German Constitutional Court Issues Temporary Injunction on Bailout

Der Spiegel Online reports that in the wake of the eurozone debt deal reached by European leaders last week, the German Constitutional Court has issued a temporary injunction against the Merkel government implementing its obligations until the court has ruled on whether the nature of the parliamentary action is lawful:

Germany’s Federal Constitutional Court on Friday expressed doubts about the legality of a new panel of lawmakers set up by the German parliament to reach quick decisions on the release of funds from the euro bailout mechanism, the European Financial Stability Facility (EFSF). The court issued a temporary injunction banning the nine-person committee in the Bundestag from taking any decisions on the EFSF’s deployment of German taxpayer money.

The special committee was recently created in order to be able to provide a quick green light for EFSF aid in especially urgent situations in which it wouldn’t be feasible to put the issue up for a vote before the full parliament. The decision from the court, located in Karlsruhe, could also slow down Bundestag approval of the further application of German credit guarantees within the scope of the euro backstop fund.

Peter Danckert and Swen Schulz, two members of parliament with the center-left Social Democratic Party (SPD), submitted their complaint on Thursday, expressing their concern that the nine-member panel might violate their rights as members of the legislative chamber.

There are multiple ways to interpret the role of the German Constitutional Court in the eurozone crisis:

• One is to see it as the vehicle of German revanchism; the moment when the Germans selfishly go back to their nationalistic, and worse, ways – not too far off to say this is how the Greeks see it.
• A second is to see it as the vehicle of German democratic sovereignty, not atavistic nationalism, an expression of German institutional commitment to the terms of its own democratic compact – this would be more or less how the Americans would see it, were anyone paying much attention, through the lens of American constitutionalism.
• A third, and perhaps the most intriguing from the point of view of EU governance theory, is to see the German court as acting (in its several holdings, not just this one) for the long-term interest of the EU and the eurozone itself.  Forcing the European system to adhere to its most basic rules, rather than relying on ad hoc kick-the-can-down-the-road discretionary deals.  The court, on this view, is acting in the interests of the whole of Europe as a long term enterprise, on the theory that governance cannot be simply whatever discretionary deal is worked out for that moment. Constitutional rule cannot be as discretionary as that.

There are probably others.  Martin Holterman made an interesting comment on an earlier post of mine about European governance in light of the eurozone crisis, suggesting that there wasn’t really anything to see from a governance aspect.  Meaning that although this was a financial crisis, from a governance standpoint, its resolution was proceeding as the treaties contemplated – including deals struck by the principal political leaders of states.  I leave it to Martin and others more knowledgeable of inside-the-EU governance to say for the EU, but as an abstract proposition of governance, I’m not sure that’s sustainable over the long run.  I don’t think it works to say that radical discretion is not radical because it’s built into the system of governance.  (Readers of a certain formation will understand that it sounds a bit like Calvin-ball.)

I don’t want to misinterpret Martin, so I don’t suggest this is actually his view (MH: feel free to give us your view in the comments).  But something like what I’ve said about institutionalized, yet extremely wide, discretion has been argued by commentators as a virtuous feature of European governance.  I would have called it a bug, not a feature.  Whether I’m right about that or not, I suspect the German constitutional court would agree with me.  But I’m prepared to be corrected by folks who understand the governance issues in Europe far better than I.

Update:  Martin is kind enough to respond (sorry, it was buried deep in the spam filter!):

Amending the EU Treaties is even more difficult than amending the US constitution, since it requires unanimous consent and, depending on the magnitude of the amendment, referendums in a number of countries. However, when it comes to a crisis like this, the “advantage” is that the negotiating is done by the political leaders of these countries, rather than by senators elected in parallel. For this reason, if something drastic needs to be done, they can sign on on behalf of their Member State, although the whole thing will still have to be ratified back home.

(Maybe the better way to characterise the difference between the EU and US constitutions is to say that the former is still very much viewed as a work in progress, rather than as gospel written in stone.)

As for the BVerfG, I think they themselves think mostly in terms of your second option. To clarify the legal background: The German Basic Law explicitly authorises the state to participate in the EU, whatever form it may take. (Although ratification is of course still necessary.) However, under art. 79(3), there are certain things that may never be amended out of the Basic Law:

“Amendments to this Basic Law affecting the division of the Federation into Länder, their participation on principle in the legislative process, or the principles laid down in Articles 1 and 20 shall be inadmissible.”

Since art. 20 contains the basic principles of German democracy, the BVerfG is called upon to decide how much power can be transferred to Brussels without violating the “eternity clause”, just like, in the 1970s and 80s, they had to claim the right to second-guess the ECJ on matters of human rights. (The “Solange” case law.)

Update 2:  EU law scholar Peter Lindseth is also kind enough to respond (and I commend the new blog eutopialaw.com, where he blogs regularly, link below):

A note of clarification.  The Court actually enjoined the future use of the new parliamentary approval mechanism but Germany’s existing obligations are not imperiled (on the most recent vote on the EFSF, Merkel was forced by members in her own party to seek approval from the full Bundestag, thus avoiding the use of the nine-member body that the Court has now enjoined).  The recent German decisions have been subject to some interesting discussion recently on eutopialaw.com, a new EU-focused blog based in London, including an exchange between me and Gunnar Beck at SOAS (here), as well as an earlier one between me and Oliver Gerstenberg at Leeds (here).  Check them out.  all best, -Peter