Meanwhile, in Germany…the OMT ruling of the German Constitutional Court

BVerfGProf Peter Lindseth

This post originally appeared in virtually the same form on the europaeus blog.  Reproduced with kind permission.

With the EU referendum taking place today, it will be easy to overlook the OMT judgment from the German Federal Constitutional Court two days ago (English press release here, full German judgment here).  The conventional wisdom is that the decision is the usual “yes, but…” effort.  There’s some element of truth in that, but it also misses some important dimensions of ruling that will no doubt occupy commentators on Germany’s legal relationship with the EU for some time.  I’m still absorbing the judgment and also awaiting an English translation.  But in the interim, I thought I’d pass on my tweets from yesterday that tried to identify several key paragraphs worthy of deeper analysis. Continue reading

The CJEU’s Response to the German Constitutional Court in ‘Gauweiler’

juropean-justiceProf Herwig Hofmann

This post originally appeared on the europaeus site and is re-produced here with permission.

Do exceptional situations make exceptionally good or exceptionally bad law? This is an old question often asked anew – especially in the context of the post-2008 economic crises travails of the European Economic and Monetary Union (EMU). The legal disputes which resulted from differing opinions about how to solve the crises and also how, incidentally, to improve the EMU’s governance have reached the Court of Justice of the European Union (CJEU). The most prominent case to date is the so-called Gauweiler case, a preliminary reference procedure initiated by the German Constitutional Court, the Bundesverfassungsgericht (BVerfG). I discuss this case in more fully argued working paper available on SSRN, ‘Gauweiler and OMT: Lessons for EU Public Law and the European Economic and Monetary Union‘.

Gauweiler concerns the legality of the decision of the Governing Board of the European Central Bank (ECB) of September 2012 on so called ‘Outright Monetary Transactions’ (OMT). This case is significant for legal integration in the EU since, although it is the first instance in which the German BVerfG has ever taken advantage of the preliminary reference procedure (Article 267 TFEU), the reference by the BVerfG was formulated in very terse words. Essentially, the reference asks for clarification about the legality of the ECB’s OMT decision. But that reference is not formulated in terms of a dialogue between Courts, each respecting the other’s distinctive powers. Instead, the BVerfG explains why it considers the ECB’s decision to be ultra vires of its mandate and asks the CJEU essentially to confirm this interpretation warning about potential consequences in its assessment of the ‘constitutional identity’ of the Federal Republic of Germany. Inherent in the reference is a thinly veiled threat not to accept the exclusive competence of the CJEU to review the legality of EU law and, instead, to unilaterally hold an act of an EU institution to be invalid within a Member State of the EU. The BVerfG reinforced its sceptical position of the primacy of EU law over the law of Member States by recalling in its decision for preliminary reference its case-law concerning the limits it perceives are set for the Federal Republic of Germany’s integration in the European Union. In its decision, it refers to and further interprets the scope of its own case-law making reference inter alia to its judgments concerning the Treaty of Maastricht, the Treaty of Lisbon and in Honeywell, as precedent for its questions to the CJEU. Continue reading

Does Germany need a political questions doctrine?

CormacCormac Mac Amhlaigh

The German Federal Constitutional Court’s (GFCC) recent decision on the (il)legality of the ECB’s bond-buying practices is the latest in what can only by now be described as a slew of cases from the Court since its 2009 Lisbon decision on questions which involve the German basic law but have an arguably disproportionate reverberation across Europe and particularly the European integration project. In fact, the OMT the decision itself, whereby the Court expressed doubts about the legality of the ECB’s bond-buying practices, but before making a definitive determination on the question, made a preliminary reference on the question to the CJEU, in a sense represents the making good on previous promises by the Court in Maastricht, Lisbon and Honeywell, where it threated to monitor the activities of the European institutions to ensure that they did not stray beyond the powers bestowed upon them in the treaties, and thereby vicariously break the German Constitution, (Maastricht and Lisbon) but would make a preliminary reference to the CJEU for its input into whether the activities of EU institutions are lawful before making a final determination on the point itself. (Honeywell)

The OMT decision has attracted much commentary and criticism in both the media and the blogosphere which I will not add to it here. Nor will I try to predict the future as to what Luxembourg’s response will be, nor Karlsruhe’s response to Luxembourg’s response (although it will be interesting to see what Luxembourg makes of a preliminary reference from a national Court which comes with a threat to ignore its opinion attached).  Rather, this latest case in the recent slew, and the occasion of the first preliminary reference from the GFCC in the fifty plus years of European integration, gives occasion, I think, to critically reflect upon the Court’s approach to politically sensitive issues involving the European integration process. 

To a student or teacher of British constitutional law, with its (however threadbare) doctrine of parliamentary sovereignty, one never ceases to be amazed by the extent to which the GFCC gets its hands dirty by wading into the heart of German political life, adjudicating upon high-profile and sensitive political issues such as the conduct of German foreign policy and the management of security threats, to the point of second-guessing the activities of the executive and legislature.  This fearless attitude to the separation of powers has resulted in some remarkable decisions in the past (see Franck for an excellent overview), and some, quite frankly, dubious political theory on the part of the court which was on full display in its Lisbon decision.    However, what stands out is the fact that Court seems to unquestioningly assume the propriety of its activities and the complete absence of any doctrine or criteria to filter out particular controversies which may be judged too politically sensitive for the Court to make a ruling.  Courts in many (if not most) other jurisdictions, tend to side-step heavily political matters through the savvy use of admissibility requirements such as rules on locus standi or the development of judicially fashioned doctrines on ‘political questions’ or justiciability. Continue reading

A Spring in the Desert: the German ECJ Reference on the ECB Bond Purchases

Daniel Thym

Among domestic commentators, the initial response was amazement: the reference by the German Constitutional Court was perceived as a sensation and turning point. My reaction is more moderate. Judges in Karlsruhe recognise their limits and try to push the ECJ in their direction. This appears to be ground-breaking against the background of widespread media hype only. In principle, it is regular business. Judges in Karlsruhe boldly go where almost 2000 German courts, the regional Constitutional Court of Hesse and highest courts from other Member States had gone before.

By following their example, the Federal Constitutional Court (FCC) recognises reality. Its position is not much different from Angela Merkel, the German Bundesbank and the Parliament. Without German involvement, euro rescue operations cannot succeed – and yet German state organs are not in a position to shape events single-handedly. In this respect, the reference for a preliminary ruling is nothing unusual and reflects the wider state of European affairs. It is quite telling that the domestic debate in Germany perceives as a sensation what is (or rather: ought to be) utterly self-evident.

Most importantly, the reference changes the legal setting. Instead of grounding the argument on the German constitution, the rules for monetary union in the EU Treaties take centre state (which the justices in Karlsruhe had ignored intentionally in earlier rulings on euro rescue operations). One may disagree how to interpret these provisions, but there is no reasonable doubt that the ECB has to comply with the prescriptions in the EU Treaties. Detailed rules in Articles 119-135 TFEU and related protocols are the appropriate standard for ECB action, not the so-called eternity clause of the German constitution, the Grundgesetz, upon which the FCC had relied hitherto.

This change of legal context has not been paid adequate attention by Justice Gertrude Lübbe-Wolff in her otherwise excellent dissenting opinion, which may soon become a must-read for students of constitutional law on the limits of judicial review (the FCC has promised to publish an English translation). She is right to criticise the majority for having embarked upon a tour of the desert, which was bound to fail from the beginning. Contrary to her suggestion, there is a spring in the desert, which justices may head for – although they refused to see it until last week: the ECB must comply with the rules of the EU Treaties and it is the responsibility of the ECJ to guarantee that they are respected. Judges in Karlsruhe should be applauded for having recognised this. Continue reading

The German Constitutional Court no longer takes itself seriously, but Germans still believe in the Bundesbank

Gunnar Beck

As I predicted in the Wall Street Journal in July and discussed earlier in the week in the Asia Times, the German Constitutional Court last week deferred to the German government and approved the ESM Treaty subject to minor qualifications. Since the judgment the markets and politicians throughout the eurozone have been in jubilant mood. Even the German ambassador in London lost his guard when, in an interview with the Guardian newspaper, boasted that there was no other country in the world where ‘all but one political party’ would consistently vote to pay out ‘billions and billions’ on euro rescue packages which are  ‘not very popular’, and, he should have added, would cost the German taxpayer hundreds of billions even in the unlikely event that they ‘succeed’.  Germany’s europhile political establishment have not only ‘have quit reason’, they may have rejoiced too early.

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National Parliaments in European Integration: Europeanization, Renationalization, or Reconciliation?

Prof. Peter Lindseth

As many readers already know, the German Federal Constitutional Court (FCC) handed down another important decision on Tuesday regarding national parliamentary oversight in the Eurozone crisis.  The Court’s official press release is here, and the full decision is here (both in German). Der Spiegel’s English language website provides an overview of the basic elements of the Court’s ruling here, along with some excerpts from the German media commentary.

The ruling deals with the unconstitutionality of the special nine-member committee established last fall to serve as the Bundestag’s oversight mechanism for Germany’s participation in the European Financial Stability Facility (EFSF), the Eurozone’s temporary bailout fund.  (The EFSF is supposed to be replaced by, or perhaps even merged into, the permanent European Stability Mechanism (ESM) later this year, depending on how things develop.)  As discussed previously on this blog, the FCC last October issued a preliminary injunction against the operation of this committee pending final decision.

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Greek ‘Sovereignty’ and European ‘Democracy’—a bit of a walk-back, due to some ‘colossal’ concerns

Prof. Peter Lindseth

A ‘walk-back’ is American political jargon to describe the strategic retreat that politicians sometimes make when an initiative stirs more political controversy than expected, or when they simply say something stupid or ill-considered.  Barak Obama’s recent effort to find a compromise on the exemption for religiously-affiliated employers providing contraception and other reproductive health coverage under his new health-care plan is an example of the former; Newt Gingrich’s innumerable efforts to dig the toenails out of his gums after shoving his foot in his mouth are examples of the latter (moon base anyone?).

Alas, sometimes scholars must also do some walking back from time to time—albeit never of the import, say, of the Obama example, or (hopefully) required to correct the sheer stupidity of the many Gingrich examples.

In my case, I’d like to walk back a bit from a post of November 9, 2011, entitled Greek ‘Sovereignty’ and European ‘Democracy’, whose imprecision on a key point has been troubling me for a while.  The vote of the Greek parliament on Sunday night on the most recent round of austerity measures (under Eurozone, and particularly German, pressure), combined with rioting in the streets of Athens, have shown that the time is right to make plain some of my reservations about that earlier post.

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The German Constitutional Court versus the EU: self assertion in theory and submission in practice – Euro Aid and Financial Guarantees. Part 3.

Dr Gunnar Beck

Dr. Gunnar Beck outlines the history of the German Constitutional Court’s complicated relationship with the EU in a series of posts. Part 1 and Part 2 are below.

On 7 September 2011 the FCC handed down its most recent decision on the relation between EU and national constitutional law. The ‘euro aid’ judgment concerned three constitutional complaints which are directed against German and European legal instruments and other measures in connection with the aid to Greece and with the euro rescue package. The complainants had invoked their right to elect the Bundestag, which is protected by Article 38 GG, to challenge a loss of substance of their power to rule, as it is organised in a constitutional state, by a far-reaching, or even comprehensive, transfer of duties and authorities of the Bundestag. They argued that Article 38.1 GG protected competences of the present or of a future Bundestag from being undermined, which would make the realisation of the citizens’ political will legally or practically impossible. The complainants submitted that the financial commitment involved in the Euro Stabilisation Mechanism Act represented a threat of the act of voting being devalued in such a way if authorisations to give guarantees are granted in order to implement obligations which the Federal Republic of Germany will incur under international agreements concluded in order to maintain the liquidity of currency union member states.

The FCC rejected the complaints as unfounded and held that the Monetary Union Financial Stabilisation Act (Währungsunion-Finanzstabilisierungsgesetz), which grants the authorisation to provide aid to Greece, and the Act Concerning the Euro Stabilisation Mechanism Act (Euro-Stabilisierungsmechanismus-Gesetz),  did not violate the right to  elect the Bundestag under Article 38.1 of the not unduly impair the budgetary autonomy of future Parliaments nor in unconstitutional manner the government’s control over the budgetary decisions.

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The German Constitutional Court versus the EU: self assertion in theory and submission in practice – Euro Aid and Financial Guarantees. Part 2.

Dr Gunnar Beck

Dr. Gunnar Beck outlines the history of the German Constitutional Court’s complicated relationship with the EU in a series of posts. Part 1 is below.

In its Lisbon Judgment of 30 June 2009 the FCC broadly affirmed its position as set out in the earlier Maastricht judgement. However, whereas in the Maastricht and Solange judgments on the formal constraints on the transfer of powers to the EU, in the Lisbon judgment it asserted its own jurisdiction of the final resort’ to review future EU treaty changes and transfers of powers to the EU on two distinct grounds: (i) ultra vires review, and (ii) identity review. Ultra vires review refers to position as characterised in the Maastricht decision: the transfer of powers to the EU and the latter’s exercise of its powers must be properly approved by the Bundestag (the German Parliament), respect fundamental rights, and be sufficiently legally certain. Identity review goes further. The institutions of the EU including the Court of Justice must respect the national identity of the Member States, the ‘non-transferable identity of (their) constitution(s)’ and the principles enshrined therein, and a minimum core of sovereignty vested in national political institutions.

The primacy of national constitutional law will remain in place for as long as the EU remains founded and is developed further on the basis of treaties and treaty amendments by sovereign states as the signatory members. It would and could change only if Member States abandoned their national constitutions and adopted a common European Constitution in their place. The FCC does not, however, state how such a supra-national constitutional revolution could or should be brought about.

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The German Constitutional Court versus the EU: self assertion in theory and submission in practice – Euro Aid and Financial Guarantees. Part 1.

Dr. Gunnar Beck

On the day that Parliament’s sovereigntist Eurosceptics have got together to hold a debate on Britain’s future in Europe and contemplate the UK leaving the EU. Dr. Gunnar Beck outlines the history of the German Constitutional Court’s complicated relationship with the EU in a series of posts.

In his post entitled ‘The People’s Court’ (a presumably unconscious allusion to the Volksgerichthof under Roland Freisler) Dr. Oliver Gerstenberg provides an admirably clear overview of the recent ‘Greek bailout’ judgment of the German Federal Constitutional Court (the “FCC”). Dr. Gerstenberg expresses apprehension at the growing self-assertion and alleged populism of the FCC. I beg to differ. To call the kernel of German identity ‘its openness to Europe’ confuses a debatable ought with a simple is. It is also unclear why the FCC should not be the appropriate forum for considering the course of EU integration if the political establishment has over fifty years coherently favoured views either not shared or only reluctantly acquiesced in by the German electorate. Dr Gerstenberg is not concerned with political debate – the German political system has never allowed for genuine debate of anything to do with EU integration. Unfortunately however – and here I agree with Dr. Gerstenberg – the FCC is indeed not the appropriate forum for articulating political debate about EU integration. The reasons for this are historical and institutional. The FCC has been self-assertive for four decades, but merely in theory. In practice it submits to the political establishment, at least in matters involving the EU.

The judgments of the FCC together with the extra-judicial writings of some of its judges, provide what is perhaps the most comprehensive analysis of the issues of primacy, legal pluralism and the problem of Kompetenz-Kompetenz in the relationship between national and EC law. The FCC developed its analysis in a series of seminal judgments which go back to the 1970s.

In the Solange I case, the FCC ruled in 1974 that, in the hypothetical case of a conflict between Community law and the guarantee of fundamental rights under the German Constitution, German constitutional rights prevailed over any conflicting norm of EC law. The FCC thus impliedly rejected the position of the doctrine of the primacy of Community law, which had first been laid down by the ECJ in the 1964 decision Costa v ENEL and then extended by it in 1970 in the Internationale Handelsgesellschaft case to cover even the fundamental constitutional norms of the Member States. However, on the facts of the case the FCC held that the rules of Community law in issue did not represent a violation of the fundamental rights under the German Constitution

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