Has Eurofederalism Hit a Legal Roadbump?

On May 5^th the German Constitutional Court did what was unthinkable to Europhiles everywhere, and ignored the claims of the CJEU that European law is superior to National law. Before we consider the implications of this ruling, we should first consider how it came to be that European law was to be regarded as being superior to National law.

Nowhere in the European Treaties is there the explicit statement of such fact. Rather, the policy derives from a judicial fiction, where the European Courts merely aggregated this power to themselves in Costa v ENEL. Up until recently this was accepted (begrudgingly by some) by National Courts. European judges had ever been at the forefront of bypassing Treaty limits to give greater powers to the institutions of the EU.

The German Constitutional Court however has reserved the right to judge the legality of institutions’ actions, though has never actually used such powers before. Its claims were technical, and for a long time, the dispute between the CJEU and the German courts was muddied and ignored. The Germans said they could review the law but would not, and the Europeans would say they simply could not (and since the Germans never did so anyway, it never came to a head).

That was until a spate of right-wing, nationalist Eurosceptics began a series of legal challenges (almost all of whom were in some way connected to the AfD party). The challenge by nationalists was centred around the proposition that the European Central Bank had acted beyond its remit (it did things it was not legally empowered to do, it was acting “ultra vires”). 

They alleged that the ECB was only entitled to affect monetary policy (the supply of money in an economy) and not fiscal policies (the spending/raising of money by governments). The ECB’s bond-buying program had been of such a magnitude that it had gone beyond its Treaty-imposed responsibilities to ensure “price stability” (to make sure that inflation was around 2%).

The European Courts had stated that such actions were justified because they were tangentially related to their Treaty-responsibilities – that affecting fiscal policies of national governments (something outside of its remit) was acceptable because doing so was in the furtherance of its primary goal (achieving price stability).

According to Europhiles, that ought to have been the end of it.

Yet the German Court ruled otherwise. They ruled that the ECB had acted outside of its powers, that the European Courts had acted irrationally and arbitrarily, requested that the ECB provide evidence that its bond-buying program was lawful and proportionate, and also directed the German Government to halt its participation in the program, and that it would need to disengage fully after 3 months.

The German Court’s reasoning was multifaceted, but to give a basic overview it was that:

The European Union is not a State in itself and has no trappings of Statehood, but that it is simply a union of States and something that exists only in Treaties.

That the European Courts were not strictly “courts” in the normal sense as they did not represent a State, but rather that they were a kind of international tribunal.

That the lack of oversight of the ECB (it is essentially completely autonomous from the Commission, the Council, and the Parliament in its functions) meant it did not fulfil certain criteria laid out previously as necessary by the German Constitution (that democratic deficits in such institutions be resolved).

The German Courts had found that, since the Nation-States are the ultimate masters of the Treaties, then the law of the Treaties are ultimately justiciable by the Courts of those Nation-States.

This is not the death knell of the European legal order as being heralded by some, and the Court could walk back its judgement later owing to political backlash. However, it is useful insofar as sets very clearly in motion a set of events which will lead to one of two outcomes: the demolition of internationalist bodies, or the creation of a federal Europe.

While the Irish Courts are unlikely to follow suit with the German interpretation of the EU’s existence, central European States will take positions more closely resembling the German one. Czechia’s constitutional court had taken a similar decision previously on the issue of pensions. Poland and Hungary (and no doubt others in future) will use this ruling to continue in their showdown with the Commission over questions on the “rule of law.”

There are two options for the EU then: The first is a strict Treaty overhaul, which requires unanimity amongst Member States (and a referendum in Ireland).This would be quite an impossibility given the obstinance of at least two Member States.

The second is to move forward with a two-speed Europe, where integration happens at a different rate for different countries.

It is with the latter option that we would begin to truly see the demise of Europe as a federal project. Nationalist Governments could not be compelled to take part, and the slow fracturing of States into ever smaller and ever more specific clubs would break the uniformity that the European Union strives towards.

A two speed Europe may address immediate political problems (such as mutual debt issuance), but it gradually pares down the “solidarity” between Member States and allows for the assertion of national interests. The Netherlands could not be compelled to guarantee the debts of Spain, Ireland could not be compelled to send soldiers to die for Tallinn, and so on and so forth. Akin to how some non-Eurozone members are not bound by the fiscal or economic provisions of the Fiscal Compact Treaty (Sweden, Poland, Czechia, Hungary, Croatia).

With the idea of a federal Europe dead, and the reassertion of national interests as being primary motivators, it would not take much then to kick off the decrepit corpse of an aging continental quasi-State. 

The German Court may not have killed the European Union, and they might indeed walk back their judgement or pretend it never happened, but the cracks that it has exposed have displayed the fragility of the European project. That is the gift to Nationalists from this ruling, that we have been vindicated in our belief that “international law” is little more than a buzzword, and the only thing that truly matters is the Nation.