GPSolo Magazine - September 2004

International Law And Practice

A Layperson’s Guide to the European Union

This short guide serves as a refresher for those who would like an overview of the basic structure of and the key terminology used by the European Union (EU) institutions and to the fundamental and important changes happening in the European Union. The EU was formed after World War II when France proposed the creation of a foundation for a European federation, and as of May 1, 2004, it had 25 members. The EU government is composed of institutions, financial bodies, and advisory bodies.

Institutions. Elected directly by the citizens of the member states every five years, the European Parliament has three basic functions: (1) it shares with the Council of the European Union the power to legislate directives, regulations, and decisions; (2) it shares budgetary authority with the Council of the European Union; and (3) it exercises oversight of the European Commission through its approval of the nomination of the commissioners and its right of censure.

The Parliament appoints the Ombudsman, who is empowered to receive complaints from EU citizens and has the power to establish temporary committees of inquiry whose powers are not limited to examining the actions of the EU institutions, but may also relate to actions by member states in implementing EU policies.

The Council of the European Union is the EU’s main decision-making institution, where each national government is represented. The Council is comprised of the ministers of the member states responsible for the activity on the agenda for each meeting, such as foreign affairs, finance, agriculture, industry, and transportation.

The Council exercises legislative power in co-decision with the European Parliament. It concludes, on behalf of the EU, international agreements with one or more states or international organizations; it shares budgetary authority with the Parliament; and it makes the decisions necessary for the implementation of foreign policy and adopts measures in police and judicial cooperation matters.

The European Commission upholds the interests of the EU as a whole. It initiates draft legislation and presents it to the Parliament and the Council. It is responsible for implementing European legislation, the budget, and programs that the Parliament and the Council have adopted. Together with the Court of Justice, it ensures that European law is properly applied. The Commission also represents the EU internationally and answers to the Parliament, which can impose its right of censure on the Commission.

The governments of the member states designate the President of the European Commission by common accord. The Parliament must then approve that candidate. The members of the Commission, who serve for five years, are appointed by the member states, after Parliament’s approval.

The composition of the Commission has been a much-discussed subject in light of the recent enlargement of the number of member states. As of November 1, 2004, the number of Commission members will be limited to one per member state.

The European Court of Justice (ECJ) ensures that European law is uniformly interpreted and applied. It has jurisdiction over disputes involving member states, EU institutions, businesses, and individuals.

The main functions of the ECJ are to verify whether instruments of the European institutions and governments are compatible with the treaties and to pronounce, at the request of a national court, on the interpretation or the validity of provisions contained in European law.

The Court of First Instance (CFI) is a second tier of judicial authority allowing the ECJ to concentrate on its basic task of ensuring the uniform interpretation of European law. The CFI has jurisdiction to hear disputes brought against the EU institutions. It also hears disputes between the EU and its officials. Judgments of the CFI may be appealed to the ECJ.

The European Court of Auditors ensures that the EU budget is managed and implemented effectively. Through independent audits, the Court verifies that all of the EU’s revenue has been received and that all of its expenditures have been incurred in a lawful and regular manner. The Court seeks to ensure that the financial management of the EU budget has been sound.

All individuals or entities residing in the EU can apply to the European Ombudsman if they consider that they have been harmed by an act of “maladministration” by an EU institution or body. The Ombudsman only examines complaints against the community institutions and bodies and cannot investigate complaints against national, regional, or local authorities.

Financial bodies. The European Central Bank (ECB)is responsible for formulating and implementing European monetary policy. The main decision-making bodies of the ECB are the Governing Council and the Executive Board. The Governing Council formulates the monetary policy, while the Executive Board implements that policy. The Executive Board also conducts the ECB’s day-to-day operations.

The ECB runs the European System of Central Banks, whose tasks are to manage the volume of money in circulation; conduct foreign exchange operations; hold and manage the official foreign exchange reserves of the member states; and promote the smooth operation of payment systems.

The European Investment Bank (EIB) is the EU’s financial institution. Its task is to contribute to the EU’s balanced development by way of economic integration and social cohesion. The EIB provides long-term financing for European projects and grants loans from resources borrowed on capital markets. Outside of the EU, the EIB supports the pre-accession strategies of the Central and Eastern European countries and manages the financial dimension of the agreements concluded under European development aid and cooperation policies.

Advisory bodies. The European Economic and Social Committee (EESC) represents the views and interests of organized civil society vis-à-vis the Commission, the Council, and the Parliament. The EESC must be consulted on matters relating to economic and social policy and may also issue opinions on its own. The EESC plays an integral role in policy formation and decision making

The Committee of the Regions (CoR) ensures that regional and local identities and prerogatives are respected. It must be consulted on matters concerning regional policy and may issue an opinion on its own initiative. The CoR’s responsibilities range far and wide, including education, transportation, vocational training, health, culture, and the environment. Another important function is to keep the public informed about the EU’s activities.

Decision making. Three main procedures govern legislative decision making in the EU: co-decision, assent, and consultation. The co-decision procedure requires two successive readings of a Commission proposal by the Parliament and the Council. If the two co-legislators cannot agree on the text, a conciliation committee is convened. It is composed of Council and Parliament representatives with the participation of the Commission to reach an agreement. The agreed-upon text is then submitted to the Parliament and the Council for a third reading and adoption.

Assent refers to the procedure whereby the Council must obtain the Parliament’s assent before certain important decisions can be taken. The Parliament can accept or reject a proposal, but it cannot amend it.

Simple consultation is the procedure by which the opinion of the Parliament is sought by the Commission. Once it has obtained it, the Commission can amend its proposals accordingly. The proposal is then examined by the Council, which can adopt it as written or amend it. The Council can only reject the proposal by unanimous vote.

Salli Anne Swartz has been practicing international commercial law in Paris since 1979 and is admitted to practice as a French avocat. She can be reached at

for more information about the Section of International Law and Practice

- This article is an abridged and edited version of one that originally appeared on page 1 of International Law News, Fall 2003 (32:4).

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- Books and Other Recent Publications: Careers in International Law, 2d ed.; Negotiating and Structuring International Commercial Transactions, 2d ed.; ABA Guide to International Business Negotiations, 2d ed.; Joint Ventures in the International Arena; ABA Guide to Foreign Law Firms, 3d ed.; International Lawyer’s Deskbook, 2d ed.; International Trademarks and Copyrights: Enforcement and Management, International Practitioner’s Deskbook Series.






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