Strasbourg, 30 January 2009                                                                LR-IC(2009)2

                                                                                                                       

EUROPEAN COMMITTEE ON LOCAL AND REGIONAL DEMOCRACY

(CDLR)

COMMITTEE OF EXPERTS ON LOCAL AND REGIONAL

GOVERNMENT INSTITUTIONS AND CO-OPERATION

(LR-IC)

REVISED DRAFT (4)

PROTOCOL NO. 3

TO THE EUROPEAN OUTLINE CONVENTION ON TRANSFRONTIER CO-OPERATION BETWEEN TERRITORIAL COMMUNITIES OR AUTHORITIES

CONCERNING EUROREGIONAL CO-OPERATION GROUPINGS

 Secretariat Memorandum

prepared by the

Directorate General of Democracy and Political Affairs

Directorate of Democratic Institutions

This document is public. It will not be distributed at the meeting. Please bring this copy.

Ce document est public. Il ne sera pas distribué en réunion. Prière de vous munir de cet exemplaire.

Introduction

This document reproduces the fourth revised version of the draft third protocol to the Madrid outline convention on Euroregional Co-operation Groupings[1].

The changes made in the text concern the issues raised at the meeting of the LR-GI committee on 13-14 October 2008 (LR-GI(2008)9) with a view to ensuring the compatibility of the draft third protocol with the fundamental requirements of the domestic legal order of member states and, of the member states of the European Union, with Regulation No 1082/2006 of the Council and European Parliament.

The LR-GI committee agreed that a further reading of the draft would be necessary before it is submitted to the CDLR for consideration and adoption at its meeting in April 2009. This reading would take place in the framework of the present meeting of the LR-IC committee, which has taken over the terms of reference of the LR-GI committee for transfrontier and interterritorial co-operation.

The protocol aims at providing the fundamental legal provisions governing the capacity and the establishment of ECGs. The implementing rules are already in the domestic legislation of the contracting parties, since the law governing the functioning of the ECG is the law of the state in which the ECG has its headquarters.

Since legislation may vary from state to state, the choice of the headquarters state may therefore be taken in the light of the legislation applicable, the advantages and disadvantages of the options available to the founding members of an ECG.

In order to overcome the difficulties linked to the differences in national legislation, the LR-CT had agreed that the protocol should be supplemented by an appendix containing model provisions for the domestic legislation applicable to ECGs. These provisions would be fully optional for the contracting parties.

The appendix would be based on the “model uniform law” originally discussed by the LR-CT and would take into account the main features of the legislation of member states, in particular that of EU member states adopted in compliance with Regulation 1082/2006. To avoid delaying finalisation of the draft third protocol, it is suggested that the appendix be drafted during a subsequent round of negotiations. The third protocol could in which case contain an article similar to Article 3 of the Madrid Outline Convention whereby optional provisions pertaining to the ECG would be drafted and appended to the protocol, subject to the approval of the Committee of Ministers of the Council of Europe.

If the Committee agrees, the current Article 13 will be amended accordingly.

Action required

The Committee is invited to

-        finalise the draft third protocol to the Madrid Outline Convention on Euroregional Co-operation Groupings;

-        agree to  forward it to the CDLR for consideration and adoption;

-        instruct the Secretariat, with the assistance of a consultant, to draft the appendix to the third protocol;

-        agree to examine and adopt the draft appendix at a subsequent meeting.

Revised Draft Protocol

General Comments

The adoption of EC Regulation No. 1082/2006 on a European grouping of territorial cooperation (EGTC) has created a new situation for promoting transfrontier and inter-territorial co-operation under the auspices of the Council of Europe. As the preambular provision (2) of this Regulation makes clear, there are still “significant difficulties” for the EU member states and their regional and local authorities in implementing and managing actions of territorial cooperation “within the framework of differing national laws and procedures.” The same holds true, of course, for Council of Europe member states. The question  which arises, therefore is how the common goal of the EU and the Council of Europe, namely to foster transfrontier and interterritorial cooperation, can best be achieved.

A closer look into the EC Regulation reveals two striking features:

-        firstly, EGTCs are, in principle, restricted to EU member states. Only the preambular provision (16) of the EC Regulation refers to the possibility that entities of third countries may participate in an EGTC. Any transfrontier or interterritorial cooperation between EU member states and Council of Europe member states which are not EU members, and respectively their sub-national entities, would therefore be difficult;

-        secondly, this EC Regulation is somewhat different from other EC Regulations, deviating as it does from the general rule developed by the European Court of Justice with regard to the direct effect and supremacy of EC regulations vis-à-vis the national law of EU member states:

a)    the establishment of an EGTC is not an obligation for member states, but only optional (preambular provision (8); Article 1); and

b)  the establishment of an EGTC is subject to the national law of the member states thereby reversing the usual hierarchical order of EU law over the national law of the member states, as can be seen from Articles 3 and 4. Article 3 enables an EGTC to be established only within the limits of their competences under national law. Article 4 prescribes in more detail that the establishment of an EGTC depends on the approval of the central authorities. The establishment of an EGTC can be prohibited if the participation of the subnational entity is not in conformity with national law or not justified for reasons of public interest or public policy of that member state.

Seen from this background, the following structural comparison of the EC Regulation with the proposed third Protocol for the establishment of Euroregional Co-operation Groupings (ECGs) clearly demonstrates that the legal regimes of the EU and the Council of Europe as well as their legal instruments neither compete nor even exclude each other. Instead they are complementary to such an extent they enable the utmost flexibility for fostering all possible forms of transfrontier and interterritorial cooperation for both EU and non-EU member states within the Council of Europe. Such a flexibility leaves it to the states themselves to determine the form of cooperation and the legal basis they prefer.

Although the EC Regulation provides general basic rules for establishing an EGTC, either their provisions sometimes lack legal clarity or they delegate several important questions for the functioning of such bodies to the founding agreement or statute, both which might provoke renewed political disputes on matters of central concern. The third Protocol, however, offers a better balance between the general principles and the detailed rules so as to provide a maximum flexibility and, at the same time, more legal certainty thus helping to avoid such disputes. This is achieved by regulating questions essential for overcoming obstacles to territorial co-operation and stemming from the legal diversity of national legal systems, by creating on the one hand a set of provisions without the possibility of reservations and, on the other, an additional optional set of detailed rules for the operation of ECGs (the optional Appendix).

The tasks of an EGTC are limited to territorial cooperation programmes or projects co-financed by the EC through the European structural funds, as can be seen from Article 7 paragraphs 2 and 3 of the EC Regulation. But even “other specific actions” of territorial cooperation, which may be implemented in exception to the rule, are limited exclusively to the objective of economic and social cohesion (see Article 1 para 2). Since non-EU member states do not have access to EU structural funds, their participation in an EGTC is therefore practically excluded. A different legal basis is therefore required, if any form of territorial cooperation between EU member states and non-EU member states is to take place. This legal basis may be provided by the third Protocol.

The tasks of an ECG, by comparison shall be much broader, covering all aspects of territorial cooperation, extending beyond social and economic cohesion, to include, for example, cultural cooperation, education and research and the creation of Euroregions as sustainable networks of territorial and functional co-operation. At the same time and in line with the EC Regulation, there are several caveats in the proposed text of the third Protocol making it clear that this Protocol does not confer any new competences or powers to the local and regional communities or authorities of the Council of Europe member states that they do not possess already under their respective national law.

As far as the legal nature and the legal capacities of an EGTC and  an ECG are concerned, it goes without saying that for legal certainty both must be established as legal persons. The third Protocol, therefore, not only follows the EC Regulation in this regard, but also the Additional Protocol to the Madrid Outline Convention which itself already provides for the possibility of establishing public or private law entities.

The legal nature and capacity of EGTCs or ECGs should further be seen in conjunction with their membership regulations. The EC Regulation excludes private law entities from membership of an EGTC under its Article 3 – an exclusion that could be seen as inconsistent with the ERDF Regulation and EC Regulation No. 1083/2006, both which provide for the participation of social partners in the management of EU programmes. The third Protocol, on the other hand, enables the inclusion of private law entities owing to the much broader tasks foreseen for an ECG, such as in the creation of Euroregions which might require the participation of actors not only from the social partners, but also from cultural organizations or civil society. Of course, the third Protocol does not extend this possibility to each and every actor. Indeed, all legal entities which are purely profit-oriented are excluded. Moreover, if the national law of a Council of Europe member state prohibits the participation of private legal entities, the third Protocol does not overrule the national law of this member state, since no new competences or powers may be created. At the same time, however, and for the sake of fostering cooperation, the participation of private entities is not excluded, if their participation is permitted by the national law of other member states of the Council of Europe. The draft Protocol in this way offers the utmost flexibility for establishing different forms of cooperation.

In theory, this could lead to an ECG being at the same time an EGTC (i.e. having an identical legal personality).  This problem, though, arises more in theory than in practice.  Territorial communities or authorities of EU member states wanting to perform tasks falling outside the scope of managing EU structural funds require the Council of Europe legal framework offered by the Madrid Outline Convention and its Protocols.  The same is true for territorial communities / authorities of EU member states which, from the outset, intend to cooperate with non-EU member States. Where the identical legal personality problem may arise, therefore, is when the members of an already established EGTC wish to broaden their tasks and/or include members from non-EU member States.  In broadening their tasks or including members from non-EU member States, they need to create an ECG. The question this raises is whether the existing EGTC is wound up by the creation of the ECG.  The answer is simply no. The two bodies co-exist. Members of an EGTC may be members of an ECG at the same time. Actions they would execute as members of the EGTC, e.g. the management of EU structural funds, are actions of the EGTC and governed by the EC Regulation, and the different broader actions they would execute as members of the ECG are actions of the ECG and governed by the third Protocol. What must always be clear, for the purpose of legal certainty, particularly vis à vis third parties, is whether in the execution of a particular task the respective territorial communities or authorities act as members of an EGTC or an ECG. 

The EC Regulation and the proposed third Protocol both contain other structural elements necessary for the functioning of EGTCs or ECGs.  These include rules for their establishment, their supervision by central authorities through financial audit and administrative and judicial review, and dispute settlement mechanisms. Any differences in these elements between the two instruments arise from the aim of the third Protocol to achieve a better balance between these general principles, the rules which are required as a minimum standard for the functioning of a legal entity and the more specific and detailed rules which provide for the practical operation of these legal entities. As outlined already above, this approach provides for greater flexibility and less intervention in the national legal systems of the Council of Europe member states.

Revised Draft (4)

Protocol No. 3

to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities

concerning Euroregional Co-operation Groupings (ECGs)

The member States of the Council of Europe, signatory to this Protocol No 3 to the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities,

-        wishing to facilitate co-operation between territorial communities or authorities belonging to different States in keeping with States’ political and administrative structures and international commitments,

-        being resolved to supplement for this purpose the legal framework provided by the European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities and its Protocols of 9 November 1995 and 5 May 1998,

-        considering the Declaration of the Third Summit of the Heads of State and Government of Warsaw (16 and 17 May 2005) and the Action Plan adopted at the Summit, which foresees the development of “transfrontier co-operation, as necessary”,

-        aware of the difference between States in terms of the political and administrative organisation of territorial communities and authorities,

-        wishing to forestall the difficulties that could arise from the diversity of national law in the field of transfrontier or interterritorial co-operation,

-        wishing to meet the needs of those member States that are resolved to harmonise further their national law,

-        aware that for a number of member States framework legislation may be sufficient, in particular having regard to the current state of their national law, which includes the relevant provisions of European law as adopted by the competent institutions of the European Union,

Have agreed the following provisions:

Part I

Article 1[2]

Euroregional Co-operation Groupings (ECGs)

1        Territorial communities or authorities of two or more Council of Europe member states and other members referred to under Article 3, paragraph 1 may set up a body in the form of a "Euroregional Co-operation Grouping” (ECG) on the territory of the member states of the Council of Europe under the conditions and subject to the arrangements provided by this Protocol.

2          The objective of the ECG shall be topromote, support and develop, for the benefit of populations, transfrontier and interterritorial co-operation between its members in their common areas of competence and in keeping with the competences established under the national law of the states concerned.

Comment

As already outlined in the General Comment above, this article is broadly drafted to ensure a maximum flexibility in co-operation, while limiting co-operation from two important aspects: firstly it is made clear from the very beginning that this protocol does not create new fields of competences. This is fully in line with the EC regulation. Local and regional authorities will always have their own spheres of competences defined by the constitutional and legal order of their member state and co-operation is thus limited to these spheres of competences. Secondly, since co-operation in a legal form also requires agreement-making powers, the limitation further guarantees that no additional agreement-making powers are conferred on local or regional communities or authorities under this Protocol. Moreover, it is made clear from the very beginning that an ECG can only be established in a member state of the Council of Europe.

The name “Euroregional Co-operation Grouping” (ECG) tries to reflect the fact that both local and regional communities and authorities established on a territorial basis and other public or private law entities as specified in more detail under Article 4 should participate in transfrontier and interregional co-operation with the intended aim of creating sustainable networks and not new territorial entities. Both territorial and functional co-operation are in line with the corresponding EC regulatory framework.

Article 2[3]

Legal Personality, Legal Capacity and Applicable Law

1        The ECG shall be a legal person, governed by the law of the state in which it has its headquarters.

2        The ECG shall have the widest legal capacity granted in the national legal order under which it is established to similar groupings of territorial authorities or communities, whether of private or public law. The name of the ECG whose members have limited liability shall include the word “limited.”

3        The ECG shall have the right to have its own budget and the power to implement it.

4.       The ECG may enter into contracts, hire staff, acquire movable and immovable property and bring legal proceedings.

Comment

For the sake of legal certainty and simplicity paragraph 1 provides that the legal personality of the ECG is obligatory, in contrast to the provision in this regard of the Additional Protocol (Article 3). Secondly, the law applicable to the agreement and to the actions of the ECG shall be the law of the state in which the ECG has its headquarters. However, there may be some instances where the law of other states is also applicable as can be seen, for example, from Article 4 paragraph 1 on notifications or Article 12 paragraph 2 on auditing.

Paragraph 2 provides for a well-liked clause for fostering the aim of promoting territorial co-operation between territorial communities or authorities. Read in conjunction with Article 3 on membership, three “types” of ECGs in terms of membership and legal instruments to be used are therefore possible:

a) public law ECGs with only public law entities, either territorial or functional, as members;

b) mixed public law ECGs, with both public and private law entities as members;

c) private law ECGs, composed of private and public law entities, the latter acting, however, under private law, as this is the case, for instance, under Article 18 of the Austrian Constitution when territorial authorities may use private law legal instruments such as contracts. Private law ECGs are already possible under the Additional Protocol so that existing forms of cooperation need not be changed. Moreover, the members of the ECG are not granted any additional competences that they do not already possess under their respective national law.

Under Article 9 paragraph 1, ECG members may be jointly liable and, if the liability of at least one ECG member is limited as a result of the national law under which it is established, then the name of the ECG shall include the word “limited”. The national law of the other ECG members will determine whether they too can limit their liability.

Paragraph 3 establishes the principle of budgetary autonomy and enumerates in a non-exhaustive list other legal capacities necessary for the proper functioning of a body with legal personality, without excluding the possibilities which might follow from the Appendix.

Article 3[4]

Membership

1        Members of the ECG shall be territorial communities or authorities and may also include the respective member states concerned of the Council of Europe. Other public or not-for-profit private law entities, as well as profit-oriented entities entrusted with public interest goals, established in a member state and associations of bodies belonging to one or more of the above-mentioned categories may also be members of the ECG. Individuals may not be members of the ECG.

2        Territorial communities or authorities of non-member states of the Council of Europe may also be members of the ECG subject to the condition referred to in Article 1 paragraph 1.

3        Territorial communities or authorities shall have the majority of voting rights in the ECG.

Comment

Paragraph 1 defines the possible members. ECGs are primarily established by and for territorial communities or authorities. However, under this provision member states themselves may become members, since this is also the case under the EC regulation on EGTCs (Article 3, 1. a). From a comparative constitutional law perspective, the participation of a member state(s) in the foundation of an ECG enables the establishment of public law legal entities with this(these) state(s) and its(their) territorial subdivisions or authorities if the (local and regional) territorial communities or authorities or other, i.e. functional, legal entities alone are not entitled to do so due to restrictions from their national constitutional law. Hence, their participation for specific purposes would not require a general amendment of the respective constitutional law.

The term “other” in “other public or not-for-profit private law legal entities” refers to non-territorial, i.e. functional, legal entities such as chambers of commerce or trade unions which might also be established at regional level. Their inclusion as full members must be seen from two aspects: firstly, they should contribute to the funding and, secondly, the new ERDF regulation and EC Regulation No. 1083/2006 provide for the participation of the social partners (see in particular Articles 11, 42 and 59) in the management of EU programmes. Representative social partners such as chambers of commerce or trade unions - which are established in several member states either as private law entities in the form of associations or as public law entities - may therefore become members from the very beginning. If a state’s national or regional law does not allow private law entities to participate in an ECG, this does not - as already outlined in the general comment - exclude the participation of private law entities from other states. No state can simply impose its national or regional legal restrictions on other jurisdictions.

With regard to the distinction between “not-for-profit” private law entities and profit-oriented entities with public interest goals it is made clear that commercial enterprises may not participate for private gain per se. However, public or private law entities which make gains in pursuing goals of public interest are authorised to become members.

Paragraph 2 must be seen in the form of an “opening clause”.  It enables the conditional participation of members which are not covered by the territorial scope of the Council of Europe under the condition that the ECG itself is established in a Council of Europe member State. Moreover, this possibility is only open to territorial communities or authorities.

With regard to paragraph 3, it has to be taken into consideration that both the EU and Council of Europe legal instruments foresee territorial and functional cooperation by territorial communities or authorities as their main purpose since they carry out tasks in the general interest of their populations. Private law entities^(*), however, pursue mostly special interests on behalf of their own members. In order to avoid the risk of these special interest organisations overruling territorial communities or authorities in the policy development and decision-making processes of the respective ECG, paragraph 3 makes it clear that whatever their number, territorial communities or authorities must retain the majority of the voting rights in an ECG and therefore its control .

^(*) including

i)          social partners such as chambers of commerce or trade unions,
ii)         but also not-for-profit oriented legal entities such as civil society associations, private universities or research foundations

iii)         and even for-profit institutions with public interest goals such as regional development agencies and other forms of Public-Private-Partnerships

Article 4[5]

Establishment of the ECG

1        The ECG shall be established by a written agreement of its founding members. The agreement shall specify the name, the headquarters of the ECG and whether the ECG shall have the status of a public-law or private-law entity. Before concluding an agreement to found the ECG or before joining the ECG, the territorial communities or authorities shall notify their national authorities of this intention in accordance with the national law applicable.

2        The agreement shall be registered or published in the State where the ECG has its headquarters, as well as in all States to which its members belong, in accordance with the national law applicable.

3        The agreement shall be written in the language(s) of the state where the ECG has its headquarters and in the language(s) of the member(s), all versions being equally authentic.

Comment

Under paragraph 1, an ECG must be established by the written agreement of its founding members thereby implying unanimity. The agreement must specify the name, the state of the headquarters (because this governs the law applicable) and its private or public law status. With regard to the status of a public or private law body, see the general comment.

In addition, the territorial communities or authorities must notify their national authorities that they wish to become a founding member of an ECG or to accede to an ECG. This follows the similar provision under Article 4 of the EC Regulation. In contrast to the EC Regulation, however, there is no requirement that the central authorities of the member state give their consent for the establishment of an ECG or accession to an existing ECG since this is determined by national constitutional law and not by interference in the national law of this Protocol. In practice, however, this provision will yield the same results: first, on the basis of notification the central authorities can have recourse to their national supervisory legal instruments in order to control the legality or constitutionality of a draft agreement; second, the provisions of Article 16 allow each state already at the time of ratification to designate all the types of territorial communities or authorities and public or private law entities it wants to exclude from the scope of application of this Protocol.

The registration or publication requirement provides legal certainty and maintains the transparency of the work of public entities such as territorial communities or authorities. Registration or publication must conform to the legal practice of the states concerned. For agreements setting up public law entities this may include publication in the national Official Gazettes, whereas agreements setting up private law entities are usually registered with administrative or judicial authorities.

The agreement shall be written in the language(s) of the headquarter state and of the members, whereby all versions shall have the same legal validity. This avoids the problem of the “authentic” language for the purposes of interpretation and disputes. This does not exclude, however, if it is agreed, an agreement drawn up in fewer languages, provided they are the languages of the members.

Article 5[6]

Statutes

1        The statutes of the ECG shall be an integral part of the agreement establishing it.

2        The statutes shall be written in the language(s) of the state where the ECG has its headquarters and in the language(s) of the member(s), all versions being equally authentic. They may specify which language or languages is(are) to be considered the working language(s).

3        The statutes shall specify the tasks of the ECG. They shall also contain rules on membership, operations, organs and their tasks, staffing, budgets and financing, liability, accountability and transparency of the ECG, without prejudice to the provisions of this Protocol and in conformity with the applicable law.

Comment

Paragraph 1 makes it clear that the provisions specifying the detailed structure for the operation of an ECG must be set out in an accompanying statute which nevertheless forms an integral part of the agreement to be concluded unanimously by the founding members.

Paragraph 1 in conjunction with paragraph 3 makes it clear that these more detailed rules are either already part of the national law of the state in which the ECG has its headquarters, or that they may be adopted from the Appendix to this Protocol. The list of contents of the statute is therefore non-exhaustive, and lays down the minimum requirements. The law applicable to all issues to be included in the statutes does not have to be the law of the state in which the ECG has its headquarters, as can be seen, for instance, from Article 12 paragraph 2 on auditing.

Paragraph 2 determines the language(s) of the text for the sake of legal certainty, in line with the provisions of Article 4 paragraph 3. The working language need not be one of the languages of the statutes or the agreement.

Article 6[7]

Amendments to the Agreement and the Statutes

Any amendment to the agreement referred to in Article 4 and any substantial amendment to the statutes referred to in Article 5 shall follow the same procedures and form. Substantial amendments to the statutes shall be those entailing, directly or indirectly, an amendment to the agreement. The majority required for the adoption of any such amendment shall be determined in the statute.

Comment

This Article follows a similar provision in the EC Regulation (Article 4 paragraph 6).

Article 7[8]

Tasks and Scope of Action

1        The ECG shall perform the tasks that its members entrust to it. These tasks shall be in accordance with the competences of the members under their respective national law and shall be listed in the statutes.

2        The ECG shall adopt decisions and ensure their implementation, in respect and for the benefit of individual persons or legal entities subject to the jurisdiction of the states to which its members belong. Members shall adopt or facilitate all necessary measures falling within their competences in order to ensure that the ECG’s decisions are implemented.

3        The ECG shall not be empowered to take measures that apply generally or which might affect the rights and freedoms of individuals, or to impose levies of a fiscal nature.

4        The ECG may not exercise competences that territorial authorities or communities exercise as agents of the state to which they belong or by virtue of the competence delegated to them by that state, except where duly authorised. It may exercise competences that state(s) members of the ECG confer upon it.

Comment

Following the argumentation in the General Comment section, paragraph 1 provides for maximum flexibility as regards the reasons why an ECG shall be established: either for particular issues such as disaster prevention or for overall territorial co-operation in all areas of competence of the prospective members. Although this is not explicitly mentioned in the text, it is clear that the tasks of the ECG may also include the implementation of territorial co-operation programmes co-financed by the European Union, notably the Structural Funds, as well as the management of any financial resources allocated to the ECG and the granting of financial aid to third parties. This goal may be pursued without the ECG having to adopt the status of an EGTC as explained above in the General Comment section. 

The second sentence of paragraph 1 again makes clear that neither this Protocol nor an agreement can create new competences which the members do not already enjoy.

Paragraphs 2 and 3 must be read in conjunction. Paragraph 2 again provides for the utmost flexibility with regard to what sort of legal acts may be used for achieving the tasks of the ECG under the national law of the State in which the ECG has its headquarters. In addition, members – according to the subsidiarity principle – must facilitate the implementation of the ECG’s decisions where it lacks the necessary executive power or effective legal mechanisms to enforce them.

 

Paragraphs 3, in contrast, sets the limits by prohibiting ECGs from exercising legislative competences, enacting regulations of an abstract general nature or levying taxes. For reasons of consistency of legal terminology within the Council of Europe legal framework, its wording is based on the more abstract formulation of Article 4, paragraph 2, letters b and c of the Additional Protocol to the Outline Convention.

In member states, local or regional communities or authorities may exercise not only their “own”, i.e. exclusive competences according to the constitutional division of powers, but also those of the State, if these have been delegated to them. In order to avoid “subdelegation” without the consent of the original authority, paragraph 4 prohibits, as a rule, members other than the states themselves from delegating the implementation of central competences to ECGs.

Article 8[9]

Duration

1        The ECG shall be established for a limited or unlimited period of time, to be specified in the agreement and the statutes.

2        The ECG shall be wound up ipso facto when the period for which it was established has expired or if the territorial authorities or communities cease to control the majority of voting rights. It may also be wound up by a unanimous decision of its members.

Comment

These provisions are included for the sake of legal clarity. They do not contain any rules on withdrawal or exclusion of members which should be regulated by the Statutes in accordance with national law or the optional rules from the Appendix.

Article 9[10]

Liabilities

1          The ECG – or, if this is no longer possible, its members jointly - shall be liable vis-à-vis third parties for the acts of its organs, even if those acts do not fall within its tasks.

2        The ECG shall be liable to its members for any breach of the law to which it may be subject.

3        The organs of the ECG shall be liable vis-à-vis the ECG for any breach of law they have committed in the exercise of their functions.

Comment

Paragraphs 1 to 3 provide a comprehensive system of liabilities for any possible breach of law by the ECG’s bodies or the ECGs themselves. The general provision in paragraph 1 follows the provision of Article 10 paragraph 3 of the EC Regulation. The joint liability of members - if the ECG cannot be held liable itself – follows a similar “subsidiarity” provision in Article 12 of the EC Regulation. However, as follows from Article 2 paragraph 2, the liability of members may be limited as this is also foreseen in Article 12 of the EC Regulation. The wording “any breach of the law to which it may be subject” covers the national law of the state where the ECG has its headquarters, the law of the territories where the ECG operates and the founding agreement including the statutes. 

Article 10

Dispute settlement

1        In the event of a dispute between the ECG and its members, the competent courts shall be those of the state in which the ECG has its headquarters.

2        In the event of a dispute between the ECG and a third party, the competent  organs or courts shall be those of the state in which the third party effectively resides or, in the case of a legal person, the state in which its seat or headquarters is located as long as these states are member states of the Council of Europe.

3        Notwithstanding the provisions of paragraph 2, the ECG, the territorial communities or authorities, other public or private law legal entities concerned and third parties may conclude an arbitration agreement.  If a third party´s residence, seat or headquarters is not located in the territory of a member state of the Council of Europe, the ECG shall conclude an arbitration agreement for all activities with this party.

4        Third parties shall retain, vis-à-vis territorial communities or authorities on behalf of which the ECG performs certain tasks, all the rights they would enjoy if those tasks were not performed by the ECG.

5        In any case the rights of individuals and legal persons shall include the right to appeal before all competent organs and courts, including the right of access to services in their own language and the access to information.

Comment

Rules on dispute settlement are a necessary part of providing legal security for all members and third parties involved in territorial co-operation activities. Since there is no transnational court system which may be addressed, any institutionalised dispute settlement must either provide rules for the choice of courts of one of the member states involved or provide for arbitration mechanisms.

Dispute settlement must be effective and fair. Paragraphs 1 and 2 provide the rules for deciding which organs or courts are competent and therefore which law is applicable for deciding disputes, either between the members of the ECG or between an ECG and third parties, as long as the parties concerned fall under the jurisdiction of Council of Europe member states which are bound to democracy and the rule of law. Thus paragraph 3, despite its general formulation, provides for arbitration mechanisms in particular for situations where neither the claimant nor the defendant fall under the jurisdiction of a Council of Europe member state.  Paragraphs 2 and 3 therefore provide for a differentiated approach with regard to third parties which are usually beneficiaries: as a rule (see paragraph 2), the competent organs or courts in disputes with third parties are those where the third party resides or has its seat or headquarters as long as this is within the jurisdiction of a Council of Europe member state. However, the first sentence of paragraph 3 allows also for the conclusion of an arbitration agreement as an exception from this rule if the parties involved agree on this in advance. The second sentence of paragraph 3 makes the prior conclusion of an arbitration agreement a binding obligation for ECGs in their dealings with third parties if they do not reside or do not have their seat or headquarters in a Council of Europe member state.

Paragraphs 4 and 5 specify the rights of third parties in more detail. In particular, paragraph 5 establishes a minimum standard for the use of legal remedies which can also be found in the EC Regulation.

Article 11[11]

Administrative and judicial review

1        Decisions and acts of the ECG shall be subject to the same administrative and judicial review of the legality of acts of territorial communities or authorities required in the state in which the ECG has its headquarters.

2        Decisions and acts of territorial communities or authorities and other public and private law entities taken for founding, joining, implementing decisions and withdrawing from the ECG shall be subject to the administrative and judicial review of the legality of acts of territorial communities or authorities and of other public law entities in the forms required in the states under whose jurisdiction the said authorities fall.

Comment

Since an ECG is equated (see Article 2 paragraph 2) to a grouping of territorial communities or authorities, its acts shall be subject to the same type of administrative and judicial review as may exist in the headquarter state for the acts of such groupings. Moreover, the exercise of administrative and judicial review implies the obligation for ECGs to provide any information necessary for the competent authorities to be able to carry out their supervisory function.

In the same way, the acts of the members which are territorial communities or authorities shall continue to be subject to the usual administrative and judicial review under the national law applicable to them. These provisions are meant simply to confirm what is already provided in Article 3, paragraph 4 of the Madrid Outline Convention and in Article 6 of its Additional Protocol.

Article 12[12]

Audit

1        The management and budget implementation of the ECG shall be subject to audit in accordance with the national law of the state in which it has its headquarters.

2        Any other state to which the members of the ECG belong may carry out audits of the acts of the ECG or any of its members acting on behalf of the ECG within its own territory, in accordance with its national law, subject to prior notification of the ECG and the State(s) to which the member(s) acting on behalf of the ECG belong.

Comment

Paragraphs 1 and 2 regulate the requirements for the financial audit of the management of an ECG. In particular paragraph 2 makes it clear that not only auditing bodies established under the national law of the state in which the ECG has its headquarters may carry out financial audits, but also other states in which the ECG is operational. The notification may prove especially helpful if the audit concerns an ECG which has a state among its members, in order to prevent any conflict arising from states auditing each other.

Part II

Article 13[13]

Implementation of the Protocol

1        The Parties shall take such legislative, administrative or other measures as are appropriate to ensure that the provisions of Part I of this Protocol are implemented.

2        In order to facilitate implementation of this Protocol, an Appendix will provide the more detailed, but optional provisions for the establishment and operation of ECGs.  The Parties wishing to introduce into their national law all or part of the provisions of the Appendix may do so in accordance with the relevant constitutional and legislative procedures.

3        The provisions of the Appendix may be reproduced as they appear or may be adapted to meet the needs of the Parties concerned.

4        The Parties may declare that the provisions of the Appendix, once introduced into their national legal order, constitute the implementing provisions referred to in para 1.

5        The provisions of the Appendix do not constitute an authoritative interpretation of the provisions included in Part I of this Protocol.

[6        The provisions of the Appendix shall be drafted by the Council of Europe and appended to this Protocol as soon as they are approved by the Committee of Ministers.]

Comment

This article serves the purpose of making it clear that implementing measures must follow in the Parties, even if no deadline is given for these measures to be adopted. In order to facilitate the drafting of national legislation applicable to ECGs, an Appendix will contain model legislation to be used by the Parties that so wish. It is also explicitly stated that the Appendix is optional and can be used as such or redrafted in full or in part. In any case, the Appendix is not an authoritative interpretation of this Protocol. In the event of conflict, the courts remain free to decide whether national law complies with the Protocol, even in cases where the Appendix has been copied and incorporated.

[To speed up the finalisation of the Protocol, the Appendix may be drafted at a later stage and subsequently added to the Protocol. The provision of paragraph 6 follows those of Article 3 of the Madrid Outline Convention. It differs however from the Madrid Convention in that the approval of the Committee of Ministers is required. In this way, the provisions of the Appendix will be more authoritative and also be better known by the Parties.]

Article 14[14]

Information

1          The Parties shall inform their territorial authorities or communities of the measures taken to implement this Protocol.

2          The Parties shall notify the Secretary General of the Council of Europe of measures  taken to implement this Protocol.

3        The Parties shall forward to the Secretary General of the Council of Europe all appropriate information on ECGs set up pursuant to this Protocol.

Comment

The purpose of this provision is threefold: first, the information of territorial authorities or communities on implementing measures will enable them to decide whether they wish to create or join an ECG or not; second, the notification to the Secretary General and through him/her the information of other Parties will provide them with the relevant information on the legislation in force in neighbouring states, for instance, and facilitate the decision of potential partners to create or join an ECG; thirdly, once ECGs are established, information on their scope, membership, statutes, etc. may prove very useful to other Parties and public opinion in general.

Article 15

Applicability of other treaties

This Protocol shall not affect the applicability of treaties existing between the Parties in matters of transfrontier or interterritorial co-operation or the ability of the Parties to conclude new treaties on the subject if they so wish.

Article 16

Scope of application

1        Each State shall, in a declaration deposited with the Secretary General of the Council of Europe at the time of ratification, acceptance, approval or accession, designate the categories of territorial authorities or communities, public or private law entities or bodies which it excludes from the scope of this Protocol.

2        For the purpose of applying this Protocol, autonomous public communities or authorities vested with their own legislative power under the national law of the Party in whose jurisdiction they are situated shall be considered as "territorial communities or authorities", without prejudice to the provisions of the first paragraph.

3        Any declaration made under paragraph 1 may be altered by a notification addressed to the Secretary General. The notification shall become effective on the day of its receipt.

Comment

As already outlined in the General Comment, this article enables the States to specify according to their national law which types of entities may not be members of an ECG from the outset, for instance private law entities. It corresponds to the similar provision of Article 2 paragraph 2 of the Madrid Outline Convention in respect of territorial communities or authorities.

Paragraph 2 covers Länder, Cantons, autonomous regions and other entities which constitutionally may not be considered as “territorial communities or authorities” in the States in which they are situated, but are nonetheless covered by the same terminology for the purpose of this Protocol.

For the sake of legal security, the categories of entities that the member State may refuse the possibility of establishing or joining in an ECG must be listed in a notification that, in accordance with paragraph 1, is mandatory. The list may be modified, however, at any time. At the time of the notification, the State is not yet a Party to the Protocol.

Article 17

Reservations

No reservations in respect of this Protocol shall be permitted.

Comment

Since one of the difficulties in the field of territorial co-operation identified in the preambular provisions is the diversity of national law, the body of provisions from Part I of the Protocol must be seen as the minimum regulatory requirement for overcoming this obstacle. Moreover, the detailed rules from the Appendix are optional and in no way binding. Hence, there is no need to allow reservations. 

Article 18[15]

Terms and Definitions

The terms and definitions used in this Protocol have the same meaning and purpose as the same terms and definitions given in the European Outline Convention, its Additional Protocol and Protocol No. 2.

Part III

Article 19

Signature and entry into force of the Protocol

1        This Protocol shall be open for signature by the states signatory to the European Outline Convention. It shall be subject to ratification, acceptance or approval. A Signatory to this Protocol may not ratify, accept or approve it unless it has previously or simultaneously ratified, accepted or approved the Convention. Instruments of ratification, acceptance or approval shall be deposited with the Secretary General of the Council of Europe.

2        This Protocol shall enter into force on the first day of the month following expiration of a period of three months after the date of deposit of the fourth instrument of ratification, acceptance or approval.

3        In respect of any signatory state which subsequently expresses its agreement to be bound by it, the Protocol shall enter into force on the first day of the month following the expiration of a period of three months after the date of deposit of the instrument of ratification, acceptance or approval.

Article 20

Accession

1        After the entry into force of this Protocol, any State which has acceded to the Convention may also accede to this Protocol.

2        Accession shall be effected by the deposit with the Secretary General of the Council of Europe of an instrument of accession, which shall take effect on the first day of the month following the expiration of a period of three months after the date of its deposit.

Article 21

Denunciation

1        Any Party may, at any time, denounce this Protocol by means of a notification addressed to the Secretary General of the Council of Europe. Such denunciation shall become effective on the first day of the month following the expiration of a period of six months after the date of receipt of such notification by the Secretary General.

2        If this Protocol is denounced, the legal personality and capacity of the ECGs established prior to denunciation shall be unaffected.

Article 22

Notifications

The Secretary General of the Council of Europe shall notify the member States of the Council of Europe and any other State which has acceded to this Protocol of:

any signature;

the deposit of any instrument of ratification, acceptance, approval or accession;

any date of entry into force of this Protocol in accordance with Article 19, paragraph 2;

any domestic legislation implementing the provisions of this Protocol pursuant to Article 13, paragraph 1;

the approval of the Appendix, or parts thereof, by the Committee of Ministers of the Council of Europe;

any declaration received in application of the provisions of Article 16, paragraphs 1 and 3 and of Article 13, paragraph 4 or any notification of modification of such declarations.

In witness thereof the undersigned, being duly authorised thereto, have signed this Protocol.

Done at .... on ..., in English and French, both texts being equally authentic, in a single copy which shall be deposited in the archives of the Council of Europe. The Secretary General of the Council of Europe shall transmit certified copies to each member state of the Council of Europe and to any state invited to accede to this Protocol.

[Appendix

to the Protocol No. 3 to the

Madrid Outline Convention

Provisions applicable to the

Euroregional Co-operation Groupings

At this stage, the text of the Appendix is the same as the one approved by the LR-CT at its meeting in March 2006. It will have to be reviewed in the light of the agreement reached on the text of the draft Third Protocol.]