Questions about the Federalisation of the European Union
- Bertrand Mathieu
- Oct 21
- 9 min read
Updated: Oct 23
Europeanist or constitutionalist doctrine has produced conflicting analyses of the legal nature of the European Union. References to existing categories have proven to be disappointing or approximate, this is why we give in to the temptation of speaking about a sui generis legal order, which is equally approximate. Nonetheless, comparing the European structure with existing categories is one way of better understanding its nature. However, a dynamic approach needs to be adopted.
Is the European Union a federal structure?
Several political structures can be invoked, among others: empire, confederation and federation. It is this latter structure, or structuring model that will be taken into consideration here.
The prospect of a federal state or a federation, which is more realistic, has often been invoked to characterise the path towards which the European Union is heading.
The founding act of a federal state is a constitution (and not a treaty, as in a confederation). Federated entities organise (through a constituent assembly) the institutions of the new state and distribute competences between the Union (i.e., the central state) and the federated states.
A federal state is characterised by the superimposition of two legal orders: citizens are subject to both a law elaborated by the federal state and a law emanating from its federated state. So, while federal law applies to every citizen, in the areas assigned to the member states, citizens are subject to rules that can vary profoundly from one federated state to another.
The areas open to the partners’ intervention vary across different systems; the constitution lays down the rules for the distribution of competences between them, but federated states never have the full competences of a sovereign state. Upon joining the federation, they have to sacrifice some of their powers to the union.
However, a federation does not necessarily take the form of a state. According to Olivier Beaud, it may be possible that a federation is not a federal state but a federative association, or a political order lacking sovereignty. In his view, the concept of sovereignty is inadequate for considering the federal phenomenon, because, unlike the unity of sovereignty, a federation presupposes a duality of powers: federal power and federated powers. From this point of view, it should be noted that while the idea of shared sovereignty is conceptually impossible, given its indivisible nature, it is conceivable to share the exercise of competences that fall under sovereignty.
As O. Beaud points out, political homogenisation is a historical law of federations. From this point of view, it is interesting to take account of the federal process in the United States.
In the United States, the federation of states was constituted in a period when the thirteen colonies did not yet have a strong institutional framework or a long political history. Those states did not aim at relinquishing their sovereignty, but rather at strengthening it by uniting[1]. When the States of America were constituted, the federation was not conceived as a State in the very spirit of the Philadelphia Convention. The federal government is not a state, but the government of a federation of states. In the words of Elisabeth Zoller, the evolution of this system is the result of a “spiral that eludes its authors”.
The constitutionalisation process of a federal legal order, its ‘transformation into a state’, is the work of the federal supreme court.
It is possible to consider the European Union as having a quasi-federal model, characterised by the constant expansion of the European Union’s competences, the broadening of the range of issues on which qualified majority voting is adopted, and the supremacy of community law, implemented by the Court of Justice.
However, it is not legally a federation. First of all, in the Preamble to the Treaties, the Union cautiously does not define itself as a federation. No reference is made to the existence of a political union, even if it could be argued that a union of the peoples of Europe could only be political. The Union is supposed to be ever tighter, but it is not specified what kind of entity this would be.
Moreover, the recognition of a member’s right to withdraw from a Treaty is also foreign to a federative pact.
Above all, what separates the Union from a true federation is that the institutions of the Union do not have the competence to make final decisions or to amend the constitution. Member States have retained the competence of competence. They have a right of veto when their fundamental interests are at stake.
Therefore, it can be argued that the European Union is neither a confederation nor a federation but has a mixed form. It combines certain confederal features (European Councils) with certain federal features (Commission, Parliament, Court of Justice and European Central Bank).
Tools for ‘federalising’ the European Union
Independently of the Treaties or the will of the Member States, this federalisation is taking place essentially under the influence of two factors: the role played by the Court of Justice of the European Union and budgetary and financial operations.
*The ‘federative’ action of the Court of Justice of the European Union
The two major principles structuring European law, i.e., direct applicability and the primacy of Union law, were established by the Court of Justice of the European Union (back then the Court of Justice of the European Communities)[2].
In general, the Court of Justice interprets the Union’s competences broadly, by referring to the theory of implicit competences[3].
Moreover, the preliminary ruling procedure has given the European Union a highly effective weapon for maintaining the unity of European law within the Member States’ jurisdiction. This is one of the areas where the phenomenon of federalisation is the most pronounced.
Although the unanimity rule applies when the vital interests of the State are at stake, it is ultimately the Court of Justice that decides whether this is the case.
Thus, the federalisation process of the federal legal order is the work of the Court of Justice, which has positioned itself as the supreme federal court.
However, the Court of Justice of the European Union cannot be considered as a true constitutional court[4]. Indeed, the purpose of a constitutional court is to ensure the supremacy of the constitution vis-à-vis all the bodies of the State and the citizens. Yet, in many countries, including France, European law takes precedence over national law, not by virtue of the European norm, but by virtue of the national constitutional norm.
*Fiscal and financial federalisation
In order to deal with exceptional economic or financial circumstances, the European institutions have been given new tasks, sometimes surreptitiously, even contra legem[5], at times explicitly, at the Member States’ request[6]. In 2020, the Commission was vested with the competence to issue common debt securities to finance a temporary instrument for recovery from the health crisis, called ‘Next Generation EU’, with a budget of €750 billion[7].
From that perspective, the reference to U.S. federalism is instructive. This procedure is similar to that used in the United States after the War of Independence, when the federated states wanted to offload their war debts onto each federal state[8]. The establishment of a Fund for the Recovery and Redemption of State Debts by the U.S. Federal State in 1790 reinforced federalism.
This procedure, used in the wake of the COVID crisis, constitutes what could be referred to as a ‘Hamiltonian’ movement. In the 1780s, Hamilton advocated the mutualisation of war debts between the Confederate States, whose public finances were very disparate. It is to be feared, or hoped, depending on particular points of view, that this decision paves the way for the constitution of a political Europe on which, once again, no real decision would have been made.
*The Union’s values: a European integration tool
The European Union is in search of its identity through reference to the values on which it considers itself to be founded. In fact, the reference to these common values, of which the Court of Justice is the guardian, is a highly effective tool for integration that goes far beyond the Union’s objectives and contributes to the development of conflicts between the Union and certain States that wish to assert their own identity.
The European Union is not a legal order based on the democratic principle. Unable to find its justification in competences of an essentially economic or financial nature, the European Union refers to values that are supposed to constitute its identity.
In the absence of demos, the Union refers to the abstract universalism of fundamental rights.
Article 2 of the TEU provides the following: “The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail.”
The scope of the values referred to owes little to determination by political bodies, but is the result of apolitical, or at least ademocratic bodies, such as the European Court of Human Rights and the Council of Europe’s Venice Commission. Even more so for NGOs, whose membership of ‘civil society’ serves as a testimony of legitimacy.
Among the Union’s values, the concept of the rule of law, an all-in-one concept, now plays a strategic role in both delegitimising sovereign functions and legitimising the infringements of national sovereignty by European institutions[9].
Independently of the difficult-to-implement procedure set out in Article 7 of the Treaty, which makes it possible to penalise a State which fails to comply with the requirements of the rule of law, in particular by suspending its voting rights, another simpler and more effective procedure designed to enforce compliance with this same principle has been implemented outside the provisions of the Treaty.
Particularly topical, and pointing towards budgetary and financial federalisation, the conditionality of aid channelled under the Recovery Fund subject to the respect for the rule of law enables the Commission, in the event of a violation of the rule of law likely to affect the management of the funds or the financial interests of the Union, to deprive ‘guilty’ States of aid under the European Recovery Plan. In this way, the “fundamental values of the Union, including the independence of the judiciary” are invoked.
The argument relating to the proper functioning of justice is at the core of the ruling of 16 February 2022 (C-175/21), by which the Court of Justice of the European Union rejected the appeal by Poland and Hungary against this sanction mechanism, which empowers the Commission to suspend aid to member states that do not respect the ‘values of the Union’.
The Court’s reasoning suggests a broadening of the Union’s competences.
The Court postulates that “the laws and practices of Member States should continue to comply with the common values on which the Union is founded”. According to the Court, the rule of law has a prominent place among those values. Thus, the rule of law is merely the generic term for the set of values enshrined in the Treaty, and compliance with it, such as its implementation, is the basis for intervention by the European institutions and control by the European jurisdiction. The Court rejects the reservation linked to the respect for state competences relating to their constitutional structure, thus marking the subordination of the states’ constitutional law, both in terms of the interpretation of common values and with regard to institutional matters, to the previously defined principles.
There are many other examples, albeit less emblematic, of the way in which reference to the Union’s values is used to support the broadening of its competences.
It is visible that the European Union is at a turning point in its history. In search of its borders, Europe is also faced with the challenges of a potential enlargement. The construction of a new institutional model and new relations between the states and the Union aim to respond to the need to give Europe a future that respects national identities and is a factor of power.
[1] Cf. C. Spector, op. cit., p. 38.
[2] Costa v. ENEL, 15 July 1964. Case 6-64 and van Gend & Loos, 5 February 1963, Case 26-62.
[3] European Agreement on Road Transport of 31 March 1971, Case 22-70.
[4] For a comprehensive analysis of this issue, cf. L. Favoreu, “Les cours de Strasbourg et de Luxembourg ne sont pas des cours constitutionnelles”, in Mélanges Dubouis, Dalloz, 2002, p. 35; see also the analyses of H. Gaudin, La Cour de justice, juridiction constitutionnelle?, Revue des affaires européennes. 2000, p. 209 et seq. and J.F. Flauss and G. Drago, in: La constitution européenne: une Constitution?, Revue des affaires européennes, 2001, 2002, No. 6, pp. 703 and 721.
[5] See in particular: BVerfG ruling, 5 May 2020, 2 BvR 859/15.
[6] Cf. Arenas, thesis cited supra.
[7] This is a considerable sum on the scale of the Union, as it represents almost three quarters of its multiannual budget (2021–2017), ie around four times the annual budget.
[8] Cf. H. Guaino, A la septième fois, les murailles tombèrent, 2023, p. 329.
[9] Cf. J. E. Schoettl, La notion européenne d’état de droit et les souverainetés nationales