The strange behaviour of the European institutions

Essays - May 16, 2022

The existence of discrepancies between national courts and the Court of Justice of the European Union is, in principle, a phenomenon that should not surprise a jurist; as different jurisdictional bodies, they can reach different and even opposing decisions. However, one would expect a clear mechanism in place for determining which of the two should prevail, a mechanism accepted by all. Unfortunately, this not being the case in the European Union, it seems quite clear that a serious flaw in its legal system puts its very seriousness in question.


Indeed, several national constitutional courts have already challenged the judgments of the Court of Justice of the European Union, as well as the principle of primacy of European law over national law, which the Court invented in 1963. From the Van Gend & Loos judgment, which is often cited as a preliminary justification for the aforementioned principle of primacy, the Luxembourg-based Court has declared that Member States limit their sovereignty when signing the Treaties, a most curious statement since it is actually nowhere to be found in the Treaties.


In the Costa v. E.N.E.L. judgment (15 July 1964) the Court further stated that “the precedence of Community law is confirmed by Article 189, whereby a  regulation shall be binding and directly applicable in all Member States“. Another awkward deduction, since neither binding force nor direct application necessarily determines primacy. The lack of logic, not just legal, but merely fundamental, by the magnificently remunerated magistrates of the European Union is another serious defect in the solidity of this international organisation.


It is true that, in accordance with Article 19.3 of the Treaty on European Union, its Court of Justice rules on the interpretation of Union law and on the validity of acts adopted by its institutions, but this does not grant any primacy to it.


Naturally, these inconsistencies have been highlighted by various Member States. Before Poland and Hungary – nations that have recently tended to behave less slavishly towards the Brussels cryptocracy – the German Federal Constitutional Court had put the principle of primacy under considerable strain. It was a question of money, and we already know that European money, after all, is substantially controlled from Frankfurt, rather than from Belgium or Luxembourg. It is worth recalling that the once beautiful city of Hessia is not only the seat of the European Central Bank, but also that of the German Federal Bank, and not by coincidence. When the European Central Bank was created to control the Euro mess, it was decided in Berlin and accepted in Brussels, Paris as well as all the other diffident European chancelleries. The finances of Brussels and of the whole Union are to be managed fifteen minutes away by car from the offices of the Germanic monetary authority.


Against this background, the Karlsruhe judges produced their Weiss ruling on May 5th 2020, thereby declaring that two decisions by European Union bodies were ultra vires and partially unconstitutional, namely, those coming from the aforementioned European Central Bank and the Court of Justice of the European Union on the European public debt purchase programme.  As a consequence, Germany was challenging the authority of both.


According to the German Constitutional Court, the European Central Bank was not acting within its remit when it purchased 2.6 trillion euros worth of bonds, since the operation should have been previously authorised by both the German federal government and the Bundestag. As a result, the German Constitutional Court declared that neither the decision of the European Central Bank nor the judgment of the Court of Justice of the European Union approving the transaction should be implemented in Germany.


The reader will easily perceive the harshness implied by the German magistrates’ resolution. EU law does not only lack any and all primacy over German law; but also the rulings of the highest authorities in the European Union should not even be applied in Germany.


Furthermore, even the legal costs were awarded in favour of Mr. Weiss and his co-plaintiffs. All funds spent on their lawyers’ fees (a six-figure amount) were to be paid out of the Federal Republic’s buoyant public treasury, due to the clarity of the case according to the Karlsruhe magistrates.


In practical terms, the Bundesbank would no longer participate in the European Central Bank’s bond purchasing programme; the European monetary authority could have continued acquiring public debt if it so wished and if the other nations graciously allowed it to continue doing so, but in no case with funds coming from Germany. It is obvious that such a scenario would considerably restrict the margin of manoeuvre in the Union.


Ultimately, German taxpayers were being protected, since by buying public debt the European Central Bank is sending a message to those Member States who wish to take on more debt, knowing that it will be purchased by the Union’s treasury body. But a greater supply of public debt reduces its price, i.e. the interest rate at which such indebted nations must repay it. This would not only be contrary to the spirit of the Maastricht Treaty (which prohibits the European Central Bank from directly buying public debt from States), but also to the interests of low-indebted nations such as Germany and their nationals.


Besides, the risks of default would also be passed on to German taxpayers, who would have to bear them to the extent of the Bundesbank being the main contributor to the European Central Bank’s balance. Both EU bodies, the European Central Bank and the Court of Justice, tried to counter criticism regarding state financing by arguing that the European monetary authority is not crossing the barrier of one-third of the public debt issued by any member state. But even that was not deemed sufficient by the German magistrates, as a further demonstration that primacy is, for them, a chimera.


After maturing for more than a year what should be done about the German attitude, on 9 June 2021 the European Commission sent the government of the Federal Republic a formal communication for violation of the fundamental principles of Union law, namely those of autonomy, primacy, effectiveness and uniform application, as well as respect for the jurisdiction of the Court of Justice. With Poland and Hungary the attacks are permanent, but here it was necessary to weigh up over and over how to act vis-à-vis Berlin, before deciding to initiate proceedings.


The website of the European Commission emphasised in particular that the decision of the German Constitutional Court violated the principle of primacy of Union law. Two months later, the government presided by Olaf Scholz replied via a four-page letter in which Germany, without reversing the decision of its Constitutional Court, recognized the principles of autonomy, primacy, effectiveness and uniform application of Union law, as well as the values proclaimed by Article 2 of the Treaty on European Union, in particular the Rule of Law.


Moreover, the Traffic Light Government – according to the colours of its three participating parties – explicitly proclaimed in its letter the authority of the European Court of Justice, whose decisions are binding and not subject to appeal. It added that the legality Union institution acts are not subject to constitutionality control by German courts, and can only be appealed before the Court of Justice in Luxembourg.


The German reply expressly confirmed abiding by the duty of loyal cooperation in accordance with the European Treaties, undertaking to use all means at its disposal to avoid, in the future, a repetition of a decision such as the one issued on 5 May 2020 by the Karlsruhe court.


With such statements, the European Commission decided to close, barely four months later, the procedure it had so deeply considered to initiate against Germany. It is by all means a false closure, a way of acting that shows to be once again very alien to any logic and legal soundness.


First, because the German executive did not bother to dispute its Constitutional Court. Quite obviously, the Federal Republic legal framework does not allow the Chancellor to revoke decisions by the body interpreting the Bonn Grundgesetzof 1949: but he could have issued a public statement, without leaving it to the European Commission, indirectly and with the proverbial lack of transparency that characterises this Union institution, to communicate a little note allowing both parties to get out of the imbroglio.


Secondly, because the decision by the Karlsruhe court confirms that the principle of primacy, so grandiloquently proclaimed by the Brussels authorities, may not be taken too seriously or even considered waste paper, depending on the specific interests at stake and the factual power of the respective sides in the fray. The Brussels resolution of this matter seemed actually rather childish, as a teacher’s reproach to a bully who has broken the same rules that less influential colleagues cannot dare to ignore, and that without any real consequence or sanction.


Finally, because none of this was a legal solution to the issue really, but rather a compromise between Berlin and Brussels, perhaps simply over a phone conversation in German, since not surprisingly Ursula Gertrude, the main tenant of the Berlaymont Palace, comes from a Bremen cloth manufacturer.


Jorge Martinez and Miguel Toledano are advisors in the European Parliament for the European Conservatives and Reformists Group.