Malta

V - 136(3) TFEU

At the 16/17 December 2010 European Council a political decision was taken to amend the Treaties through the simplified revision procedure of article 48(6) TFEU. On March 25, 2011 the European Council adopted the legal decision to amend article 136 TFEU by adding a new third paragraph: “The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.”        
The process of approval of this decision by the member states in accordance with their respective constitutional requirements as prescribed by article 48(6) has been completed and the amendment has entered into force on 1 May 2013.

Negotiation
V.1
What political/legal difficulties
did Malta encounter in the negotiation of the amendment of article 136 TFEU?

The Maltese Prime Minister emphasised in his speech in the Maltese House of Representatives on 4 April 2011[1] , that Malta – together with Cyprus – has added their interpretation of the new Article 136 (3) TFEU in the meeting of the Council. The wording is as follows:

Joint Declaration by Cyprus and Malta to the minutes of the European Council of 24 – 25 March 2011, concerning the decision amending article 136 of the TFEU with regard to the setting up of the European Stability Mechanism

Without  prejudice to the provision of article 125 of the treaty on the functioning of the European Union (TFEU), the reference in the proposed amendment of  article 136 of the TFEU that “the ESM will be activated by mutual agreement, if indispensable to safeguard the financial stability of the euro area as a whole” does not ipso jure preclude that the mechanism be used to provide financial assistance to any Member State whose currency is the Euro, since financial stability of the euro area as a whole is inextricably linked to its integrity and the financial stability of all its members.

In addition, Malta added some notes to the minutes of the Council meeting, which made it clear that Malta has a specific interest in its competence to determine national taxes. The statement is as follows:

Declaration of Malta to be attached to the minutes of the European Council of 24-25 March 2011

Malta:

– Notes that the Heads of State or Government of the Eurozone have agreed that “Developing a common corporate tax base could be a revenue neutral way forward to ensure consistency among national tax systems while respecting national tax strategies” in the Pact for the Euro;

 – Holds that a common corporate tax base would only be revenue neutral if it respects the comparative and competitive advantage of Member States;

 – Underlines that the Heads of State or Government of the Eurozone refer to a common corporate tax base and not a common consolidated corporate tax base;

– Holds that the Commission’s proposal on a common consolidated corporate tax base would distort the comparative and competitive advantage of Member States and penalise those economies where productivity is relatively high and/or that have moved to higher value-added economic activities and/or where market size is limited.

Approval
V.2
How has the 136 TFEU Treaty amendment been approved in Malta and on what legal basis/argumentation?

The approval is based on an order of the Prime Minister in the sense of Article 2 (2) of the Maltese European Union Act. The Prime Minister was granted the competence to declare that a (European) treaty or a Decision of the European Council made after the 16th April 2003 – which is the day on which the accession treaty of Malta to the EU had been signed – is in conformity with Malta’s ‘European Union Act’. Such a competence is known as ‘Delegated or Subsidiary Legislation’ in the Maltese Legal System.[2] Since the amendment of Article 136 TFEU is based on the Simplified Revision Procedure introduced by the Lisbon Treaty (Article 48 (6) TEU), Malta had to adapt its ‘European Union Act’ (see question V.5).

This order had to be approved by resolution of the Maltese parliament because Article 2 (2) of the Maltese ‘European Union Act’[3] requires that an order can only be made when a draft thereof has been approved by resolution of the House of Representatives. The Order was presented to the House of Representatives on 22 June 2012. Debate in the Foreign and European Affairs Committee (FEAC) took place and the FEAC Chairman sent the report to the Parliament on 2 July 2012. Debate in the House of Representatives took place on 2 October 2012. The Order was accepted unanimously as Subsidiary Legislation 460.28 under the title ‘European Union Act (Approval of Treaty Amendment Decision) Order’[4] on 3 October 2012. There is no requirement of further assent by Parliament in the Maltese legal system, so that the Order became valid via publication on 9 October 2012.

Ratification difficulties    
V.3
What political/legal difficulties
did Malta encounter during the ratification of the 136 TFEU Treaty amendment?

The Maltese Parliament required that Clause 3 of the Order, having the following text:

“For the purposes of article 2(2) of the Act, it is hereby declared that the Specified Decision shall be regarded as one with the Treaty”

is supplemented by the following words:

“while stating the Government’s understanding that where the Treaty refers to financial stability of the Euro Area, this should be interpreted to mean the Euro Area as a whole or one of its Member States in isolation, whatever its size.”

The expression ‘one with the Treaty’ expresses that the Specified Decision which is the European Council Decision of 25 March 2011 amending Article 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for Member States whose currency is the euro (Council Decision 2011/199/EU) is in conformity with the European Treaties. The additional words included by the Maltese Parliament after a recommendation of the Foreign and European Affairs Committee were seen as being necessary to make it clear, that the rescue mechanism is not only activated, when the Eurozone as a whole needs support, but also when a single Member State needs assistance to solve fiscal difficulties. For Malta, this is important, because their economic impact on the Eurozone is marginal.

Malta’s position in a (hypothetical) rescue situation, was also the main topic of discussion during the ratification process. At the meeting of the Foreign and European Affairs Committee on 2 July 2012[5] , opposition (Labour Party) demanded that the government (Nationalist Party) ensures that the rescue mechanism must also be activated, if small countries with a very low influence on the whole Eurozone need financial assistance. Opposition (Labour Party), in particular Alfred Sant, was not convinced that the wording ’Eurozone as a whole and of its Member States’ was clear enough to guarantee that also a single Member State, which does not play a central role in the Eurozone, has the right to receive financial assistance. The discussion dealt with the question whether an ‘or’ would have been more adequate than an ‘and’. The Minister of Foreign Affairs (Nationalist Party) reminded the Committee that even if Malta would not receive support under Article 136 (3) TFEU, it would receive financial assistance under Article 122 (2) TFEU. In addition, members of the government emphasised that Cyprus would be in the same situation such as Malta and the situation of small countries was discussed on the European level leading to the conclusion that the new Article 136 (3) TFEU would comprise the right of small Member States to receive financial assistance. Alfred Sant (Labour Party) was not convinced of this argument because countries like Cyprus can rely on the support by closely connected, bigger states such as Greece. In addition, he emphasised, that the assistance clause of the International Monetary Fund explicitly mentions that also single states can request assistance, which is not the case for the Treaty amendment.

In the framework of this discussion, opposition recommended sending a side letter with the ratification which makes the Maltese interpretation of the wording evident. The Maltese Foreign Minister Tonio Borg was not sure whether such a side letter would not place Malta in a weaker position because it could be interpreted as if Malta would have some doubts about its own decision.[6]

Furthermore, it was discussed whether the amount of financial assistance is limited by the amount of the contribution by Malta. The Minister for Finance made it clear that the amount of financial assistance is not bound to the contribution key.

In addition, the Foreign and European Affairs Committee discussed whether the treaty amendment is intended to be a fund or whether the term ‘mechanism’ allows for more diverse arrangements. The Maltese Minister of Finance Tonio Fenech (Nationalist Party) said that the new Subsection 3 of Article 136 TFEU allows different arrangements such as a fund or a bank. At the moment, only the ESM is intended to be installed, but the amended version of the Treaty also allows for other arrangements.

Case law  
V.4

Is
there a (constitutional) court judgment in Malta on the 136 TFEU Treaty amendment?

No constitutional judgment on the 136 TFEU amendment exists.

Miscellaneous
V.5
What other information is relevant with regard to Malta and the 136 TFEU Treaty amendment?

Malta had to modify its ‘European Union Act’, which is the national legal act allowing Malta to join the European Union, in order to make Article 2 (2) European Union Act applicable to the New Simplified Revision Procedure introduced by the Treaty of Lisbon. The old wording was:

“If the Prime Minister by order declares that a treaty specified in the order being a treaty entered into by Malta after the 16th April, 2003 is to be regarded as one with the Treaty as herein defined, the order shall be conclusive that it is to be so regarded:”

The amended version goes as follows:

“If the Prime Minister by order declares that a treaty specified in the order being a treaty entered into by Malta after the 16th April, 2003, or that a decision specified in the order, being a decision that amends the Treaty, is to be regarded as one with the Treaty as herein defined, the order shall be conclusive that it is to be so regarded:”       

This amendment became necessary, because the prior version simply referred to the wording ‘Treaty’, which would not completely meet the legal nature of the Simplified Revision Procedure. This is why Malta decided to amend its ‘European Union Act’ by the ‘European Union Amendment Act’ (Act VII of 2012)[7] . The amended Act entered into force on 22 June 2012.

[1]              Transcript of Sitting 334 of the Plenary Session of the House of Representatives on 4 April 2011, p. 623 et seq., http://www.parlament.mt/file.aspx?f=18155

[2]              See for further information David Joseph Attard, The Maltese Legal System, Volume I, 2012, p. 56 to 61

[3]              http://justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=8926

[4]                       http://www.justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=11942&l=1

[5]              Transcript of Sitting 74 of the Foreign and European Affairs Committee on 2 July 2012, p. 4 et seq., http://www.parlament.mt/file.aspx?f=31661

[6]              Transcript of Sitting 74 of the Foreign and European Affairs Committee on 2 July 2012, p. 14 et seq., http://www.parlament.mt/file.aspx?f=31661

[7]                       http://www.parlament.mt/file.aspx?f=23444