On 7 February 2014 in the OMT Case, the German Constitutional Court in Karlsruhe referred a question about the interpretation of Treaty law to the European Court of Justice for the first time. The question was whether the European Central Bank exceeded its mandate when it declared, in September 2012, that it was prepared to make emergency, unlimited purchases of specific states' bonds. Some view the referral as a genuflection acknowledging the judicial superiority of European Union jurisprudence. Has the Karlsruhe Court relinquished its role as “the final arbiter” and thereby surreptitiously bid farewell to the German sovereignty that the same Senate of the Constitutional Court so vigorously endorsed in the Lisbon Treaty Case in 2009?
Abstract
The relationship between the European Union (EU) and its member states has recently been the subject of several legal proceedings in the German Federal Constitutional Court (GFCC) and the European Court of Justice. The backdrop to the underlying controversies were policies instituted by the European Central Bank (ECB) dealing with the economic and monetary situation in various member states in the context of the sovereign debt crises to influence interest rates, combat deflationary tendencies and keep inflation under but close to the ECB’s 2% inflation target. Especially so-called outright monetary transactions (OMTs) and the corresponding OMT-program and a particular high volume public sector asset purchasing program (PSPP) announced by the ECB have been controversially discussed. Legally, the controversies are about the prohibition for the ECB to finance debt held by the EU or member states (Article 123 TFEU) and about the delineation of economic policy (Article 119 et seq. TFEU), which lies in the hands of the members states, and monetary policy (Article 127 et seq. TFEU), which is exclusively in the hands of the ECB. The GFCC in its decisions propagated a restrictive approach emphasizing the role of the member states and pointing to the doctrines developed by it around ultra vires acts and so-called identity review. This paper attempts to shed some light on this controversy and argues that beyond the legal controversy lies a deeper problem of the relationship between judicial and political decision-making that the GFCC should exercise restraint in exercising its functions and remember its own doctrine of “open constitutional norms” developed in a different context but applicable here as well.
In December 2018, the Grand Chamber of the European Court of Justice delivered its judgment in the Weiss case. This case is the most recent development in the Euro crisis case law. The financial crisis has shown the difficulty in determining the precise limits to the mandate of the European Central Bank. The Gauweiler case provided a legal framework but also left unanswered questions. This contribution will first provide the background to the Euro crisis and the context of the case then continue by giving a short summary and analyses of the Opinion of the Advocate General and the judgment of the Court. Finally, a reflection will be given on what lessons can be taken from the Weiss case. As the Weiss case appears to be last in Euro crisis case law, this reflection will include an overall analysis of the current interpretation of the mandate of the European Central Bank post-Euro crisis.
The European Central Bank's (ECB) program of purchasing government bonds, the OMT program (Outright Monetary Transactions Program), which was announced on 6 September 2012, is illegal. With this program, the ECB transgresses its powers. This is the central message of the Federal Constitutional Court's decision from 14 January 2014. However, the decision is not final. The Federal Constitutional Court has suspended the trial and has referred the matter to the European Court of Justice (ECJ) for a preliminary ruling. Only after the ECJ has examined the compatibility of the OMT program with European law will the Federal Constitutional Court pronounce its final judgment.
“If your Imperial Majesty will be graciously pleased to take off your clothes, we will fit on the new suit, in front of the looking glass.”Taking a look at the ECB of today means, to a certain extent, rethinking the emperor's idea. The European Central Bank is independent and seems almost untouchable in its field of responsibility. Its self-image is stamped by its special status outside the institutional structure of the European Union. However, the indefeasibility and with it the self-conception of the ECB was finally questioned by the European Court of Justice. The Treaty establishing a Constitution for Europe designs a new institutional setting and possibly constitutes a new understanding. The question is to what extent does this new institutional setting redefine the special status of the ESCB and the ECB, and how does it affect questions of democratic accountability and legitimacy.
The European Court of Justice, the European Central Bank, and the Supremacy of EU Law