Professor Panos Koutrakos discusses Germany’s Constitutional Court (BVerfG) ruling against the European Court of Justice
Germany’s Constitutional Court, the Bundesverfassungsgericht (BVerfG) has recently declared the 2018 European Court of Justice (ECJ) decision supporting the European Central Bank’s (ECB) policy of mass bond-buying (quantitative easing) to be beyond the scope of the ECJ’s powers and not binding in Germany. The BVerfG ruled that the ECB’s policy partly violates the German Constitution because there was not enough political oversight into the process.
Professor Panos Koutrakos, Professor of Law and Jean Monnet Professor in EU Law in The City Law School, says the BVerfG ruling is the “first case where a German court says the European court has no jurisdiction."
Professor Koutrakos believes that “Litigation against related ECB initiatives will by no means decrease in response to the COVID-19 crisis. The ECB has recently adopted a Pandemic Emergency Purchase Programme and while the German Court did not review that programme, its judgement is bound to raise questions about the ECB’s policy.”
Professor Koutrakos says the wording of German Constitutional Court decision is significant:
“The BVerfG judgment is significant for both what it does and does not do. First, its wording is strong. In fact, it is very strong. Whilst it points out the spirit of cooperation that governs the relationship between the domestic courts and the ECJ, the BVerfG went on to refer to the latter’s approach (in a Grand Chamber judgement) as ‘simply untenable’, ‘objectively arbitrary’ and ‘simply not comprehensible’.”
Professor Koutrakos also says that while the German Constitutional Court concluded that it did not have sufficient information to decide on the matter, the judgement set out a number of reasons, “which might suggest that the ECB had acted beyond its mandate".
These raise questions: is the distinction between economic and monetary policy as clearcut as the judgement suggests? What methodological tools should courts apply in order to review the complex assessments that underpin policy choices such as quantitative easing? And to what extent may judges examine the economic considerations to which the BVerfG referred without substituting their views for those of decision-makers?
Professor Koutrakos goes on to state that, “The BVerfG judgement may whet the appetite of other domestic courts to challenge the carefully balanced and constantly recalibrated relationship that the Court of Justice and domestic courts had maintained over the years.”