28th Oct 2016

New German complaint aims to further delay bailout fund

  • The Constitutional Court in Karlsruhe has already pushed forward the bailout fund creation until September (Photo: Al Fed)

A new legal challenge filed with the German Constitutional Court on Monday (13 August) calls on judges to further delay their ruling on the eurozone's permanent bailout fund, pending a verdict by the EU's top court.

The Karlsruhe-based court had already said it would rule on 12 September on six legal challenges lodged against both the permanent, yet-to-be-set-up European Stability Mechanism (ESM) and the treaty on fiscal discipline signed by 25 EU countries.

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But a group of plaintiffs led by German professor Markus Kerber, who already had challenged the Greek, Portuguese and Irish bailouts for allegedly being in breach of EU law, on Monday asked the court to further delay its verdict because a similar complaint has been filed with the Luxembourg-based European Court of Justice.

"As long as the European Court of Justice [ECJ] hasn't taken a final decision on the incompatibility of these treaties, neither the Federal Constitutional Court nor the Federal President must take a decision," Kerber's group, Europolis, said in a statement on its website.

The court on Monday confirmed it had received the complaint, but refrained from commenting on whether it would accept it or not, Die Welt reports.

The prospect of a further delay on the €500-billion-strong ESM fund is already spooking investors, with the German Dax index falling on the news on Monday evening.

But legal experts are sceptical whether Karlsruhe will postpone its 12 September ruling.

"It is not likely that the Constitutional Court changes its schedule just because of a similar case in the European Court of Justice, because the ECJ is not a 'higher instance' (for the German court)," Joachim Wieland, a constitutional expert, told Handelsblatt Online.

"Both decisions are from a legal point of view on parallel tracks and are independent from one another," he added

The case in Luxembourg was filed by Thomas Pringle, an Irish MP, who challenged the ESM in Irish courts for being in breach of EU law.

The Irish Supreme Court, for its part, asked the ECJ for legal advice.

If accepted, the Luxembourg court would take at least "a few months" to rule on the matter, an ECJ spokesman told Financial Times.

The paper also noted that it would be for the first time if the German judges took the ECJ ruling into account, as they have never before asked this court for an opinion on EU-related matters.

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