Article 224 of the Treaty of Rome and the Repercussions of Case C-120/94

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You are here: BAILII >> Databases >> United Kingdom Journals >> Article 224 of the Treaty of Rome and the Repercussions of Case C-120/94 URL: http://www.bailii.org/uk/other/journals/WebJCLI/1995/issue3/stefan3.html Cite as: Article 224 of the Treaty of Rome and the Repercussions of Case C-120/94

Constantin Stefanou

Helen Xanthaki

Copyright © 1995 Constantin Stefanou and Helen Xanthaki.
First Published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd.

This article examines an almost forgotten, original Article of the Treaty of Rome, Article 224, in the light of the recent case of Commission v Greece (C-120/94). The article consists of two parts. The first part looks at the ECJ's precedents, attempts an interpretation of Article 224 and then proceeds to apply the analysis on case C-120/94. The second part concentrates on the 'political' repercussions of the case which, because of its subject matter, have particular significance for the EU. Depending on the ECJ's pending final decision it may herald a return to the Court's 'activism' or confirm the 'minimalist' trend of recent years.

Introduction

Both sides (the Commission and Greece) base their arguments on Arts 224 and 225 of the Treaty of Rome, with the stipulations of Art 224 being the central issue for contention. In particular, the legal arguments put forward tackle three main issues: (a) the legality of the consultation procedure of the other member states on the imposition of the embargo against FYROM; (b) the fulfilment of one of the three conditions described in the text of Art 224 (namely serious internal disturbance, war or international obligations); and (c) the suitability of the measures taken to eliminate these conditions or to prevent them from taking place. It should be noted, however, that behind these purely legal arguments lurks a sensitive political issue.

As far as Greece is concerned, the dispute between itself and the Commission is essentially political, even though it is dressed in legal robes, seemingly based on the analysis of Art 224. It is a matter of national security and an issue on which it expected the support of its fellow member states. By deciding to refer the case to the ECJ the Commission essentially 'washed its hands' and landed the ECJ and itself with a purely political problem between a member state and a third country from which, as we shall see later, it is likely that the EU will emerge on the losing side accused of 'bias' whichever way the ECJ rules. In addition, even if only legal arguments are taken into consideration, by deciding on the suitability of measures or the nature of 'consultation', the ECJ is bound to tackle the very sensitive issue of national security which is tied to the explosive issue of national sovereignty.

The aims of this article are twofold: first, to examine Article 224 of the Treaty of Rome; and second, to attempt an assessment of the wider issues raised by case C-120/94, in terms of the ECJ's position in view of its forthcoming final decision. In order to do so an attempt for an initial interpretation of Art 224 as well as the clarification of the causes and consequences of the Court's judgment are considered necessary. But before we examine these matters let us first turn our attention on the Article of the Treaty which has been invoked.

Article 224 of the Treaty of Rome

Article 224 - A case survey

The second case where Art 224 was invoked was the Salgoil v Italian Ministry of Foreign Trade, case 13/68 [1968] ECJ 453, [1969] CMLR 181. Article 224 was used by the applicant (Salgoil) as an argument that could indirectly strengthen their case. Salgoil argued that member states have no jurisdiction to adopt measures contrary to Art 31 and that "this approach is confirmed by Articles 224 and 226, which exclude all unilateral measures on the part of a State" (Salgoil v Italian Ministry of Foreign Trade, case 13/68 [1968] ECR 453). In its written observations on the same case, the Commission argued that these provisions introduce exceptions which are to be strictly construed and that "therefore they can not be used to deny the direct effect of the rule to which they make exception"(Salgoil v Italian Ministry of Foreign Trade, case 13/68 [1968] ECJ 459). In its final decision, the ECJ (essentially adopting the Commission's argument) did not accept the applicability of Art 224 on this case. By not referring to Art 224 the Court seems to have accepted that this Article does introduce exceptions to EC law, which should be interpreted strictly. This early ruling constitutes a clear indication of the ECJ's will to limit the use of Art 224, thus discouraging its potential regular exploitation by member states as a justification for their violations of Community law.

The Salgoil case must be considered a basic judgment as far as Art 224 is concerned, even though it could have contributed much more towards its interpretation. The judges avoided commenting on the procedure which Art 224 introduces. Thus, Salgoil became a lost opportunity for the authentic interpretation of a very basic point concerning Art 224: Does Art 224, as Salgoil argued, introduce a procedure to be followed by member states wishing to take unilateral measures or does it offer member states the mere chance to present their case before their fellow states, which will be the ones to decide on the legality of the imposition of the measures in question? Who decides on the imposition of these measures, the member state involved in the situation, or the majority of member states called in consultation?

This very issue was also referred to in another case before the ECJ. In the 1969 Ugliola case (Wurttembergische Milchverwertung-Sudmilch-AG v Salvatore Ugliola, case 15/69 [1969] ECR 363) a reference for a preliminary ruling by the Bundesarbeitsgericht, the appellant (a German company employing the respondent as a worker) refused to take into account the period of Mr Ugliola's Italian military service towards the calculation of the duration of his employment with the company. In their written observations, the Federal Republic of Germany (FRG) argued that the German company had no obligation to calculate the period of military service served abroad, as Art 224 "reserves the field of defence matters to the exclusive competence of each member state" (Wurttembergische Milchverwertung-Sudmilch-AG v Salvatore Ugliola, case 15/69 [1969] ECR 367). The FRG essentially argued that national stipulations regulating the calculation or not of military service abroad in the period of employment of foreigners by the German companies was a matter of German national security and as such fell within the scope of Art 224. According to this Article, argued the FRG, member states can take unilateral measures that clash with the provisions of the Treaty of Rome and their Community obligations. The German argument indicates that under Art 224 it is the member state involved (and not the majority of member states) that will decide on the imposition of measures which are incompatible with the other provisions of EC law. The case was another opportunity for the clarification of this ambiguous issue. However, in its ruling against the FRG, the Court avoided the issue, by merely dismissing the German argument as reference to a non applicable (at least in this particular case) Article of the Treaty.

The willingness of Community judges to limit the use of Art 224 to exceptional cases resulted in a long period of abstinence from its use before the ECJ. It was 15 years after the Salgoil case (3) that Art 224 was even mentioned before the ECJ. In the 1983 Campus Oil case (Campus Oil Limited and Others v Minister for Industry and Energy and Others, case 72/83 [1984] ECR 2727, [1984] 3 CMLR 544) a reference for a preliminary ruling from the High Court of Ireland, the ECJ was essentially called to decide whether the Fuels (Control of Supplies) Order 1982, introducing the obligation of importers of oil products in Ireland to purchase from a state owned oil refinery up to 35% of their requirements, was contradictory to Arts 30 and 31 of the Treaty.

In its written observations on the case the Commission observed that Eire had not relied upon Art 224 for its defence. The Commission's argument indicates that Eire (even without the consent of the majority of member states) could have relied upon Art 224 to justify the imposition of a provision contrary to the free movement of goods. Interestingly enough, the Commission finally concluded that Art 224 could not have been applicable in this case, as "it is difficult to see how a threat to oil supplies can be removed by means of restrictions on imports of petroleum products" (Campus Oil Limited and Others v Minister for Industry and Energy and Others, case 72/83 [1984] ECR 2741). Although the ECJ did not refer to Art 224 in its judgment, the Campus Oil case proved to be significant in clarifying Art 224, since it presents a first hint of the Commission's interpretation of this Article. From the Commission's written observations it becomes clear that the role accorded to Art 224, by the Commission, is as limited as the one accorded to it by the ECJ judges. Moreover, the Commission's observations on the case constituted the first time that a Community institution had taken a stand on the procedure under which the relevant measures of Art 224 are to be taken. Indeed, the Commission appeared to take the view that the measures of Art 224 can be taken unilaterally (without the consent of the majority of the other member states) and that they must be suitable for the prevention or ending of the situation which caused their imposition.

Another opportunity given to the ECJ for the interpretation of Art 224 was the 1984 Johnston case (Johnston v Chief Constable of the Royal Ulster Constabulary, case 222/84 [1986] ECR 1651, [1986] 3 CMLR 240), on the refusal of the Chief Constable of the Royal Ulster Constabulary to renew the contract of employment of Mrs Johnston as a police officer on a full-time basis on the grounds that the relevant task could no longer be undertaken by women officers. In this case the ECJ was called to decide whether Art 224 permits the derogation of any Community obligations and whether this derogation can take place without the consultation of the other member states.

Both parties invoked Art 224. Mrs Johnston argued that Art 224 could not be applied in this case for two main reasons. Firstly, Art 224 introduced the obligation of a member state to consult the other member states, in order to "take collective steps" (Johnston v Chief Constable of the Royal Ulster Constabulary, case 222/84 [1986] ECR 1671). Since the UK did not consult its fellow member states before the imposition of the Chief Constable's decision on the exclusion of women police officers from certain tasks, one of the conditions for the applicability of Art 224 had not been fulfilled. Secondly, Art 224 indicated that "the member state must also prove that it is adopting the derogating measure for the reasons set out in Art 224" and that "the means used are proportionate to and necessary for the aim in view" (Johnston v Chief Constable of the Royal Ulster Constabulary, case 222/84 [1986] ECR 1671). According to Mrs Johnston the refusal of the Chief Constable to renew her contract did not contribute towards the resolution of the Northern Ireland crisis. However, the UK argued that member states do not have a mere margin of appreciation, but a substantial power to determine the measures to be taken in the cases introduced by Art 224.

In its observations, the Commission followed the familiar pattern introduced by previous ECJ judgments. It argued that Art 224 was inapplicable in this case, which should be decided upon Art 6 of the Council Directive 76/207 on the right to equal treatment as regards access to employment and working conditions. This pattern was also followed by the ECJ in the relevant judgment. Thus, the Johnston case became another lost opportunity for the authentic interpretation of Art 224, its main contribution to the clarification of this ambiguous provision being the acceptance by the Commission that the situation in Northern Ireland can be considered a serious internal disturbance affecting the maintenance of law and order (Johnston v Chief Constable of the Royal Ulster Constabulary, case 222/84 [1986] ECR 1675). This is the second case where an EU institution (the Commission) expressed a positive opinion on the possible applicability of Art 224 on a given situation, thus providing us with an example of the nature and gravity of the cases that fall within the scope of Art 224. Moreover, through their relevant arguments, the two parties (Mrs Johnston and the UK) laid down the three basic points that must be examined when assessing the applicability (or not) of Art 224 in a particular case: (a) whether the measures in question were taken under the procedure introduced by Art 224 (unilaterally or not); (b) whether the measures were taken for the prevention or ending of a situation falling within the scope of Art 224; and (c) whether the relevant measures are suitable for the ending or prevention of the situation in question. These are the three points that are likely to be brought up in the Greek dispute with FYROM.

The nature of the situations that may justify the implementation of Art 224 was also questioned in two recently reported cases: The 1987 Ownership of landed property case (Commission v Greece, case 305/87 [1991] 1 CMLR 611, [1989] ECR 1461) and the 1989 Richardt case (Ministre des Finances v Aime Richardt and Another, case C-367/89 [1992] 1 CMLR 61). In the first case, Art 224 was used by the Greek government in order to justify the violation of EC law by Presidential Decree 22/24 June 1927 and Emergency Law 1366 of 2/7 September 1938, which introduced the prohibition of the acquisition of ownership or other real rights by foreign natural and legal persons. In this case the ECJ did not deal with the possible applicability of Art 224, as it ruled that the late submission of the relevant argument (submitted for the first time at the hearing of the case) rendered the Greek argument inadmissible and therefore unworthy of further comment. In the Richardt case the ECJ was called upon to decide on the prohibition of transit of certain goods through Luxembourg without a licence, introduced by the Grand-Duchal Regulation of 17 August 1963 as a means of control of the import of goods of strategic importance to communist countries. Again, the Court chose to base its judgment on another provision (Council Regulation 222/77 on Community transit) without referring to Art 224. Thus, the last opportunity for the interpretation of Art 224 was not exploited by the ECJ judges.

Article 224 - An Interpretation

One of the main issues referred to by legal authors on the interpretation of Art 224 concerns the right and jurisdiction to decide on the imposition of measures. According to the text of the Article "member states shall consult each other with a view to taking together the steps needed". It seems, therefore, that ideally the member state concerned must present its case before the other member states and consult with them for the "taking together of the steps needed". In other words, Art 224 seems to imply that the member state concerned should consult its fellow member states with a view to common action. However, Art 224 fails to clarify whether the member state concerned may take unilateral measures with, or even without, the consent of the others. Moreover, Art 224 does not provide for the situation where the other member states (after their consultation) refuse or omit to take common action. Would it be fair to assume that in that case unilateral measures can be taken?

Kuyper (1993, p 402) seems to suggest that Art 224 introduces strictly common EU action, which consists of the "co-ordination of national measures under the aegis of political co-operation". However, the vast majority of legal authors seem to be of a different opinion. Mann (1991, p 446) suggests that Art 224 must be interpreted in such a way as to award member states the discretion to impose the measures in question, a view shared by Lasok & Bridge (1991). This argument is intensified by the power of other member states and the Commission to bring the state in question before the ECJ under Art 225. Indeed, the power of member states to bring the relevant issues before the ECJ would be useless - if not absurd - if these states had already taken active part in the formulation of a common position. Another argument supporting the introduction of unilateral measures by Art 224 can be drawn from Art 30(2) of the Single European Act, which introduced the possibility of the adoption of economic measures by a single member state if the relevant economic measures were adopted in reaction to injuries to the rights of individual member states. The adoption of Art 30(2) of the Single European Act and the subsequent adoption of a similar provision in Art J4(4) of the Maastricht Treaty indicate the continued tendency to allow member states to act unilaterally and to effectively pursue 'self-help' (Mengozzi 1992, pp 290-2). Smit and Herzog (1976, para 6-185) agree that Art 224 only calls for consultations between member states and "does not contain an express obligation to take common action". They also argue that the consultation of the other member states does not necessarily take place immediately after the measures in question are taken, but may also occur latter or "as soon as is compatible with its security interests [in] the Council or a meeting of diplomatic character among the States" (Smit & Herzog 1976, para 6-185).

This second opinion (introducing the possibility for unilateral measures by the member state in question) is also strengthened by the choice of the term 'consultation' used in the text of Art 224. 'Consultation' is a term that does not indicate the need for expressed approval (of the unilateral action taken by the member state in question) by the other member states. 'Consultation' does not even indicate the acquisition of permission from the other member states for the future adoption of the measures in question. It would seem that the purpose of the obligation of the member state in question is to expedite proceedings and fill a gap in the procedure introduced by Art 224. If the member state concerned was brought before the ECJ under Arts 169-171 for its failure to fulfil its EU obligations, it would have to follow a procedure consisting of two stages: The administrative stage (where the state would clarify its arguments to the Commission) and the judicial stage (procedure before the ECJ). If, however, the state in question is brought before the ECJ under Art 225, it misses the profound advantages of the administrative stage, i.e. the opportunity to negotiate its position before the matter goes to Court. Moreover, the Commission itself seems to be stripped of its powers to resolve the situation amicably and the ECJ's workload increases unnecessarily (Lipstein 1974). This profound gap in the procedure introduced by Art 225 can be partially filled by the 'consultation', when the member state concerned has the opportunity to clarify its arguments and hear the opinion of other member states. Thus, it can be said that the term 'consultation' refers purely to an exchange of opinions and an opportunity of all concerned to resolve the matter amicably, as required within the framework of EU co-operation. If this view is followed, the consultation procedure becomes strictly informative, its only aim being the attempt to resolve a possible dispute between the member state concerned and the other member states or the Commission before the issue goes to the ECJ. Thus, the other member states and the Commission seem to have little power to dictate or force the actions of the member state concerned and the answer to the question whether member states can take unilateral measures becomes positive.

The only problem with this line of argument could be the 'uncontrollability' of the behaviour of the member state which decides to take unilateral measures under Art 224. One could argue that the consultation procedure can serve as the only level of control over the decisions of member states, decisions that may well affect trade within the whole of the EU. The answer to this view is that the consultation procedure still serves as a level of indirect control, since the announcement of the intention of the Commission, or any other member state, to pursue the matter before the ECJ offers an opportunity to the member state concerned to reconsider the legality of its actions and perhaps lift those measures which would not be considered valid when challenged before the ECJ. However, the consultation procedure is not the only Treaty-based weapon given to the member states which disagree with the imposition of the measures in question. Under Art 225 any member state or the Commission can challenge the legality of a member states' actions before the ECJ. Moreover, as Smit & Herzog (1976, para 6-185) suggest, member states disagreeing with the actions of the state concerned may take unilateral countermeasures. It would seem, therefore, that Art 224 does not call for common action decided by the majority of member states, but introduces the procedure to be followed if a member state, with or without the consent of the others, needs to take measures which affect EU trade.

The question arising at this point concerns the situations which may lead to the unilateral or common action introduced by Art 224. According to the text of the Article a member state may take action if one or more of the following conditions exist: (a) serious internal disturbances affecting the maintenance of law and order; (b) war or serious international tension constituting a threat of war; and (c) when member states must carry out obligations previously accepted for the purpose of maintaining peace and international security. According to the Salgoil case, these clauses must be interpreted restrictively (Salgoil Spa v Italian Ministry for Foreign Trade, case 3/68 [1968] ECR 453 at 463). Thus local disturbances do not seem to justify measures affecting trade unless they are so serious as to necessitate a large-scale intervention of security forces (Lasok & Bridge 1991, p 446). An example of the first condition is the one affecting Northern Ireland. Smit and Herzog (1976, para 6-184) refer to further examples which cover disturbance of the state's political order, serious threat of subversion of the state's constitutional order or a serious threat of violence. The second condition falling within the scope of Art 224 covers war or threat of war between a member state and a third country, two member states or two non-member states. The bordering of a member state with a belligerent or a near belligerent state is a situation that may amount to serious international tension constituting a threat of war to the member state involved (Smit & Herzog 1976, para 6-184). The third condition falling within the scope of Art 224 concerns international obligations of that state, for example the supply of military forces under UN and NATO obligations (Smit & Herzog 1976, para 6-184). All circumstances indicated may go beyond the safeguard clauses of public policy introduced by other Articles, especially Arts 36, 48, 56 and 66 of the Treaty (Kapteyn & Verloren van Themaat 1973, p 236).

As far as the nature of the measures in question is concerned, it suffices to say that they include "measures needed in a situation of serious shortage in the economy", such as rationing measures, hoarding prohibitions, price-raising prohibitions, requisitioning measures and the like (Kapteyn & Verloren van Themaat 1973, p 236). The measures in question must be suitable for the situation they are called to prevent or end (Campus Oil Limited and Others v Ministry for Industry and Energy and Others, case 72/83 [1984] ECR 2741). According to Smit and Herzog, the necessity of the measures adopted and the assessment of the gravity of the situation lies with the member state involved. However, limited review (i.e. whether a reasonable state would consider the situation serious and the measures necessary) may be possible by the ECJ (Smit & Herzog 1976, para 6-183).

Article 224 - Application on Case C-120/94

The second condition of legality concerns the suitability of the measures taken by the Greek government. The ECJ will have to decide whether a reasonable state would proceed with the same measures in the given situation; for, if the situation is as serious and as dangerous as argued by Greece (constituting international tension and a threat of war against Greece), the embargo may not be unsuitable or disproportionate to the situation, since it involves a measure of a financial nature aimed at averting war and does not restrict trade with other EU member states. However, in order to evaluate the suitability and/or proportionality of the embargo the ECJ will first have to decide whether the dispute between Greece and FYROM falls within the three conditions described in the text of Art 224.

Clearly, the Greek-FYROM dispute does not involve international obligations previously accepted by a member state or internal disturbance affecting the maintenance of law and order, as it concerns the relationship between two countries and not an internal conflict, as was the case with Northern Ireland (the Johnston case). Although the Greece-FYROM dispute caused the fall of a Greek government (the then government of New Democracy) this situation does not remotely amount to serious disturbance affecting law and order.(4)

The Greek argument for the application of Art 224 is based on the third category of conditions justifying its implementation: war or serious international tension constituting the threat of war. Greece argues that the 'usurping' of names and symbols coupled with certain offending Articles in FYROM's Constitution indicate a threat of war, namely FYROM's intentions to invade and annex a quarter of the Greek territory and people. In order to assess the Greek argument, we must briefly refer to FYROM's Constitution and several internal FYROM official documents; for, if the intention of FYROM is indeed to annex the northern part of Greece, this undoubtedly constitutes a threat of war. If, however, FYROM has no claims on Greek territories, the Greek argument will be unfounded and the use of Art 224 will be an illegal justification for the Greek failure to comply with its EU obligations.

The basic legal text of the newly founded Republic is its Constitution. The Preamble of the Constitution refers to the "historical decisions of the Anti-Fascist Assembly of the People's Liberation of Macedonia" (IBS 1993, p 65), on whose basis the Constitution was adopted by FYROM's Assembly. Greece argues that the reference to this text is a clear indication of FYROM's intention to make territorial claims on a quarter of Greece's territory. Indeed, the Report of the Organization Committee of the Assembly states that the aim of the fighting "Piedmont" of Macedonia is "the liberation of the other two segments of our nation" and the "general unification of the entire Macedonian people" (UCM 1985, p 607). The location of these three segments of the 'Macedonian nation' is provided in the "Resolution of the Communist International on the Macedonian Question and the IMRO (United)", which refers to the struggle of the "working masses" of "Macedonia" within Bulgaria, Yugoslavia and Greece for unification (Palesutski 1993, p 199).(5) Greece interprets this reference as FYROM's attempt to legitimise its claims on Greek territory. This interpretation is strengthened by the numerous references by the political leaders of FYROM to "Great Macedonia", which includes parts of Serbia, Bulgaria and Greece.(6) Thus, it can be argued that the Preamble of FYROM's Constitution may be interpreted as an indication of FYROM's territorial claims on the northern part of Greece. Considering the generally volatile conditions which exist in the Balkans and the deployment of UN security forces in Bosnia and FYROM, there would seem to be sufficient evidence to characterise the situation as serious international tension constituting a threat of war. But is the tension between Greece and FYROM serious enough to justify the Greek embargo?

Greece argues that there is sufficient evidence that FYROM's territorial claims constitute a "threat of war". This it bases on provisions in FYROM's Constitution which threaten Greek national security, in particular Arts 3, 68, 74 and 49(1). Greece argues that three, out of a total 134, Articles of FYROM's Constitution (Arts. 3, 68 & 74) deal with the expansion of that country's borders, essentially anticipating acquisition of new territories. As far as Greece is concerned, the public pronouncements of FYROM's leadership, the Preamble of the Constitution and these three Articles constitute an official declaration of FYROM's territorial claims, complete with the specific procedures to be adopted by FYROM's Parliament (Arts. 68 & 74), which indicates that acquisition of territories is expected shortly.(7) The Greek argument is strengthened by the fact that FYROM has not officially recognised its borders with Greece.

Under pressure from the EU, FYROM modified Art 3. However, in keeping with classic Balkan gamesmanship, neither the Preamble of the Constitution nor Arts 68 & 74 have been altered, essentially rendering the modification useless.(8) The value of this modification becomes less significant if one takes into account the international pressure which led to its adoption.(9)

As far as Art 49 is concerned, it makes a clear distinction between the "members of the Macedonian people" living in the neighbouring countries and the citizens of the Republic who live abroad (Jonos 1994, pp 54-57). For the former, citizens of neighbouring countries which FYROM considers to be 'Macedonians', FYROM appoints itself responsible for their status, rights, cultural development and their links with the Republic, responsibilities usually reserved for the citizens of a sovereign state. For the latter, the Republic merely ensures that their rights are respected by the host state. As far as Greece is concerned this regulation presents multiple problems. First, if read in conjunction with the Articles on territory, it is the most comprehensive statement laying claim on land and people, indeed people who are nationals of another sovereign state. Second, Greece claims that this is a blatant attempt to intervene in Greek affairs. Third, following the official statements on the 'struggle' of Macedonian people, Greece fears that FYROM may form and support terrorist organizations, for the 'liberation' of Macedonia, to operate within Greece.

From the analysis of FYROM's Constitution it has become clear that the Greek arguments have a legal basis. The Preamble of the Constitution, Arts 3, 49(1), 68 and 74 may be interpreted as threatening in the sense that they hint at territorial claims. Threatening behaviour may also be indicated by the non-recognition, by FYROM, of its border with Greece, and to a lesser extent with the maintenance of the Sun of Vergina in the Republic's flag and the inclusion of the term 'Macedonia' in the Republic's name, which have been negatively commented upon in the Lisbon European Summit on 27 June 1992 (Sfetas & Kandriotis 1994, p 57).

It would seem therefore that the Greek case before the ECJ is not completely unfounded. The question arising at this point is why did the Commission bring Greece before the ECJ and, perhaps more importantly, what may be the repercussions of the ECJ's final ruling and the possible first authentic interpretation of Article 224?

The Political Context

It is clear that Art 225 was intended to stop member states from exploiting Art 224 by taking unilateral measures for their benefit, distorting the market or gaining an unfair advantage against the rest. It is not accidental that in all the cases which have been brought before the ECJ the state which took these unilateral measures derived some sort of commercial benefit from doing so. It is also not accidental that in none of these cases, with the possible exception of the Johnston case, was there war or serious internal or international tension involved and the ECJ's response seems to agree with this conclusion. This use of Art 225 seems to comply with the wishes of the Treaty makers. The only time when a member state took unilateral measures against a third nation and was not referred to the ECJ was the UK's economic sanctions against Argentina during the Falklands conflict in 1982. The discussions in the Council were based on the stipulations of Art 224 and the decision not to refer the UK to the ECJ appeared to comply with the wishes of the Treaty makers since clearly the UK was at war and a quick decision had to be made.

Given the conditions which exist in the Balkans and that Greece appears to fulfil at least some of the conditions set out in Art 224, as the ECJ accepted in its preliminary ruling, the Commission appears to have behaved in an uncharacteristically hasty manner. As Ludlow notes, when the Commission attempted to discipline a member state:

While the Commission's reaction may be indicative of the strength of feeling within the EU on the Greek embargo, it is nevertheless an act which does not promote solidarity. Why then was the Commission so keen to proceed with Greece's referral to the ECJ at a time when Greece had the presidency of the EU?

The Commission and Case C-120/94

It is one thing for the Commission to be involved with national policy making, even on issues which have strong 'nationalistic' overtones such as the direction of national macro-economic policy. But when the Commission attempts to involve itself with the ultimate issue within the realm of national sovereignty, that of national security, it is bound to come up against suspicion and criticism. It is interesting to note that the other member states did not refer the case to the ECJ mainly because of Greece's claims about its national security, the attempts to deal with the problem through EU and US mediation, and the support which Greece received in its dispute with FYROM from its fellow member states in the Council meeting in Guimaraes (Agence Europe, 4 May 1992) and the Lisbon European Council (Valinakis & Dalis 1994, pp 100-102). Of course, it can be argued here that there was no need for another member state to get involved since the Commission had decided to proceed with Greece's referral anyway. However, it appears that the other member states, realising the gravity of the issue at stake, decided not to get involved as they realised that Political Co-operation has not yet reached a level of maturity and mutual understanding which could allow member states to decide what does or does not constitute a danger to the national security of a fellow member state.

One can only speculate about the Commission's ulterior motives in referring this case to the ECJ. Is it merely trying to assist FYROM or is it also looking for an authentic interpretation of Art 224 which would further erode the power of the nation-state within the EU by making a neutral, the ECJ, responsible for deciding the ultimate responsibility of a nation-state, namely national security? Over the years the Commission has been the institution which most rigourously and consistently strove for 'further integration'. In this campaign the Commission and the ECJ became natural allies as the Court "...laboured strenuously to ensure that an ever closer legal and political union on Western European Soil became real" (Rasmussen 1988, p 29). It should, therefore, come as no surprise that the Commission would try to 'feed' the ECJ with cases that can result in rulings which promote EU integration. It is possible that the Commission believed that an authentic interpretation of Art 224, by the ECJ, may result in the most pro-active decision to date, from the most unexpected source. And if it did not, at least FYROM would be spared Greece's wrath.

Yet it is obvious that the Commission miscalculated. Although the ECJ has not yet taken a final decision, the preliminary ruling has gone in Greece's favour, and often preliminary rulings are a good indication of the final decision. Of course, the Court's decision at this stage may simply be indicative of its support for the current efforts to find a political solution to the dispute (Efstathiadis 1994). However, it may also be indicative of a change in the ECJ's approach to its relationship with the Commission or a re-evaluation of its role in post- Maastricht Europe.

Changes in the Commission-ECJ relationship

Clearly this has not taken place this time. There is little doubt that the Commission's referral was approved by the majority of the member states. Indeed in the past, a referral by the Commission to the ECJ was synonymous with a conviction of the recalcitrant party. To some degree this was due to the very meticulous preparation of the Commission's cases. Yet, the most important reason for the Commission's successful referrals was the unofficial alliance between the Commission and the ECJ aiming to further integration, especially in the area of the Common Market, a hitherto central focus of the neofunctionalist principles embodied in the Treaty of Rome.

However, in the 1990's there has been some evidence that this 'alliance' should no longer be taken for granted. As Charles Goldsmith (1994, p 44) noted, the Commission and the ECJ are no longer supportive of each other under a new 'dogma' within the Union which emphasises the rights of the member states against those of the central executive. This has been evident in a series of decisions of the Court of First Instance where EU companies challenged fines imposed by the Commission and won their cases, inflicting embarrassment on the Commission which over the preceding three and a half decades had appeared to be invincible in the Court. As Goldsmith notes, France, Ireland, Italy, Spain and the Netherlands are now preparing to take similar action against the Commission (Goldsmith 1994, p 44). If the Commission loses these cases too it may signify changes in the dynamics of the ECJ-Commission relationship and perhaps a re-evaluation of what being "the guardian of the Treaties" actually entails.

But is there really a change in the Commission-ECJ relationship or is Goldsmith making rather a lot of a few Court cases which went against the Commission, and could be attributed to a momentary lapse in the high standards of case preparation? After all, like all bureaucracies the Commission too has internal organisational problems.

In view of the ECJ's preliminary ruling on case C-120/94 it does appear that there is a rift opening between the roles which the Commission and the ECJ see for themselves in post-Maastricht Europe. The Commission, politically motivated or not, offered the ECJ a chance to act pro-actively, in the normal way the Commission has always attempted to further EU integration. In this sense the Commission does not appear to have swayed from its continuous promotion of further integration. The Court, though, appears not to have taken up the offer. There are two possibilities for the ECJ's behaviour. First, it could be that the Court still regards the wider field of security as the exclusive domain of the member states and does not want to provoke a backlash. The second is that the Court feels that at this stage it should merely administer the law and not attempt to shape the future directions of the Union, a concept which has been described as legal "minimalism". As there are now quite detailed rules for the operating of the Union the ECJ may perceive itself in a different manner, no longer recognising "the promotion of European integration", as Hartley (1988, p 77) suggested, as the essence of its policy.

The Court of Justice and Case C-120/94

However, the swift dismissal of the Commission's case in the ECJ's preliminary ruling indicates that the ECJ may not even have considered the validity of the Greek arguments. It is possible that the Court focused its attention, at least at this stage, not on issues concerning national security, which the Treaty makers intended to be left to the discretion of the member states, but on ensuring that there has not been improper use of Art 224. In other words the ECJ basically wanted to be convinced that Greece is not using Art 224 as a flimsy excuse to defend unilateral action which distorts EU trade and gives Greece or Greek firms an unfair advantage. Above all, the Court would want to establish the need for urgency which, in turn, would be substantiated only if the Commission could show that the embargo's effects have immediate and serious consequences for trade within the EU (Financial Times, 24 April 1995, p 16). Clearly such consequences could not be shown. In this sense the ECJ's refusal to grant an injunction against the Greek embargo on FYROM seems very logical. While this may, once again, prompt questions about the Commission's wisdom in referring this case, let us look at what an immediate injunction from the Court would have implied.

In addition to the idiosyncrasy of case C-120/94, essentially a dispute between two sovereign nation- states, one a member state the other outside the EU, the Court was faced with the wider question of national sovereignty.(11) Had the Court decided in favour of the Commission it would have produced a ruling which struck at the core of national sovereignty, namely the ability to make decisions concerning national security (the ultimate in high politics for realist interpretations of EU integration). Given the current heated debate amongst member states about the EU's federal future a ruling which cut so deeply into national sovereignty, carving the essence of the modern nation-state, would not merely make a landmark case. It would revolutionise the process of integration almost overnight. The ECJ may produce rulings which erode the power of the nation-state but clearly coup d'etats of this nature are not its style.

The question of national security is central to the very existence of a sovereign state. As Greece has noted in its Memorandum to the Commission, in the Johnston, Campus Oil and Salgoil cases the Court accepted that member states have the right to take unilateral action if their security (external or internal) is threatened (Valinakis & Dalis 1994, pp 194-200). Indeed, the right of a member state to take unilateral measures (eg Arts 223-225 of the Treaty) has been recognised as far back as the Costa v ENEL case. In addition Article J4(4) of the Maastricht Treaty stipulates that the EU's common foreign and security policies "...shall not prejudice the specific character of the security and defence policy of certain Member States...", while Article L of the Maastricht Treaty stipulates that common foreign and security policy are outside the ECJ's jurisdiction.(12) Obviously the ECJ has been careful not to delve too near such very sensitive issues. Yet, at the same time the member states, starting with the Single European Act and proceeding with the Maastricht Treaty, have increasingly favoured co-ordination of sensitive areas such as foreign policy and common security arrangements. But, and this seems to be important for the ECJ as advocate-general Jacobs confirms (Financial Times, 24 April 1995, p 16), such arrangements have been made on the understanding that national security continues to be the exclusive domain of the member states . Article L, Article J4(4) and the various references of the Maastricht Treaty to the United Nations, the Helsinki Final Act, the Paris Charter and the Western European Union, reflect the inevitable complexities of security issues and underlie the fact that these are inter-governmental arrangements which have not taken a form that allows the ECJ to make judgments. As Weiler notes, the traditional approach of the Court has been: "...you are free to bargain, but agreements reached (through) legislation must be respected" (Weiler 1993, p 428). And as far as security issues are concerned such agreements have not been reached yet.

Clearly the Court cannot rule on questions which involve foreign or security policy. But by making a conscious decision not to rule on what member states perceive to be issues of national security, which is the central aspect of case C-120/94, the ECJ indirectly makes an important statement about competence. Weiler made a very perceptive comment about this problem which he first identified with reference to subsidiarity:

It appears that national security is another 'vexed field' for the ECJ. Already the Court is accused of bias in favour of a member state and indifference to the fate of a small country. As the Greek embargo begins to have a more severe effect on FYROM's economy (Reuter Textline 1994) such criticisms will inevitably continue.

The Court of Justice and Legal 'Minimalism'

Back in 1986, Judge Koopmans (1986, p 930), comparing the American experience of judicial activism with the European experience, argued that "European politics may make no progress, but the courts cannot by themselves achieve European integration". Koopmans believed that there was a trend pointing to "a return to minimalism" where the Court would no longer try to force the pace of integration. This he concluded would have repercussions for the ECJ-Commission relationship:

Not only have we identified such changes in the Commission-ECJ relationship but case C-120/94 seems to confirm Koopmans' belief on the ECJ's insistence on a firm legal basis. Of course, it is one thing to establish the existence of 'minimalism' within the ECJ, but it is very difficult to maintain that it is the only reason for the Court's change of tactics.

Although we focused on the ECJ's relationship with the Commission, the Council - as the EU's ultimate lawmaker - often exerts the most direct influence on the ECJ by setting the limits of its jurisdiction through its expressed wishes in the form of Directives, Council Decisions, Regulations or even revisions of the Treaty. The Council does not take kindly to the ECJ's activism, not least because the member states feel that the ECJ itself and the combined influence of the ECJ, the Commission and the European Parliament on lawmaking place them in a difficult position, sometimes forcing them into avenues they do not particularly wish to travel. However, following the Council's inertia and the Court's activism of the 1960's and 1970's, recently, as Berlin (1992, pp 43-44) points out, through the use of Directives the Council is making a come-back as the EU's legislator. The recent pro-integrationist stance of many member states and the effectiveness of the Council in, for example, revising the Treaties twice within the space of seven years and preparing to look at them again in 1996, have made activism unnecessary. In this sense, the Court's changing stance may not be the result of a conscious decision to enforce minimalism but simply the result of what happens when the Council is effective and fulfils its Treaty intended role.

Arnull (1994, p 11-12) argues that the ECJ does not appear to have been inhibited by the "effectiveness of the political institutions". Yet, it is clear that the member states do not like to see the ECJ exceed its powers exactly because they believe that the political institutions, following the Single European Act and Maastricht, are effective enough not to require judicial activism which they sometimes regard as an encroachment on their autonomy. This has a rather familiar sound. When the SEA came into force, a very common argument about the limited reforms it introduced was that the Community had doubled its membership and introduced new rules within a short period of time. It was thought that time was needed for the Community to digest the changes which had taken place. Essentially this argument pointed out that the pace of integration was a decision which the member states and the member states alone could make. Given the rapid progress which has taken place during the last decade and in view of the EU's forthcoming enlargement the member states' fears concerning judicial activism are understandable, more so since, as the American experience shows, judicial activism can occur even when the Courts "...work small, in the realms of statutory interpretation and administrative review" (Shapiro 1992, p 155).

Case C-120/94 confirmed a 'cautious' approach by the ECJ. There is little doubt that the ECJ has felt inhibited by the subject matter of this case and its intensely political overtones. However, because the case was held in camera and because this was a preliminary ruling, it is difficult to establish 'minimalism' as the Court's new active doctrine. If the ECJ's final decision follows its preliminary ruling or if the final ruling does not include an authentic interpretation of Art 224 (i.e. restricted to financial penalty against Greece) there will be a strong case for minimalism to be considered as the new status quo. This will be particularly important with reference to other Treaty Articles which have not yet been subject to an authentic interpretation by the Court. Current progress towards further integration appears to be an important constituent in the EU's new order, affecting both the ECJ and the Commission. In this sense, even if minimalism can be established as the ECJ's new doctrine, it will be one of the reasons/conditions which affect its every-day work, not the sole determinant.

Conclusion

Authentic interpretations of Treaty Articles by the ECJ are always celebrated events for observers of the EU. At a basic level they define or clarify the rules of the Union and create strong precedents which influence national legislation. At a wider level, given the right Treaty Article to be interpreted, they can serve as benchmarks of the EU's progress towards 'further integration'. What is important to note is that case C-120/94 has the potential to become a landmark case, if the ECJ decides to take-up the challenge which the Commission offered. Art 224 of the Treaty, as mentioned already, is a safeguard clause allowing member states self-help in times of internal or external danger. It is therefore unlikely that such an important clause will be abandoned. But, will the ECJ attempt to reach a position which will not compromise the autonomy of the member states in the fields of security while at the same time allowing either the ECJ or the Commission to have a say in the matter? Given the fact that the majority of the member states and the Commission seem to agree that Greece ought to lift the embargo on FYROM, this case is perhaps the best chance the ECJ will get for some time for an authentic interpretation of Art 224. Of course, whether the member states are ready to jeopardise aspects of their sovereignty for FYROM when Greece appears to have a strong case is very doubtful.

From our examination it emerges that the Commission's referral was ill-advised; as the EuroWatch report noted:

That does not mean that the Greek argument about competence is valid. As Bradley (1988, pp 380-381) noted it is unlikely that an institution would act outside the competence of the Union claiming implied powers, and in any case the ECJ did not dismiss the case as it would if it deemed it was outside the competence of the EU. But the Commission's quick and severe action, in aid of a third country, had an adverse effect on itself, the ECJ and the image of the member states' common foreign policy. The latter is particularly important because, despite the fact that the Court may not have considered such issues, the media tended to focus on the political side of the issue which is after all at the heart of the Greek-FYROM dispute. Given that advocate-general Francis Jacobs seems to take the view that there is very little that the ECJ can do in this dispute (Financial Times, 24 April 1995, p 16) there are only two possible outcomes for case C-120/94. The first is a fine on Greece, which will settle things and keep everyone happy. FYROM will regard it as a moral victory, the Commission will argue that the referral was not ill-advised and Greece will be able to argue that since the Court focused on economic issues the fine does not represent a rejection of its political arguments. As for the ECJ, it will have weathered this 'storm in a teacup' having avoided the controversy of an authentic interpretation of Art 224. The second is that the Commission loses its case and the Greek embargo on FYROM continues. The latter will be a big blow to the Commission's ego highlighting the limits of integration in the post-Maastricht era.

This article examined case C-120/94 and its repercussions for the EU, and the ECJ in particular. Our examination of the case indicates that it is intensely political and offers itself to an authentic interpretation of Art 224. Our examination of Art 224 indicates that the ECJ has numerous issues to consider which, though, touch on the very sensitive issue of national security. The ECJ's preliminary ruling does not necessarily ensure that in the future issues which the member states consider to be related to security will probably be 'out of bounds' for the Commission. But, it does give the Commission and the member states an indication of possible future directions. In 1996 an Intergovernmental Conference will consider further changes to existing rules, perhaps further amendments to the Treaty. Although at this stage there are some indications of the possible directions, not surprisingly it seems that the member states appear reluctant to consider any changes in the fields of foreign and security policy. Whether case C-120/94 will prompt them to reconsider remains to be seen. By 1996 though, an enlarged EU may find agreement more difficult to reach. The ECJ may then look at case C-120/94 as a rare and lost opportunity to make its mark in one of the EU's policy areas which it has been denied access for years.

Footnotes

(2) In the meantime, Art 224 was mentioned in an Opinion given pursuant to the second sub-paragraph of Article 228(1) of the Treaty. In Opinion 1/78 [1979] ECR 2871, [1979] 3 CMLR 639, Article 224 was given as an example of a Treaty Article, which might result in the exclusion of certain measures of commercial policy from their application by member states, because "the particular reasons which underlie them [may] give rise to national measures under the conditions as to substance and form provided by the Treaty itself" (see [1979] 3 CMLR 639). Back to text.

(3) The then Greek Foreign Minister, Mr Antonis Samaras, disagreed with the governmental policy on the issue of FYROM. Believing that a tougher Greek attitude would pressurise both FYROM and the international community to accept the Greek point of view, he resigned and formed a new political party, the 'Political Spring'. His views were shared by ten governmental MPs, who followed Mr Samaras, thus depriving the then government of New Democracy of a parliamentary majority and forcing early elections. In the elections of 11 October 1993, New Democracy lost and the socialist party of Mr Andreas Papandreou (PASOK) came to power. Back to text.

(4) See also the Manifesto of the General Headquarters of the National Liberation Army and Partisan Detachments of Macedonia of October 1943 [UCM 1985, pp 431-432]. The Manifesto refers to the division of the "Macedonian state" by "Fascist imperialists together with Greater-Bulgarian, Greater-Serbian and Greater- Greek hegemonists".
In the aftermath of the second World War, Stalin, Tito and Communist parties in the Balkans tried to pursue the matter primarily because Stalin thought that the warm port of Thessaloniki offered strategic advantages to the Soviet fleet. However, the UK and the USA found that "there is no legitimate basis for any claim made on behalf of 'Macedonia' whether as an independent state or as a part of Yugoslavia or of a larger South Slav federation, to territory within the boundaries of Greece on the ground that such territory is Macedonia". (See the "Aide Memoir of the US Department of State to the British Embassy on 24 February 1945" in PRO, FO/371/66985, British Embassy, Washington, to the Department of State, Aide Memoir, 21 July 1947, Annex D). The allies also insisted that "Macedonia" should not be allowed to "annex or lay claim to any territories whatsoever belonging to either Bulgaria or Greece, on the ground that these territories are Macedonian" (See the "Foreign Office Memorandum by Orme Sargent of 30 November 1944" in PRO/ FO 371/43649, R19712/1009/67, WP (44) 707, 5-12-1944 in (Hatschikjan 1988, pp 114-115). It should be noted that the members of the Yugoslav Communist Party were aware of negative Western attitudes towards 'Macedonia'. Indeed, Kiro Miljovski, a representative of the General Headquarters of the National Liberation Army of Macedonia, in his Report of 3 October 1944 in Sofia to general Tempo and Lazar Kolisevski (see Archiv na Makedonija, File "Greece 1941 1944", K-I/31) notes that "the question of the union of Greek Macedonia, particularly the annexation of Thessaloniki to Macedonia, will be somewhat harder to settle, since England will regard such an action as a threat to its Mediterranean route, which will risk bringing Russia into the Mediterranean". Back to text.

(5) For an example of these statements, see the statement of Ljpce Georgievski (Leader of the VMRO-DPMNE party) on TV Novosti, Belgrade on 7 November 1990, who argued that "Pirin, Aegean and Vardar Macedonia do not constitute 'Great Macedonia' but simply 'Macedonia'. If we talk about 'Great Macedonia' we have to include Belgrade, Sofia, Thessaly, Valona etc."). Back to text.

(6) Art 3 of the Constitution declares that the territory of FYROM is undivided and unalienable and that the boundaries of FYROM can not be violated. In para 3 of this Article, however, it is stated that the boundaries of the Republic can be altered according to the Constitution. This procedure is stipulated by Arts 68 and 74 of the FYROM Constitution, according to which the Parliament of the Republic decides on the alteration of the FYROM boundaries with a majority of two thirds of the total number of its members. The Greeks argue that the "unalienability" of FYROM's land in combination with the passing of procedure for the alteration of the FYROM boundaries can only be interpreted as an indication of the will of FYROM to acquire more territory, the first step of which is the regulation of the relevant procedure. (see Sfetas & Kendrotis 1994, p 58). Back to text.

(7) The argument that the modification of Art 3 of 6 January 1992, which includes a clause declaring that FYROM has no claims on its neighbouring states, renders Art 3 harmless for Greece is rather contradictory as the reference to the text of the 1944 Assembly in the Preamble of the Constitution clearly indicates the opposite. The second argument that para 3 of Art 3 has been abolished and replaced with the regulation that the boundaries of FYROM can only be altered under the provisions of international law seems equally contradictory as no similar modification was done to the other two relevant Arts of the Constitution, namely Art 68 and 74. Back to text.

(8) The modifications took place after the convocation of the Badinter Committee on 28 August 1991, on behalf of the EU, with the aim to write a report on the Greek-FYROM issue. It should be noted that before the issuing of this report, FYROM proceeded to the modifications of the Constitution, which resulted to the positive recommendation of the Badinter Committee on the Constitutional issue. For further analysis on this issue, (Sfetas & Kendrotis 1994, pp 60-62). Back to text.

(9) This is in line with the observation that the Commission considers Commercial policy independently of its purpose objecting to any measure which may affect the flow of trade. In contrast Council interprets Commercial policy more restrictively. (Mengozzi 1992, p 291) A HREF = "#bk9">Back to text.

(10) The ECJ, of course, is no stranger to political controversy. It has been one of the important agents of integration for the Union. Its history, role and impact on the European integration process through pro-active rulings, also referred to as judicial activism, has been well documented, analysed, praised and criticised elsewhere and there is no need to repeat it here. Its invention and distribution of "normative supranationalism" (Rasmussen 1988) in the 1960s and 1970s had been successful in promoting integration even though its rulings often clashed with the power of the nation-state. Back to text.

(11) It should be noted here that Greece's decision for the embargo was not the result of an EU-Council common foreign policy decision covered by Title V of the Maastricht Treaty, which would have rendered it outside the ECJ's jurisdiction.Back to text.

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United Kingdom Journals

Article 224 of the Treaty of Rome and the Repercussions of Case C-120/94

Constantin Stefanou

Helen Xanthaki

Introduction