Center for Fundamental Rights

Halfway along and in Crossfire

Halfway along and in Crossfire

The German Constitutional Court has gone up against the EU in the name of democracy

The scope of European life governed by the European Union and its predecessors has widened in the recent decades. For this reason, one of the most pertinent questions facing the EU and the member states is who has final authority do pass judgement on the ultimate legality of EU legislation. The German Constitutional Court has just muddied the not too pristine waters further. Last week the Court has decided that the European Court of Justice (ECJ) acted outside its mandate, when in its earlier decision it had approved the bond purchase program of the European Central Bank (ECB).

Although the decision of the German Constitutional Court goes well beyond the specific case, this struggle for competence is far from new. The predecessor of the ECJ, back in 1958, still held that the fundamental rights enshrined in member state constitutions enjoy a priority over community law, but beginning with the 60s, and entirely on its own authority, it developed the concepts of direct applicability and then the primacy of community law.

The debate widened with time and began to include not just the matter of the relationship of member state laws and decrees and European law but also the question of primacy with regard to national constitutions and EU law. As a result, already in 1970, the ECJ was quick to point out, that the validity of EU regulation is persist even if they clash with member state constitutions. That reasoning also declared that the ECJ has the “ultimate” say in interpreting EU law. 

The member states and their constitutional courts, naturally, have been trying to set limits to the  Luxemburg based court’s efforts towards gaining ever increasing jurisdiction (and to this day the ECJ rejects the proposed accession of the EU to the European Convention on Human Rights because it deems that the European Court of Human Rights would receive competences that would place it above the ECJ itself).

The German Constitutional Court has taken the lead in this struggle and ever since the 70s it has been passing “sovereignist” decisions protecting state constitutional identity and has openly declared that indeed it can review unconstitutional EU legislation. The European court responded that courts must refrain from acting upon national legislation that contradicts European law. After a bit of fright, the Germans established, as principle, that when this problem arises, it must be investigated whether the EU rule in question remained within the limits of conferred sovereignty.  This, stronger, sovereignist position was joined by the constitutional courts of Denmark, the Czech Republic and Poland. These attempted the “envelopment” of the Luxemburg based court: on one side they tried to curtail the Union going beyond its mandate and on the other side they pointed to the primacy of their constitutions over EU law.

The Hungarian Constitutional Court dealt with the issue in its 2010, so-called “Lisbon-decision”, when it sided with its German counterpart and stressed that the member states remained the “masters of the Treaties”. Then the constitutional court underlined the need to protect sovereignty: in its 2016 decision on European migrant quotas it stated that it can review whether Hungary’s sovereignty and its historical constitutional identity are violated due to actions taken by EU institutions exercising shared competences. In 2018, the court also established that in cases where a treaty establishes an institution that can take decisions obligatory for the member state, it is necessary to examine whether the EU Treaties contain competences implied in the creation of the institution. Further they restated the “presumption of preserved sovereignty” – which means that Hungary did not abandon its sovereignty when it joined the EU and if there is debate whether a competence has been transferred, it must be presumed that it remains with the state. In 2019, the court declared that protecting sovereignty was an unambiguous necessity.

What lies behind this legalistic and seemingly “neutral” debate? The compatibility (or rather, the incompatibility) of often utopistic “peace goals” that demand internationalism and the practical, localized political decision-making (national sovereignty). In other words: a problem of legitimacy.

The European Union has no sovereignty of its own, just as there is no European “demos”. The Union exists at all due to the express will of the member states – therefore the states are the “masters of the Treaties” (“Herren der Vertage”). The member states merely agree to exercise some competences arising from their sovereignty in a manner that is shared and through the institutions of the European Union. So, even though the community was designed along the principles of Jean Monnet, one of the founding fathers, which sees the EU as bicycle, that would fall over if the pedals of integration were not pushed, throughout the course of real-life events shaping the Union, particularly during the amendments of the EU Treaties, the decision-makers from the member states (“the parties to the Treaties”) never put down this idea in print.

Clearly, because by doing so, they would have abandoned forever the power that their own nations exercise over the Treaties. As a result, what we have is an EU operating according to lofty principles, European values and standards, which however, has founding documents that never mention the primacy of European law or the final authority of legal interpretation claimed by the ECJ.

Of course, the original idea was that the values of the community (and its law) and the values of the member states (and their legal frameworks) would be grounded in a shared foundation, and apart from a few divergent details there would be no room for a serious clash of interpretations and competences. The deepening of the integration, however, didn’t validate this revolutionary experiment. As we can see, clashes when it comes to competences involve highly visible disputes over which legal system enjoys primacy and who is entitled to interpret the relevant law. 

The recent decision of the German Constitutional Court is a part of this show which challenges the decisions of two EU institutions simultaneously: the ECJ and the ECB. What is new about the decision? When it comes to the practical issue involved, we can say that the court in Karlsruhe acted in defense of German financial interests, as Germany would have been, indirectly, among the chief sponsors of a bond purchase scheme. The German decision states that as the ECB did not submit sufficient legal reasoning to support the legality of the program, it expanded its competence in a way that violates the principle of proportionality and the ECJ should have examined that, but didn’t and thus it had ‘overstepped’ its jurisdiction by not acting.    

And until a proper reasoning is submitted, the legality of the bond purchase cannot be determined and should such reasoning be not forthcoming within the time allotted by the German Constitutional Court, German institutions will be prohibited from taking part in it.

The court offered pronouncements that are far weightier and go far beyond the particular case. First, they declared that the ECJ, despite claiming the right of final arbitration in cases of European law, overstepped its jurisdiction, which itself is based on the EU Treaties. Moreover, such “incomprehensible” interpretation of the Treaties leads to “arbitrary” (!) decisions, and “lacks the minimum of democratic legitimacy necessary under the German constitution”.

Also, ECJ decisions where the court acted outside its mandate and violated the principles of proportionality “clearly fail to give sufficient effect to the principle of conferral and paves the way for a continual erosion of Member State competences”.

According to the German Constitutional Court: “For safeguarding the principle of democracy, it is imperative that the bases for the division of competences in the European Union be respected. The finality of the European integration agenda must not undermine the principle of conferral”. And if the member states should not review EU decisions in violation of this principle, that, according to the German Justices, would grant the EU institutions exclusive authority over the Treaties and would lead to an inability on the part of member states to resist even those decisions that would amount to amending the Treaties or expanding their effects. However, the German court clearly states that “the Member States remain the ‘Masters of the Treaties’ and the EU has not evolved into a federal state”.

The most consequential part of the decision is found near the end of the headnotes: “German constitutional organs, administrative bodies and courts may participate neither in the development nor in the implementation, execution or operationalisation of ultra vires acts.” Moreover, according to the logic of constitutional court process, the court directs the German government and parliament to “to take steps to ensure the rescission or non-implementation” of the bond purchase program in its current form. To put it plainly, this means that it is a constitutional obligation (!) of the member states to reject those decisions of the EU institutions that violate sovereignty, and the sovereign national organs must take steps against these.

In its reaction, the European Court of Justice, naturally, rejected that a constitutional court of a member state could establish such a principle, but common sense dictates that if we say that supreme power lies with the member states then it clearly follows that they have oversight over the EU bodies.

The view opposite is that of the United States of Europe, which does exist as an idea, but mercifully, it is yet to be legally implemented. Naturally, a “constitutional dialogue” may start among the judicial forums, the Commission may launch infringement procedures, but in the end a political decision will have to be taken regarding what kind of a Union we wish to live in. Personally, I’d choose the one that isn’t in love with itself.   

The author of this article is Miklós Szánthó, the director of the Center for Fundamental Rights.

The article was originally published in Magyar Nemzet on 13 May, 2020.