Rev Int Org (2007) 2:59 75
DOI 10.1007/s11558-006-9001-y
How the court made a federation of the EU
Jean-Michel Josselin & Alain Marciano
Received: 24 May 2006 / Revised: 2 October 2006 / Accepted: 6 October 2006 /
Published online: 14 December 2006
#
Springer Science + Business Media, LLC 2006
Abstract We analyze the European institutional integration that took place in the
1950s and 1960s as a two-stage process. Firstly, an explicitly political project aims at
establishing a European political community. The project is abandoned in the mid-
1950s and political integration stops. At that time, the institutions of the Union take
the form of a confederation. In a second stage, because of the failure of the European
political community, a legal process of integration driven by the European Court of
Justice takes place. This second stage of unification is more centralizing and in effect
leads to a federalization of the European institutional structure. The transformation
of the political structure of the European Union thus appears to result from the
actions and decisions of a legal entity, the European Court of Justice.
. . . .
Keywords European Union Agency theory European Court of Justice Federation
.
Centralization History of the EU
. . .
JEL Codes D72 H11 K10 N41
1 Introduction
The article proposes a positive assessment of the European institutions and their
evolution during the 1950s and 1960s. This stretch of time remains deeply
J.-M. Josselin ( )
Université de Rennes 1 and Centre National de la Recherche Scientifique CREM (UMR CNRS
6211), Faculté des Sciences Economiques, 7, place Hoche CS 86514, 35065 Rennes cedex, France
e-mail: jean-michel.josselin@univ-rennes1.fr
A. Marciano
Université de Reims Champagne Ardenne (OMI-EDJ) and Centre National de la Recherche
Scientifique EconomiX (UMR CNRS 7166), Faculté des Sciences Economiques, 57 bis, rue Pierre
Taittinger, 51096 Reims cedex, France
e-mail: alain.marciano@univ-reims.fr
60 J.-M. Josselin, A. Marciano
influenced by the Second World War, a stringent turning point in the organization of
collective action in Europe. Before that, nation states had demonstrated their
inability, to say the least, to provide the international institutions that could guarantee
Pareto improvements over the Hobbesian state of nature. Awful events then
prompted a series of individual reflections and actions that would have concrete
translations in future organizations, in particular at the beginning of the process of
integration in Europe.
We adopt a historical perspective on the process that has led to the European
institutional integration. We argue that during a first stage, European integration is
explicitly meant to be political and indeed, even if indirectly, led by the governments
of the member states. In effect, as soon as in the early 1950s, attempts are made to
give birth to a European political community. In 1953, a Draft Treaty establishing a
European Political Community (EPC) is submitted to the member states of the then
existing economic European Coal and Steel Community (ECSC). However, the
project is abandoned in the mid-1950s and political integration stops. At that time,
the political institutions of the Union take the form of a confederation.
Once this point is reached, and because of the failure of the EPC, legal integration
begins, driven by the European Court of Justice (ECJ). This second stage evinces
significant centralization and leads to a federalization of the European institutional
structure. As a consequence, a gap opens and widens between the outcome of initial
political integration a decentralized confederation and the organizational by-
product of legal integration a rather centralized federation. In fact, the ECJ
contributes to transform the political structure of the European Union. Judges and
courts are granted (and even grant themselves) the right to make political decisions
in the sense that those decisions and their implementation convey quasi
constitutional consequences, as we will evidence later in more details.
In many of its aspects, the evolution of the European institutions have already
been thoroughly analyzed in a public choice perspective (see for instance Buchanan,
1996; Frey, 1996; Holcombe, 1996; Mueller, 1996, 2002, 2005a, b; Salmon, 2003;
Schmidtchen & Cooter, 1997; Vaubel, 1996, 1997). More specifically, the judicial
activism of the ECJ has been investigated by economists (see among others,
Pitarakis & Tridimas, 2003; Tridimas & Tridimas, 2004; Voigt, 2003) and by
political scientists (see for instance Alter, 1998; Garrett, Kelemen, & Schulz, 1998;
Stone Sweet & Caporaso, 1998a, b). Our perspective nonetheless differs from and
extends the previous ones in that we assess the political role of the Court beyond its
judicial part. We show how its actions and decisions progressively shape the
institutional structure of the Union, thereby playing a leading part which could have
been that of elected politicians.
Our demonstration rests on the organization of historical evidence in an economic
framework. We do it through direct analysis and quotations from court cases, draft
treaties and declarations. We first stress the ambiguities and hesitations that
characterize the initial steps of the process of political integration in Europe as to
what the status of the Union should be a federation or a confederation which
nonetheless leads to the establishment of a confederation (Section 2). We then
discuss it from the perspective of the agency theory (Section 3). Economic theory
does shed light on the political role of the ECJ. It appears that the presence of a
How the court made a federation of the EU 61
supranational Court of Justice and the way it has been devised by its promoters are
potentially federal and indeed are a factor of centralization (Section 4). In other
words, and this is the main point of our article, we show how a juridical institution,
the ECJ, contributed to the progressive transformation of the political structure of the
Union.
2 The Political Integration Process and the (Hesitant) Establishment
of a Confederation
The few years separating the first attempts at the end of the Second World War to
build a supranational organization in Europe from the rejection of the Draft Treaty
establishing a European Political Community in 1953 1954 can be considered as
forming a long and informal constitutional convention, in the sense that the many
moves, trials and failures are explicitly aimed at creating a politically unified Europe.
There is indeed a shared belief that collective action is important and common
institutions necessary to reach this goal. However, although perceived as decisive,
the creation of a supranational political organization in Europe (Section 2.1) has to
face different opinions as to the form this polity should take. Thus, the analysis of
documents and texts reveals that while many argue in favour of a federation, others
are favourable to a less demanding form of regime, namely a confederation.
Hesitations and ambiguities, or maybe diplomatic caution, characterize the major
political treaties that are issued in the early 1950s (Section 2.2).
2.1 Collective Action Through a Supranational Political Community
In the mid-1940s, European nations have to face the particularly dramatic
consequences and sequels of the Second World War. The conflict has raised specific
and new problems while reviving old issues. There are social or diplomatic problems
to solve overcoming the moral consequences of the conflict, facing the threat of the
Soviet Union as well as huge economic difficulties to surmount rebuilding the
economic capacities the war has destroyed and promoting growth. These problems
are perceived as complementary. More precisely, many people are convinced that a
political organization is necessary to deal with the situation born out of the still recent
conflict. Indeed, the European nations are facing common challenges that would
require some kind of collective action. The international role of Europe as an
identifiable player is then linked to the co-operation of at least some of the nations
into a unified political entity entailed with strategic capacity (Forsyth, 1967).
This objective is put to the forefront of the diplomatic agenda at the end of the
1940s. For instance, Marshall, when presenting his plan, links the American
economic aid to the capacity of Europe to organize itself as a political community:
It is already evident that, before the United States government can proceed
much further in its efforts to alleviate the situation and help start the European
world on its way to recovery, there must be some agreement among the
countries of Europe as to the requirements of the situation and the part those
62 J.-M. Josselin, A. Marciano
countries themselves will take in order to give proper effect to whatever action
might be undertaken by this government (Marshall, 5 June 1947).
Similarly, the political resolution of the Hague Congress (7th 11th July 1948)
claims that it is the urgent duty of the nations of Europe to create an economic and
political union in order to assure security and social progress. Even more significant
is the proposal by Robert Schuman to give birth to the ECSC in May 1950. The
French government thus suggests that the pooling of Franco-German coal and steel
production should immediately provide for the setting up of common foundations for
economic development (Schuman, 1950). However, and Schuman is explicit about it,
the establishment of a European Economic Community is only a first step:
Europe will not be made all at once, or according to a single plan. It will be
built through concrete achievements which first create a de facto solidarity. The
coming together of the nations of Europe requires the elimination of the age-old
opposition of France and Germany. Any action taken must in the first place
concern these two countries (Schuman, 1950)
More precisely, it is once again stressed that economic integration is viewed only
as an intermediate objective or a means set up to advance political objectives
(Kitzinger, 1960: 24), as is indicated in the preamble of this economic Treaty which
is considered as entirely political (Kitzinger, 1960). In other words, the establish-
ment of the ECSC in April 1951 is a means to reach a more important objective, the
building of a European political community. Thus, this is no surprise to see that only
one year after the ratification of the ECSC Treaty, in 1952, two other complementary
political treaties are discussed and drafted. The treaty establishing the European
Defence Community (EDC) and the Draft Treaty establishing a European Political
Community (EPC) are designed as the basis for political integration.
The Treaty establishing the EDC goes a step further than the ECSC Treaty. It
creates a military community, consisting of common institutions, common armed
forces and a common budget (Kunz, 1953: 277). The EDC is meant to be a political
community and the treaty represents the first genuine (and explicitly institutionalized)
attempt to move beyond economic integration towards political integration in Europe.
The aim of the EDC treaty is explicit. The preamble speaks of a supranational
organization and of the formation of a United Europe, while the preamble of the Coal
and Steel Treaty speaks only of an organized and vital Europe. The supra-national
character is also strongly underlined in article 1 (the present Treaty sets up a European
community of a supranational character) and article 20, Section 2.
Then, after the establishment of an economic community and the proposed
creation of a common army, the next and second part of the European project
consists in the design of an integrated political structure. Hence, in 1952, whilst the
EDC Treaty has not yet been ratified, the six members of the ECSC decide to
elaborate a Treaty tellingly named the Draft Treaty establishing a European Political
Community. Almost forgotten nowadays and rarely (to say the least) mentioned in
studies of the origins of the European Community, this Draft Treaty is nonetheless of
the utmost importance to understand the official position in the 1950s about the
nature of the future European political structure. As Paul-Henri Spaak notes it in
1953, it fills the gap between the ECSC and the EDC treaties. He argues that the
How the court made a federation of the EU 63
Schuman plan and the creation of the European army are stages to be completed in
order to go farther towards setting up a Political Community of a supra-national
character (Spaak, 1953: 150). Heinrich von Brentano claims similar views. The idea
of a supranational and unified political entity seems sufficiently well accepted to be
incorporated in official documents. But what institutional form will the idea take?
2.2 Which Political Structure to Sustain Collective Action? Hesitations
Between a Confederation and a Federation
The definition of the concrete nature of the supranational European entity soon appears
to be a difficult task in at least two respects. On the one hand, the already established
institutions are perceived as experimental, a new type of international political
institution whose supranational powers mark a basic departure from the conception of
all previous international organizations (Bebr, 1953: 1). This institutional innovation
implies difficulties to define the political form the organization should take. On the
other hand, there are strong disagreements and divergences between those who are
convinced that the federal solution is immediately adequate, and others who argue that
a decentralized confederation would be enough, not to mention those who insist that it
may be too soon to choose between the two options.
The idea of a federal European Union dates back to the early 1940s. In 1941, the
Ventotene Memorandum towards a freer and united Europe is written in prison by
Altiero Spinelli. Two years later, Jean Monnet stresses that Leur prospérité et les
développements sociaux indispensables sont impossibles, Ä… moins que les Etats
d Europe se forment en une Fédération ou une entité européenne qui en fasse une
unité économique commune [their prosperity and essential social development are
unlikely unless the states of Europe form a Federation or European entity bringing
them into a united economic community] (Monnet, 1943; our translation. See also
Monnet, 1976). In practice, discussions regarding which route should be taken
undergo acceleration with Schuman s proposal for the creation of a Franco-German
coal and steel pool. Thus, the 1950 Schumann Plan includes many references to the
necessary federalization of the European Union. For instance: The pooling of coal
and steel production should immediately provide for the setting up of common
foundations for economic development as a first step in the Federation of Europe,
and will change the destinies of those regions which have long been devoted to the
manufacture of munitions of war, of which they have been the most constant
victims (Schuman, 1950, emphasis added). Federalism is viewed as a foundation
stone and a necessary condition for the future of Europe.
Facing the federalists are those who prefer a rather loose and decentralized
association of nations. The EDC treaty and the EPC Draft Treaty thus display
diplomatic hesitations about the nature of the future European community.
Commentators note that the ad hoc Assembly went as far in the direction of
federalism its members thought consonant with acceptance by the governments
(Karp, 1954: 185). The two major European political treaties of the early 1950s
carefully avoid choosing between federalism and confederalism. The president of the
ad hoc assembly in charge of drafting the Treaty establishing the EPC, Spaak more
specifically claims that there will not be any choice between a confederation and a
64 J.-M. Josselin, A. Marciano
federation. When presenting the Draft Treaty, he insists that the Europe we are
proposing you to create is neither federal nor confederal (Draft Treaty, 1953: 149).
Similarly, Heinrich von Brentano, Chairman of the Constitutional Committee that
drafted the Statute for the ad hoc Assembly, argues that The European Community ...
will be neither a Confederation nor a Federal State (Draft Treaty, 1953: 48). Von
Brentano is even more precise when he explains why he refuses to choose between a
confederation and a federation. He thus claims that the institutional organization is to be
such that it will be able to take on a more and more precise form ... until it develops by
a natural process into a real Federal state or a Confederation (Draft Treaty, 1953: 51).
In the meantime, von Brentano nonetheless argues that the European institutions are set
up in such a way that they would constitute genuinely European organizations carrying
out their tasks in the greatest possible independence of national influences (Draft
Treaty, 1953: 50).
Therefore, hesitations and ambiguities are noticeable in the debates around the
establishment of the EPC. The general purpose implies the willingness and necessity
to choose a specific political regime, but this is contradicted by the cautious claims
made by, among others, Spaak and Brentano. However, despite what official
discourses reveal about hesitations and a first stage of indecision, the choice goes to
a political confederation, as an economic analysis reveals it.
3 The Choice: The European Community as a Political Confederation
From the perspective of economic theory, the use of an agency relation helps to
understand which features characterize a confederation and make it a regime
different from a federation (Section 3.1). The analysis of the first steps of the
European political integration process then shows that the agency relation that will
structure the fledgling union corresponds to a confederation rather than to a
federation (Section 3.2). The way in which prerogatives are assigned among the
various institutions, some already existing, some created, confirms the choice
(Section 3.3).
3.1 A Confederate Agency Relationship
The two forms of federalism, confederate and federal, differ with regard to three
major elements: the nature of the principals and agents, the prerogatives assigned
among the different levels and finally the way assignment proceeds and changes.
Then, following conventional wisdom on the subject, we propose to define a
confederation as an association of sovereign states in which bargaining leads to
ascribing certain tasks to the upper or central institutions. This means that this form
of federalism can be best described by an agency relationship that takes place
between the states, or institutions located on the same level, and the central
institutions of the confederation. Citizens are not part of the agency relationship
because they are only nationals of the states that are represented in the central
institutions. The confederate agency relationship only connects sovereign states, as
the principals, and the common supra-national institutions, their agents.
How the court made a federation of the EU 65
Typically then, and this is a second important feature of confederations, the
common institutions benefit from the delegation of few and limited prerogatives
because the states retain most of the sovereign power. Thus, a confederate
constitution is most of the time limited to very few actions like the provision of
supra-national public goods such as a common defense.
Hence, as a consequence, a third and most important characteristic is that
prerogatives are never granted once and for all; the assignment and reassignment of
tasks to the central institutions is subject to frequent and repeated debates and
negotiations between the states. As a consequence, because its functioning rests on
ongoing negotiations, a confederation displays a greater capacity than that of any
other regime to face fluctuating objectives. As a counterpart, the same procedure
makes enforcement problematic and costly; responsiveness and plasticity may
sometimes have to be paid in terms of free-riding, transaction costs, wars of attrition
and thus possible instability.
3.2 The Agency Structure: Who are the Principals? Who are the Agents?
The first step in the classification of the European Political union as a confederation
consists in the identification of principals and agents among the citizens, the member
states and the European institutions. Of particular significance is the way the first
treaties have been designed. The latter are not conceived as a constitution and not
written by an autonomous and original constituent power dedicated to this task.
Admittedly, ratification procedures by the national legislatures could be interpreted
as constituent acts. In this perspective, the treaties could be seen as forming the body
of a constitution, and thereby European citizens could be considered as the source of
power. National legislatures would be the vehicle of this sovereignty. In economic
terms, the citizens of the member states would be the principals; the institutions of
the Community would directly be their agents and by no means those of the states.
The Treaties would thus have elaborated a federation. However, claiming that
ratification does amount to exercising a real constituent power is somewhat
farfetched. In fact, the early stages of the integration process only concern the
agency contract established between the states and the supranational institutions. Not
only is nothing said about the agency relationship that links the nation states to their
own citizens but also the latter are not involved in the building of the European
institutions. Only indirectly democratic (Mancini & Keeling, 1994), the resulting
institutions indeed correspond to a confederation.
Typically, the Council of Europe in 1949 involves the citizens as weakly or
remotely as possible, under the form of a Consultative Assembly gathering
appointees from national parliaments. As its name unmistakably indicates, it benefits
from no power and is subordinated to the decision-making entity, the Committee of
Ministers. Moreover, although Schuman and Monnet are explicit about federalism,
the Council of Europe adopts a division of power that contradicts the federal
demands for a democratically elected assembly which would participate in political
decision-making. A few years later, the ECSC Treaty is revealingly built in the name
of the Heads of States. Citizens are thus excluded from the process and the focus is
put upon the relationship between the member states and the European institutions.
66 J.-M. Josselin, A. Marciano
It appears that the former occupy the position of the principals while the latter are
their agents. Despite the ambiguities noted earlier, the Draft Treaty indeed seems to
opt for an organizational form quite close to a confederation. Accordingly, the future
EPC is to respect the powers and competence which the governments of our
countries have hitherto kept under their own control ... [and] does not entail any
fresh transfers of sovereignty (Draft Treaty, 1953: 76). Thus, the proposed political
structure can be considered as confederate in that it rests on a partial and limited
transfer of sovereignty from the member states to the future European institutions. In
the terms of the agency theory, the latter as principals delegate very limited tasks to
the European supranational institutions, their agents.
3.3 The Process of Assignment of Prerogatives
The process through which prerogatives are assigned and reassigned to the different
players completes the definition of the agency setting upon which the European
institutional framework rests. Once again, the first political steps are quite clear
about the confederate nature of this process. Thus, when presenting the Draft Treaty,
Spaak insists that the structure envisaged for the emerging political organization
stands Between the two extremes, represented on the one hand by a purely inter-
governmental system, linking states which retain their entire sovereignty and on the
other by a Constitution which would immediately pool most of the activities of our
States (Spaak, 1953: 150). This statement could be interpreted as another instance
of the repeated hesitations about the political structure of the EPC. We rather argue
that it illuminates the fact that the gathering of the ECSC member states in a political
community will be on a confederate basis. No prerogatives are to be transferred on a
permanent basis to the future central institutions. Moreover, any transfer must result
from debates, bargaining and negotiations between the principals, that is to say, the
member states. The extent of competencies granted to the central institutions is
delineated treaty after treaty and mainly comes out through diplomatic bargaining
during intergovernmental conferences.
The confederate setting of bargaining would not be complete if member states did
not have veto power. Such is the case in the early stages of the European integration
process. Bargaining is indeed the procedure followed for the pooling of national
economic activities within the ECSC; each member state is supposedly unable to
reach by itself an objective that is assumed to be collectively achievable. However,
as we have suggested it, even if bargaining does promote flexibility, it does not
provide any guarantee as to the effectiveness of the result. From this perspective, the
failure of the treaty establishing the EDC provides a good example of the difficulties
to reach a collective agreement. The treaty is drafted in 1952 but it is ratified by only
four out of six countries (France and Italy reject it) and is thus abandoned. Moreover,
as we will soon detail it, the political process of European integration stops, after
having nonetheless contributed to the establishment of European institutions under
the form of a supranational organization mostly based on the principles of a
confederation. In fact, the many hesitations between a confederation and a federation
that we have analyzed in the preceding paragraphs have permeated through the
European institutions. They are not plainly confederate, they also contain federal
How the court made a federation of the EU 67
elements. Those federal components added to the end of political integration are at
the origin of the centralization process after the end of the 1950s. This is the process
we analyze in the next section.
4 From Political to Legal Integration: The Political Role of the ECJ
The failure of the EDC could have been perceived as the outcome of the normal
functioning of a political union organized in a confederation. On the contrary, the
rejection of the EDC treaty, and the subsequent collapse of the EPC, is viewed as a
sign of the necessity to find an alternative way of uniting the European nations. A
legal integration process is then initiated (Section 4.1), that ends up in transforming
the institutional structure of the European Union. More precisely, and this is the
point we defend in this section, the ECJ transforms the political structure of the
European Union (Section 4.2) by changing the legal rules (Section 4.3).
Furthermore, by doing so, the Court smoothly shifts its own role, from agent to
principal (Section 4.4).
4.1 The Postponed Process of Political Integration
The process of integration of the European nations within a single political entity has
been conceived to rest upon two pillars, the EPC and the EDC treaties. As soon as
one of them collapses, the whole project falters. Thus, after the rejection of the ECD
treaty in 1952, the other and related part of the European political project, namely
the Draft Treaty disappears from the agenda. As a consequence, the political
innovations it proposed are not put into practice. Now, those provisions were partly
federal and centralizing for instance, the Draft Treaty attempted to involve citizens
in the functioning of the EPC through a Parliament in which one of the two
chambers was formed by directly elected representatives. The supranational
Community possesses one of the attributes of a State: its Parliament will consist of
a directly elected Peoples Chamber, and of an indirectly-elected Senate which is to
guarantee co-operation, on a basis of equality, between the peoples of the individual
national States (Draft Treaty, 1953: 50). The failure of political integration will
leave the citizens out of the decision-making procedures that will shape the
European institutions during the second half of the twentieth century. Decisions will
be made through political intergovernmental conferences. The European political
organization remains in the form it has reached in 1952, an implicit confederate
setting.
This does not mean that the political objective is forgotten and abandoned. In the
view of many political leaders of the time, the establishment of a political
community in Europe is simply postponed. Integration still aims at ultimately
creating a political union among the member states of the ECSC. However, the
objective must now be achieved through different and indirect means. This is exactly
what is expressed during the Messina meeting held in June 1955. There, the six
member states of the ECSC draw the lessons of the struggle over the European
Defence Community. The next attack could not be too directly political (...) Here was
68 J.-M. Josselin, A. Marciano
the indispensable tactical move without which there could be no further progress
toward political union (Kitzinger, 1960: 25).
The meeting held in Messina, and the conversations among foreign ministers of
the members states of the ECSC, reveal that the diplomatic actions led by Spaak,
Beyen and other Beneluxers along with Monnet and Schuman succeed in
convincing other European leaders that economic integration has to be favoured
and substituted (even if temporarily) to direct political integration (Laurent, 1970).
Economic integration is viewed as a means to reach a political goal, as an
intermediary objective: The objectives of the treaties establishing the Communities
are economic, but their aim is political (Lagrange, 1967: 709). Economic
unification is then put in the forefront and pushed further, as is officially
acknowledged by the creation of a European Economic Community by the 1957
Treaty of Rome (Issing, 2000; Maes, 2006). In theory, the establishment of an
economic community should not represent a centralizing threat, since the creation
of a common market and the promotion of free trade do not contradict the
decentralized nature of the European confederation.
However, and by contrast, the process of legal integration which takes place and
develops since the mid-1950s is much more important from the perspective of
centralization. Although the European Communities have been constructed as a
legal community since their origins (Schermers, 1974: 445), legal integration
remains largely implicit, commonly viewed as a technical means underlying the
correct functioning of the Communities. However, being federal and centralizing, the
development of a legal order contradicts the confederate and decentralized nature of
the European political institutions. Therefore, beyond the lack of checks and
balances, the possible collusion among the European institutions or the role of
bureaucracy (Salmon, 2003), we argue that the ECJ soon becomes a driving force
towards the federalization and centralization of Europe. This point has already been
put forward by constitutional lawyers (Schermers, 1974; Weiler, 1991). We shall
now further interpret it in an economic framework.
4.2 The Existence of a Court of Justice or How to Trigger an Institutional
Irreversibility Effect
The sole existence of a Court of Justice does not suffice to transform a confederation
into a federation. A supranational Court of Justice remains legitimate in a
confederation if conceived as an agent with strictly delineated competencies. Now,
the Court is precisely created to be an agent whose behavior has to respect the
Member States status as sovereign nations (Lenaerts, 1990: 93). That the domain of
competencies of the Court is limited results from the fact that most of the principles
relating to the Court and its jurisdiction in the Treaty of Rome were taken from
public international law (Delaney, 2003: 3). The Court is thus in the position of an
agent to which the sovereign member states, acting as confederate principals,
explicitly delegate some limited and defined tasks namely to interpret and control
legislation proposed by the Commission and enacted by Council and Parliament. In
other words, the Court is initially envisaged as a means to check the other
components of the European organization on behalf of the member states. This
How the court made a federation of the EU 69
specific role is even acknowledged by the Court itself. Maurice Lagrange, then
Advocate General, states in 1957 that [t]he Treaty [ECSC treaty] is based upon
delegation, with the consent of the Member States, of sovereignty to supranational
institutions for a strictly defined purpose [...] The legal principle underlying the Treaty
is a principle of limited authority (joint cases 7/56 & 3 7/57, Dineke Algera et al. v.
Common Assembly of the European Steel and Coal Community, 1957, E.C.R 69: 82).
A few years later, Lagrange also notes that the Court appears as an internal judicial
organ, the activity of which, within the field of its competence, aims at the smooth
functioning of the Community legal order (1961: 402, emphasis added).
To have a clearer vision of the precise status of the Court of Justice and to
understand why it provides the ground for future federalization and centralization,
the simple perspective of an agent with limited competencies has to be
complemented with a reference to the model which guided its promoters. In this
respect, commentators have stressed how pervasive [...] the impact of the French
administrative law was (Koopmans, 1991: 500) and how this reveals itself in the text
of the treaty (Koopmans, 1991). To be more precise, the Court is elaborated as a
replica of the French Council of State. One of the promoters of the treaties, Lagrange
himself writes in his 1964 discourse, when leaving the Court after 12 years spent in
Luxembourg, that the Court was evidently inspired by the example of the French
Council of State (Lagrange, 1964). As a consequence, the role of the Court and the
way this institution is supposed to exercise its powers can be compared to that of the
French Conseil d État. In particular, two of the procedures actually used by
the Court are similar to what exists in French administrative law, namely the appeal
for annulment and the plenary appeal. The first procedure is equivalent to what is
known in France as the recours pour excÅs de pouvoir [ultra vires appeal against
abuse of power] (Lagrange, 1961: 403; see also 1967: 712). The second one,
borrowed from the French administrative law (Lagrange, 1967: 712), corresponds to
the recours de pleine jurisdiction, a concept which means that the judge in invoking
this procedure exercises all his customary judicial powers (Lagrange, 1967) and is
therefore free to examine every aspect of the case, whether of law or fact
(Lagrange, 1967).
Therefore, this is no surprise if when interpreting the ground for annulment in
the early years, the Court always remained very close to the case law of the French
Conseil d État (Koopmans, 1991: 500). In other words, the ECJ may be considered,
even if only partially, as an administrative tribunal. It is within this framework that
Lagrange interprets the decision made in Groupement des Hauts Fourneaux et
Aciéries Belges et al., Dec. Nos. 8 to 13/57, June 21, 1958, 4 ECR 223). This case
illustrates the role of the Court, not in its capacity of economic judge but as an
administrative tribunal deciding in economic matters (Lagrange, 1961: 413), by
which it is meant that the Court does not choose between laissez-faire and dirigisme;
it does not create a doctrine (Lagrange, 1961).
Certainly, this can be understood as a form of self-restraint: the Court behaves as an
agent and therefore limits its role to technical decisions, ensuring that the different
Community institutions exercise their powers in accord with the Treaty (Lagrange,
1961). However, the establishment of the Court as an administrative tribunal
benefiting from recours pour excÅs de pouvoir and recours de pleine jurisdiction, also
70 J.-M. Josselin, A. Marciano
implies that the Court indeed possesses an overwhelming capacity: By interpreting the
Treaty in a coherent manner, and by construing so as to enable the Executive to attain
the aims of the Community (Lagrange, 1961: 413), the Court can effectively control the
application of the European treaties (Lagrange, 1967: 712).
Furthermore, for a scholar like Lagrange, trained in the subtleties of the French
legal system, to insist that the Court is a kind of administrative tribunal bears a very
specific meaning: From the perspective of the French judicial structure, administra-
tive courts are granted with the right to judge the State with specific tools (the
equivalents of the recours pour excÅs de pouvoir and the recours de pleine
jurisdiction) (Josselin & Marciano, 2005). Then, transposed at the European level,
this doctrine implies that the European supranational state that is, the European
institutions is not of the same nature as the member states. It has then to be
controlled and judged by a specific jurisdiction. In other words, the decisions made
by the Court can be interpreted as indicating, quite clearly, that the European state
is not as dependent an agent as it should be in what is then considered as a political
confederation. Strikingly, this particular agent is not controlled by its principals, the
member states, but rather by one of its own components, the ECJ! Like in France,
where administrative tribunals are at the same time within the administration and in
charge of the control of the administration, the ECJ is both inside and outside the
central European institutions. It does not simply stand on the same level as the other
political entities that form the European organization. In other words, the ECJ is
designed as something more than a standard confederate Court. This design breeds a
kind of institutional irreversibility effect, as we will explain now.
4.3 Integration and Centralization through Specific Rules
Integration is built on and develops through specific rules. From this perspective,
one of the most important innovations of the Rome Treaty consists in the creation of
so called regulations that do not require national implementing measures but are
binding on the states and their citizens as soon as they enter into force (Mancini,
1991: 181). Regulations are thus rules that the European institutions, the agents, are
legally able to provide without the assent of the member states, their principals. The
existence of regulations is also particularly significant of the way rules are envisaged
by the Treaty. These European rules can thus be considered as supranational public
goods, which obviously differs from the conception of rules in a confederation. In a
confederation, decentralization implies that rules are considered as local rather than
supranational public goods.
Now, if it is acknowledged that some European rules are federal rules, it is then
necessary to envisage a federal Court of Justice to enforce them. Article 189
corresponds to such a conception. The Treaty of Rome acknowledges the existence
of rules that apply directly and uniformly within each member country of the Union.
It also indicates that the legislatures and judiciaries of the member states are only a
subsequent part in this legal order. This is clearly stated by the ECJ in 1960, in the
case Humblet v. Belgium:
If the Court rules in a judgement that a legislative or administrative measure
adopted by the authorities of a Member State is contrary to Community law,
How the court made a federation of the EU 71
that Member State is obliged, by virtue of Article 86 of the ESCS Treaty, to
rescind the measure in question and to make reparation for any unlawful
consequences which may have ensued. This obligation is evident from the
Treaty and from the protocol which have the force of law in the member states
following their ratification and which take precedence over national law (Case
6/60, E.C.R., 559: 569; emphasis added).
Regulations are the first stones of a European common legal order, the
establishment of which is usually associated with cases such as Van Gend & Loos v.
Nederlandse Administratie der Berlastingen (case 26/62, 1963) or Flaminio Costa v.
E.N.E.L. (Case 6/64, 1964), in which the doctrines of direct effect and supremacy are
explicitly stated. In fact, those landmark cases simply make more visible the
common legal order ingrained in the conception of the ECJ.
The Court is particularly aware of the privilege of being a federal court although
the political structure is that of a confederation. In 1956, Lagrange clearly argues that
it is a federal rather than a confederate Court of Justice:
One could, no doubt, make the point that our Court is not an international court
but the court of a Community created by six States on a model which is more
closely related to a federal than to an international organization, and that although
the treaty which the Court has the task of applying was concluded in the form of
an international treaty, and although it unquestionably is one, it is nevertheless
from a material point of view the charter of the Community, since the rules of law
which derive from it constitute the internal law of that Community (Fédération
CharbonniÅre de Belgique v High Authority of the European Coal and Steel
Community, Case 8 55, Judgment of the Court of 16 July 1956).
The premises of the federalization of rules can thus be traced back to the 1950s
and 1960s. Granted with the capacity to define its own set of prerogatives, the ECJ
will soon take advantage of it.
4.4 How an Agent Behaves as a Principal
To consider that the judiciary is or should be granted with the capacity to make law,
that is to say, with the right to go beyond the interpretation and enforcement of
existing rules, necessarily leads to a kind of irreversible shift of power from the
(political) principal to the (legal) agent. This statement is quite early exemplified in
the European case by the role of the ECJ. The latter plays a decisive role in
transferring power from the member states to the central institutions.
To illustrate this evolution, one may refer to the creation of a High Authority by
the ECSC Treaty. The Authority benefits from compelling prerogatives. It is thus
stated that its members shall exercise their function in complete independence in the
general interest of their communities. In the fulfillment of their duties, they shall
neither solicit nor accept instructions from any government or from any organization
(Art. 9, Section 5; emphasis added). This institution is one of the obvious
centralizing and federal features of the ECSC.
Various judgments by the Court will exemplify it. Among them, let us mention
those that reinforce the necessary independence of the High Authority and its
72 J.-M. Josselin, A. Marciano
capacity to impose decisions on the principals. For instance, in a judgement of 29
November 1956, the Court claims that It results from [...] the Treaty that the High
Authority enjoys a certain independence in determining the implementing measures
necessary for the attainment of the objectives referred to in the Treaty (Fédération
CharbonniÅre de Belgique v. High Authority of the European Coal and Steel
Community, Case 8 55, Judgement of the Court of 29 November 1956). Then, a few
years later, in a judgement of 13 June 1958, one reads:
The power of the High Authority to authorize or itself to make the financial
arrangements mentioned in article 53 of the Treaty gives it the right to entrust
certain powers to such bodies subject to conditions to be determined by it and
subject to its supervision. However, in the light of Article 53, such delegations
of power are only legitimate if the High Authority recognizes them to be
necessary for the performance of the tasks set out in article 3 and compatible
with this Treaty, and in particular with article 65 (Meroni & Co., Industrie
Metallurgiche, SpA v. High Authority of the European Coal and Steel
Community; Case 9 56).
This case is particularly significant. It does not only state that the High Authority
can choose its own agents but it also implies that this capacity to act as a principal is
not subject to the control of the member states: it rather depends on the legitimacy
that the Court itself attributes to the High Authority. This judicial decision is
important in that it undoubtedly is political. An important contribution to the legal
science (1961: 411), as Lagrange labels what some would certainly consider as a
form of abuse of power, this judgement indeed reveals that the Court does not
hesitate to interfere into a debate about a constitutional problem of the greatest
magnitude (Lagrange, 1967: 723). It constitutes a decision which, in applying to the
Community a theory about the delegation of powers, influences directly the balance
of powers established by the Treaty (Lagrange, 1961: 411).
From the perspective of our theoretical framework, this decision means that the
European institutions are not only in the position to delineate the set of their own
competencies but also to define some of those of the member states. The legal
European institutions are then in capacity to displace their initial political principals.
5 Conclusion
This article analyzes the critical role the ECJ played in the early evolution of the
European institutions. The Court mastered the integration process and contributed to
transform the original decentralized confederation into an ever more centralized
federation. Certainly, the transformation did not go unnoticed, and the evolution of
the European institutions towards centralization has often been stressed. However,
our demonstration adopts a perspective different from the usual ones. We do not
discuss the judicial role of the Court as such. We rather emphasize and analyze the
political role the ECJ played in the process of bringing the European nation states
ever closer to each other. We show how a legal agent undertook actions and made
decisions with political consequences.
How the court made a federation of the EU 73
Furthermore, our demonstration also provides an original explanation to the
progressive tendency of an agent, the ECJ, to escape the control of the principals, the
member states. Partly, the reasons depend on the specificities of the process of
delegation in the European institutional structure the nature of the Court, designed
as a supranational administrative tribunal, is thus an important explanatory variable.
Another, more general explanation is to be found in the nature of the object
delegated. Delegation in the field of law generates problems that transcend the
context of delegation. Certainly, any process of delegation is associated with risks of
moral hazard and wrongly shaped incentive mechanisms (For a survey of the recent
literature on potential costs and benefits of delegation, see Voigt & Salzberger,
2002). Delegation in the field of law conveys more than that. Judges and courts are
in capacity to modify their own set of competencies. Most of the time, agents
granted with the right of juris dictio go beyond the limits of their prerogatives to
achieve the objectives assigned by the principals. Thus, an underlying argument in
this article is that centralization in Europe does not only come from the lack or
imperfection of control and incentives, as is usually done in the literature dealing
with legal and constitutional issues in terms of principals and agents. To focus on
incentives and control mechanisms implies that the design of an optimal agency
contract remains possible even if costly and difficult. Our perspective suggests that
whatever the incentives and constraints are, legal agents will always tend to displace
their political principals. This is another version of the skepticism expressed towards
the capacity to guard the guardians (see in particular Tullock, 1965).
Therefore, our result generalizes beyond the specific limits of the European
Union. It applies to any circumstance as soon as delegation involves legal agents. In
particular, the progressive transformation from a confederation to a federation that
obviously characterizes the evolution of the political structure in the U.S.A. can be
related to the behavior of the Supreme Court of Justice. Its actions resulted in an
increase in the role of the citizens and in the domain of competencies of the central
government, and in a parallel decrease in the importance of the member states, its
former principals (Holcombe, 1991, 1998; Josselin & Marciano, 2000, 2004).
Similar phenomena seem to relate to the same mechanism. The road to centralization
is not only a matter of incentives. It may also be an ingrained trend whenever the
object of delegation involves legal matters.
Acknowledgements We would like to thank the three anonymous referees for their comments and
suggestions on the first version of this article. An earlier version was presented at the 2006 European
Public Choice Society meetings in Turku.
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