After 57 years of shouting from the sidelines, last week the Bundesverfassungsgericht (German Federal Constitutional Court; GFCC) has for the first time chosen to take part in the game.

By Christina Eckes

For the first time ever, the GFCC referred a preliminary question to the Court of Justice of the European Union (CJEU). The occasion was the ECB case, in which the GFCC was asked to decide on the constitutionality of the European Central Bank´s much debated bond buying scheme. By referring the case, the GFCC may have chosen an easy way out; yet, it has also chosen the most legitimate way of dealing with the ECB case. The CJEU is better placed to defend a judicial ruling on whether or not an EU institution has overstepped its mandate than any national court could be.

Why now?

At several earlier occasions (including a case concerning the European Stability Mechanism (ESM)), the GFCC ought to have referred preliminary questions to the CJEU, but did not. So, why now? What is so special about the ECB case?

The case combines four Verfassungsbeschwerden (constitutional complaints) and an Organstreitverfahren (dispute between organs of the state), all aimed either directly against the ECB’s announced Outright Monetary Transactions (OMT) bond-buying scheme or indirectly against the omissions of the German government and parliament to stop this scheme. The ECB case is significant for several reasons.

Firstly, the judicial challenge has direct and far-reaching economic consequences. Already the announcement of a preliminary reference has given rise to speculations that the ECB, which has so far not implemented the scheme, will not do so in view of the case pending before the CJEU. This has led to an uncertainty, which may undermine the credibility of the OMT programme and make markets more volatile.

Secondly, this is the first time that the GFCC is confronted with a direct challenge against an act of an EU institution. The closest so far has been the case of Honeywell in 2010. In this case, the GFCC was in essence asked to rule on the constitutionality of a decision of the CJEU. Here, the GFCC accepted as a matter of principle that it would check whether the CJEU is overstepping its mandate. At the same time, it showed great deference to the EU judiciary and reduced that control to whether there was a manifest violation. Highly relevant for the present discussion, the GFCC further made clear in Honeywell that it would not rule on whether an act of the (other) EU institutions goes beyond their mandate without giving the CJEU the opportunity, in a preliminary ruling, to give its interpretation of the matter. This is what it now did in the ECB case.

Thirdly, if the GFCC had rendered a negative ruling on the OMT scheme, this would have had broader political consequences. It would have set a precedence for national constitutional or supreme courts to rein in an EU institution. In the case of Germany, this would likely add fuel to the flames of the allegations of German economic imperialism.

Reconciliatory on Form but Firm on Substance

While referring for the first time a question to the CJEU, the GFCC also stated clearly how it sees the case – clearer than what is usual in this context. The German Court set out important reasons why it assumes that the OMT scheme exceeds the ECB’s monetary policy mandate and thus infringes the sovereignty of the Member States, as well as that it violates the prohibition of monetary financing, which is a key pillar of the architecture of the EMU (just like the no-bailout clause). At the same time, it threw the CJEU a lifeline by setting out that a restrictive interpretation of the scheme could potentially achieve conformity with EU law.

Judicial Discourse in an Interlocking Legal Environment

The two core functions of the judiciary are to settle disputes in an authoritative manner and to counterbalance the other branches of power. In an increasingly interlocked European legal order, both national and EU law influence each other. This leads to direct or indirect judicial challenges of acts that originate outside of the constitutional framework in which the respective court is established. It also makes it particularly important for courts to establish an authority that carries beyond the national legal borders. One way of reinforcing judicial authority beyond borders is participating in a discourse with judicial bodies established on a different constitutional basis. This entails recognizing the authority of these bodies. It may also lead to a greater recognition of one’s own judicial authority.

The Advantages of Playing by the EU Rules of the Game

With its reference the GFCC engaged with the CJEU under the EU rules of the game. This should be applauded for many reasons. It contributes to the uniform interpretation of EU law. It will also earn the GFCC greater respect not only from the CJEU but also from other national constitutional and supreme courts that have played by EU rules for many years. It further allows the GFCC to shape the questions that the CJEU is called to consider.

It can hence influence the framing of the issue for the judicial and public debate beyond Germany. Finally, the GFCC has with its reference found its place as part of the EU judiciary and rejected all budding ideas of German exceptionalism within the EU. Amidst growing parochialism and nationalism within the EU this is politically very important. However, the GFCC also managed to pass the buck and leave the politically charged decision to the CJEU, which may be equally problematic in a nationalist climate. The CJEU may still duck the responsibility of a decision on the merits by declaring the OMT scheme nothing more than an announcement without legal effect.

A New European Judiciary?

In an increasingly interlocking European legal order, courts should move on from the trench warfare of either pushing an integrationist agenda (CJEU) or defending national sovereignty (GFCC) to reach the next level of maturity as one European judicial network and focus on the core function of any judiciary: controlling the exercise of executive power.

The judicial battles over the legal instruments to contain the Euro crisis may be the first context in which this happens. Watch this space. On 18 March 2014, the GFCC will rule on two other issues separated from the ECB case: the establishment of the ESM and the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (Fiscal Compact).

Dr. Christina Eckes is associate professor in EU law at the University of Amsterdam. Her personal page can be accessed here.

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