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Eastern European states sense opportunity in German court ruling

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Via Financial Times

The EU is seeking ways of defusing a constitutional crisis that threatens to weaken the legal glue holding the union together.

The German constitutional court’s decision last week casting aside a European Court of Justice ruling on monetary policy marked the most overt and significant challenge ever posed to the EU’s highest court, scholars said. In a statement on Friday described by one EU expert as a “cry for help”, the ECJ warned that the bloc’s legal order may be in jeopardy.

Ursula von der Leyen, president of the European Commission, said in a letter on Saturday to Sven Giegold, a German MEP, that Brussels was considering options including legal action against Germany. But the most immediate danger lies in the east, where Warsaw and Budapest are already engaged in legal skirmishes with Brussels and could be emboldened by the German constitutional court’s defiance. Experts fear courts in other countries will also start taking shots at the ECJ.

“The technique they used, to be able to judge themselves, instead of following the court in Luxembourg, is dangerous,” said Kees Sterk, a senior Dutch judge who is president of the European Network of Councils for the Judiciary, a body representing judicial councils around Europe. “They tried not to blow up the system in Europe, but I am not totally confident that they succeeded.”

On Tuesday, the constitutional court in Karlsruhe told the German government it needed ensure that the European Central Bank carried out a “proportionality assessment” of its bond-buying programme within three months. If a satisfactory assessment is not forthcoming, the Bundesbank would have to withdraw from the programme. The court rebuffed part of a 2018 ECJ ruling that had approved ECB asset purchases, calling them “untenable from a methodological perspective”. 

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Miguel Maduro, professor at the School of Transnational Governance of the European University Institute, said that while there was a history of clashes between national courts and the ECJ, this marked an unprecedented escalation. “This is an open challenge by the German Constitutional Court to the ECJ, and that is why it is such a gamble,” he said.

The stand-off has immediately thrown the spotlight on Poland and Hungary, given their existing legal battles with European institutions. Both face proceedings under Article 7 of the EU treaty, which could see them lose their voting rights as member states of the bloc, though they have vowed to protect one another. 

Politicians from Poland’s ruling Law and Justice party, which has frequently accused the EU of exceeding its competences during a five-year-long battle over changes to the Polish judiciary, were quick to seize on the German ruling as a vindication.

Mateusz Morawiecki, Poland’s prime minister, told Germany’s Frankfurter Allgemeine Zeitung newspaper that the ruling of the Karlsruhe court was “one of the most important” in the history of the EU and established that “the ECJ does not have unlimited powers”.

Julia Przylebska, head of Poland’s constitutional court, which was neutered by Law and Justice in 2016, also drew parallels between the German clash with the EU and Poland’s own tussles with Brussels. “National constitutional courts are the courts which have the final word,” she said after the ruling.

Mr Sterk said he feared that the Polish government would now be encouraged to ignore ECJ rulings against its judicial changes, such as an order last month to suspend a new disciplinary chamber for judges, which the ECJ found was not independent.

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The Hungarian government led by prime minister Viktor Orban so far has not had a record of blatantly defying ECJ judgments. However, Marta Pardavi, co-chair of the Hungarian Helsinki Committee, a rights watchdog, said the German judgment was significant. “For governments that want to disrespect EU law, including rule of law and core values, this verdict is something to study and to see how it could be used in legal questions which are not related to this particular field,” she said.

The first post-Karlsruhe test will come this week when the ECJ hands down its verdict in a case about Hungary’s asylum rules, including holding asylum seekers in so-called transit zones, areas on the border, and another rule making it possible to reject any candidate arriving from Serbia.

The court’s advocate general, in a preliminary ruling, found that holding migrants in the transit zones constitutes “detention” which “must be classified as unlawful”. Hungary’s justice minister Judit Varga responded by insisting all the country’s regulations comply with EU and international law.

In an interview in one of the main pro-government newspapers over the weekend, Ms Varga said the German judgment may set a precedent as far as national sovereignty is concerned, arguing that “the fact that the Court of Justice of the European Union has been overturned is extremely important”.

The ECB and Berlin are now attempting to formulate responses to the decision of the German court. Germany’s Olaf Scholz on Friday attempted to reassure fellow finance ministers, saying a solution would be found that kept the Bundesbank involved in ECB bond-buying, diplomats told the Financial Times.

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The commission is now analysing the judgment and is considering “possible next steps up to an infringement procedure” against Germany, Ms Von der Leyen wrote in her letter on Saturday. Her words underscore how seriously she is taking the threat, but experts warned such action — which would have to be endorsed by the commission as a whole — would be risky given that it would be taken against the German government, not the court, forcing Berlin on the defensive against Brussels.

To many politicians the situation looks ominous. “For me the ruling shows that in the long run we are on unstable ground for the European Union,” said Manfred Weber, the leader of the centre-right European People’s Party in the European Parliament.

“The supremacy of EU law is at stake, which, for example, keeps the single market together and gives investors the confidence to invest in all corners of Europe. Politicians celebrating this ruling should be careful what they wish for,” Mr Weber said.

Additional reporting by Agata Majos in Warsaw

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