) comment and make recommendations to the Administrative
Board on the programme cost estimates and the draft budget,
including the staff establishment plan drawn up by the Director;

(cid:151) approve the tendering procedures and the procedures for the
award of contracts in accordance with the rules on the award of
contracts to be established by the Administrative Board, which
may not influence the execution of decisions to be taken by the
Executive Committee;

(cid:151) perform tasks entrusted or delegated to it by the Administrative

Board.

3. Meetings, rules of procedure of the Executive Committee

The Executive Committee shall meet at least once a month. The
meetings shall normally take place at the seat of the Joint Under-
taking. The Director shall attend its meetings.

Subject to the approval of the Administrative Board, the Executive
Committee shall draw up its rules of procedure.

3. Meetings, rules of procedure of the Administrative Board

(1) The Administrative Board shall meet at least twice a year. Extra-
ordinary meetings shall be convened at the request of either

Article 10

1.
The Director shall be the chief executive responsible for the
day-to-day management of the Joint Undertaking and its legal represen-
tative. He shall be nominated by the Administrative Board on a
proposal by the European Commission.

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He shall direct the execution of the programme within guidelines
2.
established by the Administrative Board to which he shall be
responsible, and he shall
the
Executive Committee,
the other
subsidiary bodies with all information necessary for the performance
of their functions.

supply the Administrative Board,

the Advisory Committee and all

by way of division of any excess revenue over expenditure shall be paid
to the members of the Joint Undertaking.

Article 13

1.

The financial year shall correspond to the calendar year.

3.

The Director shall in particular:

(cid:151) organise, direct and supervise the staff of the Joint Undertaking;

(cid:151) submit to the Administrative Board his proposals concerning the

organisation chart;

(cid:151) draw up and regularly update the programme development plan
and the programme cost estimates, in accordance with the financial
regulations, and submit them to the Administrative Board;

2.
Before 31 March of each year, the Director shall transmit to the
members the programme cost estimates as approved by the Adminis-
trative Board. The programme cost estimates shall include a forecast of
annual expenditure for the following two years. Within this forecast,
the estimates of revenue and expenditure for the first of those two
financial years (preliminary draft budget) shall be drawn up in such
detail as is necessary for the internal budgetary procedure of each
member regarding its financial contributions to the Joint Undertaking.
The Director
supplementary
shall
information needed for this purpose.

supply the members with all

(cid:151) draw up,

in accordance with the financial regulations, the draft
annual budget, including the staff establishment plan, and submit
them to the Administrative Board;

3.
The members shall forthwith communicate to the Director their
comments on the programme cost estimates, and in particular on the
estimates of revenue and expenditure for the following year.

(cid:151) ensure

the obligations with regard to the European
that
Commission pursuant
to the contract concluded between the
latter and the Joint Undertaking are met, and in particular its
provisions allowing representatives of the European Commission
to carry out effective controls and, in the event of the detection of
irregularities, impose dissuasive and proportionate penalties.

Based on the approved programme cost estimates, and taking
4.
the Director
the comments received from members,
into account
shall prepare the draft budget
the following year and shall
for
submit it to the Administrative Board for adoption, by a majority of
75 % of the votes, before 30 September.

(cid:151) submit the annual accounts and balance sheet to the Adminis-

trative Board;

Article 14

(cid:151) submit

to the Administrative Board any proposal

involving a

significant change in the design of the programme;

(cid:151) be responsible for safety and take all the measures needed to meet

safety requirements;

(cid:151) draw up the annual report on the current status of the programme
and its financial situation, and such other reports as may be
requested by the Administrative Board, and submit them to the
latter.

Article 11

The staff complement shall be determined in the establishment

1.
plan set out in the annual budget.

The members of the staff of the Joint Undertaking shall have a
2.
fixed-term contract based on the conditions of employment of other
servants of the European Communities.

3.

All staff costs shall be borne by the Joint Undertaking.

The Administrative Board,

4.
Commission, shall adopt the necessary implementing arrangements.

acting in agreement with the

The purpose of the financial regulations is to ensure the sound

1.
and economic financial management of the Joint Undertaking.

2.

In particular, they shall include the principal rules on:

(cid:151) the presentation and structure of the programme cost estimates

and the annual budget;

(cid:151) the implementation of the annual budget and internal financial

control;

(cid:151) the method of payment of contributions by the members of the

Joint Undertaking;

(cid:151) the keeping and presentation of accounts and inventory records as
well as the drawing up and presentation of the annual balance-
sheet;

(cid:151) the procedure regarding calls for tender, based on non-discrimi-
nation between the countries of the members of the Joint Under-
taking and the Community character of the project, the placing and
the terms and conditions of contracts and orders on behalf of the
Joint Undertaking.

The financial regulations shall be adopted by the Administrative

3.
Board by a majority of 75 % of the votes.

Article 12

All the revenue of the Joint Undertaking shall be applied to promoting
the objective defined in Article 2. Subject to Article 20(2), no payment

4.
The detailed implementing rules enabling the Commission to
ensure compliance with its obligations pursuant to Article 274 of the
Treaty establishing the European Community shall be set out in an
agreement between the Joint Undertaking and the Commission.

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Article 15

Within two months of the end of each financial year, the Director shall
submit the annual accounts and balance sheets for the preceding year
to the Court of Auditors of the European Communities. The audit
executed by the Court of Auditors shall be based on records and
performed on the spot. The Director
the annual
accounts and balance sheet, together with the report of the Court of
Auditors, to the Administrative Board for approval by a majority of
75 % of the votes. The Director is entitled and, if requested by the
Administrative Board, obliged to comment on the report. The Court of
Auditors shall send its report to the members of the Joint Undertaking.

shall present

Article 16

The programme development plan shall specify the plan for the
1.
execution of all elements of the programme. It shall cover the whole
term of the Joint Undertaking and be updated regularly.

The annual

2.
programme,
performance of the programme.

report

the
in particular with regard to the timetable, costs and

show the

status of

current

shall

Article 17

Any request for accession shall be addressed to the Director, who
2.
shall transmit it to the Administrative Board. The Administrative Board
shall decide whether the Joint Undertaking shall start negotiations with
the applicant on the conditions of accession. In the case of a positive
decision,
the Joint Undertaking shall negotiate the conditions of
accession and submit them to the Administrative Board which shall
act by a majority of 75 % of the votes expressed.

3. Membership of the Joint Undertaking may not be transferred to a
third party unless the prior and unanimous agreement of the Adminis-
the
trative Board is given. Any unauthorised transfer shall entail
immediate termination of membership of the Joint Undertaking and
liability for any damage caused to the Joint Undertaking.

Article 19

1.
The Joint Undertaking shall be established for a period of four
years as from the publication of these Statutes in the Official Journal of
the European Communities.

2.
According to the progress in achieving the object of the Joint
Undertaking, as defined in Article 2, that period may be extended by
amending the Statutes in accordance with the provisions of Article 22.
That period shall, in any event, be extended until such time as the
obligations arising from the agreement referred to in Article 3 are met.

The Joint Undertaking shall be solely responsible for meeting its

1.
obligations.

Article 20

The contractual

2.
the Joint Undertaking shall be
governed by the relevant contractual provisions and by the law
applicable to the contract in question.

liability of

3.
In the case of non-contractual liability, the Joint Undertaking shall
make good any damage caused by it to such extent as the Joint Under-
taking is subject to legal liability under the relevant national law.

4.
Any payment by the Joint Undertaking for covering the liability
referred to in Articles 17(2) and 17(3) and the costs and expenses
incurred in connection therewith shall be considered as expenditure
of the Joint Undertaking within the meaning of Article 12.

5.
The Director shall propose to the Administrative Board any
necessary insurance, and the Joint Undertaking shall take out such
insurance as the Administrative Board may direct.

Article 18

The Joint Undertaking is open for accession by members other

1.
than those referred to in the second subparagraph of Article 1(4).

For the purpose of conducting the proceedings involved in winding up
the Joint Undertaking, the Administrative Board shall appoint one or
more liquidators, who shall comply with the decisions of the Adminis-
trative Board taken by majority of 75 % of the votes.

Article 21

In any matter not covered by these Statutes, the law of the State where
the seat of the Joint Undertaking is located shall apply.

Article 22

Any member of the Joint Undertaking may submit proposals for

1.
the amendment of these Statutes to the Administrative Board.

2.
If the Administrative Board agrees to those proposals by majority
of 75 % of the votes, the Commission shall make a proposal to the
Council for their approval in accordance with the procedure provided
for in the first paragraph of Article 172 of the Treaty establishing the
European Community.