The Commission must bring enforcement proceedings against Germany

, by Guillermo Íñiguez

All the versions of this article: [English] [français]

The Commission must bring enforcement proceedings against Germany
The European Court of Justice. Katarina Dzurekova (Flickr).

Much has (already) been written about the German Federal Constitutional Court (FCC)’s ruling on May 5th. In assessing the European Central Bank (ECB)’s conduct during its 2015 sovereign bond-buying program (Public Sector Purchasing Program, PSPP), the Court suggested that the ECB had misapplied its powers when assessing the ‘proportionality’ of its actions. By failing to properly consider whether its actions went beyond what was strictly necessary, in other words, it had strayed beyond its powers.

The ruling’s precise legal implications are beyond the scope of this article – and of the author’s expertise. Its political consequences, however, call the European project’s very foundations into question: as Martin Sandbu writes, it has ‘set a bomb under the EU legal order’. At a time where certain Member States are using every mechanism available to them to undermine the EU, the FCC’s judgement sends the wrong message: that national courts can choose when to apply – and when to obey – EU law.

The FCC challenges two of the core principles at the heart of the EU: that EU law is supreme; that only the European Court of Justice (ECJ) is entitled to interpret it; and that Member States cannot settle disputes concerning the interpretation of the Treaties through ‘any other method’ than those in the Treaties (Article 344 TFEU). What EU law means and how it applies, in other words, is not determined by the German courts – or, for that matter, by those of any Member State –; it is solely a matter for the ECJ. Tuesday’s ruling effectively disregards this: the actions of an independent EU institution – the ECB – are scrutinized by reference to what German law considers the appropriate standard of proportionality. The FCC, furthermore, hints at disobeying ECJ case law which declares the PSPP program lawful [1] if it disagrees with the ECB’s proportionality assessment.

Of course, notes Kyriazis, ‘German courts have always had a difficult relationship with the principle of EU law supremacy, especially with its absolute and unconditional version’. Many of the leading cases in which the ECJ has developed said principle, in fact, have stemmed from German courts; and the FCC has repeatedly claimed it has the final say when applying EU law. Yet in the present political and economic context, the ruling’s consequences risk becoming particularly serious.

The timing, on the one hand, is awful. Although the FCC expressly notes that its judgement is not targeted at the ECB’s recent Pandemic Emergency Purchasing Program, (PEPP), the resemblance is uncanny, and the Court suggesting that the Bundesbank could be prohibited from participating in such programs creates huge legal uncertainty – the very uncertainty which is meant to be avoided by relying on the ECJ as the sole interpreter of EU law. Regardless of the case’s actual outcome, and with the eurozone under increasing political strain, Tuesday’s judgement undermines the ECB’s (already limited) powers, implicitly questions its independence, and casts serious doubts over the future scope of the PEPP. As writes Hendrik Enderlein writes, it has ‘shot at the PSPP, but hit the PEPP’.

More worryingly, it provides excellent ammunition for the Hungarian and Polish governments, which are engaged in an ongoing crusade with the European Commission and the ECJ. After all, if the highest court in Germany can selectively apply EU law, what impedes Hungary or Poland from deciding to ignore ECJ judgements – for example, on the independence of the judiciary (Case 192/18, Commission v Poland)? As Esteban González Pons, vice-president of the EPP, has noted, the German court’s reasoning is the same which has been employed by the Polish and Hungarian governments: the former, in fact, has already relied on Tuesday’s precedent to further its argument that ‘Member States are the masters of the Treaties’, and that it should be up to them to determine where EU law applies.

It is therefore necessary for the European Commission to step in. Article 258 of the TFEU allows the Commission to begin enforcement proceedings against a Member State if it considers that said Member State has failed to fulfil an obligation under the Treaties, in a process which is can to lead to the ECJ finding it in breach of EU law (Article 260). The Constitutional Court’s ruling, and its questioning of the supremacy of EU law, calls for such action. Doing so would not only reassert the Commission’s role as the institution in charge of implementing EU law: it would also allow the ECJ to declare what is blindingly obvious – that it is the European Court of Justice, not national courts, which interprets EU law.

The European legal order is both strong and dangerously fragile: its survival ultimately depends on Member States’ decision to play by the rules, and uphold – and abide by – the Treaties. As Poland and Hungary have repeatedly shown, it is impossible for the Commission to force a Member State to comply EU law wholly against its will. Yet enforcement proceedings are the closest it can get to doing so: they are the Commission’s main tool as a guardian of the Treaties and of the Union’s interest.

If the EU wants to send out a strong message – that Member States, cannot selectively apply EU law; and that political and economic power do not give you a right to do so –, it has to trigger the Article 258 process, and allow the ECJ to reassert its strength. The ball is in its court.

[1] C-493/17, Weiss and Others, Judgement of the Court (Grand Chamber) of 11 December 2018.

Your comments

  • On 7 May at 23:17, by Ian Beckett Replying to: The Commission must bring enforcement proceedings against Germany

    I would point out to you that firstly the German Constitutional Court (GCC) determined that the ECJ had in fact acted unlawfully (because it was ultra vires) in its original ruling regarding the ECB Bond buying program. I have yet to see any authority denying this fact.

    Secondly the GCC has allowed the ECB 3 months to respond. If the response is not forthcoming or is not sufficient then the GCC is not forbidding the program, it is simply stating that it has determined that it is against the German Constitution for the Bundesbank to partake in the program. At that point the Bundesbank will withdraw from the bond buying program but the ECB is free to continue. In fact the GCC ruled purely on an internal German matter over which it and it alone has supremacy, ie the German Constitution.

    I seriously doubt you will find many in Germany who would accept for one minute that he ECJ and the EU has the authority to amend the Germany Constitution without any reference to the German people.

    With regards to your last paragraph, political and economic power is what has allowed Germany and France to ignore EU law for decades. I suggest you look at their compliance with assorted EU requirements e.g GSP since the founding of the euro. To believe otherwise is naïve in the extreme.

  • On 10 May at 00:11, by Petrus Replying to: The Commission must bring enforcement proceedings against Germany

    Beckett the problem with your reasoning is that it does not take into account how the EU legal order is built. Primacy is not just a principle to please the ECJ or the Commission. It is a necessary principle to protect the uniformity of application of EU law. Without this uniformity there is no EU.

    Each constitutional court could decide that this or that measure is ultra vires because in their interpretation of the treaties it exceeds the competence conferred on the EU. Imagine if they did...

    That is why the ECJ is the sole authority to interpret EU law. Even when national courts disagree with its interpretation.

    In this case, the legality of a decision of the ECB was challenged. As the decision emanated from a European institution with the exclusive competence in monetary policy, only the ECJ could review this decision. The fact that the Bundesbank executes the decisions taken by the ECB does not make it a matter of national law (or else every other matter of EU law would be national because EU law is implemented by national administrations).

    When the GCC had a doubt on the interpretation of EU law regarding the ECB buying programme it asked a preliminary question and was bound by the answer regarding EU law like any other court.

    If the GCC does not comply, an infringement action is perfectly legitimate to preserve the uniformity of EU law.

    From that there are three options for the German government: 1) accept that EU law should be applied and make the necessary domestic changes 3) try to bring a change in the treaties 2) withdraw from the EU.

    And regarding your last point, many infringements actions have been brought against France and Germany and literally hundreds of them have been resolved. If you were referring to the budget deficit rules it’s true that those have been flouted for many years. But France was typically always trying to reach the target (with great difficulty). So it’s misleading to suggest that powerful Member States disregard EU law.

  • On 12 May at 22:20, by Théo Boucart Replying to: The Commission must bring enforcement proceedings against Germany

    The Bundesverfassungsgericht may have considered that the ECB had acted “ultra vires” because of the absence of a bailout clause in the TFEU. However, the jurisprudence of the EU has enabled to strengthen the European law over the decades. The 1964 Costa vs. Enel case set the principle of the supremacy of the EU law... Which has led to a harmonized implementation of the European law throughout the EU. The BVG has breached this major principle by questionning the decision given by the ECJ in 2018... which could open a pandora box. Everyone have complied with ECJ rulings so far. The German Constitutional Court must do so too.

    From an economic perspective, the BVG and parts of the German political elites could have destroyed the EU and its EMU if they had succeeded in pushing through their deadly orthodoxy during the Euro crisis. That’s another debate but if the ECJ had decided to take the same approach as the BVG’s, the eurozone would be dead in 2020.

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