Bailout treaty breaches Constitution, argues TD

 

THE EUROPEAN Stability Mechanism treaty providing for a €500 billion permanent rescue fund for the 17 member states using the euro currency breaches the Irish Constitution, EU law and treaties on several grounds, Independent TD Thomas Pringle has argued before the High Court.

Mr Pringle’s action raises matters of “enormous importance” for the State and is concerned with the rule of law here and the EU, said his counsel John Rogers SC.

The ESM treaty of February 2012 will dilute the financial sovereignty of this State and its capacity to say yes or no in the realm of economic and monetary matters, the Donegal South West TD argues. He also contends it will give officers of the State, particularly the Minister for Finance, powers beyond those conferred on him by law.

Mr Pringle claims the ESM treaty is inextricably intertwined with the fiscal stability treaty approved by the people in last month’s referendum, which obliges member states to keep budget deficits and public debts within tight limits in an attempt to prevent a repeat of the Greek debt crisis and protect the euro currency.

He further argues that Ireland cannot formally ratify the ESM treaty next month, as intended by the Government, without first putting that to the people.

The ESM treaty breaches the Constitution and EU treaties and it could be used to compel the Republic to make a capital contribution of some €11.154 billion, a sum equal to one-third of Government tax revenue last year, to the new institution and no limit to what funding may be sought in the future, said Mr Rogers.

Decisions on whether to grant emergency funding may also be taken by qualified majority voting. Consequently larger member states will decide, said Mr Rogers. A state that might say no “will not be heard”.

The effect of continuing contribution requirements on states with excessive deficits will be to exacerbate their fiscal deficits, public debt and liability to the ESM, contends Mr Pringle. This would not only render them more vulnerable financially, but also place them in breach of provisions of the Treaty on the Functioning of the EU (TFEU).

The breach of EU treaties resulting from conferring EU competences on an international autonomous institution was exacerbated by the extensive discretion conferred on that institution, plus the fact it would act outside the control of the EU and be subject to very limited review by the European Court of Justice, he argues.

Under the ESM treaty, the governors and staff of the new institution are immune from legal proceedings in relation to acts performed by them “in their official capacity”, the court heard.

Ms Justice Mary Laffoy heard opening arguments in the action by Mr Pringle against the Government, Ireland and the Attorney General. The case is expected to last several days.

In opposing the action, the defendants dispute Mr Pringle’s entitlement to the declarations sought, including that the ESM treaty violates the principles of the TFEU and that any purported ratification of it is void.

Mr Pringle claims the ESM treaty is intertwined with the fiscal stability treaty and with a March 2011 European Council amendment to Article 136 of the TFEU. He claims the Yes vote in the fiscal treaty referendum is being used by the Government to push through the ESM treaty and the amendment to Article 136.

Some of the issues raised in the case may require a decision by the European Court of Justice, the judge was also told.

A central issue in the case relates to the legality and constitutionality of the proposed amendment of Article 136 to provide for an ESM. Mr Rogers said that decision does not take effect until January 2013 and then only if the 27 member states agree to that.