Delegating Harmonization of the Internal Market: the Ruling in Case C-270/12 United Kingdom of Great Britain and Northern Ireland v European Parliament and Council of the European Union (Short Selling Ban), Judgment of 22 January 2014

Abstract

The European Securities and Markets Authority (ESMA) was established by Regulation No 1095/2010 (the ESMA Regulation) 1 and is part of the European System of Financial Supervision, 2 bestowed, along with the European Banking Authority 3 and the European Insurance and Occupational Pensions Authority 4 (together known as the ESAs), with the supervision of the European Union’s financial system. The United Kingdom (UK) brought an action for annulment 5 of a specific provision of an EU regulation on short selling and certain aspects of credit default swaps. 6 The challenged provision, entitled ‘ESMA intervention powers in exceptional circumstances’, conferred powers on ESMA to intervene in circumstances posing a threat to the orderly functioning and integrity of financial markets or to the stability of the financial system in the Union. Pursuant to the contested provision, ESMA’s powers extended to the imposition on natural and legal persons of notification and disclosure requirements, and the prohibition or limitation on the entry into certain transactions. In a Grand Chamber judgment dismissing the action, the Court delivered an important ruling on the scope of permissible delegation powers within the context of harmonization of the internal market. 7