Julian Arato on the Eurozone Crisis and the German Federal Constitutional Court, Part 2

by Kenneth Anderson

(This is the second part of a guest post by Julian Arato, LLM candidate at NYU Law School; our thanks to him.  The first part can be found here.)

In my last comment, I said that the 2009 decision in Lisbon looms like a specter over the Eurozone crisis.  Let me explain a bit more why and how.

The key point is that in Lisbon the Court construes the entrenchment of Germany’s “democratic identity” in Article 79(3) as establishing two different types of limitations to German integration with Europe under the Basic Law: one relative and surmountable, the other absolute.  Everyone recognizes that Lisbon affirms limits of the first type, meant to protect democratic forms of government.  Less well appreciated is the Court’s assertion that the Basic Law includes limits of the second type, absolutely prohibiting any delegation that would irreversibly vitiate the sovereignty of the German state (meaning, more concretely, the ultimate ability of the German authorities to determine and interpret the nature and extent of German integration into Europe).

The first type of limit seeks to protect democratic participation in governance.  It takes the Solange model: integration cannot proceed if it would transfer significant power from German democratic authorities to European authorities that are insufficiently democratically accountable.  Solange-type limits are not absolute but relative: the FCC is willing to permit the transfer of powers from democratic national authorities to supranational authorities so long as the latter are sufficiently democratic, and offer suitable avenues for participation by the German people.  A potential delegation of power to Europe may breach this relative limitation of democracy today, in light of the oft-noted democratic deficit in the European institutions as we know them; but with adequate institutional reform, the Basic Law could permit the very same delegation of power tomorrow.

The critical move in Lisbon is the Court’s assertion of a deeper, absolute limit to integration.  The Court asserts that the German Federal Parliament must always retain “functions and powers of substantial import” as a matter of constitutional principle—irrespective of the level of democracy at the European level.  Under no circumstances can integration proceed if it involves a transfer of competences to Europe that would strip Parliament of sufficiently “substantial” power, nor if it entails the transfer of overly open-ended powers with the potential to similarly deprive Parliament in the future.  This absolute limit is meant to protect the political existence of the German people as such, within the sovereign German State.  The decision makes clear for the first time that the ultimate sovereignty of the German State can never be completely subsumed into a European federal State—to do so would breach the principle of democracy, protected from even constitutional amendment under Article 79(3).  And indeed, for all its language echoing Maastricht on reviewing for democracy, the Court admits in an aside that its review of European legislation according to the principle of democracy-qua-participatory/voting-rights is only a secondary constraint—a conditional limitation which sets “limits to the transfer of sovereign powers…which do not already result from the inalienability of the constituent power and of state sovereignty.” (Lisbon, ¶247 (my emphasis)).

To be clear: in the view of the FCC, as a matter of principle German authorities may not commit Germany to a federal state of Europe through normal constitutional amendment; as corollaries integration may not entail the delegation to European institutions of too many spheres of competence, overly broad and open-ended competences of any kind, and especially not the competence to decide upon the extent of their own competences (Kompetenz-Kompetenz).  (Lisbon, ¶233).  The Court does, admittedly, hint that such integration could perhaps proceed under Article 146 – which provides that the constituent power of Germany may always establish an entirely new constitution, perhaps without laboring under the restrictions of the normal amendment rule under Article 79.  (Lisbon,217). However Article 146 includes no procedure and has never been utilized – its use remains entirely speculative, if not a dead letter.  And even still the Court does not leave the possibility entirely open: in one of the most fascinating and enigmatic sentences of the judgment, and perhaps the slightest overexertion of its jurisdiction, the Court suggests that “it may remain open whether, due to the universal nature of dignity, freedom, and equality alone, this commitment [to guarantee democracy and human rights against normal constitutional amendment under 79(3)] even applies to the constituent power, i.e.  for the case that the German people, in free self-determination, but in a continuity to the Basic Law’s system of rule, gives itself a new constitution.” (Lisbon, ¶217).

While the relative limitations on integration remain important, it seems to be the absolute limitation that looms largest over German participation in resolving the fiscal crisis at the Europe-wide level.  Most immediately relevant is the Court’s preemptive rejection of the delegation of overly broad or open-ended powers that potentially enable European institutions to extend integration to an impermissible degree on their own initiative.  In his interview with Der Spiegel, Di Fabio seems to telegraph his view that open-ended financial commitments like “euro bonds” would run afoul of the absolute limits to integration under the Basic Law.  He indicates that the Court would have to step in if German authorities attempt to subject the state “to a mechanism whereby European and intergovernmental organs have access to revenues and expenditures that have an effect on the [German] budget, with no right of veto by the Bundestag.”  He says that this would be a “democratic problem” under Article 79: not because of the (remediable) lack of democratic input at the European level, but because it would strip the German national authorities of ultimate oversight over the national budget.

As Lindseth notes, the FCC’s hostility to integration is often overblown.  It must be borne in mind that the FCC is actually quite open to the delegation of competences to Europe in practice.  In spite of its consistent insistence on the sanctity of democracy and constitutional principles, the Court has basically blessed all of the major delegations of new powers to Europe under the recent Treaties (Maastricht and Lisbon come to mind).  Nevertheless the Court has held that there are limits, both relative and absolute, and each type must be taken seriously—especially in the present context of the Eurozone crisis where false moves could have immediate and disastrous fiscal consequences.  As Lisbon makes clear, the FCC is not only concerned with democratic legitimacy (for which it will continue to exercise Solange-type review), but also the sovereignty of the German people as embodied in the German State—the protection of which represents an absolute outer limit on integration.

As long as Germany remains the key player, the Eurozone-reformer must always ask not one question, but three: what level of political and fiscal integration would pass muster with the FCC today? What forms of integration might be possible tomorrow if coupled with sufficient democratization of the European institutions? And above all, what kinds of delegation of powers will never be permissible so long as the Basic Law and the FCC retain vitality?


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