The European Commission is considering all courses of action, including the launch of infringement proceedings against Germany, to respond adequately to the recent judgment by the German Constitutional Court in Karlsruhe testing the legal order of the European Union and the independence of the European Central Bank (ECB) (see EUROPE 12480/17).
“The final word on EU law is always spoken in Luxembourg”, said the President of the European Commission, Ursula von der Leyen, in a statement on Sunday 10 May. While the analysis of the German constitutional judges’ ruling continues, she stressed that the Commission is examining “possible next steps, which may include the option of infringement proceedings”, in order to defend and preserve the EU as a “community of values and law”.
On Saturday, she had already confirmed the possibility of launching infringement proceedings against Germany by answering a written question by Sven Giegold (Greens/EFA, Germany) in record time.
In her statement, Ms von der Leyen also reiterated “three basic principles: – that the Union’s monetary policy is a matter of exclusive competence; – that EU law has primacy over national law; – that rulings of the European Court of Justice are binding on all national courts”.
This statement was made “by the President of the Commission, on the basis of the information at her disposal”, and “there is no position of the College of European Commissioners for the moment”, its spokesman, Eric Mamer, said on Monday 11 May. He refused to speculate on a possible timetable or on the content of the Commission’s reply.
The Karlsruhe Court judgment questions the proportionality of the quantitative easing (QE) operation for the massive repurchase of essentially public securities launched in 2015 and criticises the ruling by the Court of Justice of the EU (Case C-493/17) which, in December 2018, validated this very accommodating monetary policy instrument that enabled the repurchase of more than €2,000 billion of sovereign securities of euro-area countries (see EUROPE 12157/28). The German judges also ask the Bundesbank to stop its QE activities if the ECB does not further justify its action within 3 months.
Within the Commission, the analysis is that the German constitutional judges considered that the judgment by the EU Court of Justice was not binding in Germany. According to the Karlsruhe Court, certain powers, in particular in the economic and budgetary fields, remain solely within national competence, and the Court of Justice of the EU must check that this limit is respected.
However, “only ECJ to decide what the limits are”, said one European official, noting a “contradiction”.
Secondly, the Karlsruhe Court revisits the validity of the ECB’s quantitative easing and raises the question of the proportionality of the monetary policy pursued.
However, “a national judge cannot interfere on monetary policy decisions”, argued a second European official. Today, QE “is in place and continues”.
Loyal cooperation. The Commission’s legal experts are looking for the best way to preserve the fundamental principle of loyal cooperation between the European and national judicial levels at a time when tensions between the EU and Poland on the rule of law concern the acceptance of judgements of the EU Court of Justice.
Traditionally, constant dialogue ensures that this principle is guaranteed at all times. “We are at a critical juncture. The ongoing effort has to restore this dialogue. [...] That’s the main objective”, said the second official, citing as possible actions “judicial procedure, political initiative, constitutional changes”.
What if the Bundesbank stopped its participation in quantitative easing in 3 months’ time in order to comply with the Karlsruhe Court’s ultimatum? The ECB could then consider that the German Central Bank, as a member of the European System of Central Banks, is infringing a decision of the Governing Council and, for the first time ever, it could decide to launch an infringement proceeding against the Bundesbank. (Original version in French by Mathieu Bion)