Tuesday

22nd Jun 2021

EU takes legal action against Germany on bonds ruling

  • In going against a European Court of Justice verdict, Germany's highest court has now put into question the primacy of EU law (Photo: curia.europa.eu)

The European Commission on Wednesday (9 June) launched legal action against Germany, after determining that last year's controversial ruling on bond-buying by the country's Constitutional Court "constitutes a serious precedent" that puts at risk the EU's legal order.

In May 2020, Germany's most senior court, based in Karlsruhe, ruled that the European Central Bank (ECB) had gone beyond its competence with bond purchases.

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But the European Court of Justice had already given the green light for the ECB purchases, saying that the ECB bond-buying programme was aligned with EU law.

The landmark German ruling put into question not only the verdict of EU's top court, but also the so-called "principle of primacy of EU law" - which says that in case of a conflict between EU law and the law of the member states, the EU law prevails.

One year after that German ruling, the commission decided to send a letter of formal notice to Berlin for "violation of fundamental principles of EU law". Now Berlin has two months to reply to the EU executive's concerns.

A letter of formal notice is the first stage of an infringement procedure. If the commission concludes that Berlin failed to fulfil its obligations under EU law, the case could go to the EU's top court. This can take years.

In a statement, the commission said it considered the judgment of the German Constitutional Court constitutes "a serious precedent" for both the future practice of the German court itself, and the courts and tribunals of other member states.

"This could threaten the integrity of EU law and could open the way to a 'Europe a la carte'," said a commission spokesperson.

"The European Union is and remains a community based on law and the last word of EU law is spoken in Luxembourg," he added.

The Karlsruhe ruling has provided legal ammunition for Hungary, Poland, and other member states that like to challenge the principle of primacy of EU law.

But now the Commission is making clear to these countries that non-compliance with EU law will not be simply accepted in Brussels.

The German government, for its part, said that it took note of the commission's concerns.

"We will look closely at the concerns expressed by the European Commission and then, as the procedure foresees, respond to them in writing," Chancellor Angela Merkel's spokesman, Steffen Seibert, told reporters in Berlin.

An infringement procedure itself would not overturn the court's decision, but it puts the German government, which has no control over the court or its central bank, in an awkward situation.

Commission struggles with German court challenge

While the EU commission has suggested there could be EU probes becasue of the German consitutional court's decision, chancellor Angela Merkel argued to her party that a clash is avoidable.

Column

That German court ruling hurts EU rule-of-law fightback

The short-term damage to financial markets may be smaller than feared. The damage to democracy is considerable because it weakened the ECJ - the most effective institution to stop attacks against democracy and rule of law in EU member states.

German court questions bond-buying and EU legal regime

The German Constitutional court ordered the European Central Bank to explain its 2015 bond-buying scheme that helped eurozone stay afloat - otherwise the German Bundesbank will not be allowed to take part.

Poland and Hungary sanctions procedure back after pandemic

The Article 7 sanctions procedure was initially launched against Warsaw in 2017 by the EU Commission and triggered by the European Parliament in 2018 against Budapest. Now it is back on the table, after the pandemic.

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