Wednesday, September 12, 2012

Ratification of European Stability Mechanism ESM by Germany Not Blocked by German Federal Constitutional Court, But With Some Conditions

As LawPundit predicted in its posting yesterday, the German Federal Constitutional Court ("the Court") today "reject[ed] calls to block the Eurozone rescue fund" (USA Today) (bailout of the weaker Eurozone economies) and ruled that Germany's ongoing process of ratification of the European Stability Mechanism (ESM) was legally acceptable, provided that the German contribution to ESM did not exceed € 190 billion Euros (US $240 billion dollars) and provided that the flow of comprehensive information to the German Parliament was not hindered.

Read in English at the following link Extracts from the decision of the Federal Constitutional Court of 12 September 2012 including as below the "Judgment" (which is not a definitive "legally binding" text in its English translation but is given here for information):
"The Federal Constitutional Court – Second Senate – with the participation of


The applications for the issue of a temporary injunction are refused with the proviso that the Treaty establishing the European Stability Mechanism (Bundestag printed paper (Bundestagsdrucksache – BTDrucks) 17/9045, pages 6 ff.) may only be ratified if at the same time it is ensured under international law that
As detailed by Nicholas Kulish and Melissa Eddy at the New York Times at In Victory for Merkel, German Court Backs Euro Rescue Fund:
"The court was not formally ruling on the constitutionality of what is intended as a long-term fund to bail out countries in financial trouble, but on requests to block the German president from signing the bill into law.

The question before the court was whether the new fund would weaken the German Parliament’s right to control the spending of German taxpayers’ money."
Peter Carvill in a Special for USA Today wrote:
"The court ruled only against an injunction to stop the ratification of the treaty Wednesday, and will make its final ruling in December. Even so, it laid out its reasoning for allowing the ESM to move forward. "The relevant factor to accommodate the principles of democracy is whether the (lower house of parliament) remains the institution that makes independent decisions on revenue and expenditure," judges wrote. But "no permanent mechanisms may be created under international treaties that would equal accepting liability for decisions by other countries." "
In a decision that reminded this writer of the wisdom of Chief Justice Roberts ruling opinion in the U.S. Supreme Court decision on Obamacare, German Justice Andreas Vosskuhle, President of the German Federal Constitutional Court, emphasized the rule of law and explained the decision as holding that not the Constitutional Court but rather the directly elected political representatives of the people should decide the future of Europe as well as budgetary questions related to its financial future.

Justice Peter Huber of the German Court noted about ESM that the Eurozone rescue fund does not permit German taxpayer monies to be spent without their approval and "does not hand over rights of budgetary decisions to any other actors." That was a chief worry of the applicants who had asked for the temporary injunction.

The process of the ratification by Germany of the European Stability Mechanism can now continue.

Crossposted at LawPundit.

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