Simplistic criticism of German ruling in ECB case only helps anti-EU populists | In Principle

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Simplistic criticism of German ruling in ECB case only helps anti-EU populists

Last week a judgment by the German Federal Constitutional Court (BVerfG) made headlines around the world after the country’s highest court refused to follow a preliminary ruling of the Court of Justice of the European Union. The decision attracted strong criticism. Critics accused the BVerfG of going rogue, undermining the EU system and providing support for the anti-EU populist agenda. The BVerfG judgment, although indeed controversial and issued at a difficult time, does not deserve this condemnation. Some of the critics’ unjustified opinions can do more for anti-EU populists than the judgment itself.

The case in which the judgment was issued concerned the Public Sector Purchase Programme pursued by the European Central Bank. The BVerfG was requested to decide whether the ECB’s programme of buying bonds of eurozone member states was legal and within the ECB’s powers. The BVerfG used the preliminary reference procedure to ask the Court of Justice whether the ECB programme and actions complied with EU law. The court ruled that the programme was indeed legal. This ruling should normally be binding on the BVerfG, according to the Treaty on the Functioning of the European Union. But the BVerfG concluded that the CJEU had failed to consider significant aspects of the matter and properly analyse whether the ECB was acting within the powers vested in it under EU law. It therefore decided not to follow the preliminary ruling and conducted its own analysis of the issue.

Critics of the BVerfG judgment stress the court’s reasoning that the EU is not a federal state and therefore national constitutional courts retain the right to examine whether its institutions have exceeded the powers vested in them by the member states and whether the CJEU has properly reviewed that issue. According to the critics, this was a direct challenge to the foundations of the EU legal order and grist for the mill of governments in Poland and Hungary, which allegedly will now be able to invoke the BVerfG judgment to justify breaking EU law and values, by simply stating that they do not accept the CJEU’s interpretation of law in cases against them.

What the critics do not discuss is, first, that the BVerfG merely stated the obvious: the EU is not a federal state, and the relation between the CJEU and national constitutional courts is much more nuanced than that between courts of higher instance and lower instance in a nation-state. Second, the BVerfG clearly stipulated the exceptional conditions under which the extraordinary step of refusing to follow a CJEU precedent could be taken by a national court.

The BVerfG solemnly confirmed the role of the CJEU as the ultimate interpreter of EU law. It also explained that it did appreciate that this role is vital to the proper functioning of the EU and no national court should be able to replace the CJEU’s interpretation of EU law with its own. At the same time, the BVerfG essentially acknowledged that national constitutional courts share responsibility with the CJEU for the proper functioning of EU law. Since the CJEU is not infallible, it is possible for a CJEU judgment to be issued without due attention to the relevant issues, and the national constitutional court should be able to deny such judgment the status of binding precedent for that reason—again, in good faith and with due regard for the values and proper functioning of the system of EU law.

Even national legal systems based on precedent rely on a per incuriam rule (or some variation) to allow lower courts to disregard mistaken judgments of higher courts, if they were issued with blatant oversight or failure to consider relevant aspects of the case. This does not violate the hierarchy of the courts, but constitutes an exception confirming it. Arguably, the EU could also use a similar concept. Whether the ECB decision was the right case to introduce this concept to the system of EU precedent is controversial. Very likely not, if only because “hard cases make bad law” and the timing is unfortunate. But the principle the BVerfG relied on is not incorrect. It is even more justified in EU law than in national precedent systems. This is because European law is supranational and transcends nation-states and their constitutions. The EU must therefore forge its own transnational constitution, so that proper checks can be put on its activities and legitimacy can be provided to it. This constitution can best be forged in good-faith, loyal discourse between the CJEU and national constitutional courts, and such discourse would not really be possible without the room for constructive disagreement provided by the per incuriam concept or equivalent. Note that after the BVerfG’s judgment, the role of the CJEU as primus inter pares in the European community of courts is maintained, since it is still possible to test the BVerfG’s reservations in proceedings which will likely be brought by the European Commission against Germany (with due respect for the principle of judicial independence).

The most important part of the BVerfG’s judgment is the statement of the requirements and entry criteria for the constructive discourse capable of forging the EU’s unwritten transnational constitution. According to the court, this discourse must be conducted in good faith and with due regard for European law and values, and in particular the principle of fidelity which underpins the EU’s political morality. According to this principle, the member states must act loyally towards each other, cooperate sincerely in pursuit of the common welfare, and be concerned first and foremost with the proper functioning of the EU legal system as a whole, rather than their particular interests. Hence, the BVerfG stated rather clearly that it would be against EU law for national courts lacking independence to refuse to follow CJEU precedent in order to advance or cover for particular policies of their populist governments or to try to shield them from liability for violating EU law. Such national courts can do this as a matter of fact anyway. The BVerfG essentially issued them a warning that this will be seen for what it is, and they will have no voice in shaping European constitutionalism if they do not conduct themselves independently, in good faith and in accordance with European values.

The BVerfG judgment can and should be criticised. This can only enrich the discussion about European constitutionalism. But accusations that it provides support to anti-EU populists are unjustified. This is only true under the bad-faith, fragmentary reading of the judgment advanced by these populists. We should dispel that instead of confirming it through simplistic criticism of the judgment.

Stanisław Drozd, adwokat, Dispute Resolution & Arbitration practice, Wardyński & Partners