Procedural Rule-Making of European Supervisory Agencies (ESAs): An Effective Tool for Legitimacy?

Abstract

After the ruling of the Court of Justice in the European Securities and Markets Authorities (ESMA)-short selling case, two paradigms of legitimation for European Union (EU) agencies seem to co-exist: The delegation paradigm, based on the long-standing Meroni doctrine, and an emerging procedural paradigm of legitimation. Even if the Court formally upholds the Meroni doctrine, that has long constituted the legal benchmark for the legitimate delegation of powers to EU agencies, it also provides a new ground of legitimation for EU agencies, based on the number and quality of conditions circumscribing their powers, amenable to judicial review. Procedural rules for the rule-making activity of the financial agencies are unexpectedly well developed and they could effectively contribute to enhancing their legitimacy. Contrary to most EU agencies, the financial ones built a solid and detailed procedural framework for rule-making, that guarantees participation of interested parties within the whole policy cycle, as well as transparency and reasons giving. Yet, some of the frequent criticisms affecting participation can be traced, such as unevenness in representation, showing a low input from consumers. From this regard, the role of the Stakeholders Group, where all interests at stake must be represented, is crucial and should be strengthened. Moreover, the rules for stakeholders’ representation approved by the most powerful of the financial agencies, the ESMA, provide a best practice, that could be extended. The legal framework for rule-making in the financial area – albeit not flawless and leaving room for potential improvement – can constitute a sound basis, on which the current search for devices intended to strengthen the legitimacy of EU agencies can build.