The Procedure for Relocating EU Agencies after Brexit: An Encouraging Precedent?

By Carlo Tovo 


After the UK citizens voted to leave the EU in the 23 June 2016 referendum, it was clear from the outset (although perhaps not to the UK government) that the European Medicines Agency (EMA) and the European Banking Authority (EBA) should have been relocated to other remaining Member States (cf. Chamon blog).

It is moreover apparent that the matter should be settled rapidly (see to that effect §15, European Council guidelines), preferably before the end of the two-year period for negotiating the withdrawal agreement (i.e. 29 March 2019), so as to ensure EBA and EMA’s continued operation. A number of political, legal and financial obstacles are nonetheless at odds with these expectations.


Political, legal and practical hurdles for agencies’ relocation

First of all, the decision on agencies’ seat has traditionally been taken by common accord by the Heads of State or Government of the Member States, by analogy with art 341 TFEU. A decision of the EU-27 governments will be therefore required, half of which have already made known their appetite for one (or both) of the bodies, which figure among the biggest, richest and most powerful EU agencies. The decision is rendered even more difficult by the objective, set out by the national governments themselves back in 2003, of promoting the “geographical spread” of the agencies’ seats, to the benefit of the acceding Member States.

A second –legal– obstacle flows from the fact that EBA establishing Regulation No 1093/2010 expressly provides for under art.7 that the authority shall have its seat in London. The Statute will have therefore to be amended accordingly, by means of the ordinary legislative procedure.

Last, but definitely not least, there is a financial hurdle to the smooth relocation of EBA and EMA: the €350 million rent bill to be paid for EMA’s prestigious Canary Wharf premises (€16 million a year rental contract until 2039, with no early termination clause), which overshadows the €3 million which EBA will have to bear to terminate its lease agreement, due to expire in 2020. The EU expects the UK to foot the bill, within the “single financial settlement” attached to the withdrawal agreement (cf. the Council negotiating directives, at §26). However, even assuming UK negotiators will accept this condition, it is highly likely that the leasing costs will have to be anticipated, at least partially, so as to allow the agencies’ relocation.


The relocation of EU agencies: no longer a purely political decision

Now that the Brexit negotiations are in full swing, the chickens are coming home to roost and the remaining Member States have finally shed some light on how and when relocate EMA and EBA. The decision has taken the form of a “Note” laying down the “procedure leading up to a decision on the relocation” (hereinafter referred to as the ‘Note’). After a leaked draft appeared in the press in May, the soft-law act has been formally adopted by the 27 Heads of State or Government in the margins of the European Council held on 22 June 2017, on the basis of a joint proposal from the European Council and Commission Presidents.

The Note aims at defining the decision-making process and some substantive criteria for determining the new agencies’ seats. In sum, the relocation is to be decided pursuant to a four-step procedure, according to which the interested Member States will submit their offer before the end of July, the offers will be assessed by the Commission, be subject to political discussion and then voted by Member States’ representatives in the margins of the General Affairs Council, by the end of November.

The very fact that the national governments have committed themselves to a “fair and transparent decision-making process”, “based on specified objective criteria” (§2 Note) other than purely political considerations, is in itself a remarkable achievement. To be sure, this conduct agreement is consistent with the principles and criteria laid down by the 2012 Common approach (§6 and 7). The latter are nonetheless drafted in a non-binding wording and, in any case, are binding only upon the signatories institutions and could have therefore been discarded by the Member States representatives.

Besides that, the main novelty introduced by the Note lay in the way in which the procedure leading up to the relocation decision has been designed, which will be examined in turn.


Proceduralisation as a form of “communitarisation”?

The analysis will concentrate on two main aspects of the decision-making process leading to relocation: (i) the stringent procedural steps defined by the Note and the institutional actors involved, on the one hand, and (ii) the legal obligations flowing from the Member States’ decision, on the other hand.

(i) First of all, interested Member States will have to formalize and submit an offer to host one or both the agencies. As anticipated, the offers should address in detail the six objective criteria identified in the decision, namely: the availability of appropriate office premises for the agencies to be able to take up their functions at the date of UK’s withdrawal (in light of the specific needs of EBA and EMA); the accessibility of location; the existence of adequate education facilities and appropriate access to the labour market and social securities for agencies staff family members; the timeframe required to fulfil the abovementioned criteria thus ensuring the business continuity and a smooth transition to the new seat; and finally, the geographical spread of EU agencies’ seats (§3 and 4(2) Note). The offers will moreover be subject to an unprecedented transparency regime: they shall be made in writing and published on the European Council website (§4(4-7) Note).

Second, as already envisaged by the 2012 Common approach (§6), the Commission will be called –for the first time in EU agencies’ history– to examine the offers on the basis of the aforementioned objective criteria, also consulting EBA and EMA regarding their specific requirements. The assessments will be submitted to the Council, but also, and more importantly, will be made publicly available (§5 Note). The assessments will then be presented by the Commission to COREPER and will form the basis of the subsequent political discussion among Member States representatives in the margins of General Affairs Council meetings (§6 Note).

Last, as for the final decision, it will be “informed by the [Commission] assessment” and prepared at COREPER level. Moreover, the decision will not be taken by common accord, that is, by consensus, but instead by a sui generis absolute majority following successive voting rounds (§6 Note). All Member States will have the same number of votes, which will be cast by secret ballot. In the first voting round, each Member State has 6 voting points to allocate among the three preferred offers (3, 2, and 1 points respectively). An offer is selected if it receives 3 voting points from at least 14 Member States. If otherwise, the three offers with the highest score will proceed to the second voting round. In the second (and third) voting round, each Member States has one vote. If there is no absolute majority in favour of one offer (i.e. at least 14 votes), the two highest ranked offers will go to the third ballot. In case of a tie, the Presidency will draw lots between the offers. The Member State selected for hosting EMA cannot be candidate to host EBA, but can take part in the vote on the latter. The decisions will then be “confirmed” in the margins of the General Affairs Council.

(ii) A second relevant innovation brought about by the Note relates to the legal obligations flowing from the relocation decision.

On the one hand, the successful Member State shall confirm the offered conditions in a headquarters agreement concluded with the agency, to be signed before the relocation (§4(3) Note). On the other hand, the Note commits “without delay” the Commission to “prepare legislative proposals” to amend EBA and EMA Statutes so as to confirm the new location, and, along with the Council, to give priority to the handling of these legislative proposals (§6 Note). At first sight, the latter commitment appears to conflict with the principle of institutional autonomy and the Commission monopoly on legislative initiative. It should nevertheless be recalled that the Note has been adopted on the basis of a joint proposal from the European Council and Commission Presidents. The obligation it imposes on the Commission can thus be regarded as conducive to the implementation of the European Council negotiating guidelines, pursuant to art.15(6)(b) TEU.

All in all, it could be argued that the involvement of Commission and COREPER, the transparency obligations and the recourse to a majoritarian decision-making signal a welcome trend towards the “comunitarisation” of a traditional intergovernmental remit. What is more, the commitment to mainstream the relocation decisions in EBA and EMA establishing regulations (to be amended by ordinary legislative procedure) will indirectly give the European Parliament a say over the intergovernmental deliberations, which could be seized to supervise the respect of the objective conditions laid down by the Note.


A best practice to be mainstreamed?

The Heads of State or Government have been careful to underline that the procedure established by the Note is only indicative (“the process that we recommend for reaching the decision..”) and “specific to the current situation”, without “constitut[ing] a precedent for location of agencies in the future” (§1 Note).

In light of the foregoing, it could be argued that, despite this political statement, the Note is destined to have the opposite effect. By demonstrating the Member States’ willingness to implement the principles laid down in the 2012 Common approach and to take the decision on the agencies’ seat away from the traditional intergovernmental consensus, the Note will hopefully set the standard for future cases.


Carlo Tovo is Postdoctoral researcher in EU law and Adjunct Professor at the University of Bologna, Department of Legal Studies. He obtained his PhD in European Law and Public law in 2015 from the University of Bologna and the University of Strasbourg.

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