Halt to ESM ratification pledged

The Government has undertaken not to ratify the European Stability Mechanism Treaty (ESM) pending the appeal by Independent TD Thomas Pringle against the High Court’s rejection of his claims the treaty breaches the Irish Constitution and EU law.

The treaty provides for a conditional permanent bailout fund for distressed states in the 17-member euro zone, and the Government had hoped to ratify it this week.

Yesterday, Ms Justice Mary Laffoy refused an injunction restraining ratification after rejecting Mr Pringle’s claims the treaty was unconstitutional or invalid udner EU law, but the judge said she would refer a legal issue to the Court of Justice of the EU (CJEU), the determination of which could impact the effect and operation of the ESM treaty.

Yesterday, the Chief Justice, Ms Justice Susan Denham, fixed July 23rd for the appeal after being told by lawyers for the Government and Mr Pringle they wanted a a speedy hearing.

Earlier, John Rogers SC, for Mr Pringle, said the urgency of the appeal depended a lot on what happened at a hearing before the German Constitutional Court this week as that could impact on the coming into operation of the ESM treaty. The ESM cannot come into operation without participation of 90 per cent of the states subscribing to the bailout fund and cannot come into operation in current circumstances without Germany, he said.

His side disputed Ireland’s capacity to ratify the ESM treaty on grounds it was at odds with the Economic and Monetary Union provisions of EU treaties. There were also constitutional considerations arising from the Supreme Court decision in the Crotty case, it was argued.

Michael Cush SC, for the Government, said it would undertake not to ratify the treaty if the Supreme Court would hear the appeal this month.

The State considered it likely the German Constitutional Court will give its judgment before the end of July, counsel also said. If that judgment was favourable to Germany, it would ratify the treaty and that would be enough to bring the treaty into force.

The Government considered it “a political imperative” that Ireland is at the table with a vote as soon as the treaty is operational and disagreed all aspects of the appeal have equal urgency, he said.

While the Government considered there was nothing to prevent it ratifying the treaty now, it believed, in light of the Crotty judgment, it should not ratify until the Supreme Court dealt with the appeal, he added.

Mr Cush said the High Court had found no unconstitutional breach of Irish fiscal sovereignty and, from the State’s perspective, the determination of Mr Pringle’s appeal against that finding was the imperative matter.

Mr Rogers argued the constitutional issue was linked with the claims of incompatibility of the ESM with existing EU treaties. When the Irish people voted for the Maastricht treaty in 1992 establishing Economic and Monetary Union (EMU), that gave the EU exclusive competence in the area of monetary policy, according to rules set out in that treaty, he said.

Mr Pringle’s case was that any alteration of those rules by way of establishment of a free-standing intergovernmental ESM body, as provided for in the ESM treaty, involved a “massive undermining” of the EMU provisions approved in 1992.

Counsel said he believed the Supreme Court needed to engage with all the issues raised before it could determine whether a reference of the Court of Justice of the EU was required.

In her High Court ruling, Ms Justice Laffoy said she would refer to the Court of Justice of the EU an issue concerning the implications of the intention of members of the ESM to ratify the ESM treaty now, before the coming into force next January of the March 2011 European Council Decision that authorises establishment of an ESM.

That decision provides for amendment of Article 136 of the Treaty on the Functioning of the EU (TFEU) to allow for establishment of the ESM and was made under a procedure set out in Article 46.8 of the Treaty on the European Union (TEU).

Article 2 of the decision states Article 46.8 allows the council to unanimously adopt a decision amending provisions of the TFEU but provides the entry into force of that decision “is conditional upon its subsequent approval by the Member States in accordance with their respective constitutional requirements”.

Ms Justice Laffoy said, on assumption not all member states have not yet given notice of approval in accordance with Article 2, issues arose about the implications of one or more member states not approving the fecision and not notifying such approval in accordance with Article 2.

The principal issue was what effect failure of one or more member states to comply with Article 2 would have on the effect and operability of the ESM, she added.