CELEX: 61986CC0204
Language: en
Date: 1988-05-25 00:00:00
Title: Opinion of Mr Advocate General Mancini delivered on 25 May 1988. # Hellenic Republic v Council of the European Communities. # Transfer of appropriations from one chapter to another within the Commission's budget estimates for the 1986 financial year (Special aid for TUrkey). # Case 204/86.

Important legal notice

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61986C0204

Opinion of Mr Advocate General Mancini delivered on 25 May 1988.  -  Hellenic Republic v Council of the European Communities.  -  Transfer of appropriations from one chapter to another within the Commission's budget estimates for the 1986 financial year (Special aid for TUrkey).  -  Case 204/86.  

European Court reports 1988 Page 05323 Swedish special edition Page 00669 Finnish special edition Page 00689

Opinion of the Advocate-General

++++Mr President,  Members of the Court,  1 . By application of 4 August 1986, the Government of the Hellenic Republic asks the Court to declare void transfer No 4/86 of appropriations in the amount of ECU 10 million from Chapter 100, Item 9631, to Chapter 96, Item 9632, of the general budget for 1986 . The transfer, which was proposed by the Commission of the European Communities, was approved by the Council on 2 June 1986 . By order of 28 January 1987 the Court gave the Commission leave to intervene in the procedure in support of the Council' s conclusions .  The purpose of the contested transfer was to provide funds for the budget item relating to special aid for Turkey . In implementing that item, the Commission approved, in late 1987, a number of financing projects by decisions which Greece has contested by an action brought on 27 January 1988 ( Case 30/88 ).  2 . Relations between the Community and Turkey are based on the Association Agreement signed at Ankara on 12 September 1963, which entered into force on 1 December 1964 ( Collection of the Agreements concluded by the European Communities, Vol . 3, p . 539 ) and on the Additional Protocol of 23 November 1970 which entered into force on 1 January 1973 ( Collection of the Agreements concluded by the European Communities, Vol . 3, p . 581 ). In the financial sphere, the parties concluded three protocols, the most recent of which, signed on 12 May 1977, expired on 31 October 1981 ( Official Journal 1979, L 67, p . 14 ).  Before that protocol even entered into force the Turkish Government, pointing to the country' s considerable trade deficit and serious economic difficulties, asked for the suspension of certain trade obligations imposed on Turkey by the additional protocol and requested considerable financial assistance from the EEC ( October 1978 ). The Community position which was to be adopted in the context of the association institutions was defined by the Council by means of the written procedure on 16 May 1979 . The relevant document stated that pending the conclusion of the Fourth Financial Protocol "la Communauté est prête à envisager, en faveur de la Turquie, une action spécifique, sous forme de dons, pour un montant de 75 million UCE ( European units of account ) en deux ans, destinée à financer des actions de coopération" ( Doc . 6758/79 NT 13, 10.5.1979 ). Five days later that position was notified to the Turkish Permanent Delegation ( 27th Summary of the Activities of the Council 1 January-31 December 1979, Brussels 1980, p . 135 ).  On 19 September 1980 the Association Council adopted measures to ensure the resumption and development of cooperation between the EEC and Turkey . It was decided to extend that cooperation to the field of energy and, at the same time, detailed conditions for implementing the Community position on special aid were adopted . Decision No 2/80, which was retroactive to 1 July, provided that : ( a ) "Turkey and the Community shall cooperate within the Association Committee with regard to the implementation of the exceptional aid totalling 75 million European units of account made available to Turkey by the Community"; ( b ) "Turkey shall refer direct to the Commission with regard to the submission of specific projects . The Commission shall examine such projects in the light of the criteria for the use of exceptional aid indicated to the Association Council by the Community delegation"; ( c ) "The Community shall inform Turkey of the action taken on its requests"; ( d ) "The Association Committee shall monitor the implementation of the aid"; ( e ) "It shall meet to this effect at the request of either party ".  In the mean time the procedures for the adoption of a financial protocol to replace the protocol expiring on 31 October 1981 were set in train; however, the coup d' état by the Turkish armed forces on 12 September 1980 prevented this process from being completed . The Foreign Ministers issued a communiqué expressing their concern ( Brussels, 15 September ), which the Community followed up by a series of political initiatives, including the decision to postpone the conclusion and entry into force of the Fourth Financial Protocol . Moreover, at its meeting on 7 and 8 December 1981 the Council decided, following informal discussions ( the matter was not on the agenda ), on the de facto suspension of the implementation of the EEC' s financial commitments . The suspension also applied to the special aid, which had, however, already been implemented to the extent of 46 million European units of account out of a total of 75 million owing to the approval of three projects in the energy sector .  In early 1986 the Commission considered that the improvement of the situation in Turkey justified a resumption of cooperation between Brussels and Ankara . It therefore proposed the unblocking of the aid ( 29 million European units of account, now ecus ) which had not yet been disbursed . The Council of Foreign Ministers approved that proposal on 17 February 1986 . Only Greece was against the proposal; it opposed the resumption of cooperation and, in particular, of financial aid which, in the Greek Minister' s view, could be interpreted as implicit approval of Turkish domestic policies .  Thus we come to the contested transfer . The general budget for 1986 contained no entry of commitment appropriations in respect of financial cooperation with Turkey under the heading corresponding to special aid ( Item 9632 ). However, Item 9631 of Chapter 100 ( provisional appropriations ) provided for an appropriation of ECU 10 million in respect of the Fourth Financial Protocol . Since the Protocol could not be implemented before 1987 the Commission was conscious that the relevant appropriations would remain unutilized in 1986 and considered therefore that it would be possible to use them for other purposes . ( Doc . SEC(86 ) 594 final, 11.4.1986 ).  That was the reason for the Commission' s proposal of 17 April 1986 to the budgetary authority to transfer the ECU 10 million directly to Chapter 96, Item 9632 ( Doc . 6395/86 final 149 R, 22.4.1986 ). Since the original item and the item to which the appropriations were transferred were both classed as compulsory expenditure ( CE ) in the relevant financial instruments, the operation would have to be carried out in accordance with the first subparagraph of Article 21 ( 2 ) of the Financial Regulation . That provision, following the pattern set by Article 203 ( 9 ) of the EEC Treaty, confers the power of decision on the Council, which must first consult the Parliament .  The budgetary authorities reacted in different ways . On 19 May 1986, after consulting the Political Affairs Committee, the Parliament - or more precisely the Committee on Budgets, which is authorized to give the Parliament' s opinion with regard to transfers of provisional appropriations - expressed its opposition to the Commission' s proposal . The Council, on the other hand, did not adopt any express decision . However, on 2 June 1986, that is to say on expiry of the six-week time-limit prescribed by the second subparagraph of Article 21 ( 2 ) of the Financial Regulation for the adoption of decisions, the proposal was deemed to be approved by the Council .  3 . In support of its application for the annulment of the relevant measure, Greece advances essentially three submissions . The first is based on an objection of illegality under Article 184 of the EEC Treaty, which is directed against the classification as compulsory expenditure ( CE ) of the special aid to Turkey provided for in the 1982 budget : the Greek Government takes the view that the relevant appropriations constitute non-compulsory expenditure ( NCE ) and hence that the classification is wrong; on that basis, it claims that the Council had no power to implement the transfer . The second submission is that, in transferring the appropriations, the Council was guilty of a misuse of powers and procedure . The third submission is wider in scope : Greece maintains that the Community institutions could not unblock the special aid without being in breach of the international obligation flowing from Resolution No 541 ( 1983 ) of the Security Council of the United Nations requiring Contracting States not to recognize any Cypriot State other than the Republic of Cyprus .  Before examining the submissions in more detail, we should first of all analyse the procedural issues which emerged in the course of the written procedure and during the hearing . Two of those issues relate to the admissibility of the action as a whole and are based ( a ) on the impossibility of challenging the transfer of appropriations and ( b ) on the difference between the respective supervisory powers of the Court of Justice and the Court of Auditors with regard to budgetary measures . In contrast, the third issue relates to the admissibility of the first submission in so far as the objection under Article 184 is raised by a Member State .  4 . Let us start with the claim that the transfer of appropriations cannot be challenged . This question, which deserves closer examination, was raised during the hearing by some Members of the Court, who asked the parties to state whether the transfer was capable of producing legal effects vis-à-vis third parties or whether it should be regarded as an internal measure and, therefore, as not being subject to judicial review . The question whether budgetary measures are amenable to review is an area in which the judgments of the Court have provided solutions some of which I agree with, whereas others are not convincing . I am referring here on the one hand to the judgments delivered in the proceedings bought by the political grouping "Les Verts" relating to the appropriations to finance the information campaign for the 1984 European Elections ( orders of 26 September 1984 in Case 216/83 Les Verts v Commission and Council (( 1984 )) ECR 3325, Case 295/83 Les Verts v Parliament (( 1984 )) ECR 3331, Case 296/83 Les Verts v Parliament (( 1984 )) ECR 3335, and Case 297/83 Les Verts v Council (( 1984 )) ECR 3339; the judgment of 23 April 1986 in Case 294/83 Les Verts v Parliament (( 1986 )) ECR 1339, and the judgment of 25 February 1988 in Case 190/84 Les Verts v Parliament (( 1988 )) ECR 1017 ) and on the other hand, to the judgment of 3 July 1986 by which the Court settled the constitutional dispute which had developed between the Council and the Parliament regarding the budget for the 1986 financial year ( Case 34/86 Council v Parliament (( 1986 )) ECR 2155 ).  There are very many different types of budgetary measures . First of all, there are : ( a ) measures, corresponding to the seven stages provided for by Article 203 of the EEC Treaty, which constitute the adoption procedure of the Community budget . Then there are the measures for implementing the budget . The latter break down into : ( b ) measures setting out the basic rules on expenditure; ( c ) individual measures allocating sums of money; and ( d ) accounting measures, including straightforward payment measures . Finally, there are : ( e ) measures, such as transfers, modifying, in the course of the financial year, the estimates and authorizations of expenditure which appear in the general budget .  Measures of type ( a ) were at issue both in the cases brought by "Les Verts" which were the subject of the orders of 26 September 1984, and in the dispute between the Council and the Parliament which was resolved by the judgment of 3 July 1986 . The orders declared the actions inadmissible, not on the basis of the nature of the contested measure, but because the conditions laid down in the second paragraph of Article 173, under which individuals may bring actions, were not met . Since "the procedure for the approval of the budget leads only to the authorization of the commitment of expenditure ... a natural or legal person cannot ... be directly concerned by the steps in that procedure", although such a person may be directly concerned "by the measures taken to implement the budget ". It appears to me that that approach is correct in so far as it refers to the measure by which the President of the Parliament declares that the budget has been finally adopted . However, it is deficient as regards all the other measures in that category which, as the Commission and the Council observed, cannot be challenged because, being part of a complex procedure, they are preparatory measures .  The guidance given by the judgment of 3 July 1986 in Case 34/86 Council v Parliament is more developed and completely convincing . The Court stated that "once the President of the Parliament has made the declaration ... the budget ranks among the acts which are capable of producing legal effects vis-à-vis third parties ( in so far as it ) endows the budget with binding force vis-à-vis the institutions and the Member States" ( paragraphs 6 and 8 of the decision ); and the Court adds, judiciously, that "if it were not possible to refer the acts of the budgetary authority for review by the Court, the institutions of which that authority is composed could encroach upon the powers of the Member States or other institutions ...". Moreover, the same paragraph ends with the words "the Treaty does not, moreover, contain any provision which excludes the bringing of the action for annulment against acts of a budgetary nature" ( paragraph 12 ).  In Case 294/83 ( Les Verts v Council ) the Court was called upon to give a decision on measures falling within category ( b ). The judgment in that case did not seek to inquire into the nature of those acts but, adopting the wording of the AETR judgment ( judgment of 31 March 1971 in Case 22/70 Commission v Council (( 1971 )) ECR 263 ), it acknowledged that "all measures adopted by the institutions ... which are intended to have legal effects" could be the subject of an action . I would also point out that that judgment recognized the possibility of bringing an action "against the individual decisions refusing to reimburse sums greater than those provided for" ( paragraph 36 of the decision ).  The judgment of 25 February 1988 in Case 190/84 ( Les Verts v Parliament ) considered the measures mentioned under ( c ) and ( d ). The action was held to be inadmissible because it was brought "against measures entering into commitments of expenditure and invalidating, authorizing and implementing the payment of expenditure pursuant to the (( relevant )) decisions of the Bureau and the enlarged Bureau and to the calculation under those decisions ... of the appropriations ... (( since )) such measures have only internal legal effects within the administration" ( paragraphs 7 and 8 ). That ruling must be regarded as being correct with regard to simple financial implementing measures some of which, as well as being internal to the institutions in which they originate, are preparatory ( accounting measures ), whilst others are purely factual in nature ( payments ). On the other hand, the ruling does not seem appropriate in the case of a measure by which the administration notifies an interested party of the amount by which he is being credited and of the criteria used to calculate that credit . In my opinion, such an individual measure is capable of causing damage and, in accordance with the judgment of 23 April 1986 in Les Verts v Parliament, must be considered as being open to challenge in so far as it orders the reimbursement of sums less than those provided for ( this is treated more fully in my Opinion in Case 190/84 ECR ....).  Let us now consider the admissibility of this action on the basis of the principles which can be extracted from the case-law and the observations suggested to me thereby . The measure which is the subject of the action belongs, as I have already stated, in category ( e ).  The problem does not appear to me to be difficult to resolve . As I maintained in my Opinion in Case 34/86 Council v Parliament, the budget which results from the Parliament' s final reading is a simple accounting document and therefore has no legal effect . It becomes binding on promulgation by the President . It is therefore evident that in order to obtain the complete annulment of the budget, the action must be directed against that promulgation . However, it is also obvious that it is not necessary to challenge the act of the President and bring an action against the Parliament where the unlawfulness relates to a chapter, an article or an item and is contested, as in this case, under Article 184 . We have seen, moreover, that some acts for implementing the budget may also be challenged : for example, in particular, decisions which give effect to the basic rules on expenditure and individual measures potentially capable of having adverse effects .  However, transfers of appropriations have special characteristics . Doubtless they are concerned with the implementation of the budget : as witness the fact that the provision governing such transfers - Article 21 of the Financial Regulation - occurs in Title III which is in fact entitled "Implementation of the Budget ". That, however, does not have any effect on the nature of such transfers . Transfers of appropriation are in fact on the same level as the budget, both because they modify the budget' s original expenditure estimate and authorization, and because they are decided on by the Council and the Parliament in accordance with the distribution of powers laid down in Article 203 of the Treaty or, in certain cases, by the Commission . Moreover, since transfers can even modify the maximum amount of non-compulsory expenditure, they are also capable of having an effect on the establishment of accounting documents for the following financial year .  In other words, we can conclude that since transfers of appropriations are ascribable to the budgetary authority and capable of giving rise to legal effects ( but therefore also subject to the risks which the Court highlighted so clearly in paragraph 12 of the judgment of 3 July 1986 in Council v Parliament ), they are subject to review by the Court . Nor can it be argued that it is not the transfer as such which can be contested but rather the measure by which it was implemented . That objection was raised by the Parliament in Case 34/86 in relation to the budget as a whole . The judgment took no account of the objection . I, on the other hand, criticized it strongly : I stated that acceptance of that objection would mean bringing proceedings against an institution which was not necessarily responsible for the illegality and, what is worse, would require parties to wait for the issue of a measure connected with the contested items or with the sums determined in contravention of the rules governing the budgetary procedure ( or, let me now add, contained in the Financial Regulation ).  5 . The second procedural problem which emerged during the hearing concerns the scope of the jurisdiction of the Court of Justice and the Court of Auditors to review budgetary measures . On a general level, this subject has been studied above all by French legal writers . In France, the rules governing accounts are not in fact considered to be rules of law and there is a separation between the powers of authorizing authorities and auditors which is reflected strongly in the jurisdiction of the administrative courts and that of the Court of Auditors . It is therefore clear that likewise "la violation des règles budgétaires et comptables ne peut, sans texte formel contraire, être invoquée à l' appui d' un recours pour excès de pouvoir" ( Odent : Contentieux administratif, Paris, 1981, Vol . VI, p . 1923 ).  The question has already been raised before the Court of Justice, only to be immediately rejected . It is stated in the judgment in Case 294/83 Les Verts v Parliament that "the argument that the Court of Auditors' power of review under Article 206a of the Treaty precludes any review by the Court of Justice must be rejected . The Court of Auditors only has power to examine the legality of expenditure with reference to the budget and the secondary provision on which the expenditure is based ( commonly called 'the basic measure' ). Its review is thus ... distinct from that exercised by the Court of Justice, which concerns the legality of the basic measure" ( paragraph 28 ).  The conclusion contained in that passage leaves me perplexed, not because of the consequences which it entails - the admissibility of the action - but because of the reasoning upon which it is based . For the rest, the argument put forward during the hearing by the Agent of the Commission, according to which the Court of Auditors is concerned, inter alia, with sound management from the point of view of appropriateness, and hence performs a function which is rather more political in nature, does not appear any more convincing . As for the view that the power of review of the Court of Auditors is confined to supervising "l' observation des règles de la comptabilité publique dans l' exécution du budget communautaire" ( Sacchettini : "Dispositions financières" in Le droit de la Communauté économique européenne, Brussels, 1982, Vol . 11, pp . 89 and 90 ), that seems to me to be too reductionist .  The fact is that the Court of Auditors has the power/duty to verify not only that the provisions relating to the budget which are contained in the Treaties or in the Financial Regulation are complied with, but also any provision belonging to the Community legal order in so far as it has an effect on expenditure . How then is it possible to distinguish between that power of review and that of the Court of Justice?  It has been observed, very appositely, that in the Community system the differences between the two functions result from a series of phenomena and, primarily, from the nature of the effects to which the exercise of those functions gives rise . Unlike the power of review of the Court of Auditors, the power of review of the Court of Justice is characterized by the binding effect and final nature of the judgment . Moreover, whereas the intervention of the Court of Justice presupposes the existence of a claim or, in any event, of a dispute, that of the Court of Auditors does not . Thus, in concrete terms, the work of the Court of Justice consists in the specific and individual consideration of measures or relations which are in dispute : that of the Court of Auditors consists in the systematic and general examination of the activity of management ( see Palmieri : La Corte dei conti delle Comunità europee, Padua, 1983, p . 78, No 26; Goletti : "La Corte dei conti delle Comunità europee nel quadro normativo comunitario", in Foro amministrativo, 1986, pp . 2948 et seq .).  6 . The third and final point relating to admissibility concerns the objection raised by Greece under Article 184 of the EEC Treaty against the classification of the special aid to Turkey as compulsory expenditure : the Council claims that a Member State may not invoke the inapplicability of a budgetary item in an action to annul a transfer . The Council advances two arguments in support of that claim .  The first is based on the theory, supported by an authoritative body of juristic opinion, that an objection of illegality may not be raised by Member States ( Bebr : "Judicial remedy of private parties against normative acts of the European Communities : the role of the exception of illegality", in Common Market Law Review 1966-67, pp . 11 to 13, and Development of judicial control of the European Communities, The Hague, 1981, p . 195; Joliet : Le droit institutionnel des Communautés européennes - Le contentieux, Liège, 1981, pp . 134 et seq .). The Member States may contest directly, within the time-limit laid down in Article 173, any measure of a binding nature and, in so far as they participate in the preparation of those measures, they have a political influence within the Council which justifies their not having the right to request the annulment of the measure under Article 184 . That is borne out by the judgment of 6 March 1979 in Case 92/78 Simmenthal v Commission (( 1979 )) ECR 777 . Article 184 - it is stated in paragraph 39 of the decision - "( confers ) upon any party to proceedings the right to challenge ... the validity of ... acts of the institutions ... which form the legal basis of the decision which is being attacked, if that party was not entitled under Article 173 of the Treaty to bring a direct action challenging those acts ".  The second argument turns on the special characteristics of the budget and particularly on the fact that it is indivisible and annual in nature . Because it is indivisible one part and, a fortiori, one item of the budget cannot be declared inapplicable . However, in a case such as this such a declaration would also infringe the principle of the annual nature of the budget, since it would result in change in the amount of non-compulsory expenditure in the 1986 budget which is used to calculate the maximum rate of non-compulsory expenditure for the following financial year . That is not all . The classification of expenditure forms an integral part of the budgetary procedure and may not be called into question in a dispute concerning the legality of a transfer . As the Court stated in the judgment in Case 34/86 Council v Parliament "the problems regarding the delimitation of non-compulsory expenditure in relation to compulsory expenditure are the subject of an inter-institutional conciliation procedure set up by the Joint Declaration (( of 30 June 1982 )) of the European Parliament, the Council and the Commission ... and ... they are capable of being resolved in that context" ( paragraph 50 ).  The arguments which I have just summarized cannot be accepted . As far as the first is concerned, the wording of the provision on which most textbook writers base the right of the Member States to raise an objection of illegality appears to me to be unarguable ( Barav : "The exception of illegality in Community law; A critical analysis", in Common Market Law Review, 1974, pp . 366 et seq .; Vandersanden, Barav : Contentieux communautaire, Brussels, 1977, pp . 260 to 263; Dubois : "L' exception d' illégalité devant la Cour de justice des Communautés européennes", in Cahiers de droit européen, 1978, pp . 411 et seq .; Waelbroeck : "Article 184", in Le droit de la Communauté économique européenne, Brussels, 1983, Vol . 10, Part I, pp . 359 et seq .). Indeed, Article 184 provides that "notwithstanding the expiry of the period laid down in the third paragraph of Article 173, any party may ... invoke ... the inapplicability of that regulation" ( my emphasis ). It should be added that that theory is largely confirmed by the judgments of the Court and the Opinions of its Advocates General .  Let us begin with Case 32/65 Italy v Council and Commission (( 1966 )) ECR 389 . The Italian Government contested Council Regulation No 19/65 under Article 184 and claimed that some provisions of Council Regulation No 17/62 and Commission Regulation No 153/62 were illegal . The Commission maintained that Italy was not entitled to act on the basis of Article 184 and the Court ( judgment of 13 July 1966 ) merely stated in response that under Article 184, "any party may ... plead the grounds specified in the first paragraph of Article 173, in order to invoke the inapplicability (( of a )) regulation ". However, for his part, Mr Advocate General Roemer dealt with the Commission' s argument head-on . He considered that "it would be sufficient to refer to the ... general wording used by the provision in question ..., and to the recognition of the fact that Member States may certainly have an interest, which should be protected, in putting forward an objection of inadmissibility . This is because the defects pertaining to a general regulation often do not clearly emerge until the regulation is applied to a particular case" ( pp . 414 et seq .).  Twenty years later, in Case 181/85 France v Commission, the Commission had retreated somewhat from its previous position . It conceded that Article 184 might be invoked by a Member State but only if that Member State was "taken by surprise" by the way in which the regulation was applied . In that case too, the Court avoided the question and it fell to the Advocate General, Sir Gordon Slynn, to refute the Commission' s argument . He stated that the Member State "does not have to show that there was a good reason why it did not act in time under Article 173, or that it was taken by surprise by the application or effect of an act of the Council or Commission, before it can rely on Article 184 ... this limitation, which the Commission seeks to introduce, is not to be found in the provisions of the Treaty . It would, if adopted, raise difficult questions of fact and I can see no compelling or even valid reason for reading it into Article 184 ".  I am in complete agreement with the line taken by my two colleagues, in particular because it accords with the principle that the Treaty provisions relating to remedies must not be interpreted restrictively ( judgment of 15 July 1963 in Case 25/62 Plaumann v Commission (( 1963 )) ECR 95 ) and with the rationale of the provision in question . Although it is true that Article 184 seeks to compensate for the fact that individuals do not have a right to bring proceedings against measures of general application, it is no less true that one of its objectives is to enable the legality of such measures to be reviewed from time to time, where their effects can be measured only after the two-month period laid down in Article 173 has expired . Nor can it be argued that in this case the time-limit expired long ago, on 8 April 1982 to be precise . Indeed between the end of 1981 and the beginning of 1986, aid to Turkey was blocked due to the "freezing" of relations between the Community and Turkey : as a result, Greece could not have assessed the consequences of the classification of the aid as compulsory expenditure within the time-limit for bringing an action for annulment .  It cannot be said that the judgment in Simmenthal is at odds with my view . In that case, in which the applicant was a private person, the Court was not called upon to decide whether a Member State may raise an objection of illegality . Rather, the judges were asked to decide whether an objection of illegality could also be raised against measures other than regulations, and the importance of the judgment is precisely that it stated that Article 184 is applicable to measures which, while not being in the form of a regulation, produce "similar effects" to those of a regulation .  The arguments which the Council bases on certain characteristics of the Community budget are equally weak . The first criticism to which they are open is that they contradict the line adopted by the Council in Case 34/86 ( Council v Parliament ). In that case the Council asked the Court to annul the budget for the 1986 financial year to the extent that the appropriations for commitments and the appropriations for payments exceeded the rate of increase which the Council had approved and proposed to the Parliament . The Court rejected that claim on the ground that to have upheld it would have rendered definitive the budget modified by the Council at its second reading . The Court observed, in addition, that the intervention of the Court in negotiations reserved to the two budgetary authorities would upset the institutional balance laid down by the Treaty .  That having been said, it should be stated that the indivisible and annual nature of the budget does not preclude a declaration of illegality in respect of an item relating to a previous financial year . Such a declaration would not in any way affect the balance of powers between the Parliament and the Council and, although it would modify the nature of the expenditure in following financial years, there would be no impact on the budgets containing that item because they would have exhausted their effects . Finally, in my view the Council' s reference to the passage in the judgment of 3 July 1986 in Case 34/86 Council v Parliament, in which the Court states that it is incumbent upon the budgetary authorities "acting in concert" to demarcate compulsory expenditure and non-compulsory expenditure, is not helpful . The reason is clear . It is not possible to construe that observation as excluding judicial review, particularly in a case such as this where the Court is called on to verify whether Article 203 ( 9 ) was correctly applied to the distinction between the two types of expenditure .  7 . I come now to the substance of the case . In its first submission Greece argues that the Council of the Community had no power to decide on the contested transfer . The transfer must be regarded as a mixed transfer, since the expenditure fixed under the original item ( Item 9631 of Chapter 100 ) was compulsory and that provided for by the new item ( Item 9632 of Chapter 96 ) is non-compulsory . Consequently, the transfer should have been carried out on the basis of the fourth and fifth subparagraphs of Article 21 ( 2 ) of the Financial Regulation, according to which mixed transfers are to be deemed to be approved only if neither budgetary authority has taken a decision to the contrary within six weeks of the date on which the two institutions received the proposal made by the Commission . In this case, the Parliament rejected the proposal; as a result, it must be held that the transfer could not take place .  The Greek Government goes on to state that the Council' s response is to maintain that the new item ( Special aid for Turkey ) has been listed as compulsory expenditure in every budget since the 1982 financial year and in the annex to the "Joint Declaration on various measures to improve the budgetary procedure" signed on 30 June 1982 by the Presidents of the Parliament, the Council and the Commission ( Official Journal C 194, p . 1 ). However, that classification is wrong . The aid is not in fact the subject of an obligation which is binding on the Community under an agreement with Turkey, whether it be the Agreement of 12 September 1963, the Additional Protocol or one of the financial protocols concluded up until 1977 . It was decided on unilaterally by the Council and constitutes simply "a gesture of goodwill", as can be seen from the Community' s declaration of 10 May 1979 ( in which it is said that "the Communauté est prête à envisager" the implementation of such a measure ) and Decision No 2/80 of the Association Council ( which takes note of the Community' s "offer ").  The Greek Government maintains that the Council' s argument that the legal basis for the aid is Decision No 2/80 of the Association Council, to which I have already referred, is also unfounded . There are two reasons for this . In order to be defined as "compulsory" expenditure must result from the Treaty or "from acts adopted in accordance therewith" ( first subparagraph of Article 203 ( 4 ) ). The decisions adopted by the institutions of the EEC-Turkey Association certainly do not fall into the latter category . In the second place, in order to be effective, such decisions must be transposed into the Community legal order by means of decisions of the Council of Ministers ( see Article 2 ( 1 ) of Agreement 64/737 concluded on 12 September 1963 between the representatives of the Governments of the Member States meeting in the Council "on measures and procedures required for the implementation of the Agreement establishing an Association between the European Economic Community and Turkey" ( Collection of the Agreements concluded by the European Community, Vol . 3, p . 571 ). In this case, however, there was no implementing measure and that circumstance constitutes evidence of the non-compulsory nature of the expenditure .  Greece further observes that the Council' s position is also flawed by its inability to meet the conditions which legal writers have laid down for compulsory expenditure . There are two schools of thought in this respect . According to the first ( Sopwith : "Legal aspects of the Community budget", in Common Market Law Review, 1980, p . 328; Ehlermann and Minch : "Conflicts between Community institutions within the budgetary procedure . Article 205 of the EEC Treaty", in Europarecht, 1981, p . 24 ) expenditure is compulsory when : ( a ) the particular activity to which the expenditure relates is laid down by a legal measure; ( b ) the amount of the expenditure is fixed by a legal measure other than the budget; ( c ) the Community or one of its institutions committed to the payment thereof . Yet, in this case, none of the three conditions appears to be fulfilled . As we have seen, the decision of the Council did not result in legal measures and the unilateral nature of the Community' s offer precludes the existence of binding commitments .  According to other writers, on the other hand, expenditure is compulsory when it corresponds to a claim which a legal person governed by public or private law asserts against the Community on the basis of the Treaty, derived provisions or an international agreement ( Strasser : Les finances de l' Europe, Brussels, 1980, p . 49; Dankert : "The Joint Declaration by the Community institutions of 30 June 1982 on the Community budgetary procedure", in Common Market Law Review, 1983, p . 707 ). However, even if this point of view is accepted, the result does not change : there are, in fact, no instruments of international law, not even relating to the suspension and resumption of relations between the Community and Turkey, which confer on Turkey rights capable of being invoked vis-à-vis the EEC .  Finally, the reference made by the Council to the annex to the Joint Declaration of 30 June 1982 is of very little value . Admittedly, that document does classify as compulsory expenditure the item relating to the special aid . However, in so far as it is intended to apply only between the institutions, the source of law of which it forms a part does not bind the Member States and can at the very most serve as an aid in the interpretation of Article 203 .  8 . The argument developed by the Council, and followed to a large extent by the Commission, takes the opposite view . The Council first observes that the budgetary authorities and the Commission have never had any doubts about the classification as compulsory expenditure of the original item or of the item to which the appropriations were transferred . That is shown by : ( a ) the proposal made by the Commission concerning the contested transfer; ( b ) the opinion of the Parliament which, although it rejected the proposal, does not contain any objections with regard to the nature of the expenditure; ( c ) the fact that the agenda for the discussions between the Parliament, the Council and the Commission which opened on 3 October 1986 makes not the slightest mention of the desirability of reclassifying the aid to Turkey .  Then there is the declaration of 30 June 1982 in which the three institutions declared that they consider compulsory expenditure to be "such expenditure as the budgetary authority is obliged to enter in the budget to enable the Community to meet its obligations, both internally and externally, under the Treaties and acts adopted in accordance therewith" ( my emphasis ). Greece wrongly minimizes the importance of that document . In fact, the Council has always regarded declarations by the institutions as political undertakings ( see answer to the written question of Mr Maigaard, Official Journal 1977, C 259, pp . 4 and 5 ). More important, such declarations are functionally related to Article 15 of the Merger Treaty, that is to say to a provision which, besides being used by the Court in the AETR judgment ( Case 22/70 Commission v Council, cited above ), must be regarded as expressing the principle of cooperation between the institutions ( see Van Craynenest : Le droit de la Communauté économique européenne, Vol . 15, p . 10; Amphoux : ibid ., Vol . 9, p . 241, note 2 ).  External obligations - and the special aid to Turkey undoubtedly constitutes such an obligation - may be entered into by a body possessing legal personality under international law even on the basis of unilateral commitments ( see the nuclear tests case, Australia v France, judgment of 20 December 1974 of the International Court of Justice, ICJ 1974, p 253, paragraph 43 ). In this case, however, there is no need to resort to that approach . It is true that the origin of the aid was not the financial protocols . But it is a fact that the Community' s offer of May 1975 was accepted by Turkey and the agreement thus reached was incorporated into Decision 2/80, which has already been cited several times . The fact is also that, despite its title, that measure is undeniably contractual in nature or, in any event, forms part of the contractual fabric of the EEC-Turkey Association and therefore enters into the Community system by way of the provision - Article 238 of the Treaty - on which the Association is based .  It follows that Decision No 2/80 constitutes a completely appropriate legal basis for Item 9632 of the 1986 budget . The provisions which it contains are in fact sufficiently precise and do not require implementing measures . Moreover, Article 2 ( 1 ) of Agreement 64/737 does not require all decisions of the Association Council to be transposed into the Community legal order . Nor is it possible to argue that the detailed rules laid down for the grant of the aid or the decision on the de facto suspension of the implementation of the financial commitments entered into by the EEC had an effect on the nature of the expenditure inasmuch as it rendered it non-compulsory .  Those detailed rules or conditions did not, in fact, confer on the Community institutions any power to fix the level of appropriations to be entered into the budget and the "freeze" in relations between the EEC and Turkey did not give rise to legal measures or call into question the existence of obligations on the part of the Community . Indeed, between 1981 and 1986 payments were made in respect of Item 9632 and it was only the entering of commitment appropriations that was interrupted . That explains, moreover, why the resumption in relations between the parties and the payment of the contested aid were not confirmed by means of a formal instrument .  9 . What is to be made of those arguments? In order to express an opinion on their validity one must first clarify the concepts of compulsory expenditure and non-compulsory expenditure . The distinction was first incorporated in Article 203 ( 4 ) of the Treaty by the Treaty of 22 April 1970 amending certain Budgetary Provisions, and has been applied since the 1975 financial year . It aims at reconciling the requirement to increase the budgetary powers of the Parliament and the need to prevent those powers from being exercised so as to exercise an influence after the event on decisions of the Council . However, it is undeniable that, far from achieving the objective intended by the legislature, the resulting compromise has tended to exacerbate the already difficult relations between the two institutions which constitute the budgetary authority . That is the reason for the conflict which becomes more acute each year and, in the context of that conflict, for the search for new compromise solutions designed to alleviate it . The most ambitious of those endeavours, which came in the wake of a particularly serious clash, was the inter-institutional declaration of 30 June 1982 which defines Community expenditure in terms which do not fully correspond to those of Article 203 ( 4 ).  Article 203 ( 4 ) deals, in fact, only with compulsory expenditure and defines it as expenditure "necessarily resulting from this Treaty or from acts adopted in accordance therewith ". Consequently the concept of non-compulsory expenditure is defined by implication and by way of contrast with compulsory expenditure . However, in order to be entered in the budget, even non-compulsory expenditure must be based on a provision of primary or derived law . That means that it is possible to establish the category of expenditure involved only by analysing the basic provision and, in particular, the degree to which it is binding on the institution which is called on to carry out the payment . If it is considered as a result of that examination that the authority in question has a non-discretionary power, then the expenditure is compulsory; if, on the other hand, it is found that the payment of the sums in question is the subject of a discretionary power of the institution, the expenditure is non-compulsory ( Sacchettini, op . cit ., pp . 151 et seq .).  As we have seen in section 8, the Joint Declaration, in defining the two categories of expenditure, does not depart from the method followed by Article 203 ( 4 ). However, it contains two new factors : it expressly states that compulsory expenditure may also be the result of external obligations, and classes the budgetary items ( listed in the annex ) as compulsory or non-compulsory expenditure . As the two budgetary items between which the contested transfer took place are listed as compulsory expenditure, it is clear that the second new factor is particularly important for the purposes of this case, which explains the importance which the parties have attributed, throughout the proceedings, to the legal nature of the Joint Declaration . In fact, once the binding nature of the Joint Declaration is acknowledged, the fact that it classes the special aid as compulsory expenditure renders the Greek Government' s first submission completely groundless .  I am convinced, however, that it is not absolutely necessary to go deeper into the question of the status of the Joint Declaration in the Community' s legal order . Personally, I share the view that documents of that type : ( a ) have their legal basis in Article 5 of the EEC Treaty and Article 15 of the Merger Treaty; ( b ) express the general principle according to which Community institutions are bound by a duty of mutual loyalty and cooperation; ( c ) may, if the obligations which result from them are sufficiently precise and unconditional, achieve the status of measures intended to implement the Treaty and render any derived provisions conflicting with them subject to annulment ( as regards the first two points, the following authors should be added to those mentioned by the Council . Vesterdorf : Europaparlamentet og Europaeisk Integration, Copenhagen, 1983, pp . 249 et seq ., and Bieber : "The settlement of institutional conflicts on the basis of Article 4 of the EEC Treaty", in Common Market Law Review, 1984, p . 521; as regards the third point, see Michel Waelbroeck and Denis Waelbroeck : Les "déclarations communes" en tant qu' instruments d' un accroissement des compétences du Parlement européeen, a paper contributed to the seminar "Le Parlement européen dans l' évolution institutionnelle", Brussels, 24 to 26 September 1986, in publication ).  Having said that, it remains nevertheless undeniable that joint declarations and similar measures merely constitute "droit de complément" which may not derogate from primary law on pain of invalidity . The fact that the Joint Declaration and the budgets for 1982 to 1986 classify the special aid as compulsory expenditure or that that classification has never given rise to conflict between the Council, the Parliament and the Commission would therefore be irrelevant if we were to establish that that measure was not based on, to use the words of Article 203 ( 4 ), the Treaty or an act adopted in accordance therewith . Let us examine whether that is in fact the case .  10 . Greece considers the special aid to be a mere "gesture of goodwill" because it was decided upon unilaterally by the Council and because it cannot be fitted into the contractual fabric of EEC-Turkish relations and has never been transposed into the Community legal order . For their part, the Council and the Commission maintain that the aid is based on an obligation of a contractual nature because it is the result of an offer by the Community which Turkey accepted and because it is confirmed by Decision No 2/80 which, despite its title, must be considered to be a proper international agreement . Let me say straight away that both those arguments appear to me to be unacceptable : the applicant State denies the Community a power - the power to enter into a commitment unilaterally - which it must be recognized as having, and the two institutions have interpreted the situation in question in a way which distorts its essential features .  Of course, a contractual interpretation of the events which culminated in Decision No 2/80 cannot be completely ruled out; it would perhaps be sufficient to reverse the Council' s approach by regarding the Community' s "offer" as acceptance of the request for financial aid made by Turkey in October 1978 ( section 2 above ) and then to argue that Decision No 2/80, the unilateral nature of which is not in doubt, ratified the agreement thus reached but did not change its character . However, all that has an artificial flavour . It is more in keeping with the facts and more correct from a theoretical point of view to regard the offer in question - in other words, the measure of 16 May 1979 by which the Council decided to grant the aid to Turkey - as a declaration which committed the Community to a certain line of conduct without making compliance with the declaration conditional on a quid pro quo or on prior or subsequent expressions of intent, implicit or explicit, on the part of the intended recipient of the aid .  There is no doubt that in international law promissory declarations are binding . Giacinto Bosco made that assertion 50 years ago, basing his argument - which at the time was both original and heretical - on the power of States to enter into unilateral commitments - a power which is derived from a general norm relating to law-making and based on intention on the part of the States ( see "Il fondamento giuridico del valore obbligatorio del diritto internazionale", in Rivista di diritto pubblico, 1938, pp . 626 et seq .). Subsequently that view has been taken by an increasing number of writers, even if they have used different arguments or, at times, less broad terms ( see, for example, Carbone : Promessa ed affidamento nel diritto internazionale, Milan, 1967 ). Today, the rule promissio est obligatio has been definitively confirmed by the International Court of Justice at The Hague in the judgment cited above concerning French nuclear tests in Polynesia . What is more, it is clear that the rule goes beyond its original scope and also applies to international bodies in so far as they possess legal personality ( see Sicault : "Du caractère obligatoire des engagements unilatéraux en droit international public", in Revue générale de droit international public, 1979, p . 633 et seq .).Let us now return to our original problem . If my findings are correct, the legal basis of Item 9632 is the decision of 16 May 1979, that is to say a measure which was not published in the Official Journal and was in certain respects untypical, but which is certainly more "formal" than a good many documents - such as the "communications" of the Commission to the Council of the European Communities and the "conclusions" of the European Council - which are nevertheless used by the budgetary authority as the basis for expenditure ( see for the budget for the 1987 financial year, Items 941 and 9490, Official Journal 1987, L 86, pp . 879 and 885 ). On the other hand, as a manifestation of the power to enter into obligations unilaterally, that decision is based on the norm - which is unwritten but universally recognized and primary in nature - which confers on the Community legal personality in international law . The special aid to Turkey was therefore classed as compulsory expenditure and it remained so in the financial years following the year in which it was first entered in the budget ( 1982 ), since it certainly cannot be considered that the "freeze" in relations between the Community and Turkey was capable of changing the nature of the aid .  It now remains to define the status of Decision No 2/80 . In my view, that decision merely transcribed - or, if you prefer, adopted - an obligation which was already perfect and laid down the detailed rules for its implementation . Nor can it be argued - although there is at this stage very little advantage to be gained from so doing - that the absence of measures to transpose the decision into Community law is of any importance . The Council' s argument with regard to that point seems to me to be correct : if Article 2 ( 1 ) of Agreement 64/737 is read carefully it appears that only decisions which could not otherwise be applied must be transposed into Community law . It is clear that there is no such requirement for transposition in this case .  11 . In its second, alternative submission, Greece argues that the Council was guilty of a misuse of power and of procedure in carrying out the contested transfer . In the first place there was the decision to transfer a provisional appropriation entered under a certain heading to an operating heading of another kind . The appropriations in Chapter 100 are, in fact, "individualized" and, therefore, bound by the corresponding "remarks", and for that reason they can be transferred only if the basic measure relating to the original heading has been adopted and the transfer is made to the corresponding item . However, in this case : ( a ) the basic measure for Item 9631 - that is to say the Fourth Financial Protocol - was never adopted; and ( b ) the transfer was made to a different item, and the special aid was precisely that .  The misuse of procedure also relates to the compulsory nature of the appropriations entered in Chapter 100 . The Greek Government argues that, under the circumstances, the budgetary authority should have effected a so-called "triangular transfer ": more specifically, it should have transferred the appropriation in question from Item 9631 of Chapter 100 to the corresponding operating item - that is to say again Item 9631 - of Chapter 96 and then transferred it from that item to Item 9632 of the same Chapter 96 .  Let us consider, first of all, the purpose of provisional appropriations and the nature of the commitment which they represent . Chapter 100 is not a budgetary heading against which expenditure may be charged . Rather, it is a reserve made up of sums earmarked for certain purposes and entered in the budget in case an institution has to make expenditure of an uncertain amount for an activity whose legal basis has not been completely defined . Under Article 21 of the Financial Regulation, the budgetary authority may make use of those sums only by means of transfers and, depending on whether the transfers relate to compulsory expenditure, non-compulsory expenditure or mixed expenditure, the relevant procedure involves the Council and the Parliament in different ways .  Let us now turn to the claim relating to misuse of powers . Greece, as the Council and the Commission correctly observe, fails to take account of the fact that the transfer breaks down into two stages with distinct characteristics and implications : the first stage is the authorization given by the budgetary authorities; the second, which corresponds to the implementation of the expenditure, takes the concrete form of the actual transfer of the appropriations between different chapters or within a single chapter and is carried out by the Commission under Article 205 of the Treaty . Whereas a basic measure is essential only in the second stage, no such measure is needed for releasing the appropriations entered in the items referred to in Chapter 100 .  That having been said, I consider that the "remarks" - that is to say the statements appearing on the right-hand side of the budget against each appropriation ( see Article 16 ( 2 ) ( b ) and ( c ) of the Financial Regulation ) - do not generally possess the binding nature which the Greek Government attributes to them . Their purpose is to indicate the legal basis of the expenditure, to provide certain detailed information for the auditor or, in the case of differentiated appropriations, to set out the schedule of payments over several financial years ( Strasser : Le finanze dell' Europa, Brussels, 1979, p . 60 ).  In any event, the remarks for the headings referred to in Chapter 100 are definitely not binding . The corresponding appropriations may be used only by means of a transfer and the transfer has a particular purpose, which is to modify during the financial year the expenditure estimate and authorization whenever it proves impossible to adopt the basic measure for a particular appropriation or whenever implementation of a certain action is faster or slower than anticipated and hence a given item is increased at the expense of another whose prospects of being used appear more remote or less urgent . Moreover, the objectives of that operation are clear from the Joint Declaration of 30 June 1982, Section IV, paragraph 3 ( c ) of which provides that, in the case of appropriations for which it appears impossible to adopt the basic regulation by the end of May, "the Commission shall present alternative proposals ( transfers ) for the use during the financial year of the appropriations in question ".  We can thus conclude that the line followed by the Council was correct . Exercising the powers vested in it, the Council modified certain original allocations in the light of factors which arose after the adoption of the budget, thereby ensuring that the appropriations would be used in a rational way .  12 . The charge of misuse of procedure is equally unfounded . For reasons which we have just been into, the need for a "triangular" transfer cannot be inferred from the binding nature of the remarks relating to the headings of Chapter 100 . Nor is there any support for that charge in the Financial Regulation . On the contrary, it appears from the Financial Regulation - that is to say the general provision set out in Article 15 ( 4 ) to the effect that appropriations of Chapter 100 may be transferred "in accordance with the procedure laid down in Article 21" and Article 21, which provides that "appropriations may be transferred only to budget headings for which the budget has authorized appropriations or carried a token entry" ( paragraph 5 ) - that the direct transfers are completely lawful .  It should be added that : ( a ) from the point of view of the powers conferred on the budgetary authority or within the sphere of competence of the Member States, it makes no difference whether a triangular transfer or a direct transfer is chosen; and ( b ) whichever method is used, the result of the transfer procedure is no different .  13 . As I have already stated, the third submission is wider in scope . Greece argues that in paragraph 7 of its operative part Resolution No 541 ( 1983 ), adopted on 18 November 1983 by the Security Council of the United Nations, "calls upon all States not to recognize any Cypriot State other than the Republic of Cyprus ". By recognizing "the Turkish Republic of North Cyprus", the Turkish Government is in breach of that obligation . Consequently, the Community cannot grant it the special aid without ignoring that breach and thereby itself violating an obligation imposed on it under a measure which is binding on it by virtue of the principle of substitution .  That argument must be rejected because it is based on a false premise . It is manifest from the wording of the operative part and from the debates and the declarations of vote prior to the adoption of Resolution No 541 ( see summary in La Communità Internazionale, 1984, pp . 308 to 314 ) that the resolution does not constitute a "decision" and is therefore not a binding measure, but a measure in the nature of a mere recommendation . Consequently, the States to which the declaration is addressed are not bound to comply with paragraph 7 of the resolution or to infer from the fact that paragraph 7 was not complied with the consequences which Greece claims they should infer ( in general see Conforti : Le Nazioni Unite, Fourth Edition, Padua, 1986, pp . 185 et seq ., 265 et seq .).  14 . In view of the foregoing, I propose that the Court should dismiss the action brought by the Hellenic Republic on 4 August 1986 against the Council of the European Communities .  The unsuccessful party should be ordered to pay the costs, including the costs of the intervener .  (*) Translated from the Italian .