Impact of the Finance Delegation's approval under the emergency procedure

1 Legal background and question

There was a question regarding the effect of a parliamentary decision which subsequently diverges from the Finance Delegation's (FinDel) decision.

The provisions of Article 28 paragraph 1 of the FBA are as follows:

"If the execution of a project cannot be deferred, the Federal Council may already issue the authorisation to undertake or continue a project before the requisite guarantee credit has been approved. It shall obtain the prior consent of the Finance Delegation."

Article 34 paragraph 1 of the FBA repeats this with regard to budgetary/supplementary credits. In both cases, an extraordinary session is to be held to seek retroactive parliamentary approval if the threshold of CHF 500 million is exceeded and if a quarter of the members of one of the Councils or the Federal Council so requests. The extraordinary session shall take place three weeks after the corresponding request (Art. 28 para. 3 and Art. 34 para. 3 of the FBA).

2 Materials

During the deliberations on the total revision of the FBA in 2005, the Council of States debated the possible effect of a divergent subsequent decision by Parliament. Committee rapporteur Lauri summed up as follows:1

«The effect of subsequent non-approval will have to be determined on a case-by-case basis. Personally, I can imagine that, for example, as regards guarantee credits that have not yet been committed, one could refer the matter back again if Parliament does not approve them, and that in other cases with an impact on third parties, this retroactive approval is of a purely political nature. I think it is important to note that Article 28 paragraph 2 is nothing more than what has been in Article 34 for years, or possibly decades, with regard to the, in my opinion, more problematic area of payment credits, and which has not caused any problems.»

1 Official Bulletin 2005 S 578 (04.079).

Federal Councillor Merz, speaking in the National Council, then stated:2

«It is not the case that Parliament is waiving its sovereignty here, as has been claimed. In certain cases, Parliament delegates this budgetary sovereignty and regulates it as part of its proceedings. It is often said – Mr Weyeneth has just reiterated it – that in the case of Swissair, which prompted this debate, a sham debate took place and there was nothing left for Parliament to decide. Indeed, Mr Weyeneth is largely correct. However, the legal situation is that, in that case, Parliament would have had the opportunity to rescind the contracts entered into by the Finance Delegation and the Federal Council. Parliament could have done this, but obviously it would have had consequences. The collaboration between the Finance Delegation and the Federal Council in these matters has been tried and tested in decades-long practice; you can read all about it in the history of the Finance Delegation, a body which has existed for over 100 years. I would also like to point out that the Finance Delegation is not just another body, but one whose membership is put together in proportional representation of the parties here in Parliament, and that its presidency changes each year.»

The Report of the National Council Political Institutions Committee of 5 February 2010 on the parliamentary initiative "Safeguarding Democracy, the Rule of Law and the Capacity to Act in Extraordinary Situations" provides a very good overview of all the relevant aspects:3

p. 1576 et seq.:

«During the 2001 winter session [after the grounding of Swissair/the financing of the resizing concept for national civil aviation, 01.067], a parliamentary initiative and various motions were submitted, all of which were aimed at changing the procedure for granting emergency credits in order to limit the competence of the Federal Council and/or the Finance Delegation. Credits above a certain amount should no longer be approved by the Federal Council and Finance Delegation on their own, but rather must, in all cases, be approved in advance by Parliament. Under no circumstances should a sufficiently democratic legitimation of financial decisions of such major import be waived. The Council of States Political Institutions Committee, which was discussing the draft new Parliament Act at the time, also took up the matter and requested that the FBA be amended accordingly. In line with the Merz request, this proposal was rejected by the Council of States on 20 March 2022 by 24 votes to 15 (Official Bulletin 2002 S 233 [start of 227]). It was felt that the existing procedure was tried and tested, and that a special "Lex Swissair" should not be enacted on the basis of a one-off special case. The Federal Council should have a crisis management tool at its disposal in a similarly extreme situation.

This discussion resurfaced as part of the deliberations on the partial revision of the Financial Budget Act (FBA), which the PIC-N submitted to the National Council in implementation of the parliamentary initiative from the SVP Group (01.462. "Ensuring democratic control. Amendment of the Financial Budget Act) in the form of its report of 25 March 2004 (BBl 2004 2779). Under the proposal, Parliament should in any case be responsible for approving payment and guarantee credits exceeding CHF 250 million, even if these are emergency credits. Credits below this ceiling could be approved by emergency decision of the Finance Delegation. In its opinion of 19 May 2004 (BBl 2004 2799), the Federal Council came out against the proposal, mainly because, in its view, its room for manoeuvre would be constrained as a result. However, on 2 June 2004, the National Council agreed with its committee and passed the bill without amendment by 150 votes to 7. The Council of States, by contrast, accepted the Federal Council's arguments and, on 7 October 2004, voted by 29 votes to 4 not to consider the proposal. The discussion continued in the context of the proposal, submitted in the meantime by the Federal Council, for a total revision of the Financial Budget Act (04.079). The National Council Finance Committee took up the PIC's proposal and managed to get it passed in the National Council on 17 March 2005 by 88 votes to 67. However, on 13 June 2005, the Council of States came out in favour of retaining the status quo, in line with the Federal Council's proposal. During the difference resolution procedure on 19 September 2005, the National Council initially voted by 92 votes to 63 to retain its proposed amendment, although it later relented and accepted the Council of States' decision by 112 votes to 48 on 3 October 2005."

p. 1579 et seq.:

"The Financial Budget Act (FBA) currently authorises the Federal Council, with or without the consent of the Finance Delegation (FinDel), to enter into unlimited financial commitments which are to be submitted to Parliament for retroactive approval. According to the legislation in force, the Federal Council does not have to submit such emergency financing decisions for retroactive approval by Parliament until the next addendum to the budget, or even until the federal financial statements. The PIC's draft retains the Federal Council's authority to grant emergency credits. However, with the exception of minor cases, it should be obliged to always obtain the FinDel's consent, rather than only "where possible". In the case of exceptionally high expenditure of more than CHF 500 million, a quarter of the members of one of the Councils can demand that an extraordinary session of Parliament be held to seek retroactive approval. ... By involving Parliament earlier, there is less chance of it being presented with a fait accompli, depending on the circumstances, because provisionally granted but not yet executed payments could still be halted. This reduces the risk of Parliament only being able to retroactively approve a fait accompli, which is hardly conducive to the credibility of the democratic institutions.

A Committee minority wants urgent expenditure of more than CHF 500 million to always be decided beforehand by Parliament, rather than only retroactively approved, as hitherto. The de facto delegation of powers to the Finance Delegation, which has only six members, would mean that decisions of such large import would lack sufficient democratic legitimacy. If necessary, an extraordinary session of Parliament could be called very quickly. This request was rejected by 16 votes to 10.

The request by the Committee minority corresponds to the concept in the PIC-N's draft of 25 March 2004 and the National Council Finance Committee's request during the total revision of the Financial Budget Act in 2005 (see section 1.3.4). However, this concept failed to gain traction in the face of stiff resistance from the Council of States. The Committee therefore does not regard it as advisable to present the same proposal once again. Moreover, the Committee recognises that emergency situations are conceivable in which, in order to avert severe damage to the country, decisions need to be made in such a hurry that they cannot even wait for the swift convening of an extraordinary session of Parliament."

BBl 2010 1563 et seq. (09.402)

In its position statement of 21 April 20204 on this report, the Federal Council supported the Committee majority and stated as follows:

p. 2805:

«The Federal Council takes the view that the existing regulations in the Federal Constitution and the FBA with regard to these powers have generally proved their worth. It further expects that every authority will exercise its power in good faith. The PIC-N, in its report of 5 February 2010 on the parliamentary initiative, also acknowledged that the Federal Council largely exercises its powers sparingly in exceptional situations (Committee report, section 2.1). To some extent, the Federal Council can certainly appreciate that some aspects of the execution of these powers and their effects should be regulated. However, it is essential that care be taken to ensure that the balance between the Federal Council's room for manoeuvre, on the one hand, and control by Parliament, on the other, is maintained. It is crucial that the Federal Council's executive powers under the Federal Constitution are not curtailed. The goal should be only to regulate the exercise of these powers. Even with the new regulations, the Federal Council should still be able to act in a timely and appropriate manner in an exceptional situation. The regulations proposed by the PIC-N take the Federal Council's concerns into account. The Federal Council therefore does not oppose the proposal of the PIC-N.»

p. 2811:

«Essentially, the proposal by the Committee minority results in the virtually full abolition of the credit-related emergency procedure for amounts exceeding CHF 500 million. A more theoretical exemption exists only for expenses or investment expenditure that is already covered by a guarantee credit. However, in such cases the urgency criterion will not be met anyway. In the Federal Council's view, the proposal by the Committee minority clearly and significantly constrains the state's room for manoeuvre in crisis situations. This proposal should therefore be resoundingly rejected.»

4 BBl 2010 2803 et seq.

3 Literature

According to the former Deputy Director of the Federal Office of Justice, Luzius Mader,5 insofar as the Federal Council has already made legally binding commitments, Parliament cannot actually refuse its retroactive approval. Any decision to the contrary would be understood by the Federal Council as an order to terminate any legal obligations that have been duly entered into – to the extent that this is even practicable – so that Parliament's decision can take effect to the extent possible in the future. This point of view was also expressed by Stefan Koller, Secretary of the Finance Committees6.

Lienhard/Mächler/Zielniewicz7 take a similar view. However, they consider a subsequent decision to the contrary by Parliament "only" as a political rebuke to the FinDel.

Other authors, especially in the standard commentaries on the budgetary sovereignty of Parliament under Article 167 of the Federal Constitution,8 do not comment on the effect of a subsequent decision to the contrary by Parliament. However, as far as can be seen, nobody maintains that, for legal reasons, the Federal Council should wait for a decision by the entire Federal Assembly following approval by the FinDel. It is also clear that the Federal Council must be able to act quickly in crisis situations.

5 LUZIUS MADER, Aushöhlung des Budgetrechts in Krisenzeiten? Die Fälle Swissair und UBS, in: Schweizerische Vereinigung für Verwaltungsorganisationsrecht (Hrsg.), Verwaltungsorganisationsrecht - Staatshaftung - öffentliches Dienstrecht, Bern 2010, S. 114 et .seq

6 STEFAN KOLLER, Parlamentsrecht und Parlamentspraxis der Schweizerischen Bundesversammlung, Basler Kommentar zum Parlamentsgesetz (ParlG) vom 13. Dezember 2002, Basel 2014, Art. 51 N 28.

7 ANDREAS LIENHARD/AUGUST MÄCHLER/AGATA ZIELNIEWICZ Öffentliches Finanzrecht, Bern 2017, p. 377.

8 See THOMAS STAUFFER/ULRICH CAVELTI, St. Galler Kommentar Die Schweizerische Bundesverfassung, 3rd edition, Basel 2014, Art. 167 N 21 et seq.; GIOVANNI BIAGGINI, OF-Kommentar Bundesverfassung der Schweizerischen Eidgenossenschaft, 2nd edition, Zurich 2017, Art. 167 N 8; RETO HÄGGI FUHRER/MICHAEL MERKER, Basler Kommentar Bundesverfassung, Basel 2015, Art. 167 N 26; YVO HANGARTNER, Grundzüge des schweizerischen Staatsrechts, Band I: Organisation, Zurich 1980, p. 209 and p. 211; RALPH TRÜMPLER, Das Bundesgesetz über die Wahrung von Demokratie, Rechtsstaat und Handlungsfähigkeit in ausserordentlichen Lagen – Palliation mit klingendem Namen, SJZ 108 (2012), p. 316, who would even have preferred a mere obligation to consult the FinDel.

4 Findings and conclusions

As an executive body, the Federal Council must be able to act in emergency situations in order to safeguard important public interests, e.g. public safety and health, and civilian national supply. Emergency situations can require not only rapid legal action, especially by means of emergency ordinances based directly on the Federal Constitution, but also rapid financial intervention by the Federal Council. That is why the emergency procedure was created in the FBA, within the framework of which the FinDel can very quickly grant the Federal Council approval for credits for commitments and payments. Based on the democratically legitimised Articles 28 and 34 of the FBA, the FinDel assumes the function of Parliament.

In its request to the FinDel, the Federal Council must justify in detail the temporal and material urgency of its actions, the amount and terms of the credit, and its subsequent utilisation. It must demonstrate that it is in a situation in which – based on the available information – it has to take financial action so quickly that it cannot wait for Parliament to convene, even for an extraordinary session. It must also show how it will minimise the financial risks for the Confederation under the circumstances.

All of this stems from the Federal Council's duty to act in a proportionate manner at all times in its emergency measures and thus to exercise its emergency powers as sparingly as possible.

The relationship between consent from the FinDel and subsequent non-approval or partial approval by Parliament is not explicitly regulated in Articles 28 and 34 of the FBA. Based on the materials and literature citations, the following can be stated:

  • If the FinDel has given its consent, the Federal Council may immediately use the approved credit. Otherwise, the Federal Council's ability to act in times of crisis would be significantly impaired, which would contradict the will of Parliament as expressed in the partial revision of the FinDel procedure in 2010.

  • If Parliament subsequently rejects the credit approved by the FinDel in part or in full, a general review of all legal, financial and economic policy consequences should be carried out on a case-by-case basis:

    • If the credit has already been fully utilised and its utilisation could be reversed only at a disproportionate financial cost for the federal budget or with other adverse effects for the Confederation, Parliament's decision must be regarded as a political rebuke to the FinDel and the Federal Council.

    • If the Federal Council has real room for manoeuvre, in particular if (i) a guarantee credit or budgetary credit has not yet been fully utilised, (ii) the Federal Council's entire emergency concept would not be undermined (e.g. no current or future loss of confidence in the Federal Council's actions would arise) and (iii) there is no threat of significant financial repercussions for the federal budget or the national economy, the Federal Council must endeavour to implement Parliament's decision. Experience shows, however, that there is rarely any real room for manoeuvre. Politically important emergency procedures always involve billions of francs of guarantee credits or budgetary credits that finance support operations and bailouts of macroeconomic scope caused by external factors and are embedded in a non-divisible overall concept (COVID-19 credits, Axpo credit facility, various bailouts of airlines or aviation-related businesses, prevention of the failure of UBS in 2008). Ultimately, therefore, this too would boil down to a political rebuke.

Last modification 01.09.2023

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