United Kingdom

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 the United Kingdom encounter in the negotiation of the amendment of article 136 TFEU?

One of David Cameron’s stated aims in attending the European Council Meeting (16–17 December 2010) was “to make sure that Britain is not liable for bailing out the Eurozone when the new permanent arrangements come into effect.”[1]

Most of the debates in Parliament were in relation to ratification.

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

The Article 136 TFEU Treaty amendment has been ratified in the UK following the European Union (Approval of Treaty Amendment Decision) Act 2012 (not to be confused with the European Union Act 2011).

The European Union Act 2011 sets out 3 requirements for the approval, by the UK, of a decision under Article 48(6) TEU: a Ministerial statement as to whether the decision triggers a referendum under section 4 of the Act; an Act of Parliament approving the decision; and compliance with the referendum condition, the exemption condition or the significance condition. Each of those conditions is set out in section 3 of the Act. The “exemption condition” is met if the Act providing for the approval of the decision states that the decision does not fall within section 4 of the Act. Section 4 sets out the cases in which an Article 48(6) decision is required. Section 4(4)(b) provides that an Article 48(6) decision does not fall within section 4 if it involves the making of a provision that applies only to Member States other than the United Kingdom.

Under section 5 of the 2011 Act, the Minister must lay a statement before Parliament setting out his or her opinion as to whether a referendum is required under section 4 of the Act. The Foreign Secretary laid a statement before Parliament on 13 October 2011 to the effect that, in his opinion, the Treaty amendment Decision does not fall within section 4 of the 2011 Act. The statement relies on the exemption in section 4(4)(b), on the basis that the Treaty amendment Decision applies only to Member States other than the UK.


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

Ratification Timeline

·         12 January 2011 considered by House of Commons European Scrutiny Committee[2]

·         26 January 2011 considered by House of Commons European Scrutiny Committee,[3]

·         16 March 2011 House of Commons debated the motion to support the Government’s intention to approve the decision to amend the Treaty

·         21 March 2011 House of Lords debated and passed the motion to agree[4]

·         23 March 2011 House of Commons passed the motion to agree 310 votes to 29[5]

·         24 March 2011considered by House of Lords European Union Committee scrutiny

·         Statement under Section 5 European Union Act 2011, 13 October 2011

·         10 May 2012 European Union (Approval of Treaty Amendment Decision) Bill 2012 introduced in the House of Lords

·         23 May 2012 Second Reading in House of Lord

·         13 June 2012 House of Lords Committee Stage[6]

·         27 June 2012 House of Lords Report

·         4 July 2012 House of Lords Third Reading and House of Commons First Reading

·         3 September  2012 House of Commons Second Reading

·                     3 September 2012 House of Commons Programme (No. 2) motion

·                     10 September  2012 House of Commons Committee first sitting: 

·         10 September 2012 House of Commons Third Reading

·                     31 October 2012 Royal Assent

 

Difficulties

The UK has specific procedures that must be followed before a Minister may agree to a decision to amend the Treaties under the Article 48 (6) revision procedure. This is specifically for EU law since the ratification of Treaties and their amendment is generally regulated by the Constitutional Reform and Governance Act 2010. The legislation in force at the time the question of Government approval arose was section 6 of the European Union Act 2008 Act. This required Parliamentary approval, specifically the passing of a motion that the House approves the Government’s intention to support the adoption of a specified draft decision without amendment. Each House passed an affirmative resolution in March 2011 without amendment.

During the debate on 16 March 2011 the Minister for Europe announced that the draft decision would also be subject to the provisions of the (then draft) European Union Act 2011 once it had entered into force. Approval of the decision under this regime is more difficult since a referendum may be required. The 2011 Act sets out three requirements for the UK approval of a decision under Article 48(6) TEU: a Ministerial statement as to whether the decision triggers a referendum; an Act of Parliament approving the decision; and compliance with the referendum condition, the exemption condition or the significance condition. The Foreign Secretary laid a statement before Parliament on 13 October 2011 stating a referendum was not required on the basis that the Treaty amendment Decision applies only to Member States other than the UK. Since the provision only applies to Member States whose currency is the Euro, the UK has no financial liability under it.

The European Union (Approval of Treaty Amendment Decision) Bill 2012 then needed to pass through the usual legislative stages. Difficulties arising at these stages:

Proposed amendments

At the House of Lords Committee Stage[7] there was an attempt to introduce two amendments. The first, tabled by Lord Foulkes of Cumnock, was that a referendum should be held. He relied upon the wording of section 4 of the European Union Act 2011 that no referendum is required merely because it involves certain matters. In his opinion the inclusion of “merely” implies that another factor should be involved. The subsequent debate in the House of Lords reaffirmed that government position that no referendum was necessary since “merely” intended to indicate only that other conditions ought to be taken into account. Furthermore, the Ministerial statement that there was no need for a referendum was open to judicial challenge, yet in several months no such challenge arose.

The second proposed amendment, also tabled by Lord Foulkes, was to delay the entry into force of the Act until 1 January 2013 and then only if the membership of the eurozone remained the same as it is now. Lord Foulkes also raised the concern that Greece, Ireland or Spain would have been forced out of the eurozone by this point and so a question over whether the ESM should then continue. The countering argument, from Lord Howell of Guildford, stated the ESM was an essential mechanism ‘regardless of whether there is a change in member states whose currency is the euro’, and that delaying the amendment decision risked further instability in the eurozone, with consequences for the UK economy.

Necessity of Treaty amendment

The UK Government considered the Treaty amendment did not change the legal situation. The Financial Secretary to the Treasury stated in a letter to the European Scrutiny Committee that “…the Government has no concerns about the legality of the ESM Treaty or its compatibility with the EU Treaties. It is not legally necessary for the Article 136 Treaty change to have been made before the ESM can come into force.”[8] He explained the need for amendment on the basis that the German Constitutional Court required further confirmation of the meaning of the provision.[9]

The House of Commons European Scrutiny Committee disagreed on this point. In its opinion recitals 2 and 3 of the Decision for amendment, reinforced by European Council Conclusions of October 2010 (paragraph 2), December 2010 (paragraph 1) and March 2011 (paragraph 16), it strongly suggested that Treaty amendment was the necessary precursor of the ESM.[10]

Lack of UK liability

The Bill was widely publicised as ending UK liability for bailouts,[11] although most statements by officials that the amendment will create no new liabilities, but not end existing ones.[12]

The UK Government stressed the lack of any UK liability. David Cameron stated that “In the current emergency arrangements established under article 122 of the treaty, we do have such a liability. That was a decision taken by the previous Government, and it is a decision that we disagreed with at the time. We are stuck with it for the duration of the emergency mechanism, but I have been determined to ensure that when the permanent mechanism starts, Britain’s liability should end, and that is exactly what we agreed at the European Council.” David Lidington, when introducing the motion, stated “It does not apply to non-euro area member states and cannot confer any obligations upon them”[13] and Lord Howell, the Foreign Office Minister, stated the fund will be ‘by the eurozone, for the Eurozone.’[14] Lord Howell further stressed the benefit to the UK’s financial interests. In his opinion, the Treaty change was in the UK’s national interest since stable and healthy Eurozone is important for the UK’s long-term growth and prosperity.

No transfer of powers

David Cameron reported that the “change does not affect the UK, and it does not transfer any powers from Britain to the European Union. Throughout the Parliamentary debates, the lack of any transfer of power was stressed, especially since a referendum would be required otherwise.

Exclusion of UK from Eurozone arrangements

Lord Lamont noted that the Treaty amendment was part of a larger political deal that included among others the Euro-plus-pact. Concerns were expressed that enhancements to the single market might result in adverse repercussions to countries outside the eurozone.[15] Fears were also expressed regarding a shift in the balance of power, leading potentially to a ‘Eurozone bloc’ with a bigger influence on the economic policies of the whole of the EU.[16]

Case law  
V.4

Is
there a (constitutional) court judgment in the United Kingdom on the 136 TFEU Treaty amendment?
No

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

No.

[1] HC Hansard, 20 December 2010, col 1187 http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm101220/debtext/101220-0001.htm#1012206000001

[2] House of Commons European Scrutiny Committee, ‘Documents considered by the Committee on 12 January 2011,’ 27 January 2011.

[3] House of Commons European Scrutiny Committee, Documents considered by the Committee on 26 January 2011, 10 February 2011, HC 428-xiv of session 2010–12

[4] HL Hansard, cols 527–47 http://www.publications.parliament.uk/pa/ld201011/ldhansrd/text/110321-0002.htm

[5] HC Hansard, cols 1063–6 http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110323/debtext/110323-0004.htm#11032395000003

[6] http://www.publications.parliament.uk/pa/ld201213/ldhansrd/text/120613-0001.htm#12061358000359

[7] HC Hansard cols 1343ff http://www.publications.parliament.uk/pa/ld201213/ldhansrd/text/120613-0001.htm#12061358000359

[8] Letter from Rt Hon Mark Hoban MP, Financial Secretary to the Treasury to the Chairman of the European Stability Mechanism, 13 March 2012

[9] Uncorrected transcript of oral evidence to the European Scrutiny Committee, 14 Mar 2012 (see in particular Q196-7) http://www.publications.parliament.uk/pa/cm201012/cmselect/cmeuleg/uc1817-iv/uc181701.htm

[10] Commons European Scrutiny Committee Report on the Treaty on Stability, Coordination and Governance: impact on the eurozone and the rule of law (the fiscal compact treaty) April 2012

[11] See, for instance, BBC News Queen’s Speech: plans to withdraw UK from bailouts, 9 May 2012 http://www.bbc.co.uk/news/uk-politics-18002961

[12] See ‘European Union (Approval of Treaty Amendment Decision) Bill, Bill 57 of 2012-13’, House of Commons Research Paper 12/47 30 August 2012.

[13] HC Hansard, 16 March 2011, col 427.

[14] Announcement: Foreign Office Minister introduces EU Treaty Amendment Bill to the House of Lords https://www.gov.uk/government/news/foreign-office-minister-introduces-eu-treaty-amendment-bill-to-the-house-of-lords.

[15] See Lord Lamont of Lerwick HL Hansard, 21 March 2011, cols 532–3

[16] Lord Liddle, ibid cols 537–8