In his chapter Nicholas Haagensen seeks to articulate the processes of legal construction and elaboration in a novel area of EU financial and monetary law. Using qualitative methods, he explains how EU lawyers, first, built a novel legal structure – the European Stability Mechanism (ESM) – during the Eurozone crisis in the years 2010 to 2012, and second, how they defended their construction before the CJEU. While attempting to resolve the legal tensions arising between the EU legal order and the ESM legal framework, the CJEU backed the mutation of Europe’s Economic and Monetary Union (EMU) with its ruling in the Pringle judgement. The establishment of the ESM – an international financial institution – outside EMU, while still being intimately connected to the EU legal order, instigated a mutation of EMU through the introduction of international law modalities into its EU law foundations. Drawing on interviews with lawyers from the European Commission, the Council, the European Parliament and the ECB, as well as the legal observations of all the parties to the Pringle case, the chapter explains and maps the process of legal construction and elaboration of changes to the EMU legal structure.

The change in the Founding Contract that political leaders initiated on 11 February 2010 put great pressure on the legal set-up of the euro that remained largely unaffected. When the European Court of Justice had to rule on the actions to which the change had given rise it consequently found itself between a rock and a hard place. It was not in a position to strike down actions that had been crucial to the single currency’s survival. Yet, in order to approve of them it had to engage in a Herculean struggle with the law that still largely reflected a stability conception from the past. This chapter examines this approval. Two cases are central: Pringle and Gauweiler. Both cases ultimately turned around the question whether and to what extent the law can accommodate the currency union’s new stability conception, characterized by the need to protect financial stability. Most of the Court’s reasoning in these cases is sound or, where it is strained, could have been justified through the use of different arguments. At one crucial point, however, the Court encounters the limits of what can be justified through legal reasoning alone.

The conclusion synthesizes the findings and, on that basis, discusses how the European Court of Justice should have positioned itself in relation to the change in the Founding Contract. It first reflects on the constitution of the Union and shows that this fits the tradition of the ‘constitutional contract’. It then discusses what consequences this has for constitutional actors, including the Court, when faced with a crisis like the one in the currency union. The initiation of the change in the Founding Contract by the heads of state or government on 11 February 2010 was a political act, an exercise of constitutional power outside the law. However, this exercise of political power does receive recognition in the law, in particular, through the principle of loyal cooperation. When the Court has to rule on a measure that has proven essential to preserve the Founding Contract in an emergency, it is under a duty of loyalty to abstain from disapproving it. Yet, instead of assessing and approving such measures on the merits, as the Court did in Pringle and Gauweiler, it should have acted on its duty by silence.