Because of the Karlsruhe ECB judgment EU initiates proceedings against Germany

As of: June 9th, 2021 2:58 p.m.

The EU Commission considers the judgment of the Federal Constitutional Court on bond purchases by the ECB to be a “dangerous precedent”. That is why she is now initiating infringement proceedings against Germany. From Klaus Hempel, ARD legal editors The Brussels Commission believes that the Federal Constitutional Court violated the primacy of EU law with its controversial ruling on the ECB’s bond purchases last year. In doing so, Germany violated the basic principles of EU law. With the initiation of the infringement proceedings, the federal government now has two months to respond to the allegations in writing.

A judgment with explosive political power

In May 2020 the The Federal Constitutional Court ruled that the multi-billion dollar bond purchase program “PSPP” of the ECB was partially unconstitutional . The European Court of Justice (ECJ) had previously ruled that at the request of the Constitutional Court the program is legally in order and there is no violation of EU law . The Karlsruhe judges did not accept this, however, and thus opposed the ECJ – for the first time ever. They called his judgment “objectively arbitrary” and “methodologically no longer justifiable”. Your main criticism of the bond purchase program: The ECB had not justified why the program was proportionate and the significant economic impact on all citizens should be justified. The ECB and, through the ruling, also the ECJ had exceeded competences. The Bundestag and the Federal Government would have to work towards ensuring that the ECB subsequently provides this reason. In June 2020 the Governing Council looked again at the PSPP program and its proportionality. A little later, the Bundestag decided in a resolution that the proportionality test carried out by the Governing Council met the requirements resulting from the judgment. In a decision from the end of April 2021, the Federal Constitutional Court finally found that the Bundestag and the Federal Government had implemented the ruling. For the Federal Constitutional Court, the case was closed. But not for the EU Commission.

EU Commission sees dangerous precedent

The Commission sees a need for further clarification. In their view, the judgment represents “a serious precedent both for the future practice of the court itself and for the constitutional courts of other Member States”. The Brussels authority fears that the German example could set a precedent. The fear: EU states such as Poland or Hungary, which the Commission accuses of violating the rule of law, could no longer follow judgments of the European Court of Justice and refer to Germany. A year ago, shortly after the verdict was announced, had Commission President Ursula von der Leyen made it clear that infringement proceedings could be initiated against Germany . Judgments by the European Court of Justice are binding on all national courts, she explains. “The last word on EU law is always spoken in Luxembourg. Nowhere else.” It is about holding the EU together as a community of values ​​and rights. The reaction of the Polish Prime Minister Mateusz Morawiecki shortly after the ruling from Karlsruhe showed that the fears in Brussels are not entirely unjustified. He spoke of one of the most important judgments in the history of the European Union. The judgment makes it clear that the individual member states determine where the competency limits lie for the EU institutions. In Poland, the national-conservative PiS government has been restructuring the judiciary for years. The ECJ has already intervened several times and found that parts of the reforms violated EU law.

Federal government now on the train

With the initiation of infringement proceedings, the federal government now has two months to take a position. If the Brussels Commission is satisfied with the answer, the procedure would be ended relatively quickly. In the most extreme case, however, the EU Commission could ultimately sue Germany before the European Court of Justice. In this case, the conflict between the ECJ and the Federal Constitutional Court would most likely escalate for good. Shortly after the Karlsruhe ruling, Luxembourg had already expressed its displeasure and officially declared that its rulings would be binding on a national court like the Federal Constitutional Court if it had appealed to the ECJ. Regardless of how the Federal Government will express itself: It cannot impose any requirements on the completely independently acting Federal Constitutional Court, let alone prescribe not to oppose judgments of the ECJ in the future. In previous rulings on Europe, Karlsruhe had always reserved a kind of “emergency brake”, the right to the “last word” in certain cases, as it were. At the moment it cannot be assumed that the Federal Constitutional Court will move away from this line of jurisdiction. The EU Commission is obviously interested in exactly that. She wants to ensure that the court grants the ECJ the final decision-making right with regard to European law issues – with the big, actual goal in mind that other constitutional courts of problem countries such as Poland will then also permanently bow to the ECJ rulings. But how it should succeed in persuading the very self-confident Federal Constitutional Court to give up its previous dogmatics, no one currently has a conclusive answer. As expected, the Constitutional Court did not comment on today’s decision by the EU Commission in Brussels.

Dispute over ECB bond purchases Get together!

As of: June 9th, 2021 6:05 p.m.

It is understandable that the EU Commission is reacting to the Karlsruhe ECB ruling with proceedings against Germany. But that won’t resolve the dispute. Only the courts themselves can do that. A comment from Frank Bräutigam, ARD legal editors If anyone at Karlsruhe’s Schlossplatz had hoped that the high waves after the Karlsruhe ECB judgment of May 2020 would fizzle out silently, they were disappointed today. The EU Commission is initiating infringement proceedings against Germany because of a ruling by the Federal Constitutional Court. ´ That has never happened before. The relationship between Karlsruhe and Luxembourg has always been somewhat tense. But this is now a unique escalation.

Do not lose sight of questions of democracy

The starting point of the Federal Constitutional Court on EU issues is absolutely correct and important. To see that the legal limits remain an important currency at the EU level. Because one must not lose sight of the individual voter, i.e. questions of democracy. Because the individual states have not given up all their competences to the EU. With its “yes, but” approach, the court has achieved a lot in several rulings since the financial crisis in 2012 at the latest. In this specific case of the ECB bond purchase, pulling the emergency brake, accusing the ECB and ECJ of arbitrary action, went too far.

The EU Commission had to react

That was not proportionate: in terms of content, but also with a view to the possible role model effect for other states such as Poland or Hungary. What happens there in terms of content within the judiciary is of course not comparable to Germany. Nevertheless, there is this bare result: The German court does not adhere to what the ECJ says. Then why should we do this? The fact that, from its point of view, the EU Commission must therefore react and initiate a procedure – which is understandable.

Dilemma for several actors at the same time

But you also have to be aware that if you think through the process started today, it will lead several actors into a real dilemma. First of all, the federal government, which now has to take a position as a first step. What is she supposed to do? Somehow signal an independent court to correct its judgment or take other action? And in the last step, the ECJ would decide on a breach of contract. Who? Yes exactly. One of the arguing actors. He would be a kind of judge in his own case. Would that lead to a good solution?

Take “cooperation relationship” at its word

Arguing over who “has the last word” is almost always devastating. In private life, in politics and also within a network of national and European courts. It is the last thing the citizens of the EU need in these times. If the “cooperation relationship” between the courts can be heard in many speeches, this must be taken literally. Mind you: the courts cooperate with each other. Not the courts with the state and the EU. They are supposed to strictly control these two. The fact that there is often still room for improvement at the ECJ on this point has expressly contributed to this conflict.

It is the courts’ turn

An example from the two companies at issue here shows that cooperation is fundamentally possible. Because the First Senate of the Federal Constitutional Court (the Second Senate acts in the ECB conflict) has shown with important rulings from 2019 that Karlsruhe and Luxembourg can achieve control of national and European fundamental rights in the interests of the citizens together. That means: the current situation can only be defused by the courts themselves. Not from the Federal Government or the EU Commission. The actors from the judiciary know each other. Well, actually. You have to pull yourself together. It is unclear what the one solution to the specific dispute should look like, but there has been no lack of creative ideas in Karlsruhe or Luxembourg for many decades.

Editorial note Comments generally reflect the opinion of the respective author and not that of the editors.