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Doubtful it Stood…: Competence and Power in European Monetary and Constitutional Law in the Aftermath of the CJEU's OMT Judgment

Published online by Cambridge University Press:  06 March 2019

Heiko Sauer

Abstract

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Quite unsurprisingly, the CJEU has held that the ECB's OMT program does not violate EU law. In accordance with this holding, I argue in the first part of this note that the OMT program does not transgress the ECB's mandate under the Treaty, which is often interpreted too narrowly, in particular by German legal scholars. Furthermore, I argue that a violation of the prohibition of monetary financing of the member States as enshrined in article 123, para 1 TFEU cannot be inferred from the ECB's announcement of a program, which has never been implemented. In any case, there is clearly no manifest and grave transgression of EU competences which, according to the German Federal Constitutional Court's (FCC) Honeywell doctrine, is required for an ultra vires finding. The second part of this note shows that the FCC's doctrine regarding transgressions of competences by EU organs (ultra vires review) is not only unconvincing as a matter of principle but also and worse (as on premises we can always reasonably disagree) not consistently applied to the OMT program. The note also objects to the Court's somewhat trendy blending of ultra vires and constitutional identity review of EU law through which it increasingly conceals its approach of applying the so-called constitutional constraints of European integration to the EU organs' conduct. The forthcoming FCC judgment is therefore less important as regards the quite foreseeable finding on the lawfulness of the OMT program but – hopefully – of vital importance as it might embody a more coherent relaunch of the FCC's standards of judicial review with regard to EU law.

The judgment of the Court of Justice of the European Union (CJEU) on the European Central Bank's (ECB) 2012 announcement of future Outright Monetary Transactions (OMT) comes as no surprise. It had not been expected that the CJEU would interpret the European Economic and Monetary Union's (EMU) Treaty provisions the way the FCC had “suggested.” Neither had it seemed conceivable that the CJEU would reject the FCC's request for a preliminary ruling holding that a legally non-binding assessment of the EU action's lawfulness could not be requested under Article 267 TFEU. The judgment had nevertheless been awaited for with tension for two reasons: First, in the vigorous and in part very critical debate about the ECB's competences under the TFEU and its alleged ultra vires action a judgment by the CJEU was necessary to settle the fundamental European law issues at stake. This is all the more important with regard to the ECB's current Expanded Asset Purchase Program (EAPP) as well as its interconnection with the European Stability Mechanism's (ESM) financial assistance programs. The CJEU's holdings on the ECB's competences within the EMU framework are discussed in the first part of this note regarding the distinction between monetary and economic policy (infra section A.I.) and the interpretation of Article 123, paragraph 1 TFEU which prohibits monetary financing of the member States by the ECB (infra section A.II.). Second, it was clear that the judgment would shape the new stage in the changing and sometimes explosive on-off relationship between the CJEU and the FCC, the stage entered into by Karlsruhe's first ever request for a preliminary ruling. The FCC had fortified its ultra vires doctrine and clearly indicated its readiness not to follow the CJEU but to insist on the notorious “last word” of the German Constitution instead. Thus, the second part of this note discusses the constitutional legal premises of the FCC's approach and the procedural and substantial manner in which the FCC tries to scrutinize the ECB's OMT program (infra sections B.I. and B.II.). In this context, possible scenarios for the upcoming judgment (infra section C.I.) and consequences for European multi-level constitutionalism (infra section C.II.) will be discussed.

Type
Special Section
Information
German Law Journal , Volume 16 , Issue 4 , 01 September 2015 , pp. 971 - 1002
Copyright
Copyright © 2015 by German Law Journal GbR 

References

1 See Bundesverfassungsgericht [BVerfG] [Federal Constitutional Court], Jan. 14, 2014, Case No. 2 BvR 2728/13, https://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/EN/2014/01/rs20140114_2bvr272813en.html [hereinafter OMT Decision].Google Scholar

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3 The FCC's ultra vires assumption entails that an EU action might be, even after its validation by the CJEU, declared unlawful and thus not binding on Germany from a constitutional law perspective; the FCC therefore denies or at least questions the binding force of the CJEU's preliminary ruling. In this regard, see the other member States' objections, Case C-62/14, Peter Gauweiler and Others v. Deutscher Bundestag, para. 18 et seq. (June 16, 2015), http://curia.europa.eu/.; the Advocate General's cautious criticism, Opinion of Advocate General Cruz Villalón at para. 30 et seq., Case C-62/14, Peter Gauweiler and Others v. Deutscher Bundestag (Jan. 14, 2015), http://curia.europa.eu/juris/document/document.jsf?text=&docid=161370&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid= (which are—from a European law perspective—of course correct).Google Scholar

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34 OMT Decision, BVerfG, Case No. 2 BvR 2728/13 at paras. 366, 407.Google Scholar

35 See infra A.II.Google Scholar

36 This is convincingly exposed by OMT Decision, BVerfG, Case No. 2 BvR 2728/13 at paras. 63, 99–100.Google Scholar

37 The CJEU regards the measures taken as subsidiary criteria. See OMT Decision, BVerfG, Case No. 2 BvR 2728/13 at para. 46. Indirect effects are seen as irrelevant. See Case C-370/12, Pringle v. Government of Ireland, Ireland and the Attorney General, paras. 56, 97 (Nov. 27, 2012), http://curia.europa.eu/; Gauweiler, Case C-62/14 at para. 51. In contrast, the FCC is of the opinion that the character and the effect of a particular action have to be taken into consideration too. See OMT Decision, BVerfG, Case No. 2 BvR 2728/1 at paras. 366, 402.Google Scholar

38 Cf. Id. at paras. 366, 400.Google Scholar

39 See id. at paras. 69 et seq. Google Scholar

40 Or rather aims at supporting the member States' economic policies without affecting price stability.Google Scholar

41 I doubt whether the principle of proportionality as enshrined in TEFU article 5, paragraph 4 fully applies in the area of delimitation of competences. For such an approach, see Opinion of Advocate General Cruz Villalón, supra note 3, at para. 159 et seq., Gauweiler, Case C-62/14; OMT Decision, BVerfG, Case No. 2 BvR 2728/1 at para. 66 et seq. Google Scholar

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43 See Goldmann, Matthias, Adjudicating Economics? Central Bank Independence and the Appropriate Standard of Judicial Review, 15 German L.J. 265, 269 et seq. (2014).Google Scholar

44 OMT Decision, BVerfG, Case No. 2 BvR 2728/1 at paras. 366, 401; see Schmidt, supra note 4, at 320.Google Scholar

45 Oddly, the FCC uses the pretty vague term “aussagelos,” but it obviously rather means “verfehlt,” see OMT Decision, BVerfG, Case No. 2 BvR 2728/1 at paras. 366, 416.Google Scholar

46 Id. at para. 416.Google Scholar

47 Id. at para. 405.Google Scholar

48 Bast, , supra note 14, at 177 (“The Constitutional Court's discussion of this crucial point is surprisingly brief, but still heavily loaded with claims to economic expertise.”).Google Scholar

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51 The CJEU rightly induces a margin of appreciation from the technical and complex nature of the requisite ECB's assumptions and forecasts, see Gauweiler, Case C-62/14 at para. 68.Google Scholar

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99 See Bundesverfassungsgericht, [BVerfG] [Federal Constitutional Court], July 6, 2010, 126 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 286, 298 et seq.; the origin of the FCC's ultra vires review is its Kloppenburg decision whose object, however, was an German courts' decision as well (which had disregarded a previous CJEU judgment allegedly ultra vires). See Bundesverfassungsgericht, [BVerfG] [Federal Constitutional Court], Apr. 8, 1987, 75 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 223, 243.Google Scholar

100 Initially, this was the clearly expressed view of the FCC, see Bundersverfassungsgericht [BVerfG] [Federal Constitutional Court], 22 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 293, 295.Google Scholar

101 89 BVerfGE, 155 (175).Google Scholar

102 The same is true as regards supranational actions by other international organizations as for example the European Patent Organization. For the requisite constitutional jurisprudence see, e.g., Christian Walter, Grundrechtsschutz gegen Hoheitsakte internationaler Organisationen, 129 Archiv des öffentlichen Rechts 39, 50 et seq. (2004); Sauer, supra note 71, at § 6 para. 30.Google Scholar

103 Thus, the public authority envisaged in Article 93, paragraph 1, number 4 lit. a) of the Basic Law encompasses, in a teleological interpretation, acts of State organs as well as supranational EU actions; this is however not undisputed, see, e.g., Klaus Ferdinand Gärditz & Christian Hillgruber, Volkssouveränität und Demokratie ernst genommen – zum Lissabon-Urteil des BVerfG, 64 Juristenzeitung (JZ) 872, 874 (2009) with further references.Google Scholar

104 The FCC has always left this open, see Bundersverfassungsgericht [BVerfG] [Federal Constitutional Court], 97 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 350, 372 et seq.; Bundersverfassungsgericht [BVerfG] [Federal Constitutional Court], 129 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 124, 173 et seq.; see Herrmann, supra note 50, at 338 et seq. Google Scholar

105 See also Siekmann, & Wieland, , supra note 20, at 6.Google Scholar

106 See, e.g., Sauer, , supra note 71, at § 9 paras. 47 et seq.Google Scholar

107 See 89 BVerfGE 155 (171 et seq.).Google Scholar

108 See 123 BVerfGE 267 (329 et seq.).Google Scholar

109 See, e.g., Schönberger, Christoph, Die Europäische Union zwischen “Demokratiedefizit” und Bundesstaatverbot, 48 Der Staat 535, 539 (2009); Martin Nettesheim, “Euro-Rettung” und Grundgesetz, 46 Europarecht (EuR) 765, 768 (2011); Klaus Ferdinand Gärditz, Beyond Symbolism: Towards a Constitutional Actio Popularis in EU Affairs? A Commentary on the OMT Decision of the Federal Constitutional Court, 15 German L.J. 183, 190 (2014); Bast, supra note 14, at 169; Mayer, supra note 66, at 136; Sauer, supra note 71Error! Unknown switch argument., at § 9 para. 50 with further references; defending the FCC's position among others Kahl, supra note 4, at 208; Gött, supra note 93, at 534 et seq. Google Scholar

110 See Gärditz, supra note 109, at 191 et seq. Google Scholar

111 Id. at 200. In my view, this is right in regretting that the “concept of ultra vires control will decay into a permanent angry citizens' complaint”; in contrast advocating a “principal” ultra vires complaint, Karsten Schneider, Der Ultra-vires-Maßstab im Außenverfassungsrecht, 139 Archiv des öffentlichen Rechts (AöR) 196, 253 et seq. (2014).Google Scholar

112 Remarkably, , the FCC itself adverts to this criticism. See 129 BVerfGE 124 (169 et seq.).Google Scholar

113 For the differences between central banks and commercial banks, see Binder, Jens-Hinrich, Drohende Zentrabankinsolvenz?, 70 Juristenzeitung 328, 330 et seq. (2015).Google Scholar

114 For the national central banks in the Eurozone this is in dispute, see Langner, Julian, Preliminary Notes to Art. 28-33 ESCB Statute, in Kommentar zur Europäischen Währungsunion at margin number 11 et seq. (Helmut Siekmann ed., 2013).Google Scholar

115 Compare in this regard, Willem Buiter, Can Central Banks Go Broke?, Centre for Economic Policy Research Policy Insight No. 24 (2008).Google Scholar

116 This does not refer to the increase of capital stock pursuant to article 28.1 of the ESCB Statute—apart from the fact that such increase is equally not relevant for the Federal Budget. See Langner, supra note 114, at margin no. 8; Binder, supra note 113, at 331.Google Scholar

117 The details which cannot be elaborated on here are in dispute. See, e.g., Herrmann, supra note 50, at 811; Mayer, supra note 6, at 2002; Roland Ismer & Dominika Wiesner, Die OMT-Vorlage des Bundesverfassungsgerichts – Eine dogmatische Kritik auf Grundlage juristisch-ökonomischer Analyse, 68 Die Öffentliche Verwaltung (DÖV) 81 et seq. (2015); Binder, supra note 113, at 333 et seq. (assuming that there is a legal obligation of the member States to recapitalize their central banks if the functioning of the ESCB is seriously put into question); Peter Sester, The ECB's Controversial Securities Market Programme (SMP) and its role in the relation to the modified EFSF and the future ESM, 9 Euro. Co. & Fin. L. Rev. 156, 164 et seq. (2012); Langner, supra note 114, at margin number 9 et seq.; and Simon, in this issue.Google Scholar

118 Ohler, , supra note 27, at § 4 para. 75; Simon, in this issue; Wolfgang Weiß, Das deutsche Bundesverfassungsgericht und der ESM: Verfassungsjustiz an den Grenzen der Justiziabilität, in Neue europäische Finanzarchitektur, 113, 133 (Peter Hilpold & Walter Steinmair eds., 2014). For a more critical view, see Sester, supra note 117, at 164 et seq., Ismer & Wiesner, supra note 117, at 86 (questioning with good cause whether factual constraints are at all legally relevant).Google Scholar

119 Weiß, supra note 118, at 136 (convincingly expressing the view that the original Bundestag's consent to the EMU covers eventual ESCB losses by means of open market operations); see also OMT Decision, BVerfG, Case No. 2 BvR 2728/1 at paras. 366, 413.Google Scholar

120 129 BVerfGE 124 (175).Google Scholar

121 Peterek suggests that there is no overruling of the Maastricht approach as the challenged acts did not have supranational character. Peterek, supra note 92, at 558. This is of course right, and the FCC might have reasoned that way, but it did not—what the FCC expressed is in my opinion not mistakable, as Peterek deems, but rather clear even if perhaps not convincing.Google Scholar

122 The same would be true for supranational actions of other international organizations. Cf. the texts cited, supra note 102.Google Scholar

123 See Bundersverfassungsgericht [BVerfG] [Federal Constitutional Court], 118 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 79, 95 et seq.Google Scholar

124 73 BVerfGE 339 (378 et seq.); Bundersverfassungsgericht [BVerfG] [Federal Constitutional Court], 102 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 147, 161.Google Scholar

125 The fundamental rights review might however be revitalized as part of the new constitutional identity review, see Sauer, supra note 81, at 96 et seq. Google Scholar

126 See Bundersverfassungsgericht [BVerfG] [Federal Constitutional Court], 133 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 277, 313.Google Scholar

127 Case C-617/10, Åkerberg Fransson (Feb. 26, 2013), http://curia.europa.eu/.Google Scholar

128 Case C-399/11, Melloni v. Ministerio Fiscal (Feb. 26, 2013), http://curia.europa.eu/.Google Scholar

129 As regards the modification of this premise by the Honeywell criteria of a manifest and grave transgression of EU competences, see supra B.I.1.1.Google Scholar

130 The idea is plainly that the fundamental right violated by the EU ultra vires action virtually defends itself triggering an obligation to work towards the cessation of the infringement by opposing in whatever fashion to the transgression of competences.Google Scholar

131 Contra Gött, supra note 93, at 518 et seq. (2014) (opining that the recourse is consequential).Google Scholar

132 See OMT Decision, BVerfG, Case No. 2 BvR 2728/1 366,424 et seq. (dissenting opinion of Judge Gertrude Lübbe-Wolff).Google Scholar

133 Cf. Opinion of Advocate General Cruz Villalón, supra note 3, at paras. 70 et seq. Google Scholar

134 Such a constitutional obligation is feasible only under condition that the Governors of the member States' Central Banks still act as State organs bound by their requisite constitutional laws when they take part in decisions of the ECB's Governing Council—this is not without any doubt.Google Scholar

135 OMT Decision, BVerfG, Case No. 2 BvR 2728/1 at paras. 366, 425 et seq. (dissenting opinion of Judge Gertrude Lübbe-Wolff).Google Scholar

136 For an overview, see, e.g., Christian Calliess, Staatsrecht III 330 et seq. (2014); and Sauer, supra note 71, at § 9 paras. 43 et seq. Google Scholar

137 For a convincingly skeptical view, see Funke, supra note 81, at 169.Google Scholar

138 See 123 BVerfGE 267 (356 et seq.).Google Scholar

139 See OMT Decision, BVerfG, Case No. 2 BvR 2728/1 at paras. 366, 386 et seq. Google Scholar

140 See supra B.I.2.2.Google Scholar

141 But see Kumm, , supra note 14, at 214.Google Scholar

142 See Verbatim of the Remarks made by Mario Draghi, Speech by Mario Draghi, President of the European Central Bank, available at https://www.ecb.europa.eu/press/key/date/2012/html/sp120726.en.html.Google Scholar

143 See Bundersverfassungsgericht [BVerfG] [Federal Constitutional Court], Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 286, 303 et seq. Google Scholar

144 This problem is inherent in the conception of challenging EU actions being ultra vires not on the basis of a substantive guarantee but on Article 38, paragraph 1(1) of the Basic Law: Such a constitutional complaint is without success even if the CJEU assumes a transgression of EU competences, thus it can from the outset be successful only under condition of a manifest and grave transgression which is therefore required for the admissibility of a referral by the FCC. Cf. Wendel, supra note 33, at 633 et seq. Google Scholar

145 See Britz, Gabriele, Grundrechtsschutz durch das Bundesverfassungsgericht und den Europäischen Gerichtshof, 42 Europäische Grundrechte-Zeitschrift (EuGRZ) 275, 281 (2015); Kumm, supra note 14, at 203.Google Scholar

146 See Gärditz, supra note 109, at 199 (“Uttering barely concealed threats is a questionable method of communication between the courts. …”); contra Udo Di Fabio, Karlsruhe Makes a Referral, 15 German L.J. 107, 109 (2015).Google Scholar

147 Cf. Hillgruber, Christian, Nicht nur Zähne zeigen – beißen!, Neue Juristische Wochenschrift (NJW), Editorial to issue 8 (2014); Niels Petersen, Karlsruhe Not Only Barks, But Finally Bites—Some Remarks on the OMT Decision of the German Constitutional Court, 15 German L.J. 321 (2014).Google Scholar

148 See also Funke, , supra note 81, at 184; Mayer, supra note 6, at 2002.Google Scholar

149 Cf. Klement, , supra note 29, at 19; Thym, supra note 14, at 263. Moreover, according to Honeywell, the CJEU disposes of Fehlertoleranz. See 126 BVerfGE 286 (307).Google Scholar

150 See OMT Decision, BVerfG, Case No. 2 BvR 2728/1 at paras. 366, 417 (suggesting an interpretation of the OMT program which would fulfill German constitutional requirements which is, however, largely not followed by the CJEU).Google Scholar

151 See Article 32 of the ESCB Statute; Ohler, supra note 27, at § 2 para 20; Julian Langner, Art. 32 ESCB Statute, in Kommentar zur Europäischen Währungsunion margin number 41 et seq (Helmut Siekmann ed., 2013).Google Scholar

152 As regards the “spirit of cooperation,” see also Simon, in this issue.Google Scholar

153 For example, it seems worth considering to associate the Honeywell criteria of a manifest and grave transgression of competences with the requirements for an EU organ's action being exceptionally void.Google Scholar

154 I am of the opinion that there is at least a categorical difference between the ultra vires review aiming at competences and therefore at the EU Treaties, and the constitutional identity review aiming at substantive law and therefore at the German Constitution, while the fundamental rights review could be conceived of as a subset of the constitutional identity review. There is a broad range of opinions on that issue. See, e.g., Hans-Georg Dederer, Die Grenzen des Vorrangs des Unionsrechts – Zur Vereinheitlichung von Grundrechts-, Ultra-vires- und Identitätskontrolle, 69 Juristenzeitung 313 (2014); Angela Schwerdtfeger, Europäisches Unionsrecht in der Rechtsprechung des Bundesverfassungsgerichts – Grundrechts-, ultra-vires- und Identitätskontrolle im gewaltenteiligen Mehrebenensystem, 50 Europarecht (EuR) 290 (2015); Payandeh, supra note 71, at 9; Mayer, supra note 66, at 128 (2014).Google Scholar

155 This position is represented by the FCC and several other constitutional courts. Whereas the FCC specifies ten other constitutional courts with a comparable jurisprudence on EU law (OMT Decision, BVerfG, Case No. 2 BvR 2728/1 at paras. 366, 387), Mayer, supra note 66, at 133 et seq. states that only the Czech Constitutional Court openly endorses the German ultra vires approach.Google Scholar

156 Case 26/62, van Gend en Loos v. Nederlandse Administratie der Belastingen, 1963 E.C.R. 7, 25.Google Scholar

157 Critically as regards the notion of the last word, see Häberle, Peter, Das retrospektive Lissabon-Urteil als versteinernde Maastricht II-Entscheidung, 58 Jahrbuch des öffentlichen Rechts (JöR) 317, 329 (2010).Google Scholar

158 Isensee, , supra note 90, at 1239 et seq.; Wahl, supra note 90, at 587 et seq. Google Scholar

159 Whatever term seems adequate to describe its interconnection—on the not only notional controversy regarding “Staatenverbund” or “Verfassungsverbund,” see Calliess, Christian, Die neue Europäische Union nach dem Vertrag von Lissabon 63 et seq. (2010); Heiko Sauer, Von Weimar nach Lissabon? Zur Aktualität des Methoden-und Richtungsstreits der Weimarer Staatsrechtslehre bei der Bewältigung von Europäisierung und Internationalisierung des öffentlichen Rechts, in Zur Aktualität der Weimarer Staatsrechtslehre 237, 246 et seq., 252 et seq. (Ulrich Jan Schröder & Antje von Ungern-Sternberg eds., 2011).Google Scholar

160 See Shakespeare, William's Macbeth, act 1, sc. 2 (referring to “the revolt newest state”) (“Doubtful it stood, as two spent swimmers that do cling together and choke their art.”).Google Scholar

161 See Jestaedt, , supra note 75, at 670 et seq.; see also Philipp Reimer, L'Ètat c'est le droit! Zur Aktualität der Staatslehre Hans Kelsens im Angesicht sich wandelnder Staatsgewalt, in L'État c'est quoi? Staatsgewalt im Wandel 37, 49 et seq. (Lisa Heschl et al. eds., 2015).Google Scholar

162 Weiler, Joseph H. H., The Reform of European Constitutionalism, 35 J. Common Mkt. Studs. 97, 125 (1997) (comparing this influence with the cold war's logic of mutually assured destruction).Google Scholar