On 5 May 2020, the German Federal Constitutional Court issued a judgment in which it declared a European Court of Justice ('ECJ') decision ultra vires in Germany. The ruling focused on the legality of aspects of the European Central Bank's ('ECB') Public Sector Purchase Programme (PSPP). The legality of this programme had previously been referred to the ECJ, wherein it had been determined lawful.
The recent ruling of the German Federal Constitutional Court has received widespread attention as it poses a potentially fatal threat to the future of one of the main characteristics of the EU, namely the principle of supremacy of EU law over the national law of its Member States.
In rejecting the ECJs ruling, the German Federal Constitutional Court found that the ECJ had violated principles of legal interpretation and held that the ECJ had failed to properly apply the EU's proportionality principle. In particular, the German Federal Constitutional Court indicated that the ECJ had failed to ensure that the ECB applied its own proportionality analysis when assessing the likely impact of its policies on both monetary and broader economic outcomes.
The German Federal Constitutional Court claimed that the ECJ’s interpretation of the principle of proportionality in its Judgment of 11 December 2018 ‘manifestly exceed the mandate conferred upon the CJEU in Art. 19(1)’ thus resulting in ‘a structurally significant shift in the order of competences to the detriment of the Member States’ (para 154).
For this reason, the German Federal Constitutional Court concluded that ‘the CJEU thus acted ultra vires, which is why, in that respect, its Judgment has no binding force in Germany’ (para 163).
This German Federal Constitutional Court ruling is final as it is not subject to appeal to any other court.
The European Commission responded to the German Federal Constitutional Court ruling and stated that “notwithstanding the analysis of the detail of the German constitutional court’s decision today, we reaffirm the primacy of EU law and the fact that the rulings of the European Court of Justice are binding on all national courts.”
Furthermore, the ECJ noted in a recent press statement that it has always held that the legality of the acts of EU bodies can only be determined by the ECJ and not national courts, in order to prevent the chaotic situation in which EU acts are legal in one Member State but not another.
It is reasonable to anticipate that paragraph 163 of this ruling will become one of the most cited paragraphs in the analysis of the supremacy of EU law in the coming years.
It is worth nothing that this is not the first time that a national court has found an ECJ judgment to be ultra vires, or at least concluded that it has no legal basis in domestic law. For example, the Danish Supreme Court reached a similarly controversial conclusion in 2016 in the Dansk Industri case. However, given the central role of Germany in the EU, this recent decision is a major blow from the heart of the EU.
You can access the press release here.
You can access the judgment of the German Federal Constitutional Court here.
You can read our more indepth article on this topic, which appeared in the July edition of the Law Society Gazette here.
Written by Eimear Burke and Dearbhla Walsh.
A phased return to work is taking place in different sectors. Fieldfisher is committed to supporting you through the transition and beyond. We continue to be available to our clients either remotely or in person, with your business as usual matters, as well as for C-19 support. Please review our Covid-19 hub for updates and get in touch if you require further information.
Sign up to our email digest
Click to subscribe or manage your email preferences.