Belgium

IV - Early Emergency Funding

Prior to 2010, loan assistance to States was made primarily via bilateral agreements (to Latvia, Hungary, Romania, 1st round of Greek loan assistance). 
The European Financial Stabilisation Mechanism (EFSM) and the European Financial Stability Facility (EFSF) are two temporary emergency funds, both resulting from the turbulent political weekend of 7-9 May 2010. On May 9, a Decision of the Representatives of the Governments of the Euro Area Member States was adopted expressing agreement on both funds.   
The EFSM is based on a ‘Council regulation establishing a European financial stabilisation mechanism’ of May 11, 2010 adopted on the basis of article 122(2) TFEU and therefore binding on all 27 member states of the EU.   
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:118:0001:0001:EN:PDF)
The EFSF is a special purpose vehicle created under Luxembourgish private law by the 17 member states of the Eurozone. The EFSF Framework Agreement was signed on June 7, 2010. On June 24, 2011, the Heads of State or Government of the Eurozone agreed to increase the EFSF’s scope of activity and increase its guarantee commitments.    
(
http://www.efsf.europa.eu/attachments/20111019_efsf_framework_agreement_en.pdf and http://www.efsf.europa.eu/attachments/faq_en.pdf)

Negotiation
IV.1
What political/legal difficulties did Belgium encounter in the negotiation of the EFSF and the EFSM, in particular in relation to (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process?

No legal difficulties; see the parliamentary discussion mention below in IV.2.

Entry into force
IV.2     
Article 1(1) EFSF Framework Agreement provides that it will enter into force if sufficient Eurozone member states have concluded all procedures necessary under their respective national laws to ensure that their obligations shall come into immediate force and effect and provided written confirmation of this. What does this procedure look like in Belgium and in what way does it involve Parliament?

The federal government submitted the draft law authorizing financial participation in the EFSF on August 19th, 2010. Following the optional bicameral procedure of article 78 Const., the Senate decided proprio motu to evoke the draft legislation and confirmed the text as voted by the House. The resulting law entered into force on the day of publication, i.e. November 23rd , 2010.[1]

Article 3 of this law granted the caretaker government the right to participate in the capital of the EFSF, following the distribution key as set out in the EFSF. Additionally, the original draft set out a wide delegation to adjust this key, which was criticised by the Council of State in its Advice.[2]  The draft article 6 was thus amended to refer to the EFSF as the objective and framework of the delegation and stipulated that these governmental decrees have to be approved by the House within 12 months.

The Minister of Finance received his authorization to buy shares of the EFSF the same day.[3]

The higher key following the financial support to Ireland and Portugal was approved the next year by the law of September 26, 2011.[4] The Belgian part of the State guarantee was increased from 15.3 billion euro to 34.5, which amounts to approximately 10 % of the Belgian GDP.

The initial parliamentary debates were limited, given the urgency requested by the government. Most questions inquired into the general approach of the EU to the financial crises. The most poignant question as regards the EFSF raised the issue of the Excessive Deficit Procedure. The Minister of Finance responded that any expenditure following the EFSF would be marked as government debt, but would be calculated separately.[5]

The debates on the amendment of the law approving participation in the EFSF following the extension of the Framework Agreement in 2011 extended into the general approach to the financial crisis, with little detailed remarks concerning the EFSF in particular.[6]

Parliamentary involvement is thus limited to the authorizing act, and the stipulation that the delegation to the government to acquire capital in the EFSF, or undertake other measures in that respect, has to be approved within twelve months by formal law.

Guarantees
IV.3     
Member states are obliged to issue Guarantees under the EFSF. What procedure was used for this in Belgium? What debates have arisen during this procedure, in particular in relation to the implications of the guarantees for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process?

According to article 4 of the Law of November 2nd, 2010, the Belgian State guarantees the EFSF issued loans for 165 % (initially 120%)[7] of the Belgian share in the distribution key. The maximum amount for the total of guarantees is 34 500 000 000 euro.

The debates were not of a technical nature, and focused more on the general approach to the crisis, see above, IV.2.

Activation problems 
IV.4     
What political/legal difficulties did Belgium encounter during the national procedures related to the entry into force of the EFSF Framework Agreement and/or the issuance and increase of guarantees?

The political situation was rather unstable at the time, and the caretaking government could not command a majority in Parliament. The main opposition party, the NVA, did support the legislative acts related to the EFSF, yielding a large majority in total despite the lack of formal majority.

From a legal angle, three questions arose: first, can a caretaking government submit draft legislative acts to parliament? Second, should the EFSF framework treaty be approved by parliament? And third, what are the conditions for the delegation to the government authorizing expenditure as regarding the EFSF?

With regards to the first question, the issue is whether the executive’s competence, limited to the ‘current affairs’ in a period of dismissal, includes limitations on the drafts put before parliament. The Council of State denied to opine on this question[8], but legal scholarship generally approves of this practice[9], since it does not detract any decision from the power of parliament. Even if one adheres to the limitation to the current affairs doctrine, classifying the proposal as urgent would be valid under the current affairs doctrine. The EFSF execution would certainly qualify.

Second, although article 167, paragraph 2 of the Constitution obliges Parliament to approve of all Treaties[10], the EFSF framework treaty has not been formally approved by the federal Parliament because it is “an intergovernmental agreement governed by English law and incorporating the EFSF under Luxemburg law”.[11] Again, the Council of State denied to opine on this classification.[12] Where parliamentary assent is lacking, the consequence would be the inability to derive rights and obligations from the Treaty before a Belgian judge, which is arguably not the intention of the EFSF treaty.

The delegation to the government to adjust the amounts that Belgium invests in the EFSF was criticised by the Council of State as being too wide, and was amended to be functionally limited to the operation of the EFSF. Additionally, the Royal decrees[13] authorized have to be approved by Parliament within twelve months.  

Case law     
IV.5     
Is there a (constitutional) court judgment about the EFSM or EFSF in Belgium?

As the EFSF Framework Treaty has not been formally approved by Parliament, no ordinary proceedings can invoke this agreement. However, the law of November 2nd, 2010 was twice challenged before the Constitutional Court.

a.     Const. Court, Case 111/2011

In the first case, nr. 111/2011, private citizens argued that the execution of the EFSF framework treaty as laid down by the Act of November 2, 2010 violated article 48(7) TEU[14] and a number of constitutional provisions related to the parliamentary procedure. Both norms are not within the competence of the constitutional court.[15] The appeal was rejected for lack of merits.

1.     Name of the court: Constitutional Court

2.     Parties: Four private citizens

3.     Type of action/procedure: appeal for invalidation

4.     Admissibility issues: inadmissible due to reference to constitutional norms upon which the Court cannot adjudicate. The competence of the Constitutional Court is formally limited to federal division of competences, Title II of the Constitution (fundamental rights), and articles 170,172 and 191 (tax provisions and alien status). Through the equality provision and prohibition of discrimination (articles 10 and 11), the Court casts a wider net. However, in this case, no violation of the equality clause was invoked by the applicants.

5.     Legally relevant factual situation: /

6.     Legal questions: /

7.     Arguments of the parties: violation of articles 74 (competences of the House), 77 (bicameral competences) and 96 (general provision on the executive) of the Constitution, violation of articles 48(7) and 222 TFEU, and violation of article 1 of the Special Act on Institutional Reform.

8.     Answer by the Court: Court is not competent to adjudicate upon these norms, unclear appeal as to the precise violation.

9.     Legal effects of the decision/judgment: none.

10.  Main outcome and broader political implications: none.

b.      Const. Court, Case 33/2013

The second case, nr. 33/2012, fared equally bad from the point of view of the petitioners. They construed an argument based on democracy, and lamented the severe budgetary operations that would result from the operation of the EFSF. The Constitutional Court again rejected the plea for lack of merits.[16]

1.     Name of the court: Constitutional Court

2.     Parties: Two private citizens

3.     Type of action/procedure: appeal for invalidation

4.     Admissibility issues: inadmissible due to lack of locus standi. Applicants relied on their status as citizens and voters, and lamented the impact of budgetary constraints.

5.     Legally relevant factual situation: /

6.     Legal questions: /

7.     Arguments of the parties: /

8.     Answer by the Court: Court did not find a direct and individual concern and declared the appeal inadmissible.

9.     Legal effects of the decision/judgment: none.

10.  Main outcome and broader political implications: none.

Implementation
IV.6     
What is the role of Parliament in the application of the EFSF, for example with regard to decisions on aid packages (Loan Facility Agreement and Memorandum of Understanding) and the disbursement of tranches, both of which need unanimous approval by the so-called Guarantors, i.e. the Eurozone member states?

The entire operation of the EFSF was delegated to the government. In case a Royal Decree would be necessary, for instance to acquire shares of the EFSF on top of the amount indicated in the law of 2010, or to increase the guarantee, these decrees have to be approved by Parliament within twelve months.

Normally, such delegation to the executive would be unproblematic, but since Parliament lacks any effective sanctioning mechanism vis-à-vis a government that is already demissionary, little accountability was installed.

Implementing problems    
IV.7
What political/legal difficulties did Belgium encounter in the application of the EFSF?

None.

Bilateral support     
IV.8    
In case Belgium participated in providing funding on a bilateral basis to other EU Member States during the crisis, what relevant Parliamentary debates or legal issues have arisen?

The Law of May 12, 2010 authorized the Belgian demissionary government to partake in the Commission-led Greek Loan Facility for an amount of 1 billion euro.[17] This amount was later increased (Law of December 29, 2010) to almost 2.9 billion for the full term of three years.

Political support was heavily in favour, though the extreme-right Vlaams Blok Party urged modesty of the EU in issuing financial support, and proposed to grant national parliaments more voice in this process.[18]

Miscellaneous
IV.9    
What other information is relevant with regard to Belgium and the EFSM/EFSF?

None.

[1] Law of 2 November 2010 concerning the participation of the Belgian State in the ‘European Financial Stability Facility’ and the issuance of State guarantee for the financial instruments emitted by this Corporation, Official Gazette 2010, 23 November 2010. http://www.ejustice.just.fgov.be/mopdf/2010/11/23_3.pdf

[2] Parl. Doc. House, 2010-11, nr. 53K24/1, p. 14. The draft article 6 was amended to refer to the EFSF and stipulated that these governmental decrees have to be approved by the House within 12 months. http://www.dekamer.be/FLWB/PDF/53/0024/53K0024001.pdf

[3] Royal Decree of November 23, 2010, Official Gazette November 25, 2011.

[4] Law of September 26, 2011, Official Gazette September 30, 2011. http://www.ejustice.just.fgov.be/mopdf/2011/09/30_2.pdf

[5] Parl. Doc. House, 2010-11, nr. 53K24/2, p. 5. http://www.dekamer.be/FLWB/PDF/53/0024/53K0024002.pdf

[6] See Parl. Doc. House, 2011-12, nr. 53K1715/3. http://www.dekamer.be/FLWB/PDF/53/1715/53K1715003.pdf

[7] Amended by law of September 26, 2011.

[8] See the advice of the Council of State, Parl. Doc. House, 2010-11, nr. 53K24/1, p. 13. http://www.dekamer.be/FLWB/PDF/53/0024/53K0024001.pdf

[9] A. Alen & K. Muylle, Handboek Belgsich Staatsrecht (Kluwer 2011) p. 151, and references in note 556.

[10] With the minor exception of the “executive agreements that aim to execute and update existing treaties”.

[11] Parl. Doc. House, 2010-11, nr. 53K24/1, p. 4. http://www.dekamer.be/FLWB/PDF/53/53K0024001.pdf

[12] Parl. Doc. House, 2010-11, nr. 53K24/1, p. 14. http://www.dekamer.be/FLWB/PDF/53/53K0024001.pdf

[13] As often the case, these Royal Decrees require the assent of the ministers of the government, hence ensuring parity between the two linguistic groups (see article 99 Const.).

[14] European Council initiative installing QMV instead of unanimity has to be submitted to the national parliaments who enjoy a veto right.

[15] Constitutional Court, Case 111/2011 of June 23 2011. http://www.const-court.be/public/n/2011/2011-111n.pdf

[16] Constitutional Court, Case 33/2012 of March 1st, 2012. http://www.const-court.be/public/n/2012/2012-033n.pdf

[17] Law of May 12, 2010, Official Gazette May 25, 2010. http://www.ejustice.just.fgov.be/mopdf/2010/05/25_2.pdf

[18] Parl. Doc. House, 2009-10, nr. 52K2576/2, p. 11. http://www.dekamer.be/FLWB/PDF/52/2576/52K2576002.pdf