Why the rebellion of the German Federal Constitutional Court may be the EU’s most difficult test so far
“When it comes to matters with a European element, the Treaty is like an incoming tide. It flows into the estuaries and up the rivers. It cannot be held back…”
So wrote Lord Denning in 1974, describing the new European legal order wrought by the Treaty of Rome. Champion of the jurisdiction of English judges as he was, he explained that the courts of Member States would still have the final word on applying the Treaty and on solely national legal matters. But as to the interpretation of EU law, he had no choice but to admit:
“[T]he English judges are no longer the final authority. They no longer carry the law in their breasts. They are no longer in a position to give rulings which are of binding force. The supreme tribunal for interpreting the Treaty is the European Court of Justice, at Luxembourg”
This arrangement has been the accepted status quo for members of what is now the European Union for over 50 years. It has of course been much maligned by some, who have seen the Court of Justice as a political organ and a usurper of national sovereignty. But these have been political criticisms, not legal ones. None has challenged the right of the Court of Justice to pronounce judgment on the EU’s own laws. Indeed, it is the exclusivity of this right which has so infuriated Eurosceptics, who consider the powers of the European Court to contravene the principle of nemo iudex in causa sua (no-one is judge in their own cause). Yet they charge the EU’s legislators with writing bad laws, not the Luxembourg judges with breaking them.
But on 5 May 2020, the Federal Constitutional Court at Karlsruhe, the highest constitutional court in Germany, declared that the Court of Justice had “exceed[ed] its judicial mandate” in approving the European Central Bank’s (ECB) bond buying program. The judgment is trite — it states that the Court of Justice’s interpretation of the Treaty was “not comprehensible and must thus be considered arbitrary from an objective perspective”, and that it “lack[ed] the minimum of democratic legitimation necessary”. In short, the German court held that the European court had failed in carrying out its mission of interpreting EU law. And it had failed to such a degree that a national court would have to assume responsibility for restoring the correct legal position. This was far more drastic than simply reversing a precedent, for under the EU treaties, the revisionist German court had no more right to interpret the Treaty than Manchester United has to decide the rules of football.
The significance of these accusations cannot be overstated, not least as they emanated from Karlsruhe rather than from the usual hubs of dissent in Warsaw or Budapest. To any follower of European politics, it almost defies belief that it should be judges from Germany that would strike such a blow at the very founding principles of the EU, which even the most ardent critics of the Union had not dared transgress. Even Brexiting Britain had the courtesy not to question the EU’s legal prerogatives in its protracted and bad-tempered withdrawal negotiations, politely observing the provisions of Article 50 to the letter.
But in the German judgment there is an unprecedented challenge to European legal legitimacy. The court held that the “the combination of the broad discretion afforded [the ECB] together with the limited standard of review applied by the Court of Justice… clearly fails to give sufficient effect to the principle of conferral and paves the way for a continual erosion of Member State competencies”. It stopped just short of directly mandating the ECB to act, instead requiring the German Federal Government and parliament, the Bundestag, to “take steps seeking to ensure that the [ECB] conducts a proportionality assessment” and banned all German constitutional organs, administrative bodies and courts from participating in the bond-buying scheme, which it deemed ultra vires, unless the ECB shows that its decision was “proportionate” in the next three months. It specifically included Germany’s central bank, the Bundesbank, in this prohibition.
It is difficult to read the judgment as anything other than a mutiny against the existing European legal apparatus and the aim of “ever closer union”. At any rate it seems to have been received as such by the EU’s politicians and civil servants. The Court of Justice issued a remarkable press release in response to the German ruling which stated that “the Court of Justice alone — which was created for that purpose by Member States — has jurisdiction to rule that an act of an EU institution is contrary to EU law”. It added that the role of national courts was limited to ensuring that EU law is implemented correctly in Member States. Guy Verhofstadt, MEP and former Belgian prime minister, commented that “If every constitutional court of every member state starts giving its own interpretation of what Europe can and cannot do, it’s the beginning of the end”. It is hard to find fault with his reasoning — consider for instance the possibility of the Supreme Court of Greece deciding on the legality of the country’s compliance with its bailout undertakings.
Yet it is difficult to argue that the EU will be able to ignore the Karlsruhe judgment entirely. Once the three months’ deadline set by the German court expires on 5 August 2020, then absent the production of a compliant proportionality assessment by the ECB, the Bundesbank will be faced with the choice of breaking German law in continuing its quantitative easing, or going against the Court of Justice and the EU. Inaction is therefore not an option.
On the other hand, it seems highly unlikely that the EU will bow to the wishes of the German judges through acquiescence of the ECB. Yet an infringement action against Germany as a Member State seems a heavy-handed response to such a delicate situation. The legal apparatus of the Union is ultimately dependent on the cooperation of its members, and the sheer importance of Germany to the European project means that a slap on the wrists of the Karlruhe judges is much riskier than have been past chastisements of countries such as Poland, which were doled out reluctantly but without fear of jeopardising the Union’s existence. The situation is made more sensitive by the fact that the President of the European Commission, Ursula von der Leyen, is herself German and a former member of Angela Merkel’s government.
It remains to be seen how the situation will develop, and this article does not recommend a course of action. But it is clear that the primacy of EU law and the credibility of the European legal framework is at stake. Confidence in the Union hangs by a thread, and it is hard to believe the project could continue without an effective system of recourse against those who ignore the rules. In many ways the departure of a Member State is a lesser problem for the architects of the Union than the misbehaviour of an active constituent.
That the German court knew its decision was significant is certain, yet the judgment may have a greater impact than even those rebellious lawyers had imagined. The Karlsruhe judges have defied Lord Denning and held out their hands against the tide, and they may very well find that they have stopped it.
Anders Jay is a trainee solicitor at a City law firm, currently on secondment in Sweden. He is interested in all aspects of European law and policy, and has previously written on the legal aspects of Britain’s exit from the EU.
