Weekend Edition Nº16

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SUBSTANTIVE EU LAW REVIEW BEYOND THE VEIL OF DEMOCRACY: THE GERMAN FEDERAL CONSTITUTIONAL COURT ULTIMATELY ACTS AS SUPREME COURT OF THE EU

REQUIEM FOR JUDICIAL DIALOGUE – THE GERMAN FEDERAL CONSTITUTIONAL COURT'S JUDGMENT IN THE WEISS CASE AND ITS EUROPEAN IMPLICATIONS Daniel Sarmiento

Heiko Sauer

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Substantive EU law review beyond the veil of democracy: the German Federal Constitutional Court ultimately acts as Supreme Court of the EU Heiko Sauer

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se review is given a dressing-down for being manifestly decient, or literally for being: ‘not comprehensible from a methodological perspective’ (paragraph 153) and ‘objectively arbitrary’ (paragraph 118).

It must have really bothered the Second Senate of the German Federal Constitutional Court, the Bundesverfassungsgericht (‘BVerfG’), that it was repeatedly compared with a barking dog that did not bite. On Tuesday, it ultimately bit: it declared both the ECB’s PSPP (Public Sector Purchase Programme) and the CJEU’s Weiss (C-493/17) judgment that had conrmed the PSPP’s compatibility with EU law to be ultra vires: according to the BVerfG’s judgment (2 BvR 859/15), both EU organs had transgressed the competences that the Member States had conferred upon the EU. On the one hand, the BVerfG’s concerns about the violation of the EMU rules by the ECB should have been more thoroughly addressed by the CJEU before. On the other hand, it is not only the mere result of the judgment that is unacceptable in an ever more challenged community of law. In addition, the BVerfG pretends that it just enforces its well-established ultra vires review while in fact it carries out a substantive EU law review in the place of the CJEU, who-

In this Long Read I will rst try to elucidate the German constitutional law context and the development of the BVerfG’s ultra vires review (I.). I will then analyse the reasoning in so far as it declares the Weiss judgment and the PSPP as being ultra vires (II.) and I will conclude with some general observations on the outcome of the judgment (III.). I. The doctrinal conception and the development of the BVerfG’s ultra vires review 1. Main premises and features of the BVerfG’s ultra vires doctrine The BVerfG’s ultra vires review builds on three main premises which have often and rightly been criticised but are only outlined here:

The BVerfG pretends that it just enforces its well-established ultra vires review while in fact it carries out a substantive EU law review in the place of the CJEU

The primacy of EU law has never been fully accepted in Germany. It is only accepted by the grace of the BVerfG, or less suspiciously, it is characterised as a ‘primacy by virtue of

1. Professor of German and European Public Law, Rheinische Friedrich-Wilhelms University of Bonn. Many thanks to my colleagues and friends for their invaluable comments.

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the Second Senate’s view, every single action which does not lie within the EU’s competence contravenes Article 20 para 2 of the Basic Law pursuant to which all State authority is derived from the people. The democracy problem of ultra vires acts is thus that they are conceived of as having no connection with the German people. This is how the BVerfG integrated its ultra vires review in Article 79 para 3 of the Basic Law, that is, in its constitutional identity control, in its OMT judgment (2). Nevertheless, and quite inconsistently, not every transgression of powers by an EU organ is understood to infringe the German constitutional identity. According to

constitutional empowerment’. The BVerfG assumes that the pouvoirs constitués, as a consequence of their subjection to ultimate constitutional limits enshrined in Article 79 para 3 of the Basic Law, cannot vest the EU with the power to set aside these limits. Instead, the BVerfG vests itself with the power to review EU law in order to prevent violations of the German constitutional identity. An important facet of this identity control is the BVerfG’s ultra vires control. The starting point of this doctrine is the principle of conferral pursuant to Article 5 para 1 TEU. From the BVerfG’s perspective, this principle is

The primacy of EU law has never been fully accepted in Germany

the BVerfG’s Honeywell judgment, only such ultra vires acts that can be seen as a manifest and structurally signicant excession of EU competences can be declared legally irrelevant for Germany (3). This is why the BVerfG had to be so harsh with the CJEU: A simply unconvincing judgment or a slight frontier crossing would not have triggered its ultra vires review.

constitutionally mandatory: the Basic Law is construed to prohibit the transfer of ‘Kompetenz-Kompetenz’ to the EU, meaning the power to determine the scope of its powers. Such transfer would abandon Germany’s statehood, and the pouvoirs constitués are not entitled to do so. This parochial theory of the State forms the basis of the BVerfG’s assumption that it must prohibit even a de facto ‘Kompetenz-Kompetenz’ of the EU. And in 2. BVerfGE 142, 123 (200 et seq.) 3. BVerfGE 126, 286 (304 et seq.).

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nal law perspective, the EU had to respect the limits of its competences, it held that the CJEU was far from exceeding the limits of its mandate (4). In its Maastricht judgment, the Senate repeated, by way of an obiter dictum, that ultra vires acts of the EU could not be binding for and in Germany (5). It was as late as 2010 that the second case where an EU act was challenged as being ultra vires was decided. The case concerned the ercely debated CJEU judgment in the case of Mangold (C-144/04). The Second Senate left open the question whether Mangold was ultra vires and whether a possible exceeding of the CJEU’s mandate could possibly be seen as being manifest. It conned its decision to holding that a potential exceeding of the CJEU’s competences was – in that particular case – not structurally signicant (6). In its judgment on the ECB’s OMT which was, in a way, the rst leg of the current PSPP judgment, it pronounced dissatisfaction with the CJEU’s Gauweiler (C-62/14) judgment. Albeit in a reluctant way, it came to the conclusion that both the Gauweiler judgment and the OMT did not manifestly transgress the competences of the EU (7), although only that assumption had led to the Senate’s preliminary reference (8). As this led to considerable mockery, one could have estimated the second reference on very similar questions in the Weiss case as an expression of the BVerfG’s willingness to prevail if it comes to the crunch. But before the PSPP, another potential ultra vires case involving the ECB was ready for decision: The Second Senate held that the SSM regulation as well as the

The third point is that all these premises do not yet explain why individual complaints can be lodged against EU law actions that do not affect individual rights. The gap that had to be lled by the BVerfG is the famous ‘right to democracy’: The Basic Law phrases the principle of democracy as objective law, not as an individual right. But the BVerfG, assuming that democracy is ultimately rooted in human dignity, created a fundamental right to democracy. It broadens the scope of the citizens’ right to elect the members of the German Bundestag in general, direct, free, equal and secret elections pursuant to Article 38 para 1(1) of the Basic Law and thereby establishes a fundamental right that is, albeit solely in the context of European integration, a subjective equivalent of the principle of democracy. Therefore, it can be used as a trigger of constitutional complaints against the EU, even if these have to be directed against the German State organs bearing responsibility for the integration process (‘Integrationsverantwortung’). According to the BVerfG, they are under an obligation to prevent the EU organs from infringing the constitutional identity by acting manifestly and seriously ultra vires. 2. Ultra vires case law before the BVerfG The ultra vires doctrine originated in a decision of 1987 on a constitutional complaint that had challenged the CJEU’s jurisprudence that attributes, under certain conditions, direct effect to EU directives. Whereas the BVerfG emphasised that, from a constitutio-

4. BVerfGE 75, 223 (240 et seq.). 5. BVerfGE 89, 155 (188). 6. BVerfGE 126, 286 (309 et seq.). 7. BVerfGE 142, 123 (214 et seq., at paras 175 et seq.). 8. BVerfGE 134, 366.

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and the PSPP. The judgment is nonetheless peppered with fallacies, more precisely with a disregard of at least two most important legal differences:

SRM regulation, namely the core elements of the EU banking union, did not manifestly exceed the EU’s competences (9). Finally, another candidate for a potential ultra vires nding of the BVerfG is the pending case of Egenberger (C-414/16) concerning ecclesiastical labour law. It thus remains to be seen whether the Second Senate will soon hit the EU one more time.

In lowering its standard of judicial review with regard to the ECB the CJEU might have gone too far. Thereby it might not have sufciently defended the principle of conferral, the Member States’ primary responsibility for the conduct of economic policy. Let us assume this is the case, that the CJEU did not take seriously enough its mandate, and let us ignore the fact that there might be good reasons for vesting the ECB with a particularly wide margin of appreciation, such as its experience in monetary policy that might be even higher than the know-how of constitutional judges. Let us thus assume that the Weiss judgment is unlawful. Could this be conceived of as being ultra vires? Does not the whole ultra vires doctrine go back to the premise that the EU, if it avails itself of competences that the German State organs have not conferred, encroaches on the principle of democracy and thus violates Germany’s constitutional identity? There are cases where judgments of the Luxembourg Court can be discussed as being possibly (!) ultra vires. But these cases imply, and they have to imply to t into the scheme, the CJEU’s competences. The Weiss judgment is, from the perspective of the Court’s mandate, much more a – possible – underperformance than a transgression of its limits. It entails at most a – possible – substantive violation of EU law, but not a violation of the EU’s competences. The BVerfG might have characterised the Weiss judgment as some kind of complicity to an ECB’s ultra vires act and thus might have ex-

II. The application of the ultra vires doctrine in the case at hand 1. The Weiss judgment as a manifest and structurally signicant excess of EU competences What lies at the heart of the BVerfG’s erce dissatisfaction with the Weiss judgment is that the CJEU had left considerable leeway for the ECB in the execution of its mandate. In the Second Senate’s view, the CJEU had not sufciently scrutinized the ECB’s assumptions, it had contented itself with the fact that both the objective and the instrument of the programme fell into the realm of monetary policy, and in particular it had not taken into consideration the evident economic policy effects in the assessment of the PSPP’s proportionality, although these effects might encroach upon the Member States’ primary competence for economic policy. More generally, the Second Senate thereby admonishes the CJEU for not sufciently protecting the principle of conferral and thus for not preventing the ECB from grasping at the holy grail of statehood, that is, ‘Kompetenz-Kompetenz’. This reasoning is not entirely unconvincing as regards the substantive criticism of the Weiss judgment

9. BVerfGE 151, 202 (302 et seq.).

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plained why the judgment forfeits its binding force. But accusing the CJEU of exceeding its mandate when it is too generous in its judicial review of the other EU organs is simply not coherent. That the BVerfG’s review of the Weiss judgment is, in fact, not on competences but on substantive law is highlighted by the focus on methodological shortcomings. On the one hand, methodology is inevitable if manifest transgressions must be differentiated from ‘simple’ transgressions of competences. That it is extremely difcult to distinguish between monetary and economic policy and that such insight should result in particular hesitation when it comes to declaring a manifest transgression of the ECB’s mandate is another kettle of sh. On the other hand, methodological aws in a judgment might – again at most – render it unlawful but do not indicate whether a judgment is intra or ultra vires. So the BVerfG gets entangled in its own conceptions that have long been criticised for not being all too coherent. If all is about legality, we do not need democracy. But if all is about democracy, the Second Senate should stick to its premises and not equate unlawful conduct with an exceeding of competences. The second point is that the BVerfG, even if its review is inevitably shaped by the national constitution, blurs EU and German constitutional law. Its starting point is that a transgression of EU competences must be prevented because it would violate the core of national democracy. However, the answer to the question as to whether or not an EU act is to be seen as ultra vires cannot be derived from the Basic Law, but only from the standard of EU constitutional law. This is why the Second Senate elaborates on the principle of conferral, on the EMU provisions and on Article 19 para 1 TEU. But all of a sudden, when it comes to the ECB’s independence pursuant to Article 130 TFEU, the BVerfG asserts that such independence entails, as a compensation, strict scrutiny by the CJEU. This is of course arguable, all the more so from the perspective of a German scholar familiar with this argument from German constitutional law. But does EU law view the ECB’s independence, which is by the way expressly approved (if not required) by Article 88 of the Basic Law, really from the

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Accusing the CJEU of exceeding its mandate when it is too generous in its judicial review of the other EU organs is simply not coherent.


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cally!) without giving reasons: ‘For this lack of balancing and lack of stating the reasons informing such balancing, the ECB decisions at issue violate Art. 5(1) second sentence and Art. 5(4) TEU and, in consequence, exceed the monetary policy mandate of the ECB deriving from Art. 127(1) rst sentence TFEU.’ (paragraph 177). However, the assessment that the Governing Council did not take appropriate precautions against a possible transgression of its monetary policy mandate does not entail the conclusion that the ECB did in fact encroach on the Member States’ competence for economic policy. The only possible legal consequence is that the Governing Council acted in a procedurally unlawful manner and that it has to remedy this violation if it intends to uphold the PSPP. In other words: a monetary policy instrument with a monetary policy objective does not turn into an economic policy measure for the single reason that its economic policy consequences have not been sufciently taken into account. The idea that a court is entitled to invalidate a measure not because of its established unlawfulness, but because of the lack of an ability to perform its task of legal review also stems from German law. Apart from the question of whether this doctrine can be transferred to EU law without further ado: not stating reasons is never a lack of competence, but simply a lack of sufcient grounds for evaluating the competence. Again, the BVerfG’s declaration of an ultra vires act is thus unfounded. And the question how a possible violation of Article 123 TFEU (which according to the BVerfG is not manifest) amounts to an ultra vires act is not elaborated on either.

perspective of an ‘Einussknick’ (decrease of inuence)? One might doubt that with regard to the quite different understandings of democracy in the EU on the one hand and in Germany, especially in the Second Senate, on the other hand. In the EU legal order, a national court should not avail itself of such courageous legal transplants without even considering that EU law might have a different meaning, understanding and culture than domestic law. 2. The ECB’s PSPP as a manifest and structurally signicant exceeding of EU competences The BVerfG’s central allegation as regards the PSPP itself is that the Governing Council of the ECB did not sufciently take into account, at least not in a comprehensible and transparent manner, the economic policy effects of the programme which the Second Senate elaborates on assiduously. The BVerfG is of the opinion that these effects should have been weighed against the monetary policy objective and the PSPP’s aptitude to achieve it. This is certainly maintainable. Let us therefore assume that the Governing Council was under an obligation to perform such balancing and that it did not do so (the fact that the CJEU contented itself with the monetary policy accounts, namely the public minutes of the Governing Council’s sessions, is not even mentioned by the BVerfG) or that it did do so covertly and thereby violated a legal obligation to publish its balancing (which is not self-evident either, given the specicities of monetary policy). Do such procedural deciencies amount to acting ultra vires? The Second Senate asserts this with a single phrase and (quite ironi-

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III. Concluding observations

The BVerfG engages in this case as if it were the Supreme Court of the EU while ostensibly worrying about German democracy. Even in a constitutional order of pluralism this is hard to justify

To sum up, I would like to highlight two points with regard to the ultra vires doctrine. First, the PSPP judgment shows that it is impossible and inappropriate to conceptualise EU law by virtue of national constitutional law. This is not so much a statement on the primacy of EU law. I would simply like to recall that it is unconvincing to apply EU law as a standard of review while at the same time pretending that all is about constitutional law. Second, with this PSPP judgment, the BVerfG ultimately turns the right to democracy into a right to lawfulness. And the German Constitution does include such a fundamental right. However, apart from the question whether such lawfulness also means compatibility with EU law, constitutional complaints alleging violations of this right can only be lodged by individuals who are directly affected by the measure in question. This is clearly not the case here with regard to the ECB’s monetary policy. Thus, the constitutional complaints should either have been declared as inadmissible in so far as they concern substantive violations of EU law or as unfounded in so far as they concern ultra vires acts. But this was obviously not the favoured outcome.

groups of inveterate opponents of the EMU, to bring cases before the BVerfG. Their resistance is of course politically legitimate, but it is not the BVerfG’s task to vitalise the political discourse. With regard to the case at issue, the BVerfG could execute its judgment (even ex ofcio!) pursuant to § 35 of the Constitutional Court Act should the ECB’s Governing Council not back down. In the long term however, the Second Senate bears responsibility for a heavy external shock to the community of law which already struggles to cope with quite a few other shocks. Let us hope that the Senate is not out in its estimation that the CJEU, the Commission, the ECB and the other national Constitutional and Supreme Courts are going to leap over their own shadows and help close Pandora’s box again. The BVerfG had better make every possible effort not to open it. German constitutional law lays down a principled obligation to take part in European integration, and it would have offered many ways to render quite a different judgment. But in the end, ‘whatever it takes’ seems to have outweighed the ‘within our mandate’ caveat.

In the end, the BVerfG engages in this case as if it were the Supreme Court of the EU while ostensibly worrying about German democracy. Even in a constitutional order of pluralism this is hard to justify. It remains to be seen whether the Court can hold the fort. For the time being, it has two trump cards: The right to democracy in theory enables every German citizen, and in practice enables and encourages time and again the same

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Requiem for Judicial Dialogue – The German Federal Constitutional Court's judgment in the Weiss case and its European implications 1

Daniel Sarmiento

judgment of the Court of Justice and an act The die is cast. After 30 years of irting with of the European Central Bank (ECB) are ulthe idea of declaring an EU act unconstitutra vires in Germany, the BVerfG delivered tional under German law, the German Fedewhat might be its most signicant ruling in ral Constitutional Court, the Bundesverfasits more than 70-year long history. It could sungsgericht (‘BVerfG’) nally pushed the be one of the key moments of European intenuclear button and showed the world, like an gration. Or it could just be an unfortunate infant playing with reworks that it cannot anecdote, a sinister chapter in the EU’s long control, the spectacular pyrotechnics of its road towards a more perfect Union, our own act. It did it, as expected, after a long proceDred Scott, an error stemming from parodure in which it triggered the so-called Hochial views of parochial neywell protocol: after lawyers unable to unmaking a preliminary The Bundesverfassungsgericht derstand the complexireference to the Court of Justice and in a case finally pushed the nuclear button ties of the world they live in, nor the lethal conin which the stakes wesequences of their lack re high: the Public Secof vision. tor Purchase Programme (‘PSPP’) of the European Central Bank, Whatever it may be, only time will tell if we Mario Draghi’s quantitative easing pet proare facing a crucial moment in European inject, which, according to economists of high tegration or simply another chapter in the repute, was key in keeping the Eurozone out gradual and convoluted construction of the of economic disaster in the aftermath of the EU’s legal order. In the meantime, it is nancial crisis. worth scrutinizing the decision from a European perspective, focusing on its European The BVerfG delivered on 5 May 2020 a heacontext, its rights and wrongs, as well as the vily loaded judgment, launched like a missiimmediate next steps that should be expecle directly at the oating line of the EU’s leted. That is the aim of this Long Read. gal system, which is the heart of the entire European integration process. By stating that a

1. Professor of EU Law (Complutense) and Editor in Chief of EU Law Live. Many thanks to Pedro Cruz Villalón, J.H.H. Weiler and Heiko Sauer for insightful comments and pointed criticism to a rst version of this contribution, helping me to focus on this complex matter through their wise and experienced eyes. The usual disclaimer applies.

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refer the matter to the Court of Justice through a request for a preliminary reference and, eventually, the German court would rule in light of the Court of Justice’s judgment. The EU act would only be declared ultra vires if, after this thorough review, it evidenced ‘a structurally signicant shift of competences contrary to the principle of conferral’.

1. Going nuclear: the BVerfG pushed the button For most EU lawyers working on constitutional law, the ultra vires mantra has resonated loudly for several decades (2). First introduced in the 1993 Maastricht judgment of the BVerfG, it gradually took shape until, in 2010, in the Honeywell decision , the BVerfG articulated the standard under which it would scrutinize EU acts overstepping the EU’s sphere of competence. The standard was quite high and it would be triggered only when ‘a structurally signicant shift of competences contrary to the principle of conferral’ was to be found. The context of this judgment was a very much contested line of case law of the Court of Justice, starting with the Mangold judgment, in which the Luxembourg court declared that Directives, when concretising general principles of EU law, have direct effect inter privatos. This line of case law triggered a loud reaction among German lawyers that took the matter all the way to the BVerfG, who settled the issue by developing the Honeywell protocol: according to the BVerfG, before declaring an EU act ultra vires, it would

In the Honeywell judgment the BVerfG did not even reach the step of making a preliminary reference to the Court of Justice and it ruled that the Mangold case law was merely an act of interpretation of EU Law, one among several possible outcomes in the hands of the Court of Justice. Therefore, the BVerfG let the Court of Justice off the hook, but it also left the question open for future occasions. Some years later, in 2014, the Honeywell protocol was put into action, this time with a request for a preliminary reference to Luxembourg, in the Gauweiler case. In this case, the BVerfG was confronted with the legality of the ECB’s Outright Monetary Transactions (‘OMT’), the measure that followed Draghi’s ‘whatever it takes’ moment. In an action challenging the inactivity

2. See Craig, P. ‘The ECJ and ultra vires action: A conceptual analysis’, Common Market Law Review, Vol. 48, Nº 2, 2011.

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I will not go deeper into the details of the judgment and the ultra vires analysis, since that is the subject of Heiko Sauer’s Long Read in this same issue. I will only highlight the following points:

of the Federal Government and the Bundestag, the applicants persuaded the BVerfG to trigger the Honeywell protocol, make a preliminary reference and thus take all the steps to eventually set aside OMT. In the end it did not work as the applicants wished, but the BVerfG stressed its deep disappointment with the judgment coming from the Court of Justice in response to its preliminary reference. In the Gauweiler judgment it is obvious that the BVerfG disagreed with the Court of Justice’s modest standard of review of ECB acts in complex economic matters. But the German court nevertheless concluded that the OMT Programme and the judgment of the Court of Justice were not ultra vires.

- The reasons why the BVerfG strikes out the Court of Justice’s judgment in the Weiss case are methodological, not substantive. The BVerfG does not disagree with the solution to which the Court of Justice arrives in Weiss, it departs from it because it considers that it applies the wrong methodological approach by ignoring ‘the actual effects of the PSPP’, which renders the ruling incomprehensible and arbitrary. In the BVerfG’s view, the Court of Justice should carry out a much more intrusive judicial scrutiny of the measures under review and not simply a ‘manifest breach’ review, despite the fact that the case concerns complex economic assessments.

And now, in the Weiss case, when reviewing the second effort of the ECB in launching an asset purchase programme, the BVerfG has applied the same steps and come to the result that, in contrast with past cases, this time the Court of Justice acted ultra vires. As a result, in the absence of guidance from the EU’s highest court, the BVerfG has stepped into the shoes of the EU judge and reviewed the PSPP Decision, ruling that it is poorly reasoned on economic grounds and, as a result, it breaches the principle of proportionality and, consequently, it is ultra vires in Germany.

- Once the BVerfG sets aside the Court of Justice’s ruling, it reviews the legality of the ECB’s Decision in light of EU law and comes to a similar, but not identical, conclusion as the Court of Justice on the circumvention of the monetary nancing prohibition laid down in Article 123 TFEU.

In the BVerfG’s view, the Court of Justice should carry out a much more intrusive judicial scrutiny of the measures under review and not simply a ‘manifest breach’ review, despite the fact that the case oncerns complex economic assessments

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the judgment, but it all sounds as if the implementation of this judgment will be very disappointing for the applicants. In fact, all cases that are solved on purely procedural grounds tend to be a source of frustration, and this one is not an exception.

- The ground on which the BVerfG declares the ECB’s Decisions ultra vires is the breach of the EU principle of proportionality, which has been violated due to the ECB’s insufcient reasoning on how it balanced the economic policy effects with its monetary policy objectives. Thus, the review ends up being a process-oriented review, in which the BVerfG rules that the ECB did not take into consideration (or so it appears from the text of the Decision) key factual elements, mostly prospective analysis as to the impact of the Decision.

Furthermore, the Weiss judgment of the Court of Justice has not been affected in its essence and its legal standing remains, even in Germany as a Member State, where the ECB has its seat and is still bound by the rulings of the Luxembourg court. In fact, in its caustic press release following the BVerfG’s judgment, the ECB clearly stated that the Weiss judgment of the Court of Justice conrmed the legality of the PSPP Decisions, and that is the only judicial authority that the ECB can be bound to.

And thus, we end up with two ultra vires acts: the judgment of the Court of Justice in the Weiss case and the ECB’s Decision governing the PSPP programme. In its concluding ndings, the BVerfG grants three months to the Federal Government, the German Bundestag and the Bundesbank to achieve further justication of the PSPP programme from the ECB, or otherwise the Bundesbank will be precluded from further participation in the programme.

The impact of the BVerfG’s judgment is also questionable and uncertain as regards other ECB programmes. It is true that the latest pandemic emergency programme (the ‘PEPP’) will certainly be challenged at the BVerfG by the same applicants that brought the Weiss case, but its provisions respond to a very different economic context than that of the PSPP, as well as the safeguards applied. The general remarks laid down in the BVerfG’s judgment are too broad and vague

2. The Day After Despite the music and rhetoric of the judgment, the truth is that its immediate effects are not very far-reaching. The BVerfG cannot impose obligations on the ECB, so the amendment of the challenged Decision is something that is beyond the control of the German Federal Government and the German Bundestag. They will probably deploy their best efforts to gather all the necessary information to prove that the ECB took into account the considerations pointed out by

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Despite the music and rhetoric of the judgment, the truth is that its immediate effects are not very far-reaching

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In 2016 in Ajos, the Danish Supreme Court, relying on a previous 1998 precedent (Carlsen v. Rasmussen), set aside the Court of Justice’s ruling on the direct effect of Directives inter privatos. Unlike the BVerfG in the Honeywell case, the Danish Supreme Court thought that the Court of Justice had gone too far in its Mangold case law and decided that it was not applicable in Denmark. The Commission also ignored the matter and, to date, the Ajos ruling has been left untouched.

to consider that they would result in the same outcome if the court was to rule on the PEPP. If the BVerfG wishes to rule on the pandemic emergency programme in the same way it has with the PSPP, it must trigger the Honeywell protocol all over again, which took almost ve years in the Weiss case.

So overall, the immediate effects of the BVerfG’s judgments are quite poor. It’s a pyrrhic victory for the applicants that will hardly satisfy them once they see the overall The Italian Constitutional Court threatened outcome of ve years of litigation. But we the same manoeuvre in the should not confuse the shortM.A.S. case, following an unterm effects with the long settling ruling of the Court of term and broad systemic conThis is not the first time Justice in Taricco. However, afsequences that the judgment that a national supre- ter some argumentative acroentails. me or constitutional batics, the Court of Justice managed to amend part of the court has declared 3. The BVerfG’s judgment, a judgment of the Court harm caused in Taricco and delivered a decision that satised in its European context of Justice ultra vires the Corte costituzionale. But the threat worked and the crisis This is not the rst time that was averted. a national supreme or constitutional court has declared a judgment of the In an even more subtle way, the Spanish Court of Justice ultra vires. The rst court to Constitutional Court, following the Court of do so was the Czech Constitutional Court in Justice’s judgment in Melloni, showed its 2012 in the Landtovà case, following a rudiscontent by implying that it was not bound ling of the Court of Justice on social security by the ruling. It simply pointed out that the matters that the Czech Constitutional Court judgment of the Court of Justice was ‘of was deeply unhappy with, since the Court of great use’, which tacitly implied that it did Justice sided with the Czech Supreme Court not feel bound by it. In the main proceedings on a matter that had been the source of disathe Spanish Constitutional Court followed greement among the Czech Republic’s two the suggestions of the Court of Justice, but it highest courts. The Commission ignored professed to do so on its own authority, not the matter and the Landtovà ruling was left as the result of the binding nature of EU law aside as an unfortunate anecdote. and the rulings of the Court of Justice.

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cheering national audiences. To defy the primacy of EU law in such a way is dangerous for the EU, and for its legal system, to say the least.

With this European context in mind, it shouldn’t come as a surprise that the BVerfG has followed this trend. However, it is wrong to assume that this is business as usual, or just another parochial reaction from another upset national court.

Also, the fact that the BVerfG has decided to do it in such a high-prole case sends another daunting message: no matter how existential the issue at stake may be, the judgment is inviting all other national courts to go ahead and push the button. The price stability within the Eurozone and maybe the very existence of the Euro is at stake? No problem, go ahead and push the button. The rule of law and the permanence of the country in the EU is at stake? No problem, just go ahead and push the button. Is a national constitutional court risking turning the system of fundamental rights protection in Europe upside down? It’s ne. The Germans do it, so we can do the same thing too. The list goes on and on.

The BVerfG is not an ordinary observer in this conundrum, but quite the opposite: it can be attributed full authorship over the ultra vires tool. Constitutional review of EU law is the child of the BVerfG as conceived rst in the Kloppenburg judgment of 1987 and later in the seminal Maastricht ruling of 1993 (3). It all started there (as Heiko Sauer has rightly explained in this issue), so the fact that its creator is now pressing the button itself sends a powerful signal to all national constitutional and supreme courts. To date, the precedents of ultra vires declarations were seen with deep mistrust and as exceptions coming from rogue and very domestic visions of the law. However, after the BVerfG’s ruling in Weiss, the ultra vires test risks becoming an ordinary part of the toolbox of every national court and it could now, after the founding father’s bold move, even hold a certain degree of pedigree before the

Have all these courts gone mad? Is this behaviour the result of ego and power games between judges, or is there a genuine rationale that justies this course of action?

The reasons why the BVerfG launched its ultra vires review are, in fact, grounded on genuine concerns about power-grabbing in Brussels and too many earlier legal acrobatics in the conferral of powers to the EU

3. See Craig, P. ‘The ECJ and ultra vires action: A conceptual analysis’, Common Market Law Review, Vol. 48, Nº 2, See Baquero Cruz, J., “The Legacy of the Maastricht-Urteil and the Pluralist Movement”, EUI RSCAS, 2007/13, available at the EUI Repository.

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ce of a legal base, was also a message for The reasons why the BVerfG launched its ulconstitutional courts, proving to them that tra vires review are, in fact, grounded on gethe Court of Justice was taking its compenuine concerns about power-grabbing in tences seriously. Brussels and too many earlier legal acrobatics in the conferral of powers to the EU. The However, the way in which the ultra vires underlying message in the Maastricht judgtool has evolved in recent years reveals a sigment was mostly a claim of self-restraint adnicant departure from its original concepdressed to the EU Institutions when treading tion. To date, the judgments declaring EU through elds of shared competence in law ultra vires are not good examples of EU which Member States still have their sphere arbitrariness, or at least not of the kind of arof competence. Also, the fact that the Court bitrariness that was in the mind of the of Justice’s case law had been so generous BVerfG in 1993. They are the result of judiwith the effectiveness of EU law and, as a recial misunderstandings, interpretative missult, with EU Institutions in order to promogivings and hurt egos, disputes te and enforce EU rules, reand crises that are very far sulted in a certain degree of The way in which the from what the ultra vires tool mistrust from national should stand for. In Landtovà, courts towards the Court of ultra vires tool has the Czech Constitutional Justice as an impartial arbievolved in recent years Court felt offended because it ter. So the result is a case law reveals a significant wrote a letter to the Court of that is claiming the nal Justice alerting it of the conseword in national constitutiodeparture from its quences of an unfavourable nal courts, but only for the exoriginal conception judgment and it never received ceptional cases in which the a proper reply. In Ajos, the DaEU disregards the words of nish Supreme Court refused to warning and enters, in a maaccept a European case law that has been ennifest and arbitrary way, into areas of comforced by all national courts, including the petence for which it has no powers. BVerfG. If only one single court had an issue with that case law, it is good proof that it As a tool of last resort to stop the EU from is hardly an example of an arbitrary or manigoing mad, it is not in itself a bad way of setfest breach of EU competences on the part ting internal red lines. It can even nd supof the Court of Justice, or otherwise many otport under international law, as some auther courts would have jumped in the same hors have pointed out. And it played the way as the Danish Supreme Court. But they trick: the Court of Justice introduced a simidid not. In Melloni and M.A.S., the Spanish lar approach in its Opinion 2/94 on the acand Italian constitutional courts irted with cession of the EC to the European Conventhe notion of ultra vires but managed to retion of Human Rights and the EC’s lack of solve the differences through interpretation, competence to join the Convention. The thus proving that there was no arbitrariness Court of Justice’s ruling on the Tobacco Diinvolved, but simply a matter of interpretarective, striking it out due to the wrong choi-

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are, cannot amount to a principled declaration of constitutional rebellion from Europe’s most important national constitutional court. It is simply a disproportionate reaction that deprives the BVerfG of its claim to act as the ultimate guardian of competence (and, paradoxically, of the proportionality test).

tion. And that is exactly what courts are for: to solve disputes and make use of their interpretative tools to reach solutions over the wording of rules of law. And then we come to the Weiss case and this week’s judgment of the BVerfG. Is this a case in which we face a manifest and arbitrary violation of the Member State’s core sovereign sphere?

Second, to trigger the ultra vires tool on the grounds of a methodological dispute with the Court of Justice is an irresponsible act that only a very vain and arrogant court can afford. The way in which the Court of Justice has ruled and reasoned for the last six decades is well known to all, particularly to national courts. If anybody had any concerns about the standard of review employed or the style of reasoning of the Court’s judgments, and considered it a constitutional issue that could eventually lead to a manifest breach of EU competence, it should have been raised and addressed in a Treaty reform (4). If after six decades of case law the BVerfG now realises that it doesn’t like how the Court of Justice reasons and uses its standards of review, what stops the Spanish Tribunal Constitucional from setting aside Luxembourg judgments simply because they don’t include dissenting opinions? And what would refrain the French Conseil Constitutionnel from declaring another Court of Justice ruling ultra vires because it does not use a textual method of interpretation and, instead, it uses a teleological criterion? To push a button designed for cases of extreme arbitrary violations of EU competence by referring to a awed methodological approach of legal reasoning is far from where the ultra vires argument rests. It is so far re-

I very much doubt it. First, although there is much to criticise of the Court of Justice (as of any court; nobody’s perfect!), whatever the causes of the tantrum may be do not justify making such a bold and damaging move. It is true that the Court has rendered some ill-conceived and reasoned judgments (anybody who follows the Court’s case-law has his or her collection of greatest rotten hits) and, unfortunately, after the introduction of the rotating 13judge Grand Chamber, the number of dubious rulings has only increased in the course of time. The same is true of the Court’s approach towards evidence and fact, mostly in direct actions and preliminary references of validity, where it is practically impossible to nd precedents in which the Court has bowed to expert advice nor listened seriously to anybody who had any expert knowledge that the Court lacks. This way of acting discredits the Court in the eyes of any lawyer with experience in domestic or international adjudication, where complex factual issues are always addressed with the assistance of experts, but not with the arrogance of a judge who pretends to know it all. But all these criticisms, legitimate and worrying as they

4. Criticism of the Court of Justice’s reasoning is not new. See, inter alia, Weiler’s critique at Weiler, J.H.H., “Epilogue: Judging the Judges: Apology and Critique”, Adams, M., de Waele, H., Meeusen, J. and Straetsmans, G. (eds.) Judging Europe’s Judges, Hart Publishing, 2013.

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mains within its powers to avoid turning into something other than a court of law. The aw in the BVerfG’s reasoning is so fundamental, that it can only be attributed to its isolated and self-referential way of thinking. Any court that deals with complex technical matters is well aware of the risks of going too far into non-legal assessments, but the BVerfG seems to be perfectly at ease with it and it wrongly assumes that all courts should do the same. In its parochial view of the world, in which the standard of review in complex and relevant cases can only be the one undergone by itself, it asserts that only its own way of acting can be satisfactory, irrespective of the fact that they are only one among a large community of legal traditions and supreme and constitutional courts, representing different sensitivities and different ways of approaching judicial dispute settlements.

moved, that it creates doubts as to whether it is the BVerfG itself that is acting beyond its competence. Third, the concern of the BVerfG with the Court’s standard of review and economic assessments is questionable to say the least. The BVerfG prides itself in not shying away from entering complex assessments of a technical nature that require expert knowledge from non-lawyers. Hearings at the BVerfG can involve long hours listening to economists and judges that engage with the economists, with judgments that reect how at ease the court can be in non-legal waters. The Court of Justice is more cautious. In fact, the Court of Justice acts like most courts do and, therefore, it tends to treat non-legal arguments with utmost care. In a well-established approach, very much inuenced by French administrative law, the Court of Justice avoids entering into policy and technical issues because otherwise it will be the Court who sets policy and technical matters with an authority and expertise it can hardly claim. If the Court of Justice intrudes too far into the eld of monetary policy, it will turn itself into a central bank and it will stop being a court. Taking technical expertise seriously is a serious matter, but for precisely the opposite reasons than the BVerfG appears to believe.

To make things worse, the BVerfG reveals its own contradictions by limiting its proportionality test of the ECB’s Decision to a process-oriented review. In the end, not even the BVerfG feels courageous enough to dive into the complexity of the underl-

It is exactly because the Court of Justice is cautious when handling economic assessments, that the Court remains within its powers to avoid turning into something other than a court of law

In a paradoxical turn of events, the BVerfG accuses the Court of Justice of not entering into complex technical assessments and, as a result, it rules that the Luxembourg court has acted beyond its powers under Article 19 TEU. However, it is exactly because the Court of Justice is cautious when handling economic assessments, that the Court re-

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ying issues, and it ends up striking out the ECB’s Decisions due to a lack of reasoning. If intensive judicial review is so relevant, the BVerfG proves itself wrong and tacitly ends up admitting that such review is a façade, an attractive mirage that makes the reader believe that the court will review it all, whilst in reality it backs away from assuming the responsibility (and the risks) of its own damaging actions.

The Commission must launch an infringement action against Germany both European and national. If the leading representative of national judicial reasonableness and reliability, the BVerfG, has proved to be manifestly unt to engage as a constructive participant in this community, the system must undergo a profound transformation. Some of the changes will be painful, but others are just the natural and inevitable consequence of this week’s ruling.

So overall, this is not the ultra vires declaration that the BVerfG was probably thinking of back in 1993. It is not a reaction to an arbitrary and manifest violation of competences by the EU. And if it is none of the above, the sad truth is that we are facing an unfortunate and capricious act of judicial arrogance. Seen in this light, the judgment is not a serious wake-up call for the EU and its use of power. It is rather a wake-up call for those who believe that the EU is a community of law that can rely on its highest courts to take sensitive and nal decisions. This week’s judgment is good proof that integration through law has limits, and we have reached what is probably the end of a long and lasting stage of integration through courts and judicial dialogue. By pressing the nuclear button on such frivolous terms, the BVerfG has put to rest decades of judicial efforts in building a community of law to which all jurisdictions felt they could belong to.

First, the Commission must launch an infringement action against Germany. It is impossible for the Commission to remain sitting still. Shortly after the BVerfG’s ruling, the Polish authorities appointed four new judges to the Supreme Court invoking the Weiss precedent and declared the Court of Justice’s decisions on the Polish judicial reforms ultra vires. The Commission cannot act against Poland and then stay put when it comes to Germany. The principle of equality among States is enshrined in the Treaties and the Commission must abide by it. In fact, an infringement action against Germany would be the right message, showing that if the most powerful of national courts cannot get away with rogue behaviour, other rebellious courts should get ready and stand in line. Also, the infringement action would allow the Federal Government, the German Bundestag and the Bundesbank to realise that their European obligations are not so easy to elude, leaving the BVerfG in the isolation it deserves.

4. The future So what should we expect in the medium and long term? As I just argued, we are facing the end of an era, a time now past in which high expectations were deposited on the wisdom and prudence of high courts,

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Court of Justice’s judgments, as a technicality that ensures legal certainty and provides stability and coherence to the EU legal order. And the same should be introduced in national constitutions, setting clearly, as a result of the will of the people, that when it comes to the interpretation of EU Law, there is only one nal voice. Ironically, the BVerfG’s judgment will make everyone realise how dangerous it is to have selfempowered and unelected national courts turning themselves, with no clear legal basis to do so under EU law, into the ultimate interpreters of EU law itself. In the same way that the golden rule on scal stability has been introduced in national constitutions (at the request of Germany and other scally frugal Member States during the nancial

The time of legal pluralism and judicial dialogue will have to be reset and the EU’s judiciary will need a Treaty reform, as well as constitutional amendments in national law Second, the time of legal pluralism and judicial dialogue will have to be reset and the EU’s judiciary will need a Treaty reform, as well as constitutional amendments in national law. The reader will say that this is impossible, but the alternative is worse. If the principle of primacy of EU law is too hard to digest, then the Treaties should at least include a clear reference to the primacy of the

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by the BVerfG, and set the foundations of a Union based on reinforced values of democracy and the rule of law. Looking the other way will simply prolong the agony and eventually, in due course, put the patient to rest.

crisis), it is now legitimate and fair to demand from all Member States the same guarantee in national constitutional law, in order to protect the primacy of the judgments of the Court of Justice, or otherwise risk the dissolution of the rule of law and the integration process as we have known it thus far. And third, this saga has proved, once again, how lethal and damaging it is to put the entire weight of signicant constitutional matters exclusively in the hands of courts, experts and non-elected institutions. The failure of Europe’s political establishment to reach a comprehensive solution to bring the Eurozone out of nancial chaos in 2008 resulted in decisive action by the ECB, later conrmed by the Court of Justice. Now, the past failures of politicians have returned with a vengeance, questioning not only the vigorous reaction of the ECB then, but also endangering recent steps in the midst of a severe health and economic crisis. And despite the fact that the ECB and the Court of Justice kept within the remits of their mandates to the best of their abilities, none of that matters when confronted by extravagant national courts willing to show their domestic audiences that they have something to prove. The time of integration through law is not over, but it is denitely over as we have known it to date. Making it work in the future will be an existential challenge if the EU is to survive as a successful political and economic project. To that end, the EU and its Member States must react fast, heal the wound so irresponsibly inicted

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How the world reacted to the German Federal Constitutional Court's Ruling on the Weiss case INSTITUTIONS Court of Justice of the European Union

European Central Bank

The Court of Justice has issued a press release in response to the ‘many enquiries’ it has received about the German Federal Constitutional Court’s (Bundesverfassungsgericht) ruling and noted that ‘the departments of the institution never comment on a judgment of a national court’. However, it also made the following remark: ‘In order to ensure that EU law is applied uniformly, the Court of Justice alone - which was created for that purpose by the Member States - has jurisdiction to rule that an act of an EU institution is contrary to EU law’. It warns against jeopardizing the unity of the EU legal order and detracting from legal certainty, and recalls that 'national courts are required to ensure that EU law takes full effect'. The CJEU’s press release is available here.

The ECB ‘takes note of German Federal Constitutional Court ruling’ and ‘remains fully committed to doing everything necessary within its mandate to ensure that ination rises to levels consistent with its medium-term aim and that the monetary policy action taken in pursuit of the objective of maintaining price stability is transmitted to all parts of the economy and to all jurisdictions of the euro area’. It recalled that ‘the Court of Justice of the European Union ruled in December 2018 that the ECB is acting within its price stability mandate’. A press release is available on the ECB’s website.

European Commission

Deutsche Bundesbank

European Commission spokesman Eric Mamer

Jens Weidmann, President

European Commission spokesman Eric Mamer ‘Notwithstanding the analysis of the detail of the German Constitutional Court decision today, we reafrm the primacy of the EU law, and the fact that the rulings of the European Court of Justice are binding on all national courts’ Reported by Reuters

The BVerfG’s ruling ‘highlights important features of the PSPP which, overall, ensure a sufcient safety margin to monetary nancing of governments’. ’The Governing Council of the ECB now has a period of three months to present its deliberations regarding the proportionality of the programme. While respecting the independence of the ECB’s Governing Council, I will support efforts to meet this requirement’. A press release is available on the website of the Deutsches Bundesbank

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ACADEMIA

The Right Question about the FCC Ultra Vires Decision

El Tribunal Constitucional alemán oscurece el futuro

By Matej Avbelj

By Miguel Azpitarte

Professor of European Law at the Graduate School of Government and European Studies at Kranj, Slovenia

Associate Professor of Constitutional Law at the University of Granada

A take on the BVerfG ruling as an unsurprising development within a system of constitutional pluralism, and as an opportunity to concentrate on the structural problems posed by the constitutional role of the ECB. The author argues that the position of Karlsruhe should be taken seriously by the Court of Justice, which should reconsider its lax and deferential scrutiny of the ECB. Published in Verfassungsblog

The author points out that the BVerfG’s ruling places the ECB's future purchase plans under strict surveillance, recalling that this was the only area of the Union where Germany did not have a dominant inuence. Moreover, he stresses that this ruling delimits the eld of action of the German Government in future reconstruction negotiations. This leaves little room for Eurobonds or any other action involving a redistribution of wealth beyond the EU’s ordinary budget. Published in Agenda Pública

PSPP mit ‘PEPP’: Der währungspolitische Kontrollmaßstab des BVerfG als „Ultra-vires-Akt“?

Die Verfassungsrichter beschädigen die Unabhängigkeit der EZB By Peter Bofinger

Alexander Brade and Markus Gentzsch

Professor of Economics at the University of Würzburg

The author argues that the BVerfG’s ruling ‘reveals an economic view that is as one-sided as it is limited, which will harm Europe and thus also Germany’. In this regard, he expresses that ‘it is unclear how the Court can come up with the idea that the ECB, in its policy geared to the currency area as a whole, must also take account of the effects on the interests of individual groups in individual Member States in addition to these objectives stated for the EU’. Published in Makronom

Research Assistants at the University of Leipzig

‘The BVerfG fails to recognise, on the one hand, the broad discretion of the ECB and, on the other hand, the lower density of judicial control that necessarily results from this’. The authors argue that, with its judgment on the PSPP, the BVerfG itself might have exceeded the limits of its jurisdiction and thus, to a certain extent, acted ‘ultra vires’ itself. Published in Verfassungsblog

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Gut gemeint, nicht gut gemacht

Germany’s coming constitutional turmoil

By Matthias Kottmann and Roya Sangi

By Erik Jones

The authors critically assess the BVerfG ruling as mainly addressing the Karlsruhe-Luxembourg relationship and undertaking a technical supervisory examination of the Court of Justice. They bring to the fore several aws in the ruling, inter alia that (i) the proportionality test applied by the BVerfG corresponds to the one developed in Germany for the area of fundamental rights, and that therefore it is doubtful that it is a suitable tool for EU judicial review of ECB competences; (ii) the lack of a sound justication necessary to regard another view as ‘arbitrary’; note that (iii) ultra vires and identity checks are not only dogmatically shaky, but also structurally unsuitable for checking EU acts; and (iv) that the BVerfG’s choice of words is inappropriate for a community based on the rule of law. Published in Verfassungsblog

Professor of European Studies and Director of European and Eurasian Studies at the Paul H. Nitze School of Advanced International Studies, Johns Hopkins University

The author argues that the BVerfG’s real challenge is to the German Federal Government and the German Federal Parliament, which have been placed in ‘an impossible situation’, to the extent that ‘a German constitutional struggle may not be far behind’. Published in the Blog of the International Institute for Strategic Studies

‘Keine leichte Kost’: Das BVerfG zwingt die EZB zur Rechenschaft

The PSPP judgment of the German Constitutional Court: An Abrupt Pause to an Intricate Judicial Tango

By Andrej Lang

By Dimitrios Kyriazis

Head of the Law Faculty at the New College of the Humanities, London

Research assistant at the Chair of Public, European and International Law at the Martin Luther University HalleWittenberg

The author points out some of the most prominent economic, legal and political ramications of the BVerfG ruling, arguing that it amounts to a powerful blow to the principle of primacy of EU law that may make other Member States feel emboldened to disregard the Court of Justice’s rulings. Published in European Law Blog

The author identies some of the potentially farreaching consequences of the BVerfG’s ruling for the European Economic and Monetary Union, the role of the ECB in the institutional architecture of the EU, the current European disintegration process, and the BVerfG itself. Published in Verfassungsblog

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Auf dem Weg zum Richterfaustrecht? Zum PSPP-Urteil des BVerfG

The End of ‘Whatever it takes’? – The German Constitutional Court’s Ruling on the ECB Sovereign Bond Programme

By Franz C. Mayer

Professor for European and public international law at the University of Bielefeld

By Matthias Lehmann

The BVerfG’s judgment, which explains to the Court of Justice ‘in a rather schoolmasterly manner’ that it did not properly examine the exercise of competence by the ECB, is partially surprising, as well as disappointing, not convincing, contrary to the BVerfG’s task to provide for stability, and ‘very German in the ominous sense’. Published in Verfassungsblog

Director of the Institute of Private International and Comparative Law at the University of Bonn

‘Finally, they have done it’. In his analysis, Matthias Lehmann highlights that the ECB will now be subject to a much higher degree of judicial scrutiny than the CJEU wanted to impose, and that the proportionality analysis will serve as a powerful weapon in the hands of the German judges. Published in the Blog of the Faculty of Law of the University of Oxford

Some Preliminary Remarks on the PSPP Decision of the German Constitutional Court

Ultra schwierig By Armin Steinbach

Head of the economic policy unit of the Federal Ministry for Economic Affairs (Germany) and Lecturer at the University of Bonn

By Miguel Poiares Maduro

Professor at the School of Transnational Governance at the European University Institute in Florence and former Advocate General at the Court of Justice

The author argues that the BVerfG ruling does not represent a categorical break in the established cooperative relationship between Karlsruhe and Luxembourg, but essentially a judgment about the requirements of proportionality as a parameter of control of EU institutions and bodies. Armin Steinbach stresses how this judgment further contributes to a reinforced procedural scrutiny of ECB action as a means to compensate its independence and scarce democratic legitimacy. Published in Verfassungsblog

The author reasons why the BVerfG ruling may not have a strong impact on the ECB’s Public Sector Purchase Programme to which it refers. However, it points out that the judgment may have highly problematic market effects, inter alia because of the uncertainty it will generate in the short term, the constraints arising from it for Germany’s participation in the EU response to the coronavirus situation, and the possible opening up of a dangerous path to be explored by illiberal regimes in the EU. Published in Verfassungsblog

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VB vom Blatt: Das BVerfG und die Büchse der ultra-vires-Pandora

The Decision of the German Constitutional Court on the Public Sector Purchase Programme of the European Central Bank: Preliminary Observations

By Alexander Thiele

Habilitated Senior Research Fellow in public and European law at the University of Göttingen

By Gian Luigi Tosato

The author critically points out that the BVerfG’s ruling has unnecessarily opened the ultra vires Pandora’s box, makes it easier for any Member State to ignore unpopular judgments from the Court of Justice, thereby eroding the rule of law in the EU. Specic criticism is made of the fact that the German constitutional court does not take into account the specics of monetary policy. On the positive side, the author stresses that this ruling will be a strong incentive for the ECB to pay more attention to the justication of its decisions in the future. Published in Verfassungsblog

Professor of EU Law at the University of Luiss Guido Carli, Rome

The author points out the two different sides of the BVerfG ruling: one that is conicting and controversial with respect to the Court of Justice; and one that is more conciliatory towards the ECB and aware of the importance of the PSPP in the functioning of the eurozone. It is to be expected that ‘serious tensions will arise between the two courts, in contrast to the spirit of effective collaboration that should shape their relationship’. Published in Luiss School of European Political Economy Website

Karlsruhe bites with a vengeance

Fight, flight or fudge? First reflections on the PSPP judgement of the German Constitutional Court

By Marijn van der Sluis

Assistant Professor in Constitutional Law at Maastricht University In his analysis of the BVerfG, ‘a decision that is going to shape the future of the euro, and thus the EU’, Marijn van der Sluis identies some of the potential problems it poses for the current efforts of the ECB in the corona crisis. He stresses that in the many issues of the judgment ‘there is enough ambiguity for the BverfG to accommodate other interpretations, but it is clear that the BverfG seeks to take a different approach to EU law’. Published in EU Law Live

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By Michael Wilkinson

Associate Professor of Law at the London School of Economics and Political Science

The author considers the BVerfG’s ruling ‘is damning and will damage an already fragile constitutional fabric, as well as potentially encourage other increasingly Eurosceptic courts to contest the ECJ’s authority’. He argues that the judgment ‘is aimed as a warning against Corona measures (…) and more broadly against any risk sharing, that would be in violation of core German constitutional identity in order to protect the budgetary autonomy of the Bundestag against further mutualisation’. Published in Verfassungsblog

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L’insoutenable pesanteur du juge constitutionnel allemand

Verschroben verhoben! Traurige Einblicke in Karlsruher Parallelwelten

By Jacques Ziller

By Bernhard Wegener

Professor of EU Law at the University of Pavia, former Professor of Public Law at the University of Paris-1 PanthéonSorbonne

Professor of Public and European Law at the Friedrich Alexander University of Erlangen-Nuremberg

The verdict of the BVerfG is depicted as ‘an eccentricity’ damaging the own court and the already fragile European cooperation. The author puts many of the ruling’s underlying premises into question: Can a court, and a court that is only a Member State court, effectively control the monetary policy of the ECB? Is this really about the adequate assessment of proportionality? Is it possible for a court to assess monetary policy measures better than the institutions actually responsible for them and endowed with decisive independence by the constitutional legislator? Published in Verfassungsblog

The author claims that the BVerfG ruling is based on an ‘unsustainable reasoning’. He argues that ‘the judges, who demonstrate unfounded intellectual arrogance in their claim to interpret EU law, make manifest errors in applying the principle of proportionality to the delimitation of competences between the Union and the Member States. They also make methodological errors in their application of the principle of proportionality to ECB decisions, while highlighting their prejudices in the eld of monetary and economic policy’. Published in Blogdroiteuropéen

PRESS

German court criticises European Central Bank crisis bond-buying

Sentencia antieuropea

Published in BBC News

Published in El País

The BBC highlights that ‘the Constitutional Court in Karlsruhe says there is not enough German political oversight in the purchases’, and that the claimants before the BVerfG ‘are a group of German academics, including a former leader of the far-right Alternative for Germany (AfD), Bernd Lucke’.

According to the Spanish newspaper El País, the BVerfG’s judgment ‘risks feeding ultra-nationalism’ and makes urgently necessary ‘a clear position not only from the ECB, but also from the Court of Justice’.

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German court questions bond-buying and EU legal regime

Kauf von Staatsanleihen durch EZB teils verfassungswidrig

Published in EU Observer

Published in Die Zeit

‘The ruling by the Karlsruhe-based top court (…) questions the independence of EU institutions, and creates a risky precedent by dismissing an earlier ruling by the EU's top court. It could also embolden populists, and nationalist governments in Poland and Hungary, which have railed against EU legal supremacy. On the economic front, the German ruling deals a blow to the so-called Public Sector Purchase Programme (PSPP), that has kept the eurozone's economy aoat during subsequent crises’.

Karlsruhe ‘ignores a ruling by the European Court of Justice’. The German newspaper highlights that the timing of the BVerfG’s ruling is tricky, as the eurozone is in a state of shock due to the serious impact on the economy during the corona pandemic, as a reaction to which the ECB has increased its current purchase programmes by an additional 120 billion euros by the end of 2020.

Auf dem Höhepunkt des Argwohns

BCE e Germania: perché tocca all’Italia difendere l’Europa

Published in Frankfurter Allgemeine

Published in Il corriere della sera

The German newspaper Frankfurter Allgemeine stressed that ‘the judges in Karlsruhe have for the rst time refused to follow their Luxembourg colleagues’. Recalling that ‘the guardian of the European treaties is the European Court of Justice and nobody else’, it is claimed that ‘the Federal Constitutional Court does not see it any differently’.

Describing the German judgment as an 'unprecedented clash', the Italian journal points out its potential consequences at a time when everything is at stake: the ability of the ECB to act in times of crisis, the power of the EU institutions to prevail over those of the strongest Member States and, in the long run, the system's resistance to a pandemic and a dramatic recession.

La Banque centrale européenne mise sous pression par la Cour constitutionnelle allemande

Ultimatum de la justice allemande à la BCE Published in Le Quotidien

Published in Le Monde

The Luxembourgish newspaper Le Quotidien highlights that, ‘a decision of rare virulence’, the German judges ‘refuse to abide by the opinion of the Court of Justice’ and that they deemed the Weiss judgment as ‘incomprehensible’.

The French journal Le Monde announces that the judgment of the BVerfG, which ‘has placed a legal timebomb on the very foundations of the eurozone’, will cause ‘a profound legal, economic, and political fallout’.

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German court lays down EU law

What next in Karlsruhe vs ECB? German constitutional court blows open questions about ECB independence and the supremacy of EU law

Published in Politico

‘Germany decides. That is the message the country's Constitutional Court sent to the European Union’. ‘At a time of growing tension in the EU over German reluctance to embrace ambitious plans to resuscitate southern European economies hit hardest by the coronavirus by issuing mutualized debt (…), the court's decision risks inaming anti-German sentiment’.

Published in The Financial Times

The Financial Times labelled the BVerfG ruling as ‘an explosive judgment on the legality of ECB bondbuying, setting off what could be years of legal challenges against the EU’s highest court’. According to the British newspaper, the position of the German constitutional court ‘has the potential to unleash a constitutional crisis in the EU’s biggest member state and with it the entire eurozone’, as it raises questions on ‘the rulings of the EU’s highest court in Luxembourg’.

Jolt to eurozone as German court warns against central bank stimulus Published in The Guardian

The ‘bombshell ruling’ of the BVerfG may ‘undermine the ECB’s authority to ward off the nancial crisis and spell the end of quantitative easing’. It is noted that after the release of the judgment ‘the euro dropped 0.7% to $1.0829 and was set for its biggest daily slide in more than a month’.

Our Way or No Way? German ECB Ruling Rocks EU Foundations Published in The New York Times

The judgment of the BVerfG ‘challenges the supremacy of the Luxembourg-based European Court of Justice and sets a precedent for future challenges by Eurosceptics across the bloc’. It was highlighted that ‘the right of the ECJ to dene where EU law is supreme was a principle that even Britain broadly accepted before its exit’.

Germany’s top court clashes with European Central Bank in revolutionary ruling Published in The Telegraph

According to The Telegraph, the BVerfG’s ruling ‘threatens to undermine condence in the euro and kills off any hope of eurobonds or joint debt issuance’ marking ‘an epic clash of rival judicial supremacy’.

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News Highlights Week 4-8 May 2020 EU measure addressing COVID-19 market disturbances in food, vegetables and wine sectors Monday 4 May

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The EU published Commission Delegated Regulation 2020/592, which allows derogations, under temporary and exceptional circumstances, from EU CAP Regulation 1308/2013, in order to address the market disturbances in the fruit, vegetables, and wine sectors, caused by the COVID-19 pandemic.

EU Trade – protecting the EU market: 38th Annual Report from the Commission Tuesday 5 May

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Monday 4 May

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In Air Nostrum (C-191/19), the Court held that the Air Passenger Rights Regulation 261/2004 does not entitle a passenger to compensation when despite having a reservation on a ight, the reservation is changed against the passenger’s will, and where that means that the passenger cannot board the rst of his or her reserved ight, despite it going ahead as planned, and where the passenger has been given a seat on a later ight which allows the second of the reserved ights to be boarded, with the nal result that the passenger can reach the nal destination at the arrival time originally scheduled.

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German Constitutional Court rules the Court of Justice’s Weiss judgment ultra vires due to poor reasoning and weak standard of review

The European Commission published its Annual Report on EU ‘trade defence’ or market-protection measures, entitled the ‘EU’s Anti-Dumping, Anti-Subsidy and Safeguard activities and the Use of trade defence instruments by Third Countries targeting the EU in 2019’. The report goes into detail about, inter alia, the various investigations and cases before EU Courts opened in 2019 concerning trade defence instruments.

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Court of Justice rules passengers not entitled to compensation if they have been denied boarding to the first connecting flight when they have arrived at the final destination on time

Tuesday 5 May

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For the rst time in its history, the German Federal Constitutional Court declared a judgment of the Court of Justice (C-493/17, Weiss and Others), and Decisions of the European Central Bank, ultra vires and not applicable in Germany (BVerfG, Judgment of the Second Senate of 5 May 2020 – 2 BvR 859/15). The German Court found the Court of Justice’s ruling to be arbitrary due to its lack of reasoning in its proportionality assessment and the poor standard of review employed.

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Reimbursement of cross-border medical expenses incurred on religious grounds: AG Hogan’s Opinion Tuesday 5 May

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Advocate General Hogan has delivered his Opinion in Veselības ministrija (C-243/19), advising the Court of Justice to rule that, under certain circumstances, Member States may refuse to take patient’s religious beliefs into account when it comes to the reimbursement of cross-border medical expenses incurred into due to religious reasons.

European Conference on the occasion of the 70th Anniversary of the European Convention of Human Rights Tuesday 5 May

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An international conference took place in a digital format to commemorate the 70th anniversary of the European Convention of Human Rights, with the participation of the President of the European Court of Human Rights and of many members of the Council of Europe.

How to apply the Payment Services Directive to NFC functionality of payment cards: AG Campos Sánchez-Bordona’s Opinion Tuesday 5 May

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In his Opinion in DenizBank (C-287/19), Advocate General Campos Sánchez-Bordona advised the Court of Justice to rule inter alia that near-eld communication (NFC) functionality of certain payment cards must be classied as a payment instrument within the meaning of Article 4(14) of the Payments Service Directive.

Judges’ Associations in Europe pushed to the edge: proposal to expel Polish Judicial Council from the European Network of Councils for the Judiciary By Anjum Shabbir

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The European Network of Councils for the Judiciary has proposed the expulsion of the Polish Judicial Council, supported publicly by the European Association of Judges, in the culmination of many warnings about the impact of ‘reforms’ on the independence of the judiciary in Poland and rule of law. The Polish Judicial Council has the opportunity to respond to the proposal before the ENCJ takes its decision.

AG Pitruzzella provides a detailed Opinion on interpretation of Article 8(3) of Trademark Regulation and advises CJEU to set aside judgment under appeal

ECtHR: Dismissal of Romanian Chief Anti-corruption Prosecutor for criticism against legislative reforms breached freedom of expression and right to a fair trial

Wednesday 6 May

Wednesday 6 May

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The Opinion of Advocate General Pitruzella in EUIPO v John Mills Ltd, delivered on 30 April last week, advises the Court to set aside the judgment under appeal (General Court ruling in T-7/17), the AG nding in favour of the EUIPO as appellant, and advises the Court to annul the First Board of Appeal’s trademark registration refusal decision of 5 October 2016 in that case.

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In Kövesi v. Romania (application no. 3594/19), a case concerning the removal of the applicant as the chief prosecutor of the National Anti-corruption Directorate before the end of her second term following her criticism of legislative reforms in the area of corruption, the ECtHR found a breach of Article 10 ECHR. It also declared that the right to a fair trial in Article 6(1) ECHR was breached due to the impossibility for the applicant to effectively challenge the removal decision before domestic courts.


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Termination Agreement for intra-EU bilateral investment treaties

European Chemicals Agency: Deadlines

By Dolores Utrilla

Wednesday 6 May

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An agreement for the termination of intra-EU bilateral investment treaties (BITs) was signed by 23 of the EU Member States. Once in force, it will terminate existing intra-EU BITs between the signatory States, including their sunset clauses. The agreement also sets out that arbitration clauses shall not serve as legal basis for new arbitration proceedings and regulates how to deal with new, pending and concluded arbitration proceedings, with only a few transitional measures.

The European Chemicals Agency published new information about extensions to companies’ deadlines, applied due to the COVID-19 crisis. It extended a number of deadlines until the end of May 2020, and has informed the relevant companies directly.

Italian courts have jurisdiction in negligence case concerning sinking of vessel under Panama flag under certain conditions: Court of Justice Thursday 7 May

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The Court of Justice gave its judgment in Rina (C641/18), a dispute about whether the Italian courts have jurisdiction in a negligence case concerning victims of a sinking vessel sailing under the ag of Panama (and not an EU Member State) and seeking damages. It ruled that the case can in fact be litigated, against the Italian organisations which classied and certied that vessel, before the Italian Courts.

No COVID-19 State aid for companies in tax havens Thursday 7 May

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UK nationals argue EU Citizenship is a Permanent Status and file case against the Council of the EU: case pending before the General Court Thursday 7 May

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The argument in a case led before the General Court a few weeks ago is that all UK citizens who had EU citizenship on 31 January 2020 retain that citizenship notwithstanding the UK’s departure from the EU. If successful, UK citizens would retain their rights as EU citizens; for example the right to live and work in EU Member States.

Ag’s Opinion in Austria v Commission: State aid for nuclear power development can be authorised under TFEU Thursday 7 May

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Advocate General Hogan delivered his Opinion in Austria v Commission (C-594/18 P), advising the Court to rule that the Euratom Treaty covers the building of further nuclear power plants and the replacement and modernisation of ageing plants by more modern, already developed technologies, for the purposes of State aid justication.

READ MORE ON EU LAW LIVE

Publication was made of a Commission decision approving a Polish COVID-19 State aid scheme in the form of repayable advances for micro, small and medium-sized enterprises. It species that the beneciaries of the scheme must reside, for tax purposes, in the European Economic Area, and that they cannot have tax residence in so-called ‘tax havens’ on the EU Council’s list of noncooperating countries for tax purposes.

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ECtHR: Positive obligation to protect right to life against dangerous activities not triggered if victims were informed of the risks Thursday 7 May

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In Vardosanidze v. Georgia (no. 43881/10), the European Court of Human Rights dismissed the alleged breach of the right to life in Article 2 ECHR due to the State’s inaction regarding a widespread problem of poisoning from carbon monoxide, insofar as the victim was aware of the risks of his water installation and nonetheless decided to keep using it.

Newly announced measures from the Commission: money laundering and terrorist financing Friday 8 May

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The Commission published an Action Plan for a new single EU Anti-Money Laundering System, considering that it is necessary to close loopholes that exist as a result of divergent national approaches and can as a result be exploited, by creating an EU-level system.

Advocate General Pitruzzella’s Opinion in competition appeal case Groupe Canal + v Commission Friday 8 May

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In his Opinion in appeal case C-132/19 P, Advocate General Pitruzzella suggested the Court of Justice rule that the General Court did not fail to state reasons, nor did it conduct an incomplete examination of the facts in the judgment under appeal, but that it erred in law because it did not declare that the Commission had failed to take proper account of the interests of third parties (such as Canal +) in the competition law proceedings in question.

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Strasbourg rules that failure to protect privacy rights in relations among individuals breached Article 8 ECHR Thursday 7 May

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The European Court of Human Rights (ECtHR) has handed down its judgment in Khadija Ismayilova v. Azerbaijan (no. 3). The Court found a breach of the ECHR because of the respondent State’s failure to full its positive obligations arising from the right to respect for private or family life, which involve the adoption of measures designed to secure respect for private and family life even in the sphere of the relations of individuals between themselves.

Court of Justice clarifies the place of supply of services, how to determine ‘fixed establishment’, and determine where VAT is to be paid in Dong Yang Electronics Friday 8 May

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In its judgment in C-547/18, Dong Yang Electronics, the Court of Justice found that Article 44 of the VAT Directive 2006/112, along with Articles 11(1) and 22(1) of the VAT Implementing Regulation 282/2011, do not mean that a provider of services can infer that a company has a subsidiary in a Member State’s territory, where a xed establishment is in a Member State and belongs to a company established in a non-Member State (in this case, South Korea). That provider is not required to inquire, for the purposes of such an assessment, into the contractual relations between the two entities.

Shortage of health workers and recognition of professional qualifications: Commission Guidance Friday 8 May

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Communication Guidance to Member States was published to help address the shortages of health workers created by the COVID-19 pandemic, in particular on how the recognition of health workers’ professional qualications under the Professional Qualications Directive can be interpreted exibly so the process can be sped up.

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Analyses & Op-Eds Case C-627/18 and the burden on the aid beneficiary to make the deterrence from granting illegal State aid work By Anna Nowak-Salles

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Analysis of the Court of Justice’s judgment in Nelson Antunes (C-627/18), a ruling amounting to the necessary corollary of the peculiarity of EU State aid law, where the sanction is borne not by the State that grants illegal aid, but by the undertaking that receives it.

EU citizenship and Covid-19: a crisis of citizenship?! By Sandra Mantu

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In this Op-Ed, the author argues that EU citizenship has made its presence felt especially through the right to free movement and the distinctive form of mobility that it champions, centred around the citizen’s right to move and the State’s diminished capacity to refuse entry and terminate residence rights. In this current context, where free movement is for most of us illusory, is there anything left of EU citizenship?

Disentangling clashes of paradigms: Member States reinstate EU law philosophy terminating BITs in the internal market By Edoardo Stoppioni

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This Op-Ed contextualises the Agreement for the termination of bilateral investment treaties between the Member States of the EU by placing it in the wider panorama of the interactions between EU law and international investment law. The author reects in particular on two main points: the philosophical background leading to this termination, and the implications of it.

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Reaffirming the Importance of the Interest in Bringing Proceedings in Access to Documents Cases: Igpour v Commission By Araceli Turmo

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Analysis of the judgment of the Court of Justice in Igpour v Commission (C-560 18 P), which restricts the normative scope of the ClientEarth precedent (C-57/16 P), where it was ruled that an NGO retained an interest in bringing proceedings for the annulment of the decisions refusing to grant it access to documents related to a legislative initiative, even after it had obtained them.

A step backwards for European humanitarian visas: The ECtHR’s decision in M.N. and Others v. Belgium By Dolores Utrilla

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Editorial Opinion on the meaning and implications of the ECtHR’s Grand Chamber inadmissibility decision in M.N. and Others v. Belgium (application no. 3599/18). The author argues that, by refusing the applicability of the European Convention of Human Rights (ECHR) to persons in embassies and consulates of the States parties to it, this decision contributes to the fading out of possibilities for progress in the regulation of humanitarian visas in Europe.

Advocate General Hogan argues that the Commission may approve State aid for the development of nuclear energy By Fernando Pastor-Merchante

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Analysis on the Advocate General’s Opinion in Austria v Commission, a State aid dispute on whether Member States may invoke the promotion of nuclear energy as a legitimate objective for the purposes of Article 107(3)© TFEU and whether, in light of that objective, the measures notied to the Commission by the UK were appropriate, necessary and proportionate.


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Library - Book Review VEERLE COLAERT, DANNY BUSCH, THOMAS INCALZA (EDS.)

By David Ramos Muñoz

Hart, 2019, 504 pp.

READ ON EU LAW LIVE European Financial Regulation. Levelling the Cross-Sectoral Playing Field

‘This book is both innovative and systematic and it is a collective book’. The book review notes that this publication chooses a major theme, and covers it from beginning to end, offering some interdisciplinary views, but noting that it is clearly grounded on legal analysis.

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