Council Regulation (EC) No 876/2002

of 21 May 2002

setting up the Galileo Joint Undertaking

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 171 thereof,

Having regard to the proposal from the Commission(1),

Having regard to the opinion of the European Parliament(2),

Having regard to the opinion of the Economic and Social Committee(3),

Whereas:

(1) On 13 January 1999 the European Parliament adopted a Resolution on the Communication from the Commission to the Council and the European Parliament "Towards a trans-European Positioning and Navigation Network: including a European Strategy for Global Navigation Satellite Systems (GNSS)"(4).

(2) On 10 February 1999 the Commission adopted the Communication "Galileo - Involving Europe in a new generation of satellite navigation services".

(3) The conclusions of the European Council in Cologne (3 and 4 June 1999), Feira (19 and 20 June 2000), Nice (7 to 11 December 2000), Stockholm (23 and 24 March 2001), Laeken (14 and 15 December 2001) and Barcelona (15 and 16 March 2002) make reference to Galileo.

(4) On 19 July 1999 the Council adopted a Resolution on the involvement of Europe in a new generation of satellite navigation services - Galileo - Definition phase(5).

(5) On 22 November 2000 the Commission adopted a Communication to the European Parliament and the Council on Galileo.

(6) The Council adopted a Resolution on Galileo on 5 April 2001(6).

(7) On 26 March 2002, the Council adopted conclusions on Galileo.

(8) The first research contracts and feasibility studies were funded under the fourth and fifth framework programmes for research and development.

(9) The technological development phase was funded from the appropriations assigned to the trans-European transport networks on the basis of Article 4(g) of Decision No 1692/96/EC of the European Parliament and of the Council of 23 July 1996 on Community guidelines for the development of the trans-European transport network(7), which provides for the possibility of funding for research and development, and Article 17 of Council Regulation (EC) No 2236/95 of 18 September 1995 laying down general rules for the granting of Community financial aid in the field of trans-European networks(8).

(10) At the beginning of 2001, the management of the Galileo satellite radio-navigation programme, hereinafter referred to as the "Galileo programme", entered its development phase aimed at verifying and testing the assumptions made during the definition phase, in particular with regard to the various components of the architecture of the system.

(11) The development phase should be followed by the deployment phase consisting of the production of satellites and terrestrial components, satellite launching and the installation of terrestrial stations and equipment in order to enable the system to be operational in 2008.

(12) Taking into account the number of players who will need to be involved in this process, and the financial resources and technical expertise needed, it is vital to set up a legal entity capable of ensuring the coordinated management of the funds assigned to the Galileo programme during its development phase. For reasons of legal certainty, it should be specified that this entity, which is not designed to fulfil an economic purpose and is responsible for managing a public research programme of European interest, must be considered as an international organisation within the meaning of the second indent of Article 15(10) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes(9) and the second indent of Article 23(1) of Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products(10).

(13) The Stockholm European Council noted that "the private sector is ready to supplement the public budgets for the development phase". The representatives of the main industries concerned signed a Memorandum of Understanding in March 2001 whereby they committed themselves to indicating their contribution to the total amount of EUR 200 million for the development phase of the Galileo programme by subscribing to the capital of the Joint Undertaking or contributing in some other form.

(14) It is therefore necessary to set up a Joint Undertaking under Article 171 of the Treaty, since the Galileo programme involves a major research and development component which justifies and will continue to justify the use of funds assigned to the research and development framework programmes. In addition, this programme should make it possible to make considerable progress in the development of satellite navigation technologies.

(15) The Joint Undertaking's main task should be, in accordance with Council decisions, successfully to complete the development of the Galileo programme during its development phase by combining public and private sector funding. In addition, it should make it possible to ensure the management of major demonstration projects.

(16) The Joint Undertaking's financial regulations should respect the broad principles and rules as laid down in the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities(11).

(17) In formulating its proposal for the nomination of the Director of the Joint Undertaking, the Commission should consider that he/she be appointed on the grounds of merit and managerial skills, as well as competence and relevant experience, and should be independent of any undertaking in the performance of his/her duties,

HAS ADOPTED THIS REGULATION:

Article 1

For the implementation of the development phase of the Galileo programme, a Joint Undertaking within the meaning of Article 171 of the Treaty is hereby set up for a period of four years.

The aim of the Joint Undertaking shall be to ensure the unity of the administration and the financial control of the project for the research, development and demonstration phase of the Galileo programme, and to this end mobilise the funds assigned to that programme.

The Joint Undertaking shall be considered as an international organisation within the meaning of the second indent of Article 15(10) of Directive 77/388/EEC and the second indent of Article 23(1) of Directive 92/12/EEC.

Its seat shall be located in Brussels.

Article 2

The Statutes of the Joint Undertaking, as set out in the Annex hereto, are hereby adopted.

Article 3

1. In order to ensure an adequate flow of information and effective political control by Member States of the implementation of the development phase of the Galileo programme, a Supervisory Board shall be established. It shall be composed of one representative of each Member State of the European Union, and of the representative of the Commission at the Administrative Board of the Joint Undertaking.

2. The Supervisory Board shall be chaired by the representative of the Member State which holds the Presidency of the Council of the European Union.

3. In due time, and at least 15 days before each meeting of the Administrative Board, the Commission shall convene the Supervisory Board and submit all documents to its members convening the issues on the agenda for that meeting.

The Supervisory Board shall take a decision on all issues that are on the agenda of the upcoming meeting of the Administrative Board and may put other items on that agenda. The Commission shall, when carrying out its functions on the Administrative Board, do everything possible to ensure that decisions taken by the Administrative Board reflect the decisions and views of the Supervisory Board.

4. The Supervisory Board shall take its decisions by qualified majority of the votes of the representatives of the Member States, these votes being weighted in accordance with Article 205(2) of the Treaty. The representative of the Commission shall not participate in the vote.

5. The Supervisory Board shall adopt its rules of procedure.

Article 4

Every year, the Commission shall present to the Council the annual report on the progress of the Galileo programme as well as the programme development plan, including the financial aspects.

At the end of 2003, the Commission shall inform the Council of the results of the tendering procedure launched by the Joint Undertaking in accordance with Article 4 of its Statutes.

Article 5

The Commission shall report to the Council on the accession of new members.

Any participation of new members, including the participation of members from third countries, shall be submitted to the Council for approval.

Article 6

The Joint Undertaking shall be subject to the rules contained in Council Decision 2001/264/EC of 19 March 2001 adopting the Council's security regulations(12).

Article 7

1. In order to deal with security matters regarding the Galileo system, a Security Board shall be established. It shall be composed of one representative of each Member State of the European Union and of a representative of the Commission.

2. The Security Board shall adopt its rules of procedure.

Article 8

This Regulation shall enter into force on the day of its publication in the Official Journal of the European Communities.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 21 May 2002.

For the Council

The President

R. De Miguel

(1) OJ C 270 E, 25.9.2001, p. 119.

(2) OJ C 48, 21.2.2002, p. 42.

(3) Opinion delivered on 7 February 2002 (not yet published in the Official Journal).

(4) OJ C 104, 14.4.1999, p. 73.

(5) OJ C 221, 3.8.1999, p. 1.

(6) OJ C 157, 30.5.2001, p. 1.

(7) OJ L 228, 9.9.1996, p. 1. Decision as amended by Decision No 1346/2001/EC (OJ L 185, 6.7.2001, p. 1).

(8) OJ L 228, 23.9.1995, p. 1. Regulation as amended by Regulation (EC) No 1655/1999 of the European Parliament and of the Council (OJ L 197, 29.7.1999, p. 1).

(9) OJ L 145, 13.6.1977, p. 1. Directive as last amended by Directive 2001/115/EC (OJ L 15, 17.1.2002, p. 24).

(10) OJ L 76, 23.3.1992, p. 1. Directive as last amended by Directive 2000/47/EC (OJ L 193, 29.7.2000, p. 73).

(11) OJ L 356, 31.12.1977, p. 1. Regulation as last amended by Regulation (EC) No 762/2001 (OJ L 111, 20.4.2001, p. 1).

(12) OJ L 101, 11.4.2001, p. 1.

ANNEX

STATUTES OF THE GALILEO JOINT UNDERTAKING

Article 1

1. The name of the Joint Undertaking shall be: "Galileo Joint Undertaking".

2. Its seat shall be located in Brussels.

3. (a) The following shall be founding members of the Joint Undertaking:

- the European Community, represented by the Commission,

- the European Space Agency.

(b) The following may become members of the Joint Undertaking:

- the European Investment Bank,

- any undertaking, after the Commission has, under Article 4 of Council Regulation (EC) No 876/2002 of 21 May 2002 setting up the Galileo Joint Undertaking(1), informed the Council of the outcome of the tendering procedure, and after approval in accordance with the procedure set out in Article 5 of that Regulation.

4. The capital of the Joint Undertaking shall be made up of assets brought in by its members. Assets in kind may be brought in. They shall be subject to an evaluation of their value and their utility to the carrying-out of the activities of the Joint Undertaking.

The founding members shall subscribe their shares of the capital to the extent of the amounts indicated in their respective commitments of EUR 520 million for the European Community and EUR 50 million for the European Space Agency.

Once the Commission has informed the Council of the outcome of the tendering procedure, the Administrative Board shall immediately invite the undertakings mentioned in the second indent of paragraph 3(b) to subscribe. Undertakings need to subscribe EUR 5 million within a period of one year. That amount shall be reduced to EUR 250000 for undertakings, subscribing individually or collectively, which may be regarded as small or medium-sized enterprises within the meaning of the Commission Recommendation of 3 April 1996 concerning the definition of small and medium-sized enterprises(2).

The Administrative Board shall decide on the amounts of this capital which should be released in proportion to the share of the capital subscribed by each member. Any member of the Joint Undertaking which fails to meet its commitments concerning the bringing-in of assets in kind or which does not release the amount due within the prescribed time-limits shall be, as a first step, disqualified from voting in the Administrative Board and, after six months, membership shall be repealed until such time as its obligations have been met.

Financial commitments of the Joint Undertaking shall not exceed the amount of capital at its disposal.

Article 2

The main tasks of the Joint Undertaking shall be the following:

1. to oversee the optimal integration of the European Geostationary Navigation Overlay Service (EGNOS) in the Galileo programme and the implementation of the Galileo development and validation phase and help prepare for the deployment and operational phase;

2. to launch, in cooperation with the European Space Agency in accordance with Article 3 and through contractual arrangements with private sector entities, the research and development activities needed successfully to complete the phase of development and coordination of national activities in this area; to launch, through the European Space Agency in accordance with Article 3, a first series of satellites to finalise the technological developments that have occurred and ensure the large-scale demonstration of the capabilities and reliability of the system;

3. in cooperation with the Commission, the European Space Agency and the private sector, to help to mobilise the public and private sector funds needed to make proposals to the Council for the management structures for the various successive phases of the programme, on the basis of the following activities:

- it shall draw up a business plan covering all the phases of the Galileo programme, on the basis of data to be supplied by the Commission, concerning the services that can be offered by Galileo, the revenue that they may generate and the necessary accompanying measures,

- it shall negotiate, by way of a competitive tendering process with the private sector, an overall agreement for the financing of the deployment and operational phases that sets out the responsibilities, roles and risks to be shared between the public and private sectors;

4. to supervise the carrying-out of all programmes, if necessary with the assistance of a consultant, and to make any necessary adjustments in the light of developments occurring during the development phase.

Article 3

The Joint Undertaking shall conclude an agreement with the European Space Agency by which:

- it charges to it the carrying-out of the activities required during the development phase with regard to the space segment and the earth segment associated with the system, and to that end the Joint Undertaking shall make available the funds at its disposal for that phase. The European Space Agency shall be responsible for administering them in accordance with procedures to be set out in the agreement to be concluded with the Joint Undertaking and based on the principles of non-discrimination, transparency and fair distribution of work, taking into account the Community character of the programme. In this context, an adequate participation of small and medium enterprises shall be aimed at,

- the Commission shall have the right to ensure that the financial interests of the Community are protected by carrying out effective controls. Should the Commission discover any irregularities, it shall reserve the right to reduce or suspend any subsequent payment to the Joint Undertaking. The reduced or suspended amount shall be equivalent to the amount of the irregularities actually discovered by the Commission. Any disputes shall be settled on the basis of the provisions of the agreement,

- the procedures for carrying out the Galileo programme are defined, in particular, the activities launched by the European Space Agency relating to the programme and financed from funds not assigned to the Joint Undertaking.

Article 4

Without prejudice to Article 3, and following an invitation to tender, the Joint Undertaking may conclude a contract for the provision of services with undertakings or a consortium of undertakings, in particular to carry out the activities provided for in point 3 of Article 2.

The Joint Undertaking shall ensure that the contract provides for the right of the Commission to carry out, on behalf of the Joint Undertaking, controls in order to ensure that the financial interests of the Community are protected and, in the event of the detection of irregularities, to impose dissuasive and proportionate penalties.

Article 5

The Joint Undertaking shall have legal personality. In all the Member States of the European Community, it shall enjoy the most extensive legal capacity accorded to legal persons under the laws of those States. It may, in particular, acquire or dispose of movable and immovable property and be a party to legal proceedings.

Article 6

The Joint Undertaking shall own all the tangible and intangible assets created or transferred to it for the development phase of the Galileo programme. If applicable, the right of ownership of governmental cryptography stays with the governmental authority that developed the cryptographic method.

Article 7

1. The bodies of the Joint Undertaking shall be the Administrative Board, the Executive Committee and the Director.

2. The Administrative Board may seek the advice of an Advisory Committee.

Article 8

1. Composition of the Administrative Board, voting rights:

(a) the Administrative Board shall be composed of the members of the Joint Undertaking;

(b) unless otherwise provided for in these Statutes, decisions of the Administrative Board shall be adopted by a simple majority of the votes cast. Each member of the Joint Undertaking shall have a number of votes in proportion to the share of the capital subscribed by them. The Commission and the European Space Agency shall have the same number of votes and, in any case, at least 40 % of the total of votes each.

2. Functions of the Administrative Board:

(a) the Administrative Board shall take the decisions necessary for implementing the programme and exercise overall supervision of the execution of the programme;

(b) the Administrative Board shall in particular:

- appoint the Director and approve the organisation chart,

- designate the members of the Advisory Committee,

- adopt the financial regulations of the Joint Undertaking in accordance with Article 14(3),

- in accordance with Article 13, approve the annual budget, including the staff establishment plan, the development plan for the programme development phase, and the programme cost estimates,

- approve the annual accounts and balance-sheet,

- decide on any acquisition, sale and mortgaging of land and other titles to real property, as well as on the giving of any sureties or guarantees, the taking