Summary The Interinstitutional Agreement of 13 April 2016 on Better Law-Making is the procedural backbone ensuring transparency in the preparation of delegated acts under the proposed Cloud and AI Development Act (CADA). As proposed, Recital 86 and Article 45(4) of CADA explicitly mandate that the Commission consult experts designated by Member States in accordance with this Agreement's principles. Crucially, this framework guarantees that the European Parliament and the Council receive all documents simultaneously with Member State experts and maintain equal access to meetings of Commission expert groups. This ensures that the technical rules updating CADA's annexesβ€”covering assurance levels, audit procedures, and leadership initiativesβ€”are drafted with full democratic scrutiny and equal participation before they are adopted.

Detail

The Cloud and AI Development Act (CADA), as proposed in COM(2026) 502 final, establishes a dynamic regulatory framework for Europe's cloud and AI ecosystem. Because technology evolves faster than legislation, the proposal grants the European Commission the power to adopt delegated acts to update technical details without reopening the full legislative process. These acts will amend critical annexes, such as the criteria for Union assurance levels (Annex II) and the evidence required for audits (Annex III).

To prevent these technical updates from being drafted in isolation, CADA anchors its preparatory process in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (the "Better Law-Making Agreement"). This Agreement is a binding political compact between the European Parliament, the Council, and the Commission designed to ensure transparency, inclusivity, and early involvement of all institutions in the legislative process.

The Legal Basis: Recital 86 and Article 45(4)

The application of the Better Law-Making Agreement to CADA is not merely a best practice; it is a statutory requirement embedded in the proposal's text.

Recital 86 explicitly states the Commission's obligation regarding the preparatory phase:

"When adopting delegated acts under this Regulation, it is of particular importance that the Commission carries out appropriate consultations during its preparatory work, including at expert level, and that those consultations are conducted in accordance with the principles set out in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making."

This principle is operationalized in Article 45(4), which mandates:

"Before adopting a delegated act, the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making."

Article 45(4) further specifies two critical procedural guarantees derived directly from the Agreement to ensure equal participation:

  1. Equal Access to Documents: "In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council should receive all documents at the same time as Member States' experts."
  2. Access to Expert Groups: "...and their experts should always have access to meetings of Commission expert groups dealing with the preparation of delegated acts."

These provisions ensure that the European Parliament and the Council are not merely notified of a final draft but are active participants in the drafting process, with the same information and access as the Member States.

Scope of Delegated Acts Under CADA

The Commission's power to adopt delegated acts under CADA is extensive, covering the most technically sensitive aspects of the regulation. Article 45(2) lists the specific powers conferred, which include:

  • Amending Annex I: To reflect market and technological developments regarding the Cloud and AI Leadership Initiatives (referenced in Article 6(4)).
  • Amending Annex II: To update the criteria for Union assurance levels 1–4 (referenced in Article 16(2)).
  • Supplementing Audit Rules: Laying down detailed rules for the performance of audits, including procedural steps, technical competences for auditing organisations, and methodologies (referenced in Article 20(9)).
  • Amending Annex III: To specify the necessary audit evidence required to assess compliance (referenced in Article 21(1)).
  • Specifying Assurance Levels: Determining the specific Union assurance level required for a contracting authority (referenced in Article 29).
  • Mandating Impact Assessments: Requiring impact assessments and risk mitigation measures for private companies operating in sectors of high criticality (referenced in Article 31(3)).

For each of these delegated acts, the Commission is prohibited from acting unilaterally. The Better Law-Making Agreement requires the establishment of expert groups comprising representatives from Member States. The European Parliament and the Council must be granted equal participation, meaning their experts must be present in these groups, receive the same background documents, impact assessments, and draft texts, and have the opportunity to contribute to the technical discussion.

The Role of the European Parliament and the Council

Under the Better Law-Making Agreement, the European Parliament and the Council are granted "equal participation" in the preparation of delegated acts. This is a significant shift from a passive review role to an active drafting role.

When the Commission convenes an expert group to draft a delegated actβ€”for instance, to refine the cybersecurity certification requirements in Annex IIβ€”the experts from the Parliament and the Council must be invited to attend. They have the right to view the same technical data and draft texts as the Member State experts. This ensures that the legislative intent of the co-legislators is preserved in the technical details.

This transparency is a prerequisite for the subsequent political control mechanism. Once the Commission adopts a delegated act, it must notify both the European Parliament and the Council simultaneously (Article 45(5)). Under Article 45(6), the act enters into force only if neither institution objects within a period of two months (which can be extended by three months at the initiative of either institution). Because the Parliament and Council had equal access to the preparatory work via the Better Law-Making Agreement, they are better equipped to assess whether the Commission has overstepped its delegation or failed to account for technical nuances, allowing them to exercise their right of objection effectively.

What this means for you

For in-house counsel, compliance officers, and legal teams, the Better Law-Making Agreement is not just a procedural formality; it is a strategic channel for influencing the technical rules that will govern your organization's cloud and AI operations.

1. Monitor Expert Group Consultations The criteria for Union assurance levels (Annex II) and the audit evidence requirements (Annex III) will be refined through delegated acts. These drafts are discussed in Commission expert groups. While direct participation is limited to Member State and EU institution experts, the transparency requirement means that the outputs of these groups are visible. Compliance teams should monitor the European Commission's Transparency Register and expert group directories to anticipate changes to audit scopes, such as new requirements for software bills of materials (SBOMs) or data localisation evidence.

2. Engage with National Delegations Since the Better Law-Making Agreement requires the Commission to consult "experts designated by each Member State," your national government's designated experts are the primary conduit for technical feedback. In-house counsel should engage with their national ministries (e.g., Digital Affairs, Justice, or Economy) to ensure that practical industry challengesβ€”such as the feasibility of certain audit evidence requirements or the definition of "substantial" cybersecurity certificationβ€”are raised during the expert group meetings.

3. Prepare for the Two-Month Objection Window When a delegated act is published, the two-month objection clock starts. Because the Better Law-Making Agreement ensures the Parliament and Council had full access to the drafting process, they are likely to have a clear understanding of the act's implications. If industry feedback was not adequately incorporated during the expert phase, the political institutions may object. Compliance officers should track the publication of delegated acts in the Official Journal and prepare internal assessments of impact immediately, as the rules on audit procedures and assurance levels can change significantly.

4. Audit Readiness and Technical Standards Delegated acts under Article 20(9) will lay down the specific rules for audits. These acts will define the "audit evidence" required to prove compliance with Union assurance levels. The Better Law-Making process ensures that these technical details are scrutinized by the Parliament and Council alongside Member States. Companies should expect these delegated acts to provide granular details on how to document supply chain transparency, data residency, and third-party controls. Early alignment with the principles discussed in these expert groups will reduce future compliance costs.

Common misconceptions

Misconception 1: The Better Law-Making Agreement is merely a non-binding political statement. Correction: While the Agreement itself is an interinstitutional political agreement, CADA's Article 45(4) explicitly incorporates its principles into the legislative text. This makes compliance with the consultation and transparency requirements a statutory obligation for the Commission when drafting CADA delegated acts. Failure to follow these principles could render a delegated act legally vulnerable.

Misconception 2: Only the Commission and Member State experts draft the delegated acts. Correction: The Better Law-Making Agreement mandates that experts from the European Parliament and the Council have equal access to the expert groups. They participate in the preparatory work, ensuring that the legislative intent of the Parliament and Council is preserved in the technical details. They are not excluded from the drafting phase.

Misconception 3: Industry stakeholders have direct voting rights in the expert groups. Correction: No. The expert groups are composed of experts designated by Member States, the European Parliament, and the Council. Industry stakeholders influence the process indirectly through national consultations, public feedback mechanisms, and the Transparency Register. However, the transparency guaranteed by the Agreement allows industry to monitor the process and hold their national representatives accountable.

Misconception 4: Delegated acts are merely administrative updates with no legal impact. Correction: Under CADA, delegated acts can significantly alter the compliance landscape. For example, the Commission can amend the criteria for Union assurance levels (Article 16(2)) or change the required audit evidence (Article 21(1)). These are substantive changes that affect legal obligations, not just minor administrative tweaks. The Better Law-Making Agreement ensures these substantive changes undergo rigorous democratic scrutiny before entering into force.

Related

This is general information about a draft EU regulation, not legal advice.