German Court Questioning ECJ – Economics – Free PDF Download

• Germany’s constitutional court has questioned the legality of a past ruling of the European Court of Justice (ECJ).

ECJ

• Supreme court of the European Union (EU) in matters of EU law.
• Part of the Court of Justice of the European Union (CJEU).
• Luxembourg-based
• Found in 1952 after the Treaty of Paris.
• In terms of hierarchy, the national courts of member countries are below the ECJ in matters of EU law.
• It ensures that EU law is interpreted and applied the same in every EU country.
• It ensures that countries and EU institutions abide by EU law.
• It settles the legal disputes between national governments and EU institutions.
• It is composed of one judge per member state – currently 27 – although it normally hears cases in panels of three, five or 15 judges.
• The President of the Court of Justice is elected from and by the judges for a renewable term of three years.

CASE

• The ECB’s mass bond-buying was launched after the eurozone’s 2010 crisis as support for the euro besides the EU’s national bailouts for Greece and some other countries.
• The scheme challenged in court is called the Public Sector Purchase Programme (PSPP), launched in March 2015, under which the ECB had bought €2.1tn of bonds by November 2019. Separately, the ECB bought bonds worth another €0.5tn.

ECJ’s 2018 verdict

• In 2018, the ECJ had ruled that a EUR 2 trillion bond-buying scheme of the ECB was legal as per EU law.
• This scheme aimed at reinvigorating the EU economy after the multi-year European debt crisis.

German Court’s verdict

• In Germany, opponents of the scheme had for years complained to the German Constitutional Court, the country’s highest.
• The German Court in turn had expressed its concerns on parts of the scheme in 2017.
• It ruled that the ECJ’s 2018 ruling was “ultra vires”, meaning beyond the latter’s legal authority.
• It said that the ECJ did not properly address whether the ECB scheme was justifiably suited for the EU economy.
• It said that the ECJ’s verdict failed to consider the importance of the proportionality principle that applies to the division of competences between the EU and the Member States.
• The German court has now given the ECB three months to prove that the bond-buying scheme was proportionate as per the EU’s actual needs.

Response of the EC

• After the German ruling, the European Commission (EC) underlined the supremacy of the ECJ.
• Notwithstanding the analysis of the detail of the German Court decision, they reaffirm the primacy of the EU law.
• It reaffirmed that the rulings of the ECJ are binding on all national courts.

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