German Constitutional Court is a bigger threat to EU than Brexit or Covid-19

The EU is different from other international organisations in that it can make law that takes priority over national law

The German Constitutional Court. The ruling from the Karlsruhe-based court represents a mortal threat to the EU as we know it.  Photograph: Getty Images

The German Constitutional Court. The ruling from the Karlsruhe-based court represents a mortal threat to the EU as we know it. Photograph: Getty Images

 

With the understandable focus on the Covid-19 pandemic, it is difficult for non-virus-related stories to get traction. However, a judgment last week from the German Constitutional Court has received widespread attention, and rightly so. The ruling from the Karlsruhe-based court represents a mortal threat to the EU as we know it.

The German court’s ruling focused on the legality of aspects of the European Central Bank’s bond-buying policy. This policy was part of Mario Draghi’s 2012 commitment to do “whatever it takes” to protect the euro.

The legality of this bond-buying programme had been referred to the European Court of Justice in Luxembourg. It had ruled that the programme was within the powers of the European Central Bank (ECB) because it pursued monetary policy (a power given to the ECB by the EU treaty) and not economic policy (which the treaty withheld from the ECB).

Last week the German Constitutional Court rejected this decision. It said that key elements of the European Court’s decision were incomprehensible, and that parts of the bond-buying scheme were beyond the powers granted to the ECB by the treaties, and therefore illegal.

In other words the German court substituted its judgement for that of the European Court in relation to the limits of the powers of an EU institution.

As the European Court noted in a terse press statement this week, it has always held that the legality of the acts of EU bodies can only be by the European Court, not national courts in order to prevent the chaotic situation where EU acts are legal in one state and not another.

Supremacy

The German Constitutional Court has been threatening to do something like this for some time. It has ruled that although it generally accepts that EU law is supreme over national law, this supremacy will not apply if an EU law threatens the core of the German constitution. However, until now it had never found that any EU measure failed this test.

Far more than Brexit or an inadequate response to Covid-19, this ruling is a mortal threat to the existence of the EU as we know it.

The main reason that the EU is different from other international organisations is that it can make law that is enforced by national courts and takes priority over national law.

While enforcement of most treaties needs government action and voluntary co-operation with any international ruling that the treaty has been violated, EU rules can be enforced by individuals in their local courts. This makes EU rules part of everyday life in a way that, for example, World Trade Organisation rules are not.

Academics have long noted the importance of the law to European integration, with a foundational study in the 1980s characterising European integration as a process of “integration through law”.

The German constitutional court ruling threatens to unravel this process. If national courts are empowered to overturn European Court rulings on EU law issues, then it becomes impossible to achieve the key purpose of the Single Market, namely the sharing of a common set of rules by 27 states.

How can we have a single-market function if a manufacturer does not know if the EU rules allowing the sale of its product in Portugal might be held to be illegal in Slovakia?

Worse, this ruling comes at a time when the integrity of the EU’s legal system is already under pressure due to attacks on democracy and the rule of law in Poland and Hungary. The Court of Justice has repeatedly ruled that EU law requires Poland to rescind laws undermining judicial independence.

With a court as influential as the German Constitutional Court taking it upon itself to overrule a European Court decision on the interpretation of EU law, the door is now open for the Polish government to encourage its courts to overrule ECJ rulings seeking to protect judicial independence in Poland. Indeed, a Polish government minister made this argument explicitly within hours of the German ruling.

Damage

The ruling may ultimately not have a large impact on the activities of the ECB. The ruling leaves scope for the ECB to provide clarifications in relation to its activities that might satisfy the German court. However, even if this is the case the damage to the EU legal order as a whole will be difficult to contain.

The German Constitutional Court has struck a heavy blow against the characteristic that distinguishes the EU from other international organisations, namely the Union’s ability to pass laws that bind all 27 states.

It has also weakened the strongest weapon the Union has had to prevent itself from being corroded internally by the retreat from democratic values seen in Poland and Hungary.

The EU will survive, but there is a real danger that without the ability to ensure that its law is upheld in all member states, it will be a shadow of the organisation it has been.

Ronan McCrea is professor of constitutional and European law at University College London

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