Proposal for a Council Regulation amending the Statutes of the Galileo Joint Undertaking annexed to Council Regulation (EC) No 876/2002
Date: 2006-06-29
Institutions: European Commission
Subjects: EU programme, administrative structures, company structure, corporate finance, joint venture, legal status, satellite communications

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 29.6.2006 
COM(2006) 351 final 

2006/0115 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending the Statutes of the Galileo Joint Undertaking annexed to Council Regulation 
(EC) No 876/2002 

(presented by the Commission) 

EN 

   EN 

 
 
 
  
EXPLANATORY MEMORANDUM 

CONTEXT OF THE PROPOSAL 

110 

Grounds for and objectives of the proposal 

This proposal aims to amend the Statutes of the Galileo Joint Undertaking in order to 
provide that the undertaking will cease to operate on 31 December 2006. 

120 

General context 

1) The Galileo programme 

The  aim  of  the  Galileo  programme  is  to  put  in  place  the  first  global  satellite  radio 
navigation  and  positioning  infrastructure  designed  for  civilian  purposes.  There  are 
technological, political and economic aspects to the programme.  

The programme is divided into the following four successive phases: 

a  definition  phase,  which  took  place  from  1999  to  2001,  during  which  the  system 
architecture was developed and the services to be offered were determined; 

a development and validation phase which was initially intended to run from 2002 to 
2005  and  included  the  development  of  the  system's  satellites  and  components  and 
validation in orbit; 

a deployment phase initially intended to cover 2006 and 2007 with the construction and 
launching  of  satellites  and  the  full  establishment  of  the  earth  segment  of  the 
infrastructure; 

an operating phase initially intended to start in 2008 and including the management of 
the system and its regular maintenance and upgrading. 

2) The Galileo Joint Undertaking 

The Galileo Joint Undertaking was set up by Council Regulation (EC) No 876/2002 of 
21 May 2002 under Article 171 of the Treaty to carry out the development phase and to 
prepare for the successive phases of the Galileo programme. Its founding members are 
the  European  Community  and  the  European  Space  Agency.  A  Chinese  State-run 
company  and  an  Israeli  State-run  company  are  also  members.  The  arrangements 
adopted ensure that the programme has a single, efficient management structure.  

The  Galileo  Joint  Undertaking  has  two  main  tasks.  Firstly,  it  directs  and  coordinates 
the  necessary  research  and  development  activities.  To  this  end,  it  has  concluded  an 
agreement  with  the  European  Space  Agency,  to  which  the  implementation  of  these 
activities has been assigned. It also develops activities relating to the applications and 
services which Galileo may offer. Secondly, it manages the procedure for selecting the 
system's  future  concession  holder,  which  will  be  responsible  for  managing  the 
deployment and operating phases, providing the necessary private capital and ensuring 
the commercial success of operation. 

EN 

2 

   EN 

 
3) The Supervisory Authority 

The  European  Global  Navigation  Satellite  System  (GNSS)  Supervisory  Authority 
(“Supervisory  Authority”)  was  set  up  by  Council  Regulation  (EC)  No  1321/2004  of 
12 July 2004  on  structures  for  the  management  of  the  European  satellite  radio 
navigation  programmes.  It  has  been  gradually  established  since  the  summer  of  2005 
and will be fully operational during 2006. Its aim is to ensure the management of the 
public interests relating to the European satellite radio navigation programmes, Egnos 
and Galileo, and to act as awarding authority for the future concession holder. It should 
be noted  that  the  two systems,  Egnos and Galileo, will be owned by the Supervisory 
Authority and that their ownership will remain entirely public: only the management of 
the deployment and operational phases will be awarded to the concession holder for a 
period of about twenty years. 

4) The lifetime of the Galileo Joint Undertaking as provided for in the current Statutes 

The Galileo Joint Undertaking was set up to implement the development phase and its 
lifetime is based on the duration of that phase, which was initially intended to cover the 
years 2002 to 2005 inclusive. 

The  first  paragraph  of  Article  20  of  the  Statutes  of  the  Joint  Undertaking  annexed  to 
Council  Regulation  No  876/2002  provides  that  “the  Joint  Undertaking  shall  be 
established  for  a  period  of  four  years  from  the  publication  of  these  Statutes  in  the 
Official Journal of the European Communities”. As the Statutes were published in the 
Official  Journal  on  28 May 2002,  the  period  of  four  years  referred  to  in  the 
abovementioned text expires at midnight on 28 May 2006.  

However,  to  take  account  of  any  extension  of  the  development  phase,  the  second 
paragraph of Article 20 of the Statutes reads: "According to the progress in achieving 
the tasks of the Joint Undertaking, as defined in Article 2, that period may be extended 
by amending these Statutes in accordance with the provisions of Article 23. The period 
shall,  in  any  event,  be  extended  until  such  time  as  the  obligations  arising  from  the 
agreement referred to in Article 3 are met." Article 3 of the Statutes provides that the 
Joint Undertaking will conclude an agreement with the European Space Agency under 
which the Agency is responsible for 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”. 

It  therefore  follows  that  the  existence  of  the  Galileo  Joint  Undertaking  must  be 
extended  until  the  activities  required  during  the  development  phase  as  regards  the 
space segment and the earth segment of the system have been completed, i.e. de facto 
until the completion of the development phase. The imperative nature of the extension 
is due to the fact that, as indicated above, the lifetime of the Joint Undertaking is based 
on the duration of the development phase. 

130 

Existing provisions in the area of the proposal 

1)  The  need  to  amend  the  Statutes  of  the  Joint  Undertaking  in  order  to  wind  it  up 
before completion of the development phase 

As  the  Galileo  programme  currently  stands,  the  development  phase  will  not  be 

EN 

3 

   EN 

 
completed  before  the  end  of  2008.  Only  at  that  time  will  the  four  satellites  to  be 
constructed  and  launched  by  the  European  Space  Agency  in  the  framework  of  the 
“validation  in  orbit”  phase  become  operational.  The  entry  into  service  of  these  four 
satellites represents the completion of the space segment of the development phase and 
for them to become operational requires the earth segment of this phase to be in service 
as well. 

As  the  Statutes  currently  stand,  the  Galileo  Joint  Undertaking  would  therefore  not 
normally complete its activities before the end of 2008, a lifetime of three years more 
than that originally planned. 

Such an extension of the Joint Undertaking’s lifetime beyond 2006 would be pointless 
and  costly  as  the  Supervisory  Authority  will  be  in  a  position  to  gradually  take  over, 
during the course of 2006, and complete all the activities currently being carried out by 
the Joint Undertaking. It would be equivalent to a duplication of structures and costs at 
a  time  when  it  also  seems  that  the  programme  development  phase  will  be  more 
expensive than initially envisaged. 

Before the end of 2006, the Supervisory Authority will have the necessary resources, in 
particular in terms of staff, to complete the tasks of the Joint Undertaking, namely to 
complete the development phase and prepare for the programme phases which follow. 
In  order  to  enable  the  Supervisory  Authority  to  take  over  the  activities  of  the  Joint 
Undertaking in an optimum manner, it would be desirable for the two structures to co-
exist for a few months and for the Supervisory Authority to be closely associated with 
the activities of the Joint Undertaking during this period. The latter has experience and 
knowledge which it is essential to pass on to the Supervisory Authority, in particular as 
regards  the  process  of  negotiating  the  concession  contract,  which  must  be  continued 
and completed by the Joint Undertaking in 2006. It is therefore reasonable to provide 
for  the  Joint  Undertaking  to  cease  operating  on  31 December  2006  and  then  to  be 
wound up. 

Consequently,  the  Statutes  of  the  Galileo  Joint  Undertaking  should  be  amended  to 
provide  that  the  undertaking  will  cease  to  operate  on  31 December 2006.  The 
amendment  consists  of  revoking  the  abovementioned  provisions  of  Article  20  of  the 
Statutes of the Joint Undertaking and replacing them by a new Article 20 to read: “The 
Joint Undertaking shall be established for a period starting on 28 May 2002 and ending 
on 31 December 2006”. 

Continuing  the  activities  of  the  Joint  Undertaking  until  31  December  2006  has  no 
financial implications for the Community budget for 2006. Financing the activities of 
the  Joint  Undertaking  for  the  whole  year  is  already  provided  for  in  the  approved 
Community budget. 

2) The need to amend the Statutes of the Joint Undertaking to correct the erroneous use 
of the word “capital” 

Articles  1  and  8  of  the  Statutes  of  the  Galileo  Joint  Undertaking  contain  the  word 
“capital” five times and once, respectively, to designate the funds made available to the 
Joint Undertaking by its members. This term is incorrect in that it does not reflect the 
real  economic  nature  of  the  sums  in  question.  Assets  brought  in  by  members  to  the 
Joint  Undertaking  are  not  recoverable  and  are  not  returned  since,  when  the  Joint 

EN 

4 

   EN 

 
Undertaking is wound up, its tangible and intangible assets will be transferred free of 
charge  to  the  Supervisory  Authority  pursuant  to  the  first  paragraph  of  Article  3  of 
Council  Regulation  No  1321/2004.  These  assets  are  in  fact  financial  contributions  or 
contributions in kind to a research programme since the Joint Undertaking is required 
to spend all sums placed at its disposal and furthermore has no profit-making objective. 

Therefore,  in  order  to  remove  any  ambiguity  regarding  the  nature  of  the  funds  made 
available to the Joint Undertaking, it is necessary, before it is wound up, to correct the 
Statutes  and,  where  it  is  used  in  the  text,  to  replace  the  word  “capital”  by 
“contribution” or “funds”. 

3)  The  need  to  amend  the  Statutes  of  the  Joint  Undertaking  to  enable  it  to  finance 
additional costs during the development phase 

The  second  subparagraph  of  Article  1(4)  of  the  Statutes  of  the  Galileo  Joint 
Undertaking  specifies  that  the  financial  contributions  from  the  founding  members  of 
the Joint Undertaking are, respectively, €520 million for the European Community and 
€50 million for the European Space Agency. These figures are obtained from the initial 
estimate of the cost of the development phase of the programme, namely €1.1 billion. 

It  is  now  certain  that  the  actual  cost  of  the  development  phase  will  be  about 
€400 million more than the initially estimated cost of €1.1 billion. Therefore, in order 
to  enable  the  Joint  Undertaking  to  finance  some  of  these  additional  costs  before  it  is 
wound  up  on  31 December  2006,  it  is  necessary  to  amend  the  Statutes  of  the  Joint 
Undertaking by adding the following sentence at the end of the second subparagraph in 
question:  “They  (the  founding  members)  may,  as  necessary,  make  additional 
contributions to finance the development phase”. 

4) The procedure for amending the Statutes of the Joint Undertaking 

The procedure for amending the Statutes of the Galileo Joint Undertaking derives from 
the  provisions  of  Article  23  of  the  Statutes  of  the  Joint  Undertaking,  which  read  as 
follows:  "Any  member  of  the  Joint  Undertaking  may  submit  proposals  for  the 
amendment of these Statutes to the Administrative Board. If the Administrative Board 
agrees to such proposals by a 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  subparagraph  of  Article  172  of  the  Treaty  establishing  the  European 
Community." The first subparagraph of Article 172 of the Treaty is worded as follows: 
"The  Council,  acting  by  qualified  majority  on  a  proposal  from  the  Commission  and 
after  consulting  the  European  Parliament  and  the  Economic  and  Social  Committee, 
shall adopt the provisions referred to in Article 171." 

As  Article  171  of  the  Treaty  provides  for  the  creation  of  joint  undertakings  by  the 
Community,  it  follows  that  the  procedure  for  amending  the  Statutes  of  the  Joint 
Undertaking is – after the Commission has presented a proposal to amend the Statutes 
– the same as the procedure for creating the Joint Undertaking. It requires the adoption 
of a Council regulation. 

However, the Commission can only present a proposal for a regulation amending the 
Statutes of the Joint Undertaking if the administrative board of the Joint Undertaking 
has already agreed to the amendments in question by a majority of 75% of the votes. In 

EN 

5 

   EN 

 
this particular case, the Commission, representing the European Community, founding 
member  of  the  Joint  Undertaking,  submitted the  draft  amendments  in  question  to  the 
administrative board of the Joint Undertaking, and the item was put on the agenda of 
the administrative board’s meeting of 2 June 2006. In accordance with the provisions 
of  the  third  subparagraph  of  Article 3  of  Council  Regulation  No  876/2002,  the 
Commission had previously submitted this same item to the supervisory board of the 
Joint Undertaking. During its meeting of 13 March 2006, the supervisory board agreed 
to  the  proposed  amendments.  Then,  on  2 June  2006,  the  administrative  board  of  the 
Joint Undertaking agreed to the same amendments by the required majority. It follows 
that  the  Commission  is  now  entitled  to  propose  that  the  Council  adopt  the  relevant 
amendments to the Statutes. 

141 

Consistency with the other EU policies and objectives 

Not applicable. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

Consultation of stakeholders 

219 

Not applicable. 

Collection and use of expertise 

229 

230 

No recourse to external expertise was necessary. 

Impact assessment 

There is no solution other than to amend the regulation in order to achieve the desired 
result. 

The impact of the Joint Undertaking ceasing to operate is low insofar as its activities 
will be taken over by the European GNSS Supervisory Authority. 

LEGAL ELEMENTS OF THE PROPOSAL 

305 

Summary of the proposed measures 

It  is  appropriate  to  wind  up  the  Galileo  Joint  Undertaking  on  31  December  2006.  In 
order to do this, it is necessary to amend the Statutes of the Joint Undertaking. It is also 
necessary  to  amend  the  Statutes  of  the  Joint  Undertaking  in  order  to  correct  the 
erroneous  use,  in  the  Statutes,  of  the  word  “capital”,  and  to  enable  the  Joint 
Undertaking to finance additional costs during the development phase. The procedure 
for amending the Statutes includes preceding stages which have been followed in the 
case in question; it concludes with the adoption of a Council regulation. 

310 

Legal basis 

The legal basis has been indicated above. 

EN 

6 

   EN 

 
 
 
329 

Subsidiarity principle 

The proposal concerns an area that falls under exclusive Community competence. The 
principle of subsidiarity does not therefore apply. 

Proportionality principle 

The proposal complies with the principle of proportionality, for the following reasons: 

331 

332 

341 

342 

The proposed amendments do not go beyond what is necessary. 

They do not involve an increase in the financial burden. 

Choice of instruments 

Proposed instrument: regulation. 

Other instruments would not have been appropriate, for the following reasons: 

Only a regulation can amend a regulation. 

BUDGETARY IMPLICATION 

409 

The proposal has no implications for the Community budget. 

ADDITIONAL INFORMATION 

520 

Repeal of existing legislation 

The adoption of this proposal will mean that some legislation must be repealed. 

Review / revision / sunset clause 

533 

The proposal includes a sunset clause on all or part of the legislative act if predefined 
conditions are met. 

EN 

7 

   EN 

 
 
 
 
 
 
2006/0115 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending the Statutes of the Galileo Joint Undertaking annexed to Council Regulation 
(EC) No 876/2002 

THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to the proposal from the Commission,1 

Having regard to the opinion of the European Parliament,2 

Having regard to the opinion of the European Economic and Social Committee,3 

Whereas: 

(1) 

(2) 

(3) 

The Galileo Joint Undertaking was set up by Council Regulation (EC) No 876/2002 of 
21  May  20024  to  complete  the  development  phase  and  prepare  for  the  successive 
phases of the Galileo programme. 

Article  20  of  the  Statutes  of  the  Galileo  Joint  Undertaking  provides  that  the  Joint 
Undertaking has a lifetime based on the duration of the development phase, which was 
initially intended to cover the years 2002 to 2005 inclusive. 

However, as the Galileo programme currently stands, the development phase will not 
be completed before the end of 2008. As the Statutes currently stand, the Galileo Joint 
Undertaking  would  therefore  not  normally  complete  its  activities  before  the  end  of 
2008, a lifetime of three years more than that originally planned. 

(4)  Moreover,  it  seems  pointless  and  costly  to  extend  the  Galileo  Joint  Undertaking 
beyond  2006  since  the  European  GNSS  Supervisory  Authority  set  up  by  Council 
Regulation  (EC)  No  1321/2004  of  12  July  20045  will  be  able  to  gradually  take  over 
during the course of 2006 and then complete all the activities currently being carried 
out by the Joint Undertaking. 

1 
2 
3 
4 
5 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ L 138, 28.5.2002, p. 1. 
OJ L 246, 20.7.2004, p. 1. 

EN 

8 

   EN 

 
  
                                                 
(5) 

(6) 

(7) 

(8) 

(9) 

In  order  to  enable  the  European  GNSS  Supervisory  Authority  to  take  over  the 
activities  of  the  Joint  Undertaking  in  an  optimum  manner,  it  would,  however,  be 
desirable  for  the  two  structures  to  co-exist  for  a  few  months  and  for  the  European 
Supervisory  Authority  to  be  closely  associated  with  the  activities  of  the  Joint 
Undertaking during this period. Under these conditions it seems reasonable to provide 
for the Joint Undertaking to cease operating on 31 December 2006. 

The provisions of Article 20 of the Statutes of the Galileo Joint Undertaking therefore 
need to be amended. 

In addition, in order to correct the erroneous use of the word “capital” in the Statutes 
of  the  Joint  Undertaking  and  to  remove  any  ambiguity  regarding  the  real  economic 
nature  of  the  funds  made  available  to  the  Joint  Undertaking  by  its  members,  it  is 
necessary  to  amend  the  Statutes  of  the  Joint  Undertaking  and  to  replace  the  word 
“capital” by “contribution” or “funds” in Articles 1 and 8 of the Statutes. 

In addition, in its current wording, Article 1 of the Statutes of the Joint Undertaking 
refers  to  contributions  from  the  founding  members  of  the  Joint  Undertaking,  the 
amounts  of  which  are  calculated  based  on  the  initial  estimate  of  the  cost  of  the 
development  phase.  The  amounts  do  not  take  account  of  the  additional  costs  of  this 
phase.  Therefore,  in  order  to  enable  the  Joint  Undertaking  to  finance  the  additional 
costs  of  the  development  phase,  it  is  necessary  to  amend  the  Statutes  of  the  Joint 
Undertaking to provide that the founding  members  of  the  Joint  Undertaking  may,  as 
necessary, make additional contributions. 

After the proposed amendments have been agreed by the administrative board of the 
Joint  Undertaking,  the  procedure  for  amending  the  Statutes  of  the  Galileo  Joint 
Undertaking,  provided  for  in  Article  23  of  these  Statutes,  requires  the  adoption  of  a 
Council  regulation  following  the  same  procedure  as  that  for  creating  the  Joint 
Undertaking. 

(10)  As  the  administrative  board  of  the  Joint  Undertaking  agreed  to  the  amendments  in 
question  of  Article  20  of  the  Statutes  of  the  Joint  Undertaking  during  its  meeting  of 
2 June 2006, the Council is in a position to adopt the regulation amending the Statutes 
of the Galileo Joint Undertaking, 

HAS ADOPTED THIS REGULATION: 

Article 1 

The  Statutes  of  the  Galileo  Joint  Undertaking  annexed  to  Council  Regulation  (EC) 
No 876/2002 are amended as follows: 

(1) 

Article 1(4) is amended as follows: 

(a) 

in  the  first  subparagraph,  the  first  sentence  is  replaced  by  the  following 
sentence:  

“The funds of the Joint Undertaking shall be made up of the contributions of its 
members”. 

EN 

9 

   EN 

 
(b) 

the second subparagraph is replaced by the following text: 

"The  founding  members  shall  subscribe  their  shares  of  the  financial 
contributions  to  the  extent  of  the  amounts  indicated  in  their  respective 
commitments  of  €520  million  for  the  European  Community  and  €50  million 
for  the  European  Space  Agency.  They  may,  as  necessary,  make  additional 
contributions to finance the development phase”. 

(c) 

in  the  fourth  subparagraph,  the  first  sentence  is  replaced  by  the  following 
sentence:  

“The Administrative Board shall decide on the amounts of these contributions 
which  should  be  released  in  proportion  to  the  share  of  the  financial 
contributions subscribed by each member”. 

(d) 

the fifth subparagraph is replaced by the following text: 

"The  financial  commitments  of  the  Joint  Undertaking  shall  not  exceed  the 
amount of the contributions at its disposal." 

(2) 

In Article 8(1)(b), the second sentence is replaced by the following sentence: 

"Each member of the Joint Undertaking shall have a number of votes in proportion to 
the share of the contributions subscribed by them." 

(3) 

Article 20 is replaced by the following text: 

"Article 20 

The Joint Undertaking shall be established for a period starting on 28 May 2002 and 
ending on 31 December 2006”. 

This  Regulation  shall  enter  into  force  on  the  [third]  day  of  its  publication  in  the  Official 
Journal of the European Union. 

Article 2 

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

Done at Brussels,  

For the Council 
The President 

EN 

10 

   EN