The House of Commons decided, yesterday, pursuant to Article 6 of Protocol (No 2) on the Application of the Principles of Subsidiarity and Proportionality, to send to the Presidents of the Council, the European Parliament and the Commission a Reasoned Opinion stating that the Draft Regulation of the European Parliament and of the Council to introduce a Common European Sales Law does not comply with the principle of subsidiarity, for the reasons set out in Chapter 5 of the Forty-Seventh Report of the European Scrutiny Committee.

During the debate Bill Cash made the following interventions:

The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt): I beg to move,

That this House considers that the Draft Regulation of the European Parliament and of the Council to introduce a Common European Sales Law (European Union Document No. 15429/11 and Addenda 1 and 2) does not comply with the principle of subsidiarity, for the reasons set out in Chapter 5 of the Forty-Seventh Report of the European Scrutiny Committee (HC 428-xlii); and, in accordance with Article 6 of Protocol (No. 2) of the Treaty on the Functioning of the European Union on the application of principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the Presidents of the European Institutions.

I will start by making some general contextual comments. I am pleased that this debate has been called because the proposed common European sales law is important both politically and legally. I know that it is of interest to Parliament and the public.

This debate makes use of article 6 of protocol 2 to the Lisbon treaty, the subsidiarity protocol, which enables national Parliaments to put forward a reasoned opinion challenging a proposal by the European Commission on the grounds that they do not consider that it complies with the principle of subsidiarity. I believe that this is the fourth time that this House has considered such a motion. The first three related to financial services and this is the first in the area of justice. I note with interest that a debate on the same proposal was held in the German Bundestag last week, where it was accepted unanimously that the proposal for the common European sales law was contrary to the principle of subsidiarity. I am sure that fellow member states and their Parliaments will listen with interest to what is discussed and concluded here today.

I should make it clear at the outset that the drafting of a reasoned opinion is a matter for Parliament, not for the Government. The European Union treaties have given the role of the supervision of subsidiarity to national Parliaments. It is therefore Parliament’s task to decide whether to present such an opinion to the European Union institutions. I should also say that the Government are considering a report by the Procedure Committee relating to the handling of reasoned opinions such as this. I hope that the House will understand if I do not speculate on what the outcome of those considerations will be.

Subsidiarity is a word that we hear much about when dealing with European legislative proposals. It may assist the House if I say a few words about it. The concept is defined in article 5 of the treaty on European Union: “in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.”

It follows that subsidiarity is a specific legal and political concept. In simple terms, it means that decisions should be taken as closely as possible to the citizens whom they affect, and that the European Union should act only when outcomes can be better achieved at European Union level. Subsidiarity is different from the principle of proportionality, under which any action taken by the European Union should not exceed what is necessary to achieve the stated objectives.

Successive Governments have supported the principle of subsidiarity. I am told that the United Kingdom pushed for it to be strengthened in the Lisbon treaty. The treaty includes a requirement that all legislative proposals should include a statement making it possible to appraise their compliance with the principles of subsidiarity and proportionality. It also introduced the power for national Parliaments to transmit reasoned opinions relating to subsidiarity, such as that which we are debating today. The European institutions—the Commission, the Council and the European Parliament—are obliged to take account of all such opinions.

Moreover, if one third of the national parliamentary chambers throughout the European Union submit such opinions, the Commission must review its proposal. I do not think that any proposal has yet been objected to by a third of the national parliamentary chambers. If that did happen, it would represent a powerful political signal, which the Commission would do well to heed. It cannot be denied that one third is a high threshold. To achieve it will require a great deal of co-ordination between national Parliaments. As I have said, this is a matter for Parliament and not for the Government. I can only encourage the European Scrutiny Committee and other interested parties in Parliament, both in this House and the other place, to make the best use of their contacts with other national Parliaments in this regard.


Mr William Cash (Stone) (Con): I am grateful to the Minister for his comments. As he knows, the European Scrutiny Committee’s conclusion is that the proposal does not respect the principle of subsidiarity. I heard what he said about the difference between the two chambers in Germany. We know that the Bundestag takes the same view as us, and the fact that the Bundesrat does not fails to alter the fact that there is a powerful reason for us to pursue the points that led to the reasoned opinion that we are submitting.

Many organisations have been consulted or have offered evidence on the matter, and their evidence is very powerful from a practical point of view. I have in mind the evidence of Which?, Consumer Focus, the Federation of Small Businesses and the Law Society. It would be invidious to go through each of the objections and arguments that they have made, but in general there are questions about whether there is clear evidence that the regulation is needed and about legal uncertainty, cost and potential confusion.

There is no doubt that throughout the whole business community, there is grave concern about the range and extent of such a provision. In a nutshell, the question whether there is compliance with the principle of subsidiarity is essentially one of practicality as much as of constitutional propriety. The whole object of subsidiarity is to determine whether a matter is better handled at national level than under the aegis of the European legal framework. It remains to be seen whether other national Parliaments enable us to reach the threshold necessary for the matter to be returned to the Commission, but all the evidence that we have received demonstrates that the UK should adopt the reasoned opinion and send it to the Presidents of the Commission, the Council of the European Union and the European Parliament before 12 December.

All the arguments are set out in the papers that are in the Vote Office. As I said, I do not think it is necessary or desirable to take the House through every jot and tittle of them—they are so powerful that I really do not think there is any need for me to do so. I would, however, say that it is axiomatic that an optional sales law common to all member states is something that can be better achieved at EU level than at national level. However, that is to assume that the proposed common sales law is necessary and will produce clearer benefits by reason of its scale and effect than action by member states. Based on the evidence to which I have referred, the European Scrutiny Committee doubts whether either requirement has been met.

In addition, the Committee finds that the Commission has again failed to prepare a detailed assessment, in accordance with article 5 of protocol 2 to the Lisbon treaty. That is a very important point. It makes it exceedingly difficult for national Parliaments to determine whether there has been compliance with the principles of subsidiarity within the eight-week period. We were greatly assisted in this case by the submissions that we received from the organisations in the UK to which I have referred. Where their concerns overlapped, we found that there was a convergence of views. That was particularly instructive and helpful to the Committee, and we are grateful for that. In fact, I would go further and say that I wish more business organisations would make submissions more frequently on many such matters that come before my Committee. It is one thing for us to form a judgment, but it is also extremely important to know that it is based on firm practical considerations.

The Commission’s failure to provide a detailed statement amounts, in our view, to an infringement of the essential procedural requirements laid down in protocol 2. We therefore recommend that the House adopts a reasoned opinion to be sent to the Presidents of the Commission, the Council and the European Parliament before the deadline of 12 December. We retain the draft regulation under scrutiny pending a further update on the negotiations, and we are particularly interested to hear the outcome of the discussions on the appropriate legal base. As far as we are concerned, the communication itself can be cleared from scrutiny. I therefore submit that the draft reasoned opinion of the House should be adhered to and submitted accordingly, and that we should do all in our power to get as much support as possible from other member states, because of the serious breaches of the procedural arrangements and because of the breach of the subsidiarity principle. I look to the Government to do that.


Mr Cash: I rise simply to say that the City of London corporation has also provided a method of objection and to add it to the other representative organisations I mentioned.


Mr Cash: On the question of legal base, does my hon. and learned Friend recall that originally the Secretary of State for Justice took the view that he had doubts over whether article 114 was appropriate? There was then the question of whether article 352 might not be more appropriate. Unfortunately, because of the enactment of the European Union Act 2011, primary legislation had to be passed before the Government could give their consent to the adoption of the proposal on article 352. Therefore, there is a serious question over whether there has been complete compliance not only with the principle of subsidiarity but with the legal base.


Stephen Phillips: I am extremely grateful to my hon. Friend for his intervention, brief or not. I will not fall into his elephant trap of discussing what precisely is necessary under the European Union Act 2011, but I will say that I agree with him. It is right that there is no justifiable legal base under article 114, not least because the European Court of Justice has itself made it clear that that article cannot be used for the harmonisation of laws within the European Union.

I was on the point of saying that there is a real problem with running in parallel two systems of contract law, particularly where that might lead to different results and where one has not been the subject of extensive judicial consideration. In such a case, it is inevitable that there would be differences of opinion among those who are called on to provide advice on the rights, obligations and entitlements of parties to contracts, and they are the ones who are subject to this new system of optional contract law were it to be in place. For those reasons, it must be entirely right that we should not seek to accommodate the Commission’s proposals to have in place two parallel systems of contract law in this country. That would be detrimental to the interests of the United Kingdom and consumers and businesses all over the European Union. For those reasons, I urge the Minister to make those points as strongly as he can to his colleagues in Europe, and I make those points, albeit through you, Mr Deputy Speaker, to the other national Parliaments who really need to require the Commission to justify its proposals.