Recommendations for ensuring controls for shared enforcement in the EU

Shared direct enforcement of EU laws is a relatively new phenomenon in the EU. If the default rule of enforcing EU laws at the national level faces challenges, it is logical to enhance the regulation of national enforcement and/or the exercise of enforcement stages at the same level where EU rules are established (functional policy cycle over spillover). Hence, we witness a proliferation of EU enforcement authorities (EEAs) which can enforce EU laws directly vis-à-vis private actors themselves or together with national competent authorities. This development prompts to address the question of control over actions and decisions resulting from this EU shared direct enforcement. This blog post argues that the EU shared enforcement necessitates aligning of the systems of controls (EU-national, national-national) and creating ‘joint controllers’. It uses the logic of the ‘Meroni+’ (non-) delegation doctrine to support its argument. It concludes with three recommendations for assessing and (re)designing controls for EU shared enforcement.

Evolving EU law enforcement

The ‘default’ rule for enforcing EU laws has been enforcing at the national level by national authorities and via national systems of control and bodies of private, administrative and criminal laws. National enforcement has not been always successful and a number of EU enforcement authorities and other institutional innovations have appeared; EEAs number and powers seem to be growing too. The European Securities and Markets Authority (ESMA) has been known as the strongest of all EU agencies as it enjoys rule-making and direct supervisory and enforcement powers vis-à-vis credit-rating agencies and trade repositories. As of the 1st of January 2022, ESMA’s supervisory and enforcement powers are expanding further to include more financial market participants (Annual report 2019, amendments).

Developments concerning the need to readjust enforcement of EU law are noticeable throughout different policy areas, what has also received attention in the recent RENFORCE’s special blog series on EU law enforcement (10 blog posts published from May 9 until May 25, 2021). In my contribution to that series, I have argued for the necessity of EU law enforcement strategy and theory to ensure successful enforcement. An essential part of that should concern the proliferation and institutionalization of EEAs where the design of system of controls must be discussed. A number of studies have showed that the design of such system needs to take into account the fact that enforcement involves a number of different types of actions and decision-making processes, including determining enforcement strategy, issuing soft law guidelines for supervision, exchange of information, (non) legally-binding decisions and actions resulting from investigations and sanctioning, undertaken by officials and institutions from different jurisdictions, whose norms, procedures and standards for operation and review differ (among others Mustert and Scholten 2021; Contreras Condezo, Kingma and Scholten 2020; Scholten and Brenninkmeijer (eds) 2020; Binder, Karagianni and Scholten 2018; Simonato, Luchtman and Vervaele (eds) 2018; Luchtman and Vervaele (eds) 2017).

Shared direct enforcement => aligned systems of controls and ‘joint controllers’

The system of control for shared enforcement tasks is at this moment embedded largely in relevant secondary legislation, such as founding acts of respective EEAs and other additional acts with reference to the relevant Treaties’ provisions and mechanisms. Those provisions delegating tasks, powers and possible in- and outputs of EEAs and national counterparts are different and are not necessarily connected with the types of controls relevant for those tasks and decisions and/or at least they do not necessary account for possible limits of individual types of controls they prescribe. The provisions on accountability and other controls are often prescribed in separate articles and are oftentimes quite generally formulated and seem to focus largely on EU institutions and procedures. The design of controls does not seem to take into consideration the fact that the shared enforcement tasks and other actions will involve actors, procedures and standards of different jurisdictions, which can cause challenges of different kinds and result in no or less or questionable level of controls. The current situation makes the system of controls for shared enforcement not ‘watertight’ and challenging to enhance the rule of law and democratic values.

The EEAs can enjoy powers to monitor application of EU laws, often in accordance with various soft-laws that EEAs can create. Furthermore, EEAs can be investigating and sanctioning on their own or together with national authorities, using information and other in- or output from authorities from another jurisdiction. These processes, or at least parts of them, can fall outside administrative review and judicial control, which is normally designed for specific legally-binding decisions coming out of the investigation and sanctioning stages when appealed, if are accepted for review and upon further possible limitations in light of the standard of review and deference. Furthermore, the political accountability via reporting and possible hearings is known to show other limits, such as unspecific reporting standards concerning explaining and justifying choices and actions, which may not be always resolved by de facto agencies’ justifications, and political salience influencing the frequency and level of scrutiny. Clearly, reporting is crucial also for transparency and giving account to the public, yet the public may not be always organized and have resources and channels to scrutinize and bring further actions (via democratic means of control).

Given the limits and peculiarities of different types of controls, also in different jurisdictions for those cases where relevant enforcers work together, it seems logical to consider designing ‘joint controllers’ and at least align the systems of control of different jurisdictions. The ‘joint controllers’ extend to various possibilities:

  • institutions (specialized boards of appeal, panel of EU and national judges or other forums to deal with ‘mixed jurisdiction’ cases),
  • institutional arrangements (such as possibilities to convene (ad hoc/regular) parliamentary hearings of representatives of EU and national parliaments to hold to account for shared direct supervision and enforcement tasks and strategies),
  • and other possibilities, including cooperation networks and joint databases with translated judgements by national courts, etc.

And even when the systems of controls rely on each other’s possibilities and capacity, a check is crucial on to what extent procedural, substantive and other standards and norms for operation and reviews are aligned. For instance, would the relevant courts of auditors be able to cooperate with each other if they were to have different powers in relation to specific types of institutions? To what extent can you expect a system of private law enforcement be effective if national courts use different procedures and interpretations of key notions in a specific policy area? Finally, the alignment is crucial in terms of expertise between the enforcement actors and those who are designed to control them (parliaments, courts), where the development of proliferating Boards of Appeal seems like a relevant development.

Meroni+ (non-)delegation doctrine also for designing the necessary system of controls over shared direct enforcement

“[O]ne of the weightiest objections to a plurality in the Executive . . . is that it tends to conceal faults and destroy responsibility . . . .It often becomes impossible, amidst mutual accusations, to determine on whom the blame or the punishment of a pernicious measure . . . ought really to fall” (The Federalist No. 70 (Alexander Hamilton)). The shared direct enforcement in the EU gives rise to concerns stemming out these ‘classic’ dangers prompted by dispersion of the executive power (risk of escaping controls) as well as poses novel questions of what system is ought to be the ‘right’ one for such a sui generis system of shared enforcement processes, which by the way differ greatly throughout different policy areas. Scholten, Maggetti and Versluis (2017) distinguish three types of sharing of enforcement powers between EU and national authorities – hierarchical, parallel and supportive – and argue that the systems of control may need to be adjusted to these different types (and possible variations within them).

Anyhow, the essence of the non-delegation doctrine is to lay down the norm as to when a delegated power is legitimate. The EU delegation doctrine is built on the so-called ‘Meroni+’ case-law (Meroni, Romano, ESMA-shortselling judgements) where the essence is allowing delegation of specific and delineated powers only under the obligations of ensuring conditions limiting discretion and controls over the exercise of those powers. Since the system of delegation of power has been evolving and includes also shared tasks in enforcement, which include novel interactions between actors and their different in- and outputs from different jurisdictions, it is only logical that the creation of such institutional innovations can be legitimate once is being supported by a reconciled system of controls. Such system of controls should reflect upon the peculiarities of the EU multi-jurisdictional set-up in which the shared enforcement takes place upon delegation. Hence, the logic of the (non) delegation doctrine can be useful for establishing aligned systems and mechanisms and joint institutional and other arrangements, such as mentioned earlier.

Recommendations for those who will assess and (re)design

To ensure having the appropriate system of controls – be it for an official (re)designing the system or a researcher assessing it with a view of giving further advice – the following three recommendations seem useful to take into account. 

  1. Analyse the system of shared enforcement and identify relevant responsibilities, tasks, powers, parts of processes, inactions and possible in- and outputs in the process of EU shared enforcement. In other words, do not limit your focus only to potential final, legally-binding decisions issued by an EEA or national authorities.

(Among the questions to address are the following. Which authority (EU and/or national one) does what in monitoring, investigating and sanctioning? What is exactly shared between EU and national authorities (tasks, stages of enforcement, processes, etc.) and how? Who determines the standards for monitoring and enforcement strategy and via which means (soft laws?)? How much discretion is given and is delineated to an EEA and/national authority in performing its enforcement tasks?)

  1. Analyse the system of controls in relation to the identified responsibilities, tasks, powers, part of processes, inactions and possible in- and outputs of EEAs and/or national authorities. In other words, do not limit your analysis to controls of an enforcement authority as an institution or in general.

(Among the questions to address are the following. What type of control is there for each (shared) enforcement action, decision, process, etc? To what extent is that type of control effective in a multi-jurisdictional legal order of the EU? What additional types of controls could mitigate for possible challenges? To what extent does the law define and take into consideration possible differences in actors, procedures and standards of different jurisdictions in the prescribed controlling mechanisms?)

  1. Make assessments and adjustments, where necessary, by connecting adjustments to the sources of challenges in controls to ensure controls for EU shared direct enforcement. In other words, note that sources of the problem can be hidden in limits of individual types of controls and/or in differences in norms, procedures and standards of operation and review of different jurisdictions involved in shared enforcement.

(Among the questions to address are the following. What is the source for challenges in controls: limits of individual types of controls and/or disalingment of the system of controls? To what extent the identified types of controls can be effective for the identified shared enforcement actions, decisions, processes, etc. and if not, which types of controls and in which jurisdictions should be used instead/as addition to the existing ones? To what extent can the identified control be meaningful in terms of the degree of mismatch of expertise of enforcers and those who design to control them and how could the possible mismatch in expertise be addressed? To what extent can existing or potential de facto controlling practices be useful to support missing or ineffective de jure controls?)

Author: Miroslava Scholten

Miroslava Scholten is an Associate Professor of EU law enforcement at Utrecht University and a member of the Utrecht Centre for Regulation and Enforcement in Europe (RENFORCE). The author would like to acknowledge the financial support of the Dutch Council for Scientific Research (NWO) under the “veni scheme” for writing this blog post.

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