Germany

V - 136(3) TFEU

At the 16/17 December 2010 European Council a political decision was taken to amend the Treaties through the simplified revision procedure of article 48(6) TFEU. On March 25, 2011 the European Council adopted the legal decision to amend article 136 TFEU by adding a new third paragraph: “The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.”             
The process of approval of this decision by the member states in accordance with their respective constitutional requirements as prescribed by article 48(6) has been completed and the amendment has entered into force on 1 May 2013.

Negotiation
V.1
What political/legal difficulties
did Germany encounter in the negotiation of the amendment of article 136 TFEU?

The ‘German Act on Cooperation between the Federal Government and the German Bundestag in Matters concerning the European Union’ (EUZBBG) demands in its section 9 that in case of an amendment of the contractual foundations of the EU the Federal Government shall refer to the Bundestag’s right to deliver an opinion under section 8 of this Act. Section 9 (2) reads as follows: Before the final decision in the Council or in the European Council, the Federal Government is to reach agreement with the Bundestag. This shall not prejudice the right of the Federal Government, in awareness of the Bundestag’s opinion, to take divergent decisions for good reasons of foreign or integration policy.

This is why the Federal Government had to obtain approval by the Bundestag before consenting to the treaty amendment on the EU level. The head of states had generally agreed on the amendment at their meeting on 16/17 December 2010. The formal approval by all Member States was made on 25 March 2011 via a European Council Decision.[1] The Federal Government informed the Bundestag about the intended treaty amendment on 14 December 2010 and alluded to the right of the parliament to make representations.[2] In addition, the government informed the parliamentary Committee for European Affairs during its meeting on 23 February 2011.[3]

The Greens from the opposition criticized that the Federal Government had not tried to receive a parliamentary approval before the summit in December 2010. They were of the opinion that the government is obliged to ask for the approval by the Bundestag before deciding about a treaty amendment together with the other Member States.[4] The government, in contrast, was of the opinion that such a parliamentary approval is only necessary for the formal decision which took place in March 2011. The Bundestag gave its approval to the amendment of Article 136 TFEU by the simplified treaty amendment procedure under certain conditions.[5] In contrast to the declaration added to the Bundestag approval which was based on the application of the government coalition of Christian Democrats (CDU/CSU) and Liberals (FDP), the parliamentary groups forming the opposition (Social Democrats (SPD)[6], the Greens (Bündnis 90/Die Grünen)[7] and the Left (Die Linke)[8]) demanded stronger participation rights of the German parliament. In addition, the Left was of the opinion that the Treaty amendment must be based on Article 48 (2) TEU and not on Article 48 (6) TEU.[9] The discussion about the amendment of Article 136 TFEU was linked to the establishment of the ESM.

Approval
V.2
How has the 136 TFEU Treaty amendment been approved in Germany and on what legal basis/argumentation?

The Bundestag adopted the Treaty amendment of Article 136 (3) TFEU on 29 June 2012 by the ‘Law Amending Article 136 of the Treaty on the Functioning of the European Union’, which was a federal law. In the plenary session 604 MPs casted a ballot. 504 MPs voted in favour, 97 against the law and one MP abstained. The approval was given by MPs of the parliamentary groups of the Christian Democrats (CDU/CSU) and the Liberals (FDP) from the government as well as the Social Democrats (SPD) and the Greens (Bündnis 90/Die Grünen) from the opposition. Against the law voted all MPs from the parliamentary group the Left (Die Linke) as well as 16 MPs from CDU/CSU, 8 MPs from the FDP, one MP from the SPD and one MP from the Greens. One MP from CDU/CSU abstained.[10]

 

This law had to be approved by the Bundestag and the Bundesrat based on section 2 of the federal ‘Law about the Integration Responsibility of the Bundestag and the Bundesrat in matters of the European Union’[11] (IntVG) and on Articles 23 (1), 59 (2) sentence 1 GG.  Article 23 (1) sentence 2 and 3 GG rule that „the Federation may transfer sovereign powers by a law with the consent of the Bundesrat. The establishment of the European Union, as well as changes in its treaty foundations and comparable regulations that amend or supplement this Basic Law, or make such amendments or supplements possible, shall be subject to paragraphs 2 and 3 of Article 79.“ Article 59 (2) sentence 1 GG establishes that “[T]reaties that regulate the political relations of the Federation or relate to subjects of federal legislation shall require the consent or participation, in the form of a federal law […].“

 

Ratification difficulties               
V.3
What political/legal difficulties
did Germany encounter during the approval of the 136 TFEU Treaty amendment?

I. General Facts and Modus of Examination

In Germany, the adoption of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (known as the Fiscal Compact), the European Stability Mechanism (ESM Treaty), and the Treaty amendment of Article 136 (3) TFEU was carried out in one single legislative procedure, starting on 20 March 2012 with the introduction of three legislative proposals[12] by the parliamentary groups of Christian Democrats (CDU/CSU) and Liberals (FDP) who supported the government at that time. Ab initio, these ‘European’ crisis measures were discussed controversially, but the level of controversy peaked on 29 June 2012 when the bills had to be voted on. The showdown that day resulted from the fact that Merkel had agreed to controversial modifications of the ESM Treaty at the Euro Summit the night before.

 

The subsequent analysis will describe and evaluate the legislative negotiations of these three crisis measures in more detail. The Fiscal Compact, the ESM Treaty, and the Treaty amendment of Article 136 (3) TFEU were not only introduced and voted on in the same plenary session but also debated as a package. Due to these procedural and substantial ties they will be described conjointly below.

 

Similar to the previous analysis of the EFSM/EFSF, the protocols of the plenary debates as well as the reports and recommendations of the respective Lead Committees will be the main sources for the below description and evaluation (see also question IV.4, under no.I).

 

In total, the adoption of the three crisis measures required the adoption of five federal laws:

 

First, on 29 June 2012 the Bundestag adopted the ‘Law to the Contract on 2 March 2012 on Stability, Coordination and Governance in the Economic and Monetary Union’[13] (hereinafter Fiscal Compact Law) in order to ratify and implement the Fiscal Compact.

 

Second, in order to ratify and implement the ESM Treaty the Bundestag had to adopt three federal laws:

 

  • The Bundestag ratified the ESM Treaty through the ‘Law to the Contract on 2 February 2012 on the Establishment of the European Stability Mechanism’[14] (hereinafter ESM-Ratification Law) on 29 June 2012.

 

  • In order to authorize the payment of capital to the ESM, the ‘Act on Financial Participation in the European Stability Mechanism’[15] (ESMFinG) was adopted on 29 June 2012.

 

  • Finally, the ESM Treaty required its members to change their national debt management laws through the inclusion of so-called ‘collective action clauses’ (CACs). Such clauses aim to facilitate an agreement between a government and its creditors if debt restructuring becomes necessary. The Bundestag included such CACs in the ‘Act Amending the Federal Debt Management Law’[16] (hereinafter BSWG) adopted on 29 June 2012.

 

Third, on 29 June 2012 the Bundestag adopted the Treaty amendment of Article 136 (3) TFEU through the ‘Law to the Decision of the European Council Decision of 25 March 2011 Amending Article 136 of the Treaty on the Functioning of the European Union with regard to a Stability Mechanism for the Member States whose Currency is the Euro’ [17] (hereinafter Law Amending Article 136 of the Treaty on the Functioning of the European Union)

 

In addition to these five federal laws, two additional ones had to be adopted for a full transformation of the ‘European’ rescue measures into German law. However these two laws were not part of the legislative procedure that will be described below.

 

  • The ‘Supplementary Budget Law for 2012’[18] (hereinafter NHG 2012), through which the acquisition of new debt was decided, was adopted by the Bundestag on 14 June 2012. Due to the German share of ESM called-in capital, new debt up to the amount of Euro 6 billion (rising from Euro 26.1 billion to Euro 32.1) had to be acquired.

 

  • Finally, a revised version of the ‘Law on the Cooperation between the Federal Government and the German Bundestag in Matters concerning the European Union’ (EUZBBG) was adopted by the Bundestag on 18 April 2013.

 

II. Short Chronology of Events

 

Due to the complexity of this legislative process, the chronology of events on the European and national level will be shortly explained, followed by a description of the position of the Federal Government and the opposition in the negotiations.

 

1. ‘European’ Crisis Measures

 

The ESM Treaty was signed by all 17 Eurozone Member States on 2 February 2012. Its lending capacity was initially restricted to Euro 500 billion but has been increased to Euro 700 billion through the amalgamation with the EFSF in June 2013.[19] Overall, the capital stock of the ESM is divided into paid-in capital and callable capital.[20]

 

The paid-in capital has to be provided by ESM Member States in five installments and amounts up to an amount of Euro 80 billion in total.[21] Under normal circumstances the ESM should accumulate its needed capital through paid-in capital as well as outside capital. [22] In special circumstances ESM Member States might have to pay the so-called callable capital up to an amount of Euro 620 billion in total.[23] The ESM Member States’ contribution is based on the ECB contribution key, which is 27.15 % for Germany. This corresponds to Euro 22 billion in paid-in capital and Euro 168 billion in callable capital.  

 

One obstacle on the path towards ratification of the ESM Treaty was the doubt of some Eurozone countries (especially Germany) on the Treaty’s legality under EU law. It was discussed whether the ESM Treaty complies with Article 125 TFEU that prohibits EU Member States from giving financial assistance to each other (the so-called ‘no bailout’-clause).[24] In order to dissipate these doubts, EU Member States agreed to amend Article 136 TFEU.

 

The Fiscal Compact was signed on 2 March 2012 by all EU Member States, except the United Kingdom and the Czech Republic. It aims at strengthening fiscal discipline for Eurozone Member States through establishing a balanced budget rule. It complements the Stability and Growth Pact (SGP) of 1997 that is known to have become ineffective.

 

2. Legislative Procedure in Germany

 

Below, a brief chronology of the legislative procedure in Germany for the adoption of the Fiscal Compact, the ESM Treaty, and the Treaty amendment of Article 136 (3) TFEU will be provided.

 

On 29 March 2012 the federal bills adopting the Fiscal Compact, the ESM Treaty, and the Article 136 TFEU amendment were introduced in the first plenary session of the Bundestag, followed by a legislative debate between the governing parties and the opposition. One day later, on 30 March 2012, the Ecofin Council decided to increase the lending capacity of the ESM from Euro 500 billion to Euro 700 billion from June 2013 onwards.

 

During the subsequent weeks the Bundestag Committees modified the introduced bills in order to find a common denominator between the government and the opposition. Due to the Fiscal Compact being an international agreement it was necessary to have a 2/3 majority according to Article 23 (1) in conjunction with Article 79 (2) GG (see also question IV.2). The consent of the opposition parties was thus inevitable. The ESM Treaty required a simple majority in the Bundestag (see for further information question VIII.2).[25] Yet the Federal Government tried to get a 2/3 majority in order to prevent constitutional problems. The ‘Law Amending Article 136 TFEU required a simple majority in the Bundestag (see question V.2).[26]  

 

On 7 May 2012, an expert hearing took place in the Budget Committee which was the Lead Committee dealing with the Fiscal Compact and the ESM Treaty.[27] The Committee on European Affairs, which was the Lead Committee for the ‘Law Amending Article 136 TFEU’, refrained from organizing an expert hearing.

 

On 14 June 2012 the Bundestag adopted the ‘Supplementary Budget Law for 2012’ (hereinafter NHG 2012), through which the acquisition of new debt (necessary for the German shares of the ESM Fund) was decided (see also question VIII.5).

 

On 19 June 2012, the FCC issued a judgment which was initiated by the Greens (Bündnis 90/Die Grünen). The Court found that the Federal Government had violated its information obligations towards the Bundestag when negotiating the ESM Treaty and the Euro Plus Pact. According to the Court, the Federal Government has to inform the Bundestag “in matters concerning the European Union fully and […] as soon as possible.”[28] (see question VIII.4)

 

On 21 June 2012, the government agreed conjointly with the Social Democrats (SPD) and the Greens (Bündnis 90/Die Grünen) on the ‘Pact For Sustainable Growth and Employment’, which included a plan to introduce a Financial Transaction Tax (FTT) and an economic stimulus package. This Pact was a concession of the government in exchange for the opposition’s votes for the adoption of the European crisis measures.

 

The same day the ‘Pact For Sustainable Growth and Employment’ was adopted, The Left (Die Linke) together with Germany’s former Justice Minister Herta Däubler-Gmelin (SPD) issued an emergency appeal at the FCC claiming the unconstitutionality of the bills ratifying and/or adopting the Fiscal Compact, the ESM Treaty, and the Article 136 TFEU amendment. The FCC asked Federal President Joachim Gauck on 28 June 2012 to wait signing the bills to be adopted by the Bundestag and Bundesrat on 29 June 2012 until there will be a decision by the FCC.

 

On 29 June 2012, all five bills described above were adopted by Bundestag and Bundesrat. The date of the voting session (Friday afternoon for the Bundestag and Friday evening for the Bundesrat) was very unusual for a parliamentary gathering and can be contributed to the fact that the bills were supposed to be adopted before the summer break. On 12 September 2012, the FCC confirmed the legality of the five bills (see questions V.4, VIII.4, and IV.7) and so President Gauck signed them. On 13 September 2013 they entered into force through their publication in the German Law Gazette.

 

It is important to stress that the FCC judgment from 12 September 2012 was only a preliminary ruling, meaning that a final judgment still needed to be issued. In addition to the former Justice Minister Herta Däubler-Gmelin (SPD) many other citizens filed constitutional complaints against the three measures at stake. Overall, this case had the largest number of plaintiffs in a German Constitutional Complaint procedure ever (about 37.000) ( for more details and the final reasoning of the Court, see questions V.4, VIII.4, IX.7).[29]

 

III. Parliamentary Negotiations

 

1. The First Plenary Session on 29 March 2012

 

a. Position of the Government

 

On 19 March 2012, all five bills adopting the three European crisis measures were introduced and debated in the Bundestag. Federal Minister of Finance Wolfgang Schäuble held the first plenary speech and pointed out the three ’building blocks’ of the Federal Government’s crisis management strategy. Such ‘building blocks’ have been repeatedly pointed out by the Federal Government when justifying European rescue measures.

 

First, Schäuble highlighted that the government favors the approach to provide “help for self-help”[30], meaning that countries with financial difficulties are offered financial help under the condition that they implement structural reforms. This “growth-friendly deficit reduction policy”[31] has in the past been successful in Germany and is already yielding fruits in Ireland, Portugal, and Greece. The government opposed Eurobonds because they contradict the idea of providing “help for self-help”, Schäuble said. The pooling of financial liabilities in the EU would set wrong incentives, as it would render structural reforms unnecessary.[32]

 

Second, Schäuble emphasized the necessity of stricter fiscal measures, as included in the Fiscal Compact. What is really needed for the stabilization of the Euro is the elimination of high levels of debt, he said.[33] Through the Fiscal Compact a “constant stability union”[34] is created, as member states agreed to introduce debt brakes in the constitutions and to allow the European Commission to monitor their economic and monetary policies.

 

According to Schäuble, the third strategy of the government is to build up financial firewalls until a more stable union is being created. After the stabilization of the union, high firewalls are not necessary anymore. At the moment, however, it is indispensable to increase the ESM lending capacity from Euro 500 billion to Euro 700 billion, he said. The following day, such increase of the ESM lending capacity was agreed on in an informal meeting of the Ecofin Council in Copenhagen through the amalgamation of the ESM with the EFSF.[35]

 

The chairman of the Liberals (FDP), Rainer Brüderle, supported Schäuble’s position and added that inflation can only be prevented through low levels of debt.[36] He justified the crisis measures by saying that “monetary stability is silent social policy”.[37] This rhetoric of depicting economic policy as social policy is very typical for the governing coalition of Christian Democrats (CDU/CSU) and Liberals (FDP). The most famous statement in this respect is the slogan “what creates work is social policy” that has repeatedly been used by the coalition partners in their election campaigns.[38]

 

b. Position of the Opposition Parties

 

The parliamentary leader of the Social Democrats (SPD), Frank-Walter Steinmeier, reminded the Federal Government that it depends on the consent of the opposition to adopt some of the crisis measures. According to him, the coalition should not assume that the consent of his party would “just fall into their laps”.[39] Both the Social Democrats and the Greens (Bündnis 90/Die Grünen) demanded from the Federal Government to complement the Fiscal Compact with “elements for economic growth” that should be financed through a Financial Transaction Tax (FTT).[40]

 

Furthermore, Steinmeier criticized the government for combating the crisis with “half-truths” and “throwing sand in the eyes of the citizens”.[41] He accused the Federal Government of constantly drawing financial ‘red lines’ by stating that there will be no additional money for Greece or no increase of the ESM lending capacity, only to revise these ‘red lines’ a couple of months later. The government’s “red lines have become wandering sand dunes”[42], Steinmeier said. In the same vain, Jürgen Trittin from the Greens accused the government of suffering from “political dyscalculia, a chronic mathematical disorder.”[43] Such criticism by Steinmeier and Trittin was extensively quoted in the news coverage and dominated the debate on the ESM.[44] Opposition towards an increase of the ESM lending capacity also came from within the governing coalition (especially the Christian Social Union (CSU) from Bavaria).[45]

 

The parliamentary leader of the the Left (Die Linke), Gregor Gysi, emphasized the fact that the crisis measures violate the German Constitution in several regards. The Fiscal Compact, e. g., does not only violate the budget competence of the Bundestag but also not in conformity with the eternity clause of Article 79 (3) GG because the Fiscal Compact does not provide for a cancellation option.[46]

 

Furthermore, Gregor Gysi criticized the Federal Government for building up "a Europe of banks and hedge funds."[47] Banks should be nationalized and made smaller and the banking sector (and not the taxpayers) should pay for the rescue measure. Finally, Gysi addressed all members of the Bundestag and urged them to “listen to us and stop marginalizing us. It’s worthwhile to discuss and think about the things I have said.”[48] The background to this claim is that the parliamentary group the Left (Die Linke) has been excluded from many informal meetings between government and opposition, as nobody was willing to work with them.

 

c. Treaty Amendment Article 136 (3) TFEU

 

Interestingly, the ‘Law Amending Article 136 of the Treaty on the Functioning of the European Union’ was not part of the above-summarized debate, although it was amongst the bills debated. Yet, only the Fiscal Compact and the ESM Treaty were explicitly discussed.

 

A couple of parliamentarians and the parliamentary group the Left introduced a petition ‘Implementing Fundamental Reforms of the EU Treaties and Preventing the Modification of Article 136 TFEU’. In summary, it urged the Federal Government not to amend the TFEU but to “engage at the EU level for a fundamental reform of the treaties.” [49] This petition was not mentioned in the debate (not even by the Left).

 

2. Negotiations between Government and Opposition

 

As explained above, several of the bills at stake had to be adopted by a 2/3 majority, thus making the consent of the opposition indispensable (the Fiscal Compact required a 2/3 majority; the bills adopting the ESM Treaty only required a simple majority but the Federal Government explicitly aimed for a 2/3 majority to prevent constitutional problems). Social Democrats and the Greens clarified that they are in favour of the crisis measures under the condition that the involvement of the Bundestag would be strengthened, an economic stimulus package adopted, and a FTT introduced.[50]

 

In order to get the opposition parties ‘on board’, the coalition parties thus had to modify the legislative proposals during the committee proceedings. Additionally they would have to find a solution to the additional demands of the opposition that were unrelated to the bills. For that purpose the ‘Pact For Sustainable Growth and Employment’ was negotiated.[51] Below, the main substance of this Pact will be described, followed by an analysis of the revision and modification of all the bills in the respective committees of the Bundestag.[52] Finally, the role of the parliamentary group the Left (Die Linke) in the negotiations will be shortly explained.

 

a. Pact For Sustainable Growth and Employment

 

On 21 June 2012, the Federal Government agreed together with the Social Democrats (SPD) and the Greens (Bündnis 90/Die Grünen) on the ‘Pact For Sustainable Growth and Employment’, which consisted of three elements: first, the introduction of a Financial Transaction Tax (FTT), second, the promotion of economic growth, and third, the commitment to further strengthen financial stability in the EU. The agreement to engage for a FTT was the most prominent part of the Pact, as Merkel had opposed a FTT for a long time but was eventually persuaded of its benefits. The Liberals (FDP) were still not in favour of the tax but agreed to it in order to get the opposition parties ‘on board’.

 

The Pact states that “we want to introduce a financial transaction tax"[53], which should be imposed on all financial instruments, including stocks, bonds, foreign currency transactions and derivate contracts.[54] The agreement further specifies that if not all 27 Member States of the EU can be persuaded to adopt such a tax, the Federal Government obliges itself to look for different ways of introducing it. [55] Finally, the Pact outlined ways to stimulate economic growth and proposed ways to fight financial instability in the EU.[56]

 

b. Committee Amendments 

 

i. ESM Treaty

 

The German parliament had to adopt three federal laws in order to ratify the ESM Treaty: the ESM-Ratification Law, the ESMFinG and the BSWG. In the Budget Committee, these bills were amended which mainly aimed at strengthening the participation rights of the Bundestag. One amendment concerned the voting procedure of a bill. 

 

Voting Procedure

 

In relation to the first bill, the ESM-Ratification Law, Christian Democrats (CDU/CSU) and the Liberals (FDP) from the government at that time introduced a resolution requiring the adoption of the ESM-Ratification Law with a 2/3 majority, although it only required a simple majority (see also question VIII.2). In the report of the Budget Committee, the coalition parties referred to the FCC judgment from 19 June 2010 (see also question V.4) and explained that they believed a 2/3 majority is necessary in order to avoid constitutional risks. In particular, they argued that the ESM Treaty is substantially and politically very closely connected to the Fiscal Treaty, which could only be ratified with a 2/3 majority. In the end, the resolution was agreed upon by all parties, except the Left (Die Linke) and some members of the Social Democrats.[57] However, it was only a recommendation for the plenary and did not become part of the ESM-Ratification Law.

 

Most legislative amendments concerned a strengthened involvement of the Bundestag which was a special concern of the opposition parties, also because of the constitutional requirements defined by the Bundesverfassungsgericht. With regard to the ESM-Ratification Law, an amendment specified that the German representative at the ESM Board of Governors is only allowed to consent to changes of the financial rescue measures pursuant to Article 19 of the ESM-Treaty (TESM) if he has been authorized by a federal law. This amendment was introduced by the coalition parties and agreed upon by all parties, except the Left and some members of the Social Democrats.[58]

 

The ESMFinG, the law that authorizes the issuance of German shares for paid-in and callable capital to the ESM Fund, underwent most modifications (see also question VIII.5). During the Budget Committee stage, four paragraphs concerning the involvement of the Bundestag were added which were in total longer than the bill itself. The amendments were either introduced conjointly by Christian Democrats (CDU/CSU) and Liberals (FDP) from the Government as well as Social Democrats (SPD) and the Greens (Bündnis 90/Die Grünen) from the opposition or separately by the parliamentary groups.[59] These amendments were consented to by all parliamentary groups, except the Left and some members of the Social Democrats).[60]

These were the most important amendments to the ESMFinG: First, the new § 4 guarantees that ESM decisions affecting the budgetary responsibility of the Bundestag always require the approval by the plenary of Bundestag (see also question VIII.6). Three major fields are identified in which ESM matters touch upon the budget responsibility of the Bundestag: first, the issuance of rescue measures pursuant to Article 13 (2) TESM; second, matters and agreement about the EFSF; third, changes of the guarantee volume of the ESM Treaty.[61] In the report of the Budget Committee, this amendment was justified by referring to the FCC judgment from 28 February 2012, in which the Court had highlighted the special role of the plenary (see also question IV.5).[62]

 

Second, § 5 determines that all other ESM measures that concern the Bundestag and in which the consent of the plenary is not intended according to § 4 have to be adopted in consent with the Budget Committee of the Bundestag. Amongst others, this applies to changes to the procedure to retrieve capital from the ESM or to the acceptance of changes in the guidelines for the implementation conditions of financial rescue measures.[63]

 

Third, one of the most important (and in the media controversially discussed)[64] amendments to the ESMFinG concerned the establishment of a so-called special-body (‘Sondergremium’). In contrast to the Committee of Nine (“Neuner-Gremium”) pursuant to the StabMechG (see Question, II.4) the ESMFinG dedicated a separate paragraph for this special body and explained its role in detail. Paragraph 6 specifies that in case of special confidentiality, such as the purchase of government securities on the secondary market pursuant to Article 18 TESM, the ‘Sondergremium’ is supposed to take a decision instead of the Bundestag in its plenary constellation.[65] In the report of the Budget Committee, the establishment of the ‘Sondergremium’ was explained by referring to the FCC judgment from 28 February 2012. In this judgment the Court had declared a ‘Sondergremium’ to be unconstitutional, except for instances in which the Bundestag has to consent to confidential matters such as the ESM purchase of government securities.[66] (see also question VI.5, under III) 

 

Finally, § 7 of the ESMFinG strengthened the information obligations of the Federal Government towards the Bundesrat and the Bundestag, one of the central demands from the Greens and the Social Democrats.[67] The amendment clarified that the Bundestag has to be informed about ESM matters at “the earliest possible point of time.”[68]

 

ii. Fiscal Compact

 

Involvement of the Parliament

 

Also the amendments to the Fiscal Compact Law mainly concerned the participation rights of the Bundestag. In reference to the FCC Judgment from 19 June 2012 (see also question IX.9), the Bundestag decided that the ‘Law on the Cooperation between the Federal Government and the German Bundestag in Matters concerning the European Union’ (EUZBBG) has to be adapted to the Fiscal Compact Law. The original version of the EUZBBG was adopted in 1993 with the ratification of the Maastricht Treaty. In the end, all parties in the Budget Committee (except the Left) agreed to the amendment of the Fiscal Compact Law via modifications of the EUZBBG. Furthermore, it was agreed to more generally revise the EUZBBG by the end of 2012.[69]

 

iii. Article 136 (3) TFEU-amendment

 

Like in the first plenary session, the ‘Law Amending Article 136 TFEU’ was not intensively discussed in the Committee on EU Affairs (the Lead Committee). An objection came from the parliamentary group the Greens (Bündnis 90/Die Grünen) pointing out that the amendment was not necessary because a teleological interpretation of Article 122 TFEU would have been sufficient to justify the EU rescue measures. Nevertheless, the party voted in favour of the bill due to it being a “preferable clarification.”[70]

 

Opposition to the bill only came from the parliamentary group the Left (Die Linke) that had introduced the petition ‘Implementing Fundamental Reforms of the EU Treaties and Preventing the Modification of Article 136 TFEU’. Yet, this petition was neither debated nor consented to in the committee.[71] 

 

Finally, it should be mentioned that the Committee on EU Affairs did not organize an expert hearing. In the report of the Committee this was justified by the fact that the amendment of Article 136 TFEU is closely connected to the adoption of the ESM Treaty for which an expert hearing took place in the Budget Committee. [72]

 

Overall, the expert hearing in the Budget Committee on 7 May 2012 brought forth a wide range of positions about the effectiveness of the EU rescue measures. The view that the lending capacity of the ESM is not sufficient for its purposes was shared by a majority of the participants. Professor Bofinger (University Würzburg) said that the ESM Fund is “better than nothing”[73] but insufficient to fully mitigate the risk. The chief economist of Deutsche Bank, Thomas Mayer, stressed that the ESM must have emergency access to loans from the ECB so that large liquidity crises could be overcome.[74] Finally, Silke Tober from the Institute for Macroeconomic Research, believed that neither the ESM Treaty nor the Fiscal Compact is helpful in overcoming the crisis. According to her only time has been bought so far. [75]

 

d. Opposition of the Left (Die Linke)

 

Overall, the parliamentary group the Left (Die Linke) vehemently opposed all introduced bills, as it believed that the crisis measures change the spirit of the German Basic Law to such an extent that a national referendum is necessary. The Left was part of the negotiations about the ‘Pact For Sustainable Growth and Employment’ but did not agree to it. Overall, it introduced three petitions to the Bundestag always aiming at preventing the adoption of the Fiscal Compact, the ESM Treaty and the Article 136 TFEU amendment.[76] All three petitions were rejected.

 

Nevertheless, the Left (Die Linke) found another way to prevent the (at least immediate) adoption of the crisis measures. Together with Germany’s former Justice Minister Herta Däubler-Gmelin (Social Democrats), the Left applied for emergency appeals to the Bundesverfassugsgericht on 21 June 2012, claiming the unconstitutionality of the measures. Because of these applications the FCC pleased the Federal President Joachim Gauck to wait signing the bills on 29 June 2012. The Federal President agreed to this request (see questions V.3, VIII.3, and IX.3)

 

3. Governmental Declaration of Merkel on 27 June 2012

 

After the committee sessions and briefly before the parliamentary vote on all the five bills, Merkel gave a Governmental Declaration in the Bundestag on 27 June 2012. The main purpose of this speech was to clarify her position concerning the further crisis measures to be discussed at the EU Summit on 28-29 June 2012.

 

At first, Merkel warned that there should not be too high expectations regarding the EU Summit: “Because I know the expectations and hopes with regard to the upcoming Summit, I repeat again, something which cannot be said often enough: there are no quick and there are no easy solutions. There is no magic formula or a coup with which the crisis can be solved.” According to Merkel, the crisis can only be overcome by a process of successive steps.[77] In this vain, she emphasized the importance of the adoption of the Fiscal Compact and the ESM Treaty by the Bundestag which will send a "strong signal internally and externally."[78]

 

Overall, Merkel mainly focused on explaining the growth incentives to be adopted at the EU Summit. The most important part of her speech concerned Eurobonds, as they had been repeatedly demanded by other Eurozone Member States. Merkel also clarified that she will not discuss the introduction of Eurobonds at the EU Summit. The path to sustainable growth in the EU cannot be guaranteed through joint liabilities but only through structural reforms. In a previous parliamentary meeting Merkel had even said that there would not be Eurobonds "as long as I live."[79] This comment was later extensively quoted in the media.

 

Frank-Walter Steinmeier, leader of the parliamentary group of the Social Democrats (SPD) at that time, attacked Merkel by saying that she is “not part of the solution but rather part of the problem.”[80] The only reason why the Social Democrats will vote in favour of the ESM Treaty and the Fiscal Compact is because the SPD has managed to change the “direction of the impact.” [81] Finally, Steinmeier urged Merkel to “ensure that the results of our negotiations will be adopted at the EU Summit.[82]

 

4. The Second and Third Plenary Session on 29 June 2012

 

a. The EU Summit on 28 June 2012

 

The level of controversy concerning the EU rescue measures peaked on Friday, 29 June 2012, when the Bundestag and the Bundesrat had to vote on the bills. For a while it looked as if the 2/3 majority, which the government had worked on for the previous three months, was lost. The reason for this was that Chancellor Merkel had to make controversial concessions at the EU Summit with regard to the ESM Treaty. As a result, politicians from the Social Democrats (SPD), the Left (Die Linke) and even some members of Merkel’s coalition partner the Liberals (FDP) requested to postpone the vote.[83]

 

Nobody had expected the outcome of the EU Summit, where Italian Prime Minister Mario Monti and the Spanish Prime Minister Mariano Rajoy had convinced their Eurozone partners to facilitate the access to the ESM Fund. First, the summit participants agreed that states fulfilling the budgetary rules laid down by the European Commission could receive ESM loans without having to accept strict austerity measures. Second, the heads of state agreed that the ESM could directly assist banks, however only after a European banking supervision mechanism has been established under the auspices of the ECB.[84]

 

On the eve of the EU Summit, Merkel insisted that she would not make any concessions. Her advisors even explicitly ruled out the possibility of allowing easier access to the ESM Fund. Resulting, Merkel’s concessions were depicted as a personal defeat in the media. The weekly magazine ‘Der Spiegel’ even published an article titled ‘The night in which Merkel was defeated’.[85]

 

b. Government Declaration by Merkel on 29 June 2012

 

The concessions Merkel made at the EU Summit and the negative media coverage led to much insecurity on the part of many parliamentarians in the Bundestag. This became especially clear in the plenary session the next day, where the Bundestag was supposed to vote on the crisis measures. After Merkel’s Government Declaration, in which she explained the measures taken the day before, a very emotional and heated debate erupted.

 

Merkel commented positively on the crisis measures to be voted on.[86] In the major part of her speech, Merkel explained the outcomes of the EU Summit. She praised the economic stimulus package and the agreements taken in relation to the FTT. In addition, she explained the new decisions concerning the ESM Fund and repeatedly pointed out that these decision are not related to the five bills voted on today and that the Bundestag could still veto the EU Summit decisions at a later point of time.[87]

 

Merkel’s coalition party, the Liberals (FDP), were in a difficult situation because many of their MPs disagreed with most of the decisions taken at the EU Summit, including the FTT. The opposition used this situation to scorn Merkel’s coalition partner. Jürgen Trittin from the Greens, e. g., said that the fact “that the FDP consented to the introduction of a FTT is as if the Pope and Volker Beck [a LGBT-member from the Greens] demonstrate at the Christopher Street Day."[88]

 

c. Position of the Opposition Parties

 

The chairman of the Social Democrats (SPD), Sigmar Gabriel, sharply criticized the Federal Government.[89] Due to the high level of youth unemployment "Europe is about to produce a lost generation"[90] for which Merkel is responsible, Gabriel said. The economic stimulus package should have been adopted much earlier. Moreover, he heavily criticized Merkel for giving in at the EU Summit.

 

Nevertheless, the Social Democrats will vote in favour of the bills because “Europe is more important to us than the party political profiling,"[91] Gabriel said. According to him, Germans "are the net winners of the European Union!" and that’s why we have an obligation to return some of our money.[92] The parliamentary group the Greens (Bündnis 90/Die Grünen) repeated Gabriel’s accusation towards the government.

 

Dagmar Enkelmann from the parliamentary group the Left (Die Linke) as one of the opposition parties, criticized the government for not giving the parliamentarians more time to decide about the EU measures. That the government ignores this demand is the "arrogance of power" and renders the legislative process into “bullshit”. Sarah Wagenknecht, also from the Left, called the government “puppets”[93] of the banks, the ESM a “grave of billions of Euro” and Merkel the “gravedigger of the Euro.”[94]

 

 

III. Voting Behavior

 

The Bundestag consisted of 620 MPs at that time whereas the governing coalition of Christian Democrats (CDU/CSU) and Liberals (FDP) had 330 seats in total. An absolute majority could be reached with 311 votes. A 2/3 majority could be reached with 414 votes.[95] After the second plenary session, the parliamentarians voted on the five federal bills adopting the Fiscal Compact, the ESM Treaty and the Article 136 TFEU amendment. Most of the votes were conduced as roll-call vote which usually happens when the Bundestag has to decide on controversial issues.

 

In the end, the necessary 2/3 majority was reached but the governing coalition missed the so-called ‘Kanzlermehrheit’ in the Bundestag when voting on the Fiscal Compact Law, the ESM-Ratification Law and the ESMFinG. A ‘Kanzlermehrheit’ would have been reached if all members of the governing coalition, consisting of all MPs from the Christian Democrats (CDU/CSU) and the Liberals (FDP), would have voted for the bills. Although the ‘Kanzlermehrheit’ was not necessary, it was negatively commented on in the media coverage the subsequent day.[96]

 

At first, the Fiscal Compact Law was voted on with a roll-call. The adoption of this bill required a 2/3 majority according to Article 23 (1) in conjunction with Article 79 (2) GG which was finally reached. 604 members of the Bundestag casted their vote, 491 parliamentarians voted in favour of the bill, 111 voted against it and 6 MPs abstained.[97]

 

Second, the ESM-Ratification Law was voted on, for which the Federal Government also demanded a 2/3 majority (see question VIII.2). In the end, 604 MPs casted their vote, 493 parliamentarians voted in favour of the bill, 106 voted against it and 6 MPs abstained. Therewith, the required 2/3 majority was reached.[98]

Third, the ESMFinG, which only required a simple majority, was voted on through a roll-call vote. 603 MPs casted their vote, 497 parliamentarians voted in favour of the bill, 101 voted against it and 5 MPs abstained.[99] Hence, the bill was adopted with a 2/3 majority, although it only required a simple majority.

Fourth, the Act Amending the Federal Debt Management Law (BSWG) was voted on. It was adopted with a simple majority and voted on without a roll-call.[100]

 

Finally, the Law Amending Article 136 TFEU, which only required a simple majority, was voted on through a roll-call vote. 602 MPs casted their vote, 504 parliamentarians voted in favour of the bill, 97 voted against it and 1 MP abstained.[101] Hence, the bill was adopted with a clear 2/3 majority, although it only required a simple majority.

 

The same day, all five federal bills were adopted by the Bundesrat. However, due to pending cases at the FCC the bills were not immediately signed by Federal President Joachim Gauck but only on 13 September 2012 and announced in the Federal Law Gazette on 18 September 2012.

 

IV. Federal President’s signature

 

In June 2012, several constitutional complaints against the bills ratifying and adopting the Fiscal Compact, the ESM Treaty, and the Article 136 TFEU amendment led to a deferral of the legislative procedure. On 29 June 2012, all five laws described above were adopted by the Bundestag and Bundesrat. One day before, on 28 June 2012, the FCC had asked Federal President Joachim Gauck to wait signing the laws due to the constitutional complaints which had not been decided at that time.

 

The signature of the Federal President is the last constitutional requirement of the ratification process of a German law. Article 82 (2) GG determines that “[l]aws enacted in accordance with the provisions of this
Basic Law shall, after countersignature, be certified by the Federal President and promulgated in the Federal Law Gazette.“ Federal President Gauck accepted the request of the Bundesverfassungsgericht by saying that he “intends to respect this request [of the Bundesverfassungsgericht] in accordance with the established state practice between German constitutional organs and out of respect for the constitutional court.”[102].

 

On 12 September 2012 the Bundesverfassungsgericht did not see sufficient concerns regarding the constitutionality of the German laws adopting the three EU resuce measures that it would issue an interim order. As a result President Gauck signed the laws adopting and ratifying the Fiscal Compact, the ESM Treaty, and the Article 136 TFEU amendment on 13 September 2012. They entered into force on 19 September 2012.

 

Case law           
V.4
Is there a (constitutional) court judgment in Germany on the 136 TFEU Treaty amendment?

I. Judgment on 19 June 2012 (ESM Treaty, Euro-Plus-Pact)

 

1. Name of the Court

 

Bundesverfassungsgericht/German Federal Constitutional Court (FCC)

 

2. Parties

The applicant in this constitutional court proceeding was the parliamentary group the Greens (Bündnis 90/Die Grünen), represented by its chairpersons Renate Künast and Jürgen Trittin. The respondent was the Federal Government of Germany, represented by Chancellor Angela Merkel.

 

3. Type of action/procedure

The proceeding was an Organstreit pursuant to Article 93 (1) No. 1 GG in conjunction with §§ 13 No. 5, 63 et seq. German Federal Constitutional Court Act (Bundesverfassungsgerichtsgesetz, or briefly BVerfGG).

 

4. Admissibility & Arguments of the parties

 

The applicant claimed that the Government had infringed the parliamentary rights to participation laid down in Article 23 (2) GG since it has neither sufficiently nor in good time informed the parliament about the negatioations concerning the ESM and the Euro Plus Pact. The constitutionally guaranteed rights of the German Bundestag are concretised in §§ 4 et seq. of the ‘Act on Cooperation between the Federal Government and the German Bundestag in Matters concerning the European Union’ (EUZBBG). These provisions provide that the government informes the Bundestag in matters concerning the EU at the earliest possible date. The obligation to give the German Bundestag comprehensive information is intended to put the Bundestag in the position to exercise its rights of participation effectively, and it therefore also covers preparatory papers of the European Commission and the Council, including unofficial documents.

 

ESM-Treaty (TESM)

In the view of the applicant, the government failed to inform the Bundestag in the period before and after the meeting of the European Council of 4 February 2011 comprehensively, at the earliest possible date and at regular intervals of the structuring of the ESM. In addition, the government did not send the TESM-draft at the latest on 6 April 2011 which – in the view of the applicant – constituted a further infringement of the obligation to inform parliament.

 

Euro Plus Pact

The applicant also argued that the instruments of the Euro Plus Pact extend the right of supranational surveillance of Articles 121 and 126 TFEU. In light of the content and the procedures which are recognisably based on Article 121 TFEU, the Euro Plus Pact is a European matter in the sense of Article 23 (2) GG. Pursuant to § 5 (2) EUZBBG, the Federal Government is obliged to inform the German Bundestag of the government’s initiatives by sending comprehensive documents and information at the earliest possible date. The Euro Plus Pact has its origin in a German-French initiative of 4 February 2011. This initiative was introduced to the European Council by the Federal Chancellor Merkel together with the President of France, M. Hollande, without the German Bundestag having been informed of it in advance. The requirement of comprehensive information at the earliest possible date excludes the possibility of informing the German Bundestag only after the event. In this respect, a German initiative is only possible after a consultation between the government and the parliament. Describing the initiative as a “personal” initiative of the Federal Chancellor would circumvent the obligation to inform under Article 23 (2) sentence 2 GG. The Federal Government also breached its duty to inform the German Bundestag in the further course of the negotiation process on the Pact – argued the applicant.

 

The Bundesverfassungsgericht decided that the applications are admissable. In general, parliamentary groups such as the applicant are entitled to claim infringements of the Bundestag as a whole by using the legal construction of representative action. This instrument is a mechanism to safeguard the control function of the parliament and the parliamentary minority rights. Applications are, however, restricted to infringements of constitutional rights of the Bundestag which is why legal provisions of statutory law can only be invoked as far as they reflect constitutional obligations of the government. The applicant’s need for legal review is not excluded because the government has made good its omission to inform the Bundestag. The procedure aims at objectively determining infringements of constitutional rights and does not depend on the on-going existence of an infringement. It’s function is also to publicly announce constitutional violations caused by a constitutional organ.

 

5. Legally relevant factual situation

 

None.

 

6. Legal questions & Arguments of the parties

 

The Federal Government as respondent argued that the planned ESM is an international financial construction outside the EU-framework and therefore it is not a European matter within the meaning of Article 23 (2) GG. In the case of actions under international law outside the framework of the supranational European Union, the German Bundestag has a right of final decision under Article 24 GG and/or Article 59 (2) GG, and therefore the need for comprehensive information is not of the same intensity.

 

ESM

In addition, the Federal Government was of the opinion that it had always informed the German Bundestag on the negotiations concerning the ESM comprehensively and at the earliest possible date. Committees of the Bundestag were regularly informed orally, the Committee on European Affairs was provided with a term sheet on the principles of the ESM as a room document and the German Bundestag received a document as early as 23 March 2011 which summarised the ideas on the ESM discussed at the meeting of the European Council on 24/25 March 2011. On 18 May 2011, the chairpersons of the Budget Committee and the Committee on the Affairs of the European Union received the English version and an unofficial German translation of the TESM-draft.

 

Euro Plus Pact

In the view of the Federal Government the Euro Plus Pact is not a European matter within the meaning of Article 23 (2) GG because it is merely intended to supplement the coordination mechanisms provided for in European Union law (in particular Article 121 TFEU) in areas of economic and social policy, which are completely in the competence of the Member States. The goals to be agreed are without exception voluntary self-commitments on an intergouvernmental basis. Notwithstanding this, the Federal Government has always informed the German Bundestag of the Euro Plus Pact at an early date, comprehensively and at regular intervals. The Federal Government had no obligation to provide information on the deliberations in the Federal Government or between the Federal Government and the French government, which were as yet not agreed on, at an earlier date than it did so. Nor is there a duty to give information on the internal forming of decisions which is not yet completed.

 

7. Answer by the Court to the legal questions and legal reasoning of the Court

 

The Bundesverfassungsgericht’s reasoning took into account the Federal Government’s argument that the ESM and the Euro Plus Pact are not European matters in the sense of Article 23 (2) GG. It interpreted this provision of the Basic Law and ruled that agreements under international law, irrespective of whether they are directed towards a formal amendment of the treaty foundations of the European Union (Article 23 (1) sentence 3 GG), are European Union matters if they supplement, or stand in another particular proximity to, the law of the European Union. It cannot be determined on the basis of a single and at the same time clear-cut characteristic when such a relationship exists. Instead, the crucial factor is an overall consideration of the circumstances, including planned contents, objectives and effects of the legislation, which, depending on their respective weight, may be decisive individually or collectively. Article 23 (2) GG is therefore intended to give the Bundestag sufficient time for a decision as to whether and, if so, how it wishes to participate in the national development of informed opinion. This question arises not only with regard to participation in law-making within the meaning of Articles 288 et seq. TFEU, but also for other initiatives and proposals which are important for the development and the actions of the European Union.

 

The Court added that it is also of importance for the interpretation and handling of Article 23 (2) sentence 2 GG that the obligation to inform serves not only to make possible the rights of participation of the German Bundestag under Article 23 (2) sentence 1 GG. At the same time it guarantees on a national level that the German Bundestag can fulfil the duties allocated to it in Article 12 TEU and in Articles 1 and 2 of the Protocol on the role of the national parliaments in the European Union and in Article 4 of the Protocol on the application of the principles of subsidiarity and proportionality. The interpretation and application of Article 23 (2) GG must further take account of the fact that this provision also serves the public nature of the parliamentary process, which is firmly founded in the principle of democracy. In the European context, the public parliamentary forming of decisions at the same time increases the responsiveness of European decisions to the interests and convictions of the citizens. It is only the public nature of deliberation which creates the conditions for review by the citizens. This also applies where parliamentary deliberation, whether in a participatory or a supervisory role, relates to the decision process. Parliamentary responsibility to the citizens is the essential condition for the effective influence of the people on the exercise of state power which is called for by Article 20 (2) sentence 2 GG. Limits to the obligation to inform follow from the principle of separation of powers. The system of functions of the German Constitution proceeds on the basis that the government has a core area of specifically executive responsibility which includes an area of initiative, consultation and action which is fundamentally confidential. Such a confidential core area is recognised by the Bundesverfassungsgericht in connection, for example, with the investigations of parliamentary committees of inquiry and with parliamentary rights to ask questions. In relation to the way in which information must be given to the Bundestag, the Bundesverfassungsgericht highlighted that Article 23 (2) sentence 2 GG provides that the provision of information to the Bundestag must, with regard to the facts, be comprehensive, with regard to time, occur at the earliest possible date, and be structured in a manner appropriate to its purpose.

 

After having clarified the standards the Bundesverfassungsgericht held the applications as well-founded. The Federal government had violated the rights of the German Bundestag under Article 23 (2) sentence 2 GG both with regard to the establishment of the European Stability Mechanism and with regard to the agreement to the Euro Plus Pact.

 

ESM-treaty (TESM)

The Bundesverfassungsgericht made it clear that the ESM is an European Union matter in the sense of Article 23 (2) sentence 1 GG. According to the Bundesverfassungsgericht an overall survey of the ESM’s dominant characteristics shows substantial points of contact with the integration programme of the European treaties. The establishment of the ESM is to be made possible and guaranteed under EU law by an amendment of the Treaty on the Functioning of the European Union. The insertion of Article 136 (3) TFEU which is planned in this connection must be made by a treaty amendment under Article 48 TEU.

 

In addition, a number of bodies of the European Union are allocated new competences by the TESM. Together with the International Monetary Fund and in consultation with the European Central Bank, the European Commission determines the actual financing requirements of the Member State benefiting. Authorised by the Board of Governors, the European Commission negotiates a macro-economic programme of adjustment and monitor compliance with the political conditions, again with the International Monetary Fund and the European Central Bank, which already work together in conducting the debt sustainability analysis. Article 13 (1) of the TESM-draft also provides that the Chair of the Board of Governors may assign duties to the European Commission. If the borrower remains a debtor of the European Stability Mechanism after the termination of the programme, the Board may order continuing surveillance. After discussion by the Board of Governors, it may, on the proposal of the Commission, resolve to carry out surveillance after the programme is completed; this may be continued as long as a specific amount of the financial aid has not yet been repaid. Finally, under Article 273 TFEU, the European Court of Justice is to decide on the interpretation and application of the Treaty on the European Stability Mechanism.

 

In the view of the Bundesverfassungsgericht, the allocation to European Union matters is not called into question by the fact that the ESM only calls on the bodies of the European Union by way of Organleihe. Substantively, in this way further duties and powers are transferred to the bodies, albeit not in the procedure actually intended for this under Article 48 (1) TEU. Every allocation of duties and powers to the European Union and/or its bodies is therefore substantively a transfer of sovereign powers, which is even the case if the bodies are called on to carry out a duty and are granted powers “only” by way of Organleihe.

 

Finally, the Bundesverfassungsgericht decided that the ESM is to serve to safeguard an area of policy which is allocated to the exclusive competence of the European Union. The TESM-draft supplements the economic and monetary policy. With the addition of a paragraph 3 to Article 136 TFEU, which subjects financial aid to strict conditions and permits the ESM to act only when it is indispensable to stabilise the currency area as a whole (Article 3 of the TESM-draft), a link is made to the economic and monetary policy laid down in Title VIII of the European Treaties (Article 119 et seq. TFEU) and it is made clear that the provisions are intended to safeguard the monetary policy and in particular the stability of the euro currency area. In this way an area of policy is supplemented, which the Treaty on the Functioning of the European Union places in the exclusive competence of the European Union (Article 3 (1) letter c TFEU). The ESM therefore directly serves to realise the objectives of the European Union (Article 3 (4) TEU).

 

The fact that the ESM is to be established under a separate agreement under international law outside the previous structure of EU law does not alter this result – argued the Bundesverfassungsgericht. In their view, the wording “European Union matters” also includes projects which are to be realised intergovernmentally if they are in a supplementary relationship or another relationship of particular proximity to European Union law. At least because of its blending with supranational elements, the ESM has a hybrid nature, which makes it a European Union matter.

 

The fact that an European Union matter is concerned, makes it necessary that the German Bundestag is informed. The Bundesverfassungsgericht emphasized the importance of this obligation: In view of the complexity and the importance of the ESM for the overall budgetary responsibility of the German Bundestag, it is necessary for the German Bundestag to be involved in a manner which puts it in the position – including specifically in public debate – to critically consider the topic in detail and to clarify the necessity and scope of the measures to be adopted. Only in this way can it be guaranteed that the German Bundestag is the place which makes decisions on revenue and expenditure on its own responsibility, including decisions with regard to the obligations associated with the ESM. The Bundesverfassungsgericht underlined that it is important that strict requirements with regard to quality, quantity, timeliness and usefulness of the information on the negotiations on the ESM which follow from the requirement of comprehensive information at the earliest possible date are respected by the Federal Government. The information must in particular comprise the complete forwarding of the official materials and documents of all bodies and other groups and authorities of the EU and other Member States. The Federal Government must also send information on informal processes and on those not documented in writing, as well as information on the subject, course and results of the meetings, and deliberations of all bodies and groups of the EU in which it is represented, plus information on bilateral and multilateral actions of Members States on the level of international law. Last but not least, Article 23 (2) sentence 2 GG requires the Federal Government to inform the German Bundestag about its own initiatives and positions in European Union matters relating to the ESM. This is the only way to prevent the German Bundestag from finding itself in the role of merely following along.

 

The Bundesverfassungsgericht decided that the German Federal Government had failed to comply with the information obligation of Article 23 (2) sentence 2 GG in two cases concerning the ESM. First, the Federal Government did not send the German Bundestag a text of the European Commission which was in its possession on 21 February 2011 on the establishment of the ESM; this text was the subject of the deliberations on the elements of the Stability Mechanism in the Council. Second, the draft-TESM had not been sent to the German Bundestag by the Federal Government at the earliest possible date.

 

According to the Bundesverfassungsgericht later oral or written information which at this date had already been discussed in the extended Eurogroup, does not alter the fact that there was a violation of Article 23 (2) sentence 2 GG. The Federal Government has an obligation to send to the Bundestag not merely a treaty text the deliberations on which have been completed or which has even already been decided. It must send the Bundestag at the earliest possible date interim results and text versions in its possession, such as the draft-TESM dated 6 April 2011. The fact that drafts are changed and therefore updates are necessary, and that such information therefore may have “a short half-life”, does not justify deferring written information until a date at which the results have already been reached. The fact that the two documents might have been confidential, does not remove the requirement to forward them. In particular, the Federal Government may not invoke fundamental confidentiality in the specific format of the extended Eurogroup, which meets informally. Negotiations preceding agreements under international law which are aimed at binding the Federal Republic of Germany and which are intended to be given the status of law are from the outset not confidential vis-à-vis the Bundestag. If, under exceptional circumstances, there were reasons for keeping individual information or documents confidential from the public, the Federal Government would have a duty to send the documents to the German Bundestag with an indication that they must be handled confidentially. The Bundestag created the conditions for this when it adopted its Rules on Document Security.

 

Euro Plus Pact

The Bundesverfassungsgericht began its reasoning about the Euro Plus Pact by stating that agreeing on the Euro Plus Pact is a European Union matter within the meaning of Article 23 (2) sentence 2 GG. An overall survey of its characteristics shows that the Pact has substantial points of contact with the integration programme laid down in the European treaties. The very circumstance that the Euro Plus Pact or the earlier initiative to decide on a Competitiveness Pact is directed at the EU-Member States indicates that it is directed towards the European Union integration programme. Substantively, in view of the objectives of the Pact to achieve a qualitative improvement of economic policy and the public budget situation and to reinforce financial stability, the Pact is directed towards a policy area of the European Union laid down in the European treaties. Bodies of the European Union are involved in the realisation of the objectives of the Pact, as is already shown by the planned annual assessment by the European Commission, the Council and the Eurogroup of the reform and stability programmes undertaken by the Member States of the Euro Plus Pact to fulfil their self-commitments. There is also a substantive point of contact with the European Union integration programme in the partial implementation of the Euro Plus Pact by provisions of secondary legislation. Thus, for example, Regulation (EU) No 1175/2011 of the European Parliament and of the Council of 16 November 2011 amending Council Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, which was adopted as part of the “Six-Pack”, increases the “extent of review” of the European Semester, which it made part of secondary legislation, to the objectives of the Euro Plus Pact, too.

 

This is why – following the Bundesverfassungsgericht – the Federal Government also had to inform about the negotiations about the Euro Plus Pact. Specifically the self-commitments in areas which are under the legislative competence of the Member States, such as for example tax law and social welfare law, and in which the legislature will in future be subject to surveillance by bodies of the European Union, relate to parliamentary responsibility and are capable of restricting the legislature’s options. The Bundestag had a strong interest in learning in advance about, discussing and participating in the decision as to whether and if so in what areas a coordination should be promised and what assessment criteria should be envisaged.

 

The Bundesverfassungsgericht defined the cases in which the Federal Government had failed to comply with this information obligation: The Euro Plus Pact originated in a German-French initiative which the governments of both Member States made the subject of the meeting of the European Council of 4 February 2011 and which the Federal Chancellor, together with the French President, presented to the public at this meeting. The Federal Government should have informed the German Bundestag of this plan at the latest on 2 February 2011. If – as the Federal Government asserts – before 4 February 2011 there was not yet a finally agreed position on the envisaged contents of an increased economic policy coordination in the euro currency area within the Federal Government, this fact would not have released the Federal Government from its obligation to inform. In this case, the subject of the necessary information was not (yet) the agreement on a Competitiveness Pact as such, but solely the respondent’s intention to initiate a process to draft it (§ 5 (2) sentence 1 EUZBBG). On this subject, the government spokesman had, at the press conference of 2 February 2011, announced an agreed position of the Federal Government. The forming of decisions within the Federal Government was therefore completed to the extent that it could present its initiative to the public and intended to enter a process of consultation with other governments with its own position. The Federal Government therefore had an obligation to inform the German Bundestag before the beginning of the meeting of the European Council of at least the fundamental outlines of the initiative (§ 5 (5) sentences 1 and 2 EUZBBG).

 

In addition, the Federal Government did not send to the German Bundestag an unofficial document from the Presidents of the European Commission and the European Council of 25 February 2011 entitled “Enhanced Economic Policy Coordination in the Euro Area – Main Features and Concepts”, which described essential contents of the Competitiveness Pact – later the Euro Plus Pact. Despite express request, the respondent did not supply the German Bundestag with this document (§ 5 (3) EUZBBG). It was only on 11 March 2011 that it forwarded the official draft of a Competitiveness Pact. At this time, the German Bundestag no longer had an opportunity to discuss its contents and to influence the Federal Government by an opinion, because the heads of state and government of the Member States of the euro currency area agreed on the Pact on the same date, 11 March 2011. As a result, from this date concrete self-commitments came into being, for the Federal Republic of Germany and other Member States, without the German Bundestag having been able to influence their contents or to prevent them.

 

8. Legal effects and & broader political implications of the judgment

 

No legal effects which go beyond the reasoning of the Court. The judgment reminded the Federal Government of its information obligations towards the Bundestag which will propably be taken more into account in future negotiations in EU matters.

 

II. FCC Preliminary Ruling on 12 September 2012 (ESM Treaty, Fiscal Compact, Article 136 TFEU Amendment)

 

On 12 September 2012, the FCC rejected the applications to issue an interim order which interdicts the German Federal President to sign the national laws ratifying and adopting the Fiscal Compact, the ESM Treaty, and the Article 136 TFEU amendment.

 

1. Name of the Court

 

Bundesverfassungsgericht/German Federal Constitutional Court (FCC)

 

2. Parties

 

On the side of the plaintiffs were several individuals (about 12.000) and the parliamentary group of the Left (Die Linke). In the framework of this proceeding the laws were defended by the German Bundestag and the German Federal Government.

 

3. Type of action/procedure

 

This decision was initiated by several constitutional complaints and an organstreit proceeding by the parliamentary group the Left (Die Linke). The Bundesverfassungsgericht combined all of them for joint decision.

 

4. Admissibility & Arguments of the parties

 

The individual plaintiffs argued that the respective laws infringe their fundamental right to vote for the German Bundestag (Article 38 (1) in conjunction with Article 79 (3), Article 20 (1), (2) GG). Some of them also claimed that the laws would infringe the right to equality before the law (Article 3 (1) GG), the right to property (Article 14 (1) GG) and the right to resist (Article 20 (4) GG).

 

The parliamentary group the Left (Die Linke) argued that the German laws would infringe rights of MPs and of the Bundestag (Article 38 (1) sentence 2 GG in conjunction with Article 20 (1) and (2), Article 23 (1) and (2), Article 79 (3) and Article 23 (2) sentence 1 GG).

 

In the view of the plaintiffs, it is necessary to issue an interim order because the ratification of the Treaties would bind the German State on the international level which would lead to an irreversible status.

 

The German Federal Government represented the opposite point of view. Following their argumentation, it would have massive negative consequences if the German ratification of the ESM – being the most important because of the capital contribution of 27 % – would be delayed.

 

The German Bundestag was of the opinion that the complaints based on Article 3 (1), Article 14 and Article 20 GG are not admissible. The same applies to the complaints against the German law requiring approval for the Article 136 TFEU amendment.

 

The Bundesverfassungsgericht decided that it must make a summary review of the complaints at an early stage because the ratification of the Treaties in question would bind Germany as a state which could not be withdrawn in case of non-compliance with the German Constitution. Such a procedure is necessary if infringements of subjects of protection in the sense of Article 79 (3) GG (basic principles of the German Constitution and fundamental rights) are at stake. The Court added that economic and political disadvantages which may arise from a delayed entry into force of the challenged statutes may be of great weight, but at the same time they cannot be weighed against democracy which is the interest protected by Article 79 (3) GG.

The Court declared that the complaints arguing that the respective laws infringe the rights laid down in Article 38 (1), Article 20 (1) and (2) GG in conjunction with Article 79 (3) GG are admissible because it is possible that the laws take incalculable risks, shift democratic decision processes to the supranational or intergovernmental level and that it is no longer possible for the German Bundestag to exercise overall budgetary responsibility. The other complaints were inadmissible because of the following reasons:

  1. Article 3 GG (right to equality before the law)

The plaintiffs could not plead that their right to equality is infringed by the personal immunity of office holders laid down in Article 35 TESM. The plaintiffs assert a general claim to the enforcement of a statute. Such a claim can be derived neither from the general principle of equality before the law nor from Article 19 (4) GG or Article 2 (1) GG.

  1. Article 14 GG (right to property)

The right to property can only be invoked against financial and economic decisions if a clear reduction of monetary value is likely to follows from such a decision.

  1. Article 20 (4) GG (right to resist)

This right is a subsidiary exceptional right which cannot be asserted in cases such as the present one.

  1. Article 38 (1) sentence 2 (right of MPs)

As far as the plaintiffs refer to Article 38 (1) sentence 2 GG claiming that the simplified treaty amendment procedure infringed their rights as MPs because they would have the right to participate in a convent which decides about the amendment, the FCC did not follow the plaintiffs argumentation. Since there is no norm in EU-law which determines that national parliaments have the competence to consultation concerning the choice of the treaty amendment procedure.

 

5. Legally relevant factual situation

 

None.

 

6. Legal questions & Arguments of the parties

 

The plaintiffs, the Bundestag as the respondent and the German Federal Government as joined respondent presented several arguments. They are presented in relation to the three EU-measures which were attacked.

 

a) Article 136 TFEU Amendment

In the view of the plaintiffs, the new paragraph 3 of Article 136 TFEU would obliterate the bail-out-prohibition in Article 125 TFEU which would limit the freedom to decide about budgets of national parliaments. Essential foundations of the Economic and Monetary Union would be eliminated. In addition, the new norm is completely indetermined – from their point of view. Furthermore, this amendment could not have been based on the Article 48 para. 6 TEU-procedure.

 

The German Federal Government countered that the amendment of Article 136 TFEU does not remove the no bail-out-clause but is rather a clarification of the existing legal situation. The measures of stability support are not measures of monetary policy but measures of economic policy, for which the Member States are competent.

 

The German Bundestag supplemented that Article 125 TFEU is not opposed to voluntary grant of assistance. The new paragraph would not establish a transfer union but is dominated by a strict proportionality principle which is why financial assistance under Article 136 (3) TFEU is only possible in sufficiently clear situations for a limited period of time. Moreover, the amendment would not enlarge the competences of the EU.

 

b) ESM

The plaintiffs argued that the ESM would not be in conformity with the basic principles of the Grundgesetz, in particular with the principle of democracy. Essential competences of the Bundestag in the field of budget autonomy would be transferred to an international institution because the ESM creates a liability automatism which cannot be turned back by the present or a future Bundestag. The liability volume goes beyond the degree which is constitutionally allowed. The obligations resulting from the ESM would also violate the debt brake (golden rule) of the German Constitution (Article 109 (3), Article 115 (2) GG). Moreover, the liability volume is not determined in the ESM-Treaty because the Treaty contains a clause (Article 9 (2) and (3), Article 25 (2) TESM) which obliges all Member States to make additional payments if one of the other Member States is bankrupt. Furthermore, in its Article 4 (8) the ESM-Treaty contains the possibility that voting rights of the Member States can be automatically removed which is a severe violation of the principle of democracy. The members of the ESM-organs are subject to a duty of professional secrecy (Article 34 TESM) which is not in conformity with the obligation to inform parliament laid down in Article 23 (2) GG – argued the plaintiffs. The non-terminability of the ESM-Treaty would also infringe the German Statehood (“Staatlichkeit”). Finally, the immunity of the members of the ESM-organs (Article 35 TESM) would infringe the right to equality before the law (Article 3 (1) GG).

 

In contrast, the German Federal Government was of the opinion that the overall budget responsibility of the German Bundestag is safeguarded because the Federal Finance Minister is sent to the Board of Governors and a Permanent Secretary to the Board of Directors of the ESM. The maximum amount for which Germany would be liable is approximately Euro 190 billion, so that there is no uncertainty about the risks which arise by becoming member of the ESM. In fact, the alternative to the ESM would not be without risks. The ESM would also not the beginning of transfer union. Long-term payments similar to financial equalisation remain out of the question.

 

The German Bundestag supported the point of view of the German Federal Government and added that the ESM contains clear conditions which burdens it creates. Most importantly, the ESM is of permanent nature, but the assistance measures are not. Even if all the paid in-capital given to the ESM by Germany would be devaluated, the burdens arising from this would merely increase German state deficit by approximately eight percentage points. The German parliament would still have enough latitude to take political decisions. Furthermore, abstaining from the ESM would lead to developments which would result in burdens for the present and for future budget legislatures which would be equally large or even larger. Finally, there would be no democratic deficit because all decisions must be approved by the Bundestag and the German representatives in the ESM-organs are under parliamentary scrutiny.

 

c) Fiscal Compact

Legal objections against the Fiscal Compact were raised by the plaintiffs because it would oblige the German State to keep the debt brake permanently. The obligations following from the Fiscal Compact would not make it necessary to change the German Constitution but it would receive a new legal quality. Furthermore, the automatic correction mechanism is an intervention into the German sovereignty. Article 4 of the Fiscal Compact obliges Germany to make an annual reduction of debt in the amount of Euro 26 billion. The plaintiffs argued that this is incompatible with Article 109 (3), Article 115 (2), Article 143d (1) GG and requires to change the German Constitution because the budget law governs only the reduction of deficit but not the reduction of public debt. Moreover, the budget autonomy is eroded because the European Commission is empowered to approve budget and economic programmes (Article 5 of the Fiscal Compact). Finally, the non-terminability of the Fiscal Compact is against the German Constitution because it involves an irreversible economic policy.

 

The German Federal Government replied that the Fiscal Compact does not create fundamental new obligations for Germany but must rather be seen as a concretization of regulations being already in force. This is why there is no material new restriction of the budget autonomy. Concerning the missing of a terminability-clause in the Fiscal Compact, the Government pointed to the fact that this is not unusual for international contracts. However, these contracts could be terminated, for example on the basis of Article 62 of the Vienna Convention on the Law of Treaties.

 

The German Bundestag agreed with the German Federal Government and, additionally, pointed to the fact that sanctions of the EU-institutions could only be addressed to the federal level and not to the Länder. By integrating the ECJ into the Fiscal Compact the Treaty would not transfer competences to another body with sovereign power. Article 8 of the Fiscal Compact merely grants the Court of Justice the competence with regard to compliance with Article 3 (2) of the Fiscal Compact to decide legal actions of the Contracting Parties and in the case of a violation to impose a penalty payment on a Contracting Party.

 

7. Answer by the Court to the legal questions and legal reasoning of the Court

 

The Bundesverfassungsgericht judged that the complaints against the German laws requiring approval for the Article 136 TFEU Amendment, the ESM-Treaty and the Fiscal Compact were – after a summary review – unfounded. The reasons are presented in relation to the three laws.

 

a) Article 136 TFEU Amendment

The Bundesverfassungsgericht was of the opinion that the amendment of Article 136 TFEU constitutes a fundamental reshaping of the existing economic and monetary union and that it is detached, if not completely, from the principle of independence of the national budgets which has up to now characterised the monetary union. Nonetheless, the introduction of the new paragraph 3 of Article 136 TFEU does not mean abandoning the stability-directed orientation of the monetary union. Article 136 (3) TFEU does not provide release from the obligation of budgetary discipline. Only in the field of exclusions of liability laid down in Article 125 (1) TFEU does the new norm introduce changes but they are restricted to the purpose of authorisation and the nature of the provision as an exceptional provision. The possibility of active measures of stabilization complements the existing rules aiming at stability of the monetary union. In this regard, the Court respects the latitude of assessment of other competent constitutional institutions which chose the model for stability after a risk assessment.

Furthermore, the new Article 136 (3) TFEU is based on a democratic decision because all national parliaments – including the German – will have to approve the amendment. The norm is also precise enough. Since it does not transfer sovereign competences from the national to the European level, the German Constitution does not require restrictive criteria.

 

b) ESM-Treaty

All in all, the Bundesverfassungsgericht declared that approving the German participation of the ESM would not violate the German Basic Law but in some cases this is only possible when Germany notifies before the ratification that only a certain interpretation of ESM-Treaty norms is valid.

 

The ESM-Treaty contains rules which would enable a higher amount of liability, in particular the competence to issue shares of the European Stability Mechanism’s authorised capital stock higher than at par (Article 8 (2) sentence 4 TESM), the competence to call in authorised capital (Article 9 (2) and (3) TESM) and the possibility of a revised increased capital call (Article 25 (2) TESM). The Court states that these rules must be interpreted in light of the general rule which determines the upper limit of liability obligations (Article 8 (5) sentence 1 TESM). This upper limit can never be exceeded by other measures in the framework of the ESM-Treaty. A higher sum of liability must be approved by national parliaments in the framework of an ESM-Treaty amendment.

 

The ESM-Treaty norms concerning the inviolability of all official papers and documents (Article 32 (5) TESM), the professional secrecy of the members of the ESM-organs (Article 34 TESM) and the immunity from legal proceedings (Article 35 (1) TESM) do not infringe the principle of democracy and parliamentary control because they do not exclude that national parliaments can and must be informed comprehensively. The Bundesverfassungsgericht highlights that Germany must make sure before the ratification that the German parliament receives all necessary information concerning decisions taken at the ESM-level.

 

The ESM-Treaty contains the suspension of Members’ voting rights if the respective Member State does not fully meet its obligations to make payment that it has vis-à-vis the European Stability Mechanism. In the view of the Bundesverfassungsgericht, this does not infringe Article 38 (1), Article 20 (1) and (2) GG in conjunction with Article 79 (3) GG because it belongs to the constitutional obligations of the Bundestag (Article 110 (1) GG) to make sure that the payments can be made on time and up to its full amount. As long as the Federal Republic of Germany fulfills its Treaty obligations, there is no threat that the German voting rights are suspended.

 

The total German sum of liability mounts up to Euro 190.024.800.000. This does not lead to a complete failure of budget autonomy even if one adds the obligations arising from the participation at the EFSF, the bilateral aid measures for the Hellenic Republic and the risks resulting from the participation at the ESCB and the IMF. It is within the legislators’ assessment to take risks which is not replaced by the FCC’s own evaluation of the risk assessment. Since the assumptions of the Government are not evidently erroneous, the German participation of financial assistance is not incompatable with the German Constitution.

 

The German Bundestag ’s overall budget responsibility is not impaired by the fact that there is no express right of resignation or termination. Since there is an upper limit for the liability sum, there is no need to include regulations about the resignation or termination.

 

The Court did not finally decide whether the rights of participation of the Bundestag were respected by the German laws requiring approval for the participation at the ESM. It highlighted that this question must not be checked in detail in this decision because it can be left to the main proceedings. The ratification of the ESM-Treaty does not exclude that national laws are changed in order to make sure that the parliamentary responsibility is respected. In the view of the Bundesverfassungsgericht, the ESM-Treaty itself does not exclude that national laws safeguard that national parliaments are informed about ESM-measures, that they control the national members of the ESM-organs and that they give instructions to them.

 

c) Fiscal Compact

In general, the Bundesverfassungsgericht was of the opinion that the rules of the Fiscal Compact correspond to those in the German Constitution. This is the main reason why there is no infringement of Article 38 (1), Article 20 (1) and (2) GG in conjunction with Article 79 (3) GG. The rules of the Fiscal Compact concerning the budget discipline partly conform to Article 109, 115 and 143d GG. The rules of the Fiscal Compact concretise the regulations about the national budgets in the European Treaties, in particular Article 126 TFEU.

 

Both the Fiscal Compact and the German Constitution require that the budget – in general – must be financed without loans. The structural compatibility of the rules is not upset by the fact that the German debt brake refers to the budgets of the Federal Government and the Länder while the European debt brake also includes the budgets of local governments and social security funds. The limited reasons for which a national budget can deviate from the aim of a balanced budget are also similar in the Fiscal Compact and the German Constitution. Moreover, there are procedures when European institutions – in particular the Commission – is involved in the planning of the national budget but there is no direct “reach-through” of the bodies to national budget legislation. The fact that the ECJ is competent to decide in Fiscal Compact matters does not include the control about the concrete application in the Member States but is limited to the codification of the Fiscal Compact rules in national law. The competence is comparable to the treaty violations proceedings. In its last paragraph the judgment mentions which possibilities exist to resign from the contract: The FCC refers to Article 62 of the Vienna Convention on the Law of Treaties which allows the withdrawal from an international treaty when there was a fundamental change of the circumstances which applied when the treaty was entered into. Additionaly, leaving the European Union or the Eurozone would also have the effect that the respective Member State would no longer be obliged by the Fiscal Compact rules.

 

8. Legal effects and & broader political implications of the judgment

 

No relevant effects and/or implications.

 

III. Judgment on 18 March 2014 (ESM Treaty, Fiscal Compact, Article 136 TFEU Amendment)

 

1. Name of the Court

 

Bundesverfassungsgericht/German Federal Constitutional Court (FCC)

 

2. Parties

 

The parties are the same as in the FCC Preliminary Ruling from 12 September 2012 (see above).

 

3. Type of action/procedure

 

The type of actions are the same as in the FCC Preliminary Ruling from 12 September 2012 (see above).

Though, in a court order from 17 December 2013 the FCC has separated the procedures which are related towards the decision of the ECB-Council concerning Outright Monetary Transactions (OMT) and the acquisition of government bonds at the secondary market.

In the course of the oral hearing, representatives of the European Stability Mechanism, the European Central Bank and the German Bundesbank were heard as expert third parties (§ 27a Federal Constitutional Court Act). The German Bundestag, the Federal President, the German Bundesrat, the Federal Governments and all Länder governments had the opportunity to submit statements.

 

4. Admissibility & Arguments of the parties

 

The individual plaintiffs referred to basic rights of the German Constitution, the parliamentary group to institutional provisions of the Grundgesetz. They used the arguments already mentioned in the Bundesverfassungsgericht’s Preliminary Ruling from 12 September 2012 (see above). However, in this proceeding additional arguments were presented.

 

In general, all of the plaintiffs using the constitutional complaint proceeding referred to Article 38 (1) sentence 1 GG in conjunction with Article 79 (3) and Article 20 (1), (2) GG. These provisions contain the democratically founded right to vote for the German Bundestag which is violated in their point of view by the fact that the power to take decisions of the Bundestag is severely limited by the financial obligations laid down in the national laws approving European fiscal agreements. In addition, individuals claimed the infringement of the right to equality (Article 3 (1) GG). Moreover, other plaintiffs referred to the right to property (Article 14 (1) GG) and the right to resistance (Article 20 (4) GG). One of their main argument was that the right to vote for the Bundestag is infringed because the European character of the assistance mechanisms makes it legally and factually impossible to influence the decisions taken at the European level which results in a substantial reduction of the Bundestag’s discretion and its democratic function in Germany.

 

The parliamentary group the Left (Die Linke) claimed that the laws in question infringe rights of the parliamentary group and of the Bundestag laid down in Article 38 (1) senence 2, Article 20 (1), (2), Article 23 (1), (2) and Article 79 (3) GG.

 

The Federal Government argued that the constitutional complaints are inadmissible to the extent that they challenge the division of tasks between the plenary and the budget committee as envisaged in the ESM Financing Act (ESMFinG). Based on Article 38 (1) GG, the Bundesverfassungsgericht had acknowledged the voters’ protection against the erosion of the right to vote in the form of a depletion of the Bundestag’s responsibilities through the delegation of powers to international or supranational institutions, but it did not give them the right to take action on behalf of the individual parliamentarians for their rights under Article 38 (1) sentence 2 GG – argued the Federal Government.

 

The German Bundestag supported the point of view of the Federal Government. With regard to the accompanying legislation on the ESM, in particular the division of competences between the plenary and the budget committee, the constitutional complaints are inadmissible. In their point of view, there can be no violation of the complainants’ rights under Article 38 (1) GG in conjunction with Article 20 (1) and (2) and Article 79 (3) GG in this context, which means that they are not entitled to lodge a constitutional complaint. Unlike the transfer of sovereign powers to the European Union, the division of responsibilities within the Bundestag cannot erode the substantive content of the right to vote under Article 38 (1) GG. An individual right of complaint against the allocation of competences in parliament is also incompatible with the German Bundestag ’s right to self-organisation.

 

The Bundesverfassungsgericht decided that the constitutional complaints are admissible to the extent that the complainants submit that through the Article 136 (3) TFEU amendment, the ESM, and Fiscal Compact, and through insufficient budgetary provision for the case of capital calls, incalculable risks are taken and democratic decision processes are shifted to the supranational or intergovernmental level, so that it is no longer possible for the German Bundestag to exercise its overall budgetary responsibility. The legal basis is Article 38 (1) sentence 1, Article 20 (1), (2) GG in conjunction with Article 79 (3) GG.

With regard to all other aspects, the constitutional complaints are inadmissible. The Bundesverfassungsgericht reasoned its decision with the fact that Parliament’s internal, functional allocation of responsibilities between the plenary of the Bundestag, its committees, and other subsidiary bodies cannot be challenged with a constitutional complaint. Regarding the complaint that Article 35 (1) TESM violates the general principle of equality before the law (Article 3 (1) GG) the Court stated that there is no objective justification for the personal immunity from jurisdiction which is granted to the office-holders of the ESM with regard to their official acts, which is why the complainants themselves suffer no adverse effects from this provision and their constitutional constraints are inadmissable.

Furthermore, there is no general right to have the laws enforced (“allgemeiner Gesetzesvollziehungsanspruch”), which can be derived neither from the general principle of equality before the law (Article 3 (1) GG) nor from Article 19 (4) GG or Article 2 (1) GG. To the extent that complainants claim a violation of their fundamental right under Article 14 (1) GG (right to property) with regard to inflationary developments as a result of the ESM and the accompanying legislation, they have not sufficiently substantiated their claims.

The claim of the complainants that their right under Article 20 (4) GG (right to resist any person seeking to abolish this constitutional order), which is equivalent to a fundamental right, has been violated, is inadmissible because they are not entitled to make such a claim. The right to resist any person seeking to abolish the constitutional order is a subsidiary, exceptional right which cannot be asserted in the very proceedings in which a judicial remedy against the alleged abolition of the constitutional order is sought.

Moreover, the complainants have not shown how and to what extent the implementation of the TARGET2-system could impair the overall budgetary responsibility of the German Bundestag, and thus their rights under Article 38 (1) sentence 1 GG. Also the alleged various omissions of German constitutional organs in regard to TARGET2 were inadmissible. The constitutional complaint is also inadmissible to the extent that it challenges measures of the European Central Bank in connection with the refinancing programmes of commercial banks because this claim has not been substantiated enough.

In the submission that the “Six Pack” violates the German Constitution, complainants did not state that their right to vote pursuant to Article 38 (1) sentence 1 GG has been violated by an interference with the constitutional identity protected under Article 79 (3) GG or by a failure of German state organs to react to qualified ultra vires acts. The general allegation that the six acts of secondary legislation of the “Six-pack” establish an economic government of the European Union neither suffices to substantiate that the right to vote is eroded because the German Bundestag loses indispensable powers to decide, nor to substantiate a possible right to a declaration that the European Union acted ultra vires.

To the extent that complainants challenge Regulation (EU) No 1176/2011, they did not sufficiently substantiate a possible violation of Article 38 (1) sentence 1 GG.

The application of complainants for a declaration that their rights have been violated by the Euro Plus Pact was also unsubstantiated.

 

The application in the Organstreit proceedings is only admissible to the extent that the applicant asserts that through the challenged legislative acts, the German Bundestag divests itself of its overall budgetary responsibility. Allocating a parliamentary obligation to a committee does not violate a right of the German Bundestag which the applicant could assert on its behalf via representative action, even if the allocation did not satisfy the constitutional requirements and therefore violated the principle of democracy. The principle of democracy, which is protected by Article 20 (1) and (2) GG, is not a right of the German Bundestag, not even to the extent that Article 79 (3) GG declares it inviolable

 

5. Legally relevant factual situation

 

In relation to the situation in Germany, there were no relevant facts regarding this decision which are legally relevant for the procedure or the reasoning of the court.

 

6. Legal questions & Arguments of the parties

 

All arguments of the parties are presented in relation to the European rescue measure concerned.

 

Article 136 TFEU

The complainants argued that the introduction of Article 136 (3) TFEU factually eliminates the no bail-out clause (Article 125 TFEU) and consequently the discretion of the national parliaments in budgetary questions. By introducing Article 136 (3) TFEU and, in the consequence, the ESM, the Monetary Union is fundamentally restructured into a community of comprehensive joint liability and stability, which is incompatible with Article 79 (3) GG. In addition, Article 136 (3) TFEU would deepen the connectedness of the euro currency area to such a degree that a federal state is created and Germany's statehood and sovereignty are largely terminated. This would violate the principle of democracy, the rule of law and the principle of a social state, as well as the guarantee of sovereign statehood, and at the same time Article 146 GG, because it paves the road to a further consolidation of the European Union, while the German people was not given an opportunity to approve this by voting on a new Constitution.

 

The Federal Government argued that Article 136 (3) TFEU merely clarifies that the assistance measures of the ESM are measures of economic policy, for which the Member States are competent, and that Article 136 (3) TFEU does not change the orientation of the monetary union. In addition, the financial assistance measures, which are subject to strict conditionality, are designed as a last resort to ensure the financial stability, and are thus compatible with Article 125 TFEU.

 

The German Bundestag was of the opinion that in the unanimous agreement of the Member States of the European Union, Article 125 TFEU does not prevent the voluntary granting of assistance. Article 136 (3) TFEU would clarify this once more and also be sufficiently precise. The provision would serve to safeguard the stability of the monetary union and specifically not make it possible to introduce a comprehensive liability and transfer union, but instead give selective authorisation for assistance measures for a limited period of time in a situation which is sufficiently clearly defined. In addition, it would respect the requirements of strict conditionality. Finally, Article 136 (3) TFEU would not expand the competence of the European Union.

 

ESM-Treaty (TESM)

The complainants argued in relation to the ESM-Treaty that it could – in conjunction with the ESM Financing Act – lead to incalculable burdens on the federal budget that are not controlled and accounted for by the Bundestag, and would thus be incompatible with the Bundestag’s overall budgetary responsibility. This would be true, in particular, because of the obligation under international law to possible capital increases and re-capitalisations which removes the Bundestag’s right to decide autonomously about such a question which is – in their point of view – an infringement of the principle of democracy. A further point was that capital calls pursuant to Article 9 (2) and (3) TESM can be made without the Bundestag’s approval. It would have no opportunity to influence the loss risks which follow from the operations of the ESM. It can only indirectly influence policy matters via the guidelines which the Board of Directors adopts.

In addition, the Bundestag would have no means of enforcing a conduct of the ESM institutions that adheres to these guidelines. With regard to the Director and alternate Director to be appointed by Germany, they are not bound by the decisions of the Bundestag in a sufficiently reliable manner, and their accountability to parliament is not sufficiently ensured. In order to do so, a permanent legal protection of Germany’s veto position in the institutions of the European Stability Mechanism would be necessary, which is not the case because other states can join the euro area and the ESM Treaty any time while Germany does not have a veto position against such an accession.

The plaintiffs also argued that the participation of parliament is not precisely enough regulated with regard to the issuance of shares of the capital stock of the ESM on terms other than at par pursuant to Article 8 (2) sentence 4 TESM.

Moreover, shifting decision-making powers from the plenary to the budget committee which the ESM Financing Act stipulates would violate the principle of holding meetings in public, a vital element of representative democracy covered by Article 79 (3) GG.

Furthermore, the provisions on immunity in Article 35 (1) TESM for the members of the ESM-bodies would lead to arbitrary and thus, with regard to Article 3 (1) GG, unconstitutional unequal treatment.

In addition, there must be – from their point of view – a guarantee in the German law safeguarding that awarding financial assistance is only permissible if the expression “indispensable to safeguard the financial stability of the euro area as a whole”, laid down in the ESM-Treaty, is interpreted in a narrow sence. This had not been the case in the assistance to Cyprus in 2013.

Moreover, it is seen as being not in conformity with the Grundgesetz that the German authorities take part in negotiations with Member States which applied for financial assistance and concluded a Memorandum of Unerstanding because in these cases the German Bundestag can no longer decide freely whether it wants to vote in favour or against such a decision. There is a fait accompli with regard to foreign policy and massive, inescapable pressure to approve for the Bundestag.

Furthermore, problematic constitutional effects are reinforced by the fact that the ESM Treaty contains no termination clause.

In addition, the complainants argued that the stability principle applying to monetary policy (Article 88 sentence 2 GG), which is based on the principle of a social state and laid down in the “debt brake” of Article 109 (3) and Article 115 (2) GG, is repealed. The principle of a social state would be violated because the social benefits and pension payments for Germans have to be cut.

The right to property under Article 14 (1) GG is also infringed from their point of view because Germany's financial obligations will lead to inflationary developments.

The complainants also criticized that it is not clear how the Federal Government can satisfy its duties to provide information pursuant to Article 23 (2) GG, given the duty of professional secrecy (Article 34 TESM) imposed on the members of the bodies of the European Stability Mechanism.

 

The Federal Government was of the opinion that the ESM Treaty does not constitute a transfer union in the sense of a European financial equalisation system; the overall budgetary responsibility of the German Bundestag would remain intact and the amount of German liability limited. Furthermore, the additional participation of the Bundestag in case of an accession of a new member of the ESM would be unnecessary because the accession would not expand the existing liability of the “old” ESM Members. The German law safeguards that the overall budgetary responsibility of the Bundestag is safeguarded and only in the exceptional constellation of a purchase of government securities, that has to be kept confidential, the plenary’s right of information is dispensed, and pursuant to § 6 ESMFinG, the decision is transferred to a special committee consisting of members of the budget committee. The implementation of the decisions of the Bundestag in the Board of Directors of the ESM would be guaranteed by posting a State Secretary to the Board who has to accept instructions by the Federal Government. The mere possibility that the German share could be reduced by future developments to the degree that Germany would lose its veto power does at least currently not lead to any interference with the principle of democracy- argued the German Federal Government. Currently, it would not be realistic that an accession occurs which reduces the German share dramatically and such an accession would need the unanimous approval of all Eurozone members.

 

The German Bundestag argued that its overall budgetary responsibility is not affected. For the most important decisions of the ESM, in particular for decisions pursuant to Article 10 TESM (increase of capital stock) and Article 13 (2) TESM (decision on the award of grants), the involvement of the plenary is provided. The parliamentary budget committee is only responsible for the less significant, more technical decisions below the threshold under the “Wesentlichkeitsdoktrin” (threshold relevant for the requirement of parliamentary approval). In addition, as far as internal organisation and procedures are concerned, the margin of appreciation of the German Bundestag has to be respected. Overall, the involvement of a democratically legitimised organ in internal procedures of the ESM goes – albeit for good reasons – beyond the standards for parliamentary scrutiny of public financial institutions at the national level. The possibility of issuing new shares of the ESM-capital would be unproblematic with regard to the overall budgetary responsibility because pursuant to Article 4 (7) TESM, the voting rights in the Board of Governors and the Board of Directors are based on the number – and not the value – of the shares which have been allocated to each party to the Treaty pursuant to Annex II of the ESM Treaty. Therefore, the weight of the German vote would not be affected. The possible suspending of voting rights (Article 4 (8) TESM) would also not affect the overall budgetary responsibility because the German budget law and its institutions are able to provide capital within the required time frame.

 

Fiscal Compact (TSCG)

Even though the Fiscal Compact did not introduce stricter rules than already contained in the German Constitution, the approval to such a treaty violates – in the view of the plaintiffs – the Constitution because it takes away the freedom to decide whether it wants to abolish rules such as the “debt brake”. The Fiscal Compact would introduce new unchangeable rules affecting the German Constitution. The Fiscal Compact would violate the fundamental right of all German citizens to decide on the Constitution because Germany is obliged to make an annual reduction of debt of Euro 26 billion which is incompatible with Article 109 (3), Article 115 (2), and Article 143d (1) GG and would require an amendment of the German Basic Law, because the budget law governs only the reduction of deficit but not the reduction of public debt. Another argument was that the loss of budgetary sovereignty lies in the fact that the parties that go through an excessive deficit procedure henceforth have to get their “budgetary and economic programs” approved by the European Union. This would result in a lasting loss of the Bundestag’s legislative discretion. The obligation to never remove the “debt brake” from the Constitution, without including it in the eternity clause, would violate the constitutional identity of the Basic Law.

 

In the view of the Federal Government the (European) limitation of government borrowing would be compatible with the Basic Law, since it only defines a framework to be filled by the Member States and this framework corresponds to the model of the German “debt brake”. The proposals, which the European Commission is to make pursuant to Article 3 (2) TSCG, on common principles for national correction mechanisms and on the time-frame for convergence towards the medium-term budget objective under Article 3 (1) letter b sentence 3 TSCG are merely interpretation guidelines putting the provision in specific terms. The indefinite duration of the Treaty would not be a violation of the German Constitution. A treaty entered into for an indefinite period of time may be terminated at any time by all contracting parties by mutual agreement. In addition, in the case of fundamental changes of circumstances, a party may withdraw from the treaty on the basis of Article 62 of the Vienna Convention on the Law of Treaties.

 

The German Bundestag added that due to the federal structure of the Federal Republic of Germany, the Treaty differs in some respects from the “debt brake” in the Basic Law, but these differences do not result in a substantially different legislative concept. The path to debt reduction provided in the Basic Law is defined by Article 143d (1) GG, while the Fiscal Compact leaves it to be put into specific terms by the European Commission. The Bundestag admits that it is not certain that the European Commission will ultimately decide on an identical path to debt reduction to that provided in the Basic Law; however, the Commission would have a duty to take into account country-specific risks and in this respect may orient itself towards the legal position of the Member State in question. From their point of view, it is true that Article 7 TSCG with its “reverse” rule on a qualified majority is an innovation, but this would have no constitutional relevance to the budgetary sovereignty of the national parliaments; the agreement on a particular voting behaviour would not modify the excessive deficit procedure in substance. There would also be no transfer of substantive legislative powers to other bodies with sovereign power. Article 8 TSCG merely grants the Court of Justice the power, with regard to compliance with Article 3 (2) TSCG, to decide legal actions of the Contracting Parties and in the case of a violation to impose a penalty payment on a Contracting Party.

 

Further arguments

An additional argument by the complainants was that by failing to work towards a change of the TARGET2-system and of the framework for the creation of money the plaintiffs’ right to participate in the legitimation of state power (Article 38 (1) GG) would be infringed. The constant growth of the TARGET2-balances would show that the system allows a Member State of the euro currency area to take out “overdraft loans” in unlimited amounts at the expense of other Member States to fund its own imports. The European System of Central Banks would violate the sovereignty of the Member States, and thus also the individuals’ right to vote, by expanding the money supply, in particular by granting loans at low interest rates while accepting insufficient collateral, and by the TARGET2 system.

The acts of secondary legislation contained in the so-called “Six-pack” and the Euro Plus-Pact would interfere with the complainants’ rights under Article 38 (1) GG because they introduce an economic government of the European Union over all Member States of the euro currency area. The Federal Republic of Germany thus would become a constituent state of the federal Union State and lose at the same time its fiscal, financial and economic sovereignty, and thus its sovereignty as a whole which would require the adoption of a new Constitution (Article 146 GG).

Regulation (EU) No 1176/2011 would lack an authorisation under primary law and it impermissibly would affect the inviolable economic and budgetary competence of the Bundestag by establishing a European economic government.

 

7. Answer by the Court to the legal questions and legal reasoning of the Court

 

The Bundesverfassungsgericht confirmed its prior judgments stating that Article 38 (1) GG is violated in particular if the German Bundestag relinquishes its budgetary responsibility with the effect that it or a future Bundestag can no longer exercise the right to decide on the budget on its own. It follows from the democratic basis of budget autonomy that the Bundestag may not consent to an intergovernmentally or supranationally agreed automatic guarantee or performance which is not subject to strict requirements and whose effects are not limited, and which – once it has been set in motion – is removed from the Bundestag’s control and influence. No permanent mechanism may be created under international treaties which is tantamount to accepting liability for decisions of other states, above all if they entail consequences which are hard to calculate. The German Bundestag cannot exercise its overall budgetary responsibility without receiving sufficient information concerning the decisions with budgetary implications for which it is accountable. The principle of democracy under Article 20 (1) and (2) GG therefore requires that the German Bundestag is able to have access to the information which it needs to assess the relevant background and consequences of its decision. Notwithstanding the principle of democracy, which aims at legal reversibility, it is not from the outset anti-democratic for the budget-setting legislature to be bound by a particular budget and fiscal policy. It is primarily for the legislature to weigh whether and to what extent, in order to preserve some discretion for democratic management and decision-making, one should enter into commitments regarding future spending behaviour and therefore – correspondingly – accept a restriction of one’s discretion for democratic management and decision-making in the present. In this context, the Bundesverfassungsgericht may not with its own expertise usurp the place of legislative bodies, which are first and foremost entrusted with this.

 

Article 136 TFEU amendment

The Bundesverfassungsgericht made it clear that Article 136 (3) TFEU neither starts a mechanism with financial effect, nor does it transfer budgetary authorisations to other actors. Article 136 (3) TFEU merely enables the Member States of the euro currency area to establish a stability mechanism to grant financial assistance on the basis of an international agreement. To this effect, Article 136 (3) TFEU confirms that the Member States remain the masters of the Treaties. The introduction of Article 136 (3) TFEU and the establishment of the ESM constitute a fundamental reshaping of the existing EMU because it detaches its concept, albeit to a limited extent, from the principle of independence of the national budgets which had characterised it before. This does not mean that the stability-directed orientation of the EMU is abandoned. Parts of the monetary union, which are essential under constitutional law, such as the independence of the ECB, its commitment to the paramount goal of price stability, and the prohibition of monetary financing of the budget, are unaffected. Article 136 (3) TFEU does not release the Member States from the obligation of budgetary discipline and it has clearly been designed as an exceptional provision.

 

ESM-Treaty (TESM)

The Bundesverfassungsgericht ruled that the German law ratifying the ESM-Treaty satisfies the requirements of Article 38 (1), Article 20 (1) and (2) GG in conjunction with Article 79 (3) GG. The absolute amount of the payment obligations does not exceed the ultimate limits which could, at most, be derived from the principle of democracy. In the view of the court, the legislature’s assessment that the payment obligations arising from the participation in the ESM do not lead to an effective failure of budget autonomy is at any rate not evidently erroneous and must therefore be accepted by the Bundesverfassungsgericht. With regard to the provisions on revised increased capital calls (Article 9 (2) and (3) sentence 1 in conjunction with Article 25 (2) TESM), it seemed possible at first to interpret the wording of the Treaty in a way from which a violation of the Bundestag’s overall budgetary responsibility could have been inferred. Such an interpretation was, however, effectively precluded by the joint interpretative declaration of the parties to the Treaty establishing the ESM of 27 September 2012 and the identical unilateral declaration of the Federal Republic of Germany.

Moreover, the necessary legitimation of ESM-decisions is ensured by the fact that they cannot be taken against the vote of the German representative in the bodies of the ESM. In case of accession of new Member States, the present majority requirements could be adapted in such a way that Germany’s present veto position, which is required under constitutional law, will also be maintained under changed circumstances. Pursuant to Article 44 TESM, accession to the ESM requires an unanimous decision by the Board of Governors. This enables, and if necessary, obliges the Federal Government to make its approval of an application for membership contingent on an amendment of Article 4 (4) sentence 2 and (5) TESM in order to safeguard the Bundestag ’s overall budgetary responsibility.

Article 32 (5), Article 34 and Article 35 (1) TESM, which stipulate the inviolability of all official papers and documents of the ESM and the professional secrecy and immunity of the members of its bodies and its staff, ultimately do not violate Article 38 (1), Article 20 (1) and (2) GG in conjunction with Article 79 (3) GG and the German Bundestag’s right under Article 23 (2) sentence 2 GG to be informed comprehensively and at the earliest possible date. They are to be interpreted in such a way that they do not stand in the way of sufficient parliamentary control of the ESM by the German Bundestag.

The possibility provided for in Article 8 (2) sentence 4 TESM of issuing shares of the ESM’s authorised capital stock on terms other than at par also does not stand in the way of the limitation of the amount of payment obligations. The Bundestag‘s overall budgetary responsibility can be affected by decisions pursuant to Article 8 (2) sentence 4 TESM if the issuance of shares in the capital stock higher than at par entails additional payment obligations. The Bundestag‘s overall budgetary responsibility, however, is at any rate ensured because a decision pursuant to Article 8 (2) sentence 4 TESM cannot be taken against the vote of the German representative in the competent ESM body.

The abstract possibility that the ESM might generate financial losses also does not impair the Bundestag’s overall budgetary responsibility. With regard to the question whether and if so, to what extent, losses can be expected to arise from the operations of the ESM, the legislature has a margin of appreciation which the Bundesverfassungsgericht must generally respect. Possible losses are the result of conscious decisions of the Bundestag because it can participate in the decision on the amount, on the terms and conditions, and on the duration of stability support in favour of Members seeking help, so that it can decisively influence the probability and the amount of possible later capital calls.

Concerning the possibility to suspend voting rights (Article 4 (8) TESM), the suspension of the German voting rights would – in the view of the Bundesverfassungsgericht – mean that the decisions taken in this period would not be legitimised and monitored by the German Bundestag. In order to avoid a suspension of voting rights, the Bundestag must not only include the Federal Republic of Germany’s share in the initial capital, which is set out in Article 8 (2) sentence 2 TESM, in the budget, but it must also comprehensively ensure to the extent necessary that in the event of calls pursuant to Article 9 TESM, if necessary in conjunction with Article 25 (2) TESM, it will be possible at any time to pay in Germany’s further shares in the authorised capital stock pursuant to Article 8 (1) TESM fully and in a timely manner. Therefore, the national institutions to pay the German participation sum must work efficiently and in a timely manner. This was assured by the German government and the Bundesverfassungsgericht accepted this factual statement. In addition, it highlighted that the German Budgetary Law allows for expenses which were not foreseen in the annual budgetary law in case of excess of budgetary appropriations or for purposes not contemplated by the budget (Article 112 GG). This ensures that Germany will be able to pay increases of the ESM so that the German voting rights are not suspended.

The fact that termination is not expressly provided for in the ESM-Treaty does not violate the overall budgetary responsibility of the Bundestag. The limitation of liability sufficiently ensures that the ESM-Treaty does not establish an automatic and irreversible procedure regarding payment obligations or liability commitments; therefore, it is not required to provide a special right of termination in the Treaty. Apart from this, it is possible for Members to withdraw even though there is no express regulation.

 

The provisions of the Act on the Treaty Establishing the European Stability Mechanism and the ESM Financing Act, at least if they are interpreted in conformity with the Constitution, also meet the requirements under Article 38 (1), Article 20 (1) and (2) GG in conjunction with Article 79 (3) GG regarding the way the German Bundestag’s rights to participate and opportunities to exert influence need to be designed in order to ensure democratic governance of the ESM and in order to ensure its overall budgetary responsibility. The Bundesverfassungsgericht clarified how certain provisions of the ESM Financing Act must be interpreted in order to safeguard that the parliamentary participation is sufficiently guaranteed. The rights to information of the German Bundestag contained in the ESM Financing Act satisfy the requirements of Article 23 (2) sentence 2 GG. The provisions of the ESM-Treaty, in particular Article 34 TESM, do not stand in the way of an information of the Bundestag in accordance with the requirements of Article 23 (2) sentence 2 GG. Under the aspect of democratic legitimation of the activity of the ESM, which Article 20 (1) and (2) GG requires, the structuring of Germany’s representation in the ESM-bodies is in line with this basic principle, in particular because the ESM Financing Act clearly assumes that the German representatives are bound by the decisions of the Bundestag and are accountable to it.

 

Fiscal Compact (TSCG)

The Fiscal Compact does not violate Article 38 (1), Article 20 (1) and (2) GG in conjunction with Article 79 (3) GG. Its essential content conforms to requirements of constitutional law (in particular Article 109, Article 109a, Article 115 and Article 143 GG) and of European Union law (in particular Article 126 TFEU). The competences of the European Commission following from the Fiscal Compact do not grant it authority to impose specific substantive requirements for the structuring of the budget. This follows in particular from the fact that the correction mechanism to be established pursuant to Article 3 (2) sentence 3 TSCG for the reduction of public deficit is subject to the reservation that the parliamentary prerogatives shall be respected. Nor can the Court of Justice of the European Union review the application of the correction mechanisms.

Due to the evaluation provision under Article 16 TSCG and the general rules of international law concerning the possibilities of terminating a treaty, the lack of an explicit right of termination in the Treaty is at any rate not objectionable under constitutional law.

 

8. Legal effects and & broader political implications of the judgment

 

The judgment confirmed the participation of Germany in the European rescue mechanisms. At the same time, the role of the Bundestag was strengthened which makes every new decision for financial assistance a highly political decision.

 

Miscellaneous
V.5
What other information is relevant with regard to Germany and the 136 TFEU Treaty amendment?

No relevant information.

 

[1] See European Council Decision 2011/199/EU, http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32011D0199&qid=1432554732168&from=DE

[2] See Deutscher Bundestag, printed matter No. 17/5094, 16 March 2011, p. 3, http://dipbt.bundestag.de/dip21/btd/17/050/1705094.pdf

[3] See Deutscher Bundestag, printed matter No. 17/5094, 16 March 2011, p. 9, http://dipbt.bundestag.de/dip21/btd/17/050/1705094.pdf

[4] See Deutscher Bundestag, printed matter No. 17/4880, 23 February 2011, p. 2,

[5] See for the catalogue of postulations Deutscher Bundestag, printed matter No. 17/4880, 23 February 2011, p. 2-3, http://dipbt.bundestag.de/dip21/btd/17/048/1704880.pdf

[6] See Deutscher Bundestag, printed matter No. 17/4881, 22 February 2011, http://dipbt.bundestag.de/dip21/btd/17/048/1704881.pdf

[7] See Deutscher Bundestag, printed matter No. 17/4883, 23 February 2011, http://dipbt.bundestag.de/dip21/btd/17/048/1704883.pdf

[8] See Deutscher Bundestag, printed matter No. 17/4882, 22 February 2011, p. 3, http://dipbt.bundestag.de/dip21/btd/17/048/1704882.pdf

[9] See Deutscher Bundestag, printed matter No. 17/4882, 22 February 2011, p. 2, http://dipbt.bundestag.de/dip21/btd/17/048/1704882.pdf

[10] Deutscher Bundestag, plenary protocol 17/188, 29 June 2012, p. 22747 et seq., http://dipbt.bundestag.de/dip21/btp/17/17188.pdf

[11] In German the title for this law is: Gesetz über die Wahrnehmung der Integrationsverantwortung des Bundestages und Bundesrates in Angelegenheiten der Europäischen Union (Integrationsverantwortungsgesetz, IntVG). The Law was adopted on 22 September 2009.

[12] Act on the financial participation at the ESM (ESMFinG): Deutscher Bundestag, printed matter 17/9048, 20 March 2012, http://dipbt.bundestag.de/dip21/btd/17/090/1709048.pdf; Act on the Decision oft he European Council about the amendment of Article 136 TFEU concerning a Stability Mechanism for the Member States whose currency is the Euro (Artikel 136-G): Deutscher Bundestag, printed matter 17/9047, 20 March 2012, http://dipbt.bundestag.de/dip21/btd/17/090/1709047.pdf; Act on the Treaty from 2 February 2012 for the establishment of the ESM (ESMG): Deutscher Bundestag, printed matter 17/9045, 20 March 2012, http://dipbt.bundestag.de/dip21/btd/17/090/1709045.pdf

[13] The German title of the law is: ‘Gesetzes zu dem Vertrag vom 2. März 2012 über Stabilität, Koordinierung und Steuerung in der Wirtschafts- und Währungsunion’.

[14] The German title of the law is: ‘Gesetzes zu dem Vertrag vom 2. Februar 2012 zur Einrichtung des Europäischen Stabilitätsmechanismus’

[15] The German title of the law is: ‘Gesetzes zur finanziellen Beteiligung am Europäischen Stabilitätsmechanismus (ESM-Finanzierungsgesetz – ESMFinG)’

[16] The German title of the law is: ‘Gesetzes zur Änderung des Bundesschuldenwesengesetzes’

[17] The German title of the law is: ’Gesetzes zu dem Beschluss des Europäischen Rates vom 25. März

2011 zur Änderung des Artikels 136 des Vertrags über die Arbeitsweise der Europäischen Union hinsichtlich eines Stabilitätsmechanismus für die Mitgliedstaaten, deren Währung der Euro ist’

[18] The German title of the law is: ‚Nachtragshaushalt 2012’

[19] During the Eurogroup meeting on March 30, 2012 it was decided that the EFSF would continue to be the official lending fund for Greece, Portugal and Ireland until June 2013. The combined lending capacity of the EFSF and the ESM is close to €700 billion. See Statement of the Eurogroup, March 30, 2012. Online available at http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/129381.pdf.

[20] See ESM Treaty, Article 8, par. 2.

[21] Two installments have to be paid after the enforcement of the ESM Treaty, another two installments have to be paid in 2012 and the final installment in the first half of 2014. See ESM-Treaty, Article 41 par. 1.

[22] Article 21, par.1 of the ESM Treaty specifies that the ESM can borrow outside capital through borrowing from capital markets, financial institutions and other persons for its purposes. This also included the ESM borrowing money through issuing ESM bonds to private investors, See ESM Treaty, Article 21, par. 1, ESM Borrowing Guidelines, October 9, 2012. Online available at: http://www.esm.europa.eu/pdf/ESM%20borrowing%20guidelines.pdf.

[23] See ESM Treaty, Article 8, par. 2.

[24] See de Witte, 2012, International Treaties on the Euro and the EU Legal Order, p. 9.

[25] See Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p.6.

[26] Deutscher Bundestag. Gesetzesentwurf der Fraktionen der CDU/CSU und FDP. Entwurf eines Gesetzes zu dem Beschluss des Europäischen Ratesvom 25. März 2011 zur Änderung des Artikels 136 des Vertrags über die Arbeitsweise der Europäischen Union hinsichtlich eines Stabilitätsmechanismus für die Mitgliedstaaten, deren Währung der Euro ist. Drucksache 17/9047. 20.03.2012, p.4.

[27] Deutscher Bundestag. Haushaltsausschuss, Protokoll Nr. 17/88, 88. Sitzung, 7.Mai 2012. Online available at: http://www.bundestag.de/bundestag/ausschuesse17/a08/anhoerungen/Fiskalpakt_und_ESM/088_Protokoll.pdf

[28] Bundesverfassungsgericht [BVerfG –Federal Constitutional Court], 2 BvE 4/11, June 19, 2012.

[29] See Bundesverfassungsgericht, Pressemitteilung Nr. 9/2014 of February 7, 2014. http://www.bundesverfassungsgericht.de/pressemitteilungen/bvg14-009.html

[30] The translation of the famous slogan is: „Hilfe zur Selbsthilfe leisten“.

[31] Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20210 C.

[32] See Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20210 D.

[33] See Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20211 B–p. 20212B.

[34] Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20211 A.

[35] See ZeitOnline,‘Euro-Zone erweitert Rettungsfonds auf 800 Milliarden’, 30.03.2012. Online available at: http://www.zeit.de/wirtschaft/2012-03/euro-rettungsfonds-ausweitung.

[36] See Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20217 C.

[37] Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20217 C.

[38] The coalition partner have repeately used this slogan in election campaigns („Sozial ist was Arbeit schafft“).

[39] Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20215 A.

[40] See Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p.20215-2016, See Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20223 A-C.

[41] Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20214 A.

[42] Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20214 A.

[43] Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20222 C.

[44] The full statement of Steinemer was: „Kein Cent für Griechenland – wir erinnern uns gut. Kein permanenter Rettungsschirm – wir erinnern uns gut. Auf keinen Fall Hebelungen – haben sie auch her am Podium gesagt. Und ganz sicher waren Sie sich: Keine Aufstockung des ESM. Keine dieser Zusagen hat länger als drei Monate Bestand gehabt. Aus Ihren roten Linien sind im Verlaufe der Diskussion in Wahrheit Wanderdünen geworden.“

[45] See Stern.de, ‘Merkel will mit noch mehr Geld den Euro retten’, 26.03.2012. Online available at: http://www.stern.de/politik/deutschland/efsf-und-esm-merkel-will-mit-noch-mehr-geld-den-euro-retten-1805287.html

[46] The argument goes as follows: The Compact changes Article109, 155, 143 GG without providing a cancellation option of the Compact, thus making the changed Articles in the GG irrevocable. As Article 79(3) GG determines only principles laid down in Article 1 and Article 20 to be irrevocable, the Fiscal Compact is unconstitutional. See Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20219 B-D.

[47] Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20220 A.

[48] See Deutscher Bundestag. Plenarprotokoll 17/172, 172. Sitzung, 29.03.2012, p. 20222 A.

[49] See Deutscher Bundestag. Antrag. Grundlegende Reformen der EU-Verträge umsetzen – Änderung von Artikel 136 des Vertrags zur Arbeitsweise der Europäischen Union verhindern. Drucksache 17/9148. 27.03.2012. Online available at http://dipbt.bundestag.de/dip21/btd/17/091/1709148.pdf.

[50] See statements of the opposition parties in the Budget Committee the ESM-Treaty: Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 6; see also statement of the parties in the opposition parties in Budget Committe on the Fiscal Compact: Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10171. 27.06.2012, p. 4-7.

[51] See Bundesregierung. Pakt für nachhaltiges Wachstum und Beschäftigung. Nummer 212/12. 21.06.2012. Online available at: http://www.bundesregierung.de/Content/DE/_Anlagen/2012/06/2012-06-21-wachstum-pakt.pdf;jsessionid=75422B17932C0932903BABA9340EB26D.s4t2?__blob=publicationFile&v=3.

[52] The bills necessary for the adoption of the ESM Treaty and the Fiscal Compact were forwarded to the Budget Committee. The Committee on the Affairs of the European Union was in charge of the bill for the Treaty amendment Article136(3) TFEU. Below, the modification of the bills will be explained in more detail.

[53] See Bundesregierung. Pakt für nachhaltiges Wachstum und Beschäftigung. Nummer 212/12. 21.06.2012, p.1.

[54] In a footnote, the Pact makes a reference to a EU Commission proposal suggesting a tax rate of 0.1 and 0.01 % per financial transaction.

[55] See Bundesregierung. Pakt für nachhaltiges Wachstum und Beschäftigung. Nummer 212/12. 21.06.2012, p. 2.

[56] See Bundesregierung. Pakt für nachhaltiges Wachstum und Beschäftigung. Nummer 212/12. 21.06.2012, p. 3-6.

[57] See Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 8.

[58] See Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 8/10.

[59] 17(8)4442 was introduced by BÜNDNIS 90/DIE GRÜNEN, 17(8)4410 by CDU/CSU and FDP and 17(8)4549 by the coalition parties and the SPD.

[60] See Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 9.

[61] See Law of May, 13 1012, Bundesgesetzblatt Teil I, 2012, Nr. 43, 18.09.2012 S. 1918. Online available at: http://www.bgbl.de/Xaver/stArticlexav?startbk=Bundesanzeiger_BGBl#__Bundesanzeiger_BGBl__%2F%2F*%5B%40attr_id%3D'bgbl112s1918.pdf'%5D__1376232252506.

[62] Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 11.

[63] See Law of May, 13 1012, Bundesgesetzblatt Teil I, 2012, Nr. 43, 18.09.2012 S. 1918.

[64] See e.g. Heribert Prantl, ‘Neun Hansel sind nicht das Parlament’, in: Süddeutsche.de, 28.10.2011. http://www.sueddeutsche.de/politik/euro-rettungsschirm-neun-hansel-sind-nicht-das-parlament-1.1175819.

[65] See Law of May, 13 1012, Bundesgesetzblatt Teil I, 2012, Nr. 43, 18.09.2012 S. 1918.

[66] See Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 13.

[67] See Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 6-8.

[68] Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 13.

[69] See Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10171. 27.06.2012, p. 4.

[70] Deutscher Bundestag. Beschlussempfehlung und Bericht des Ausschusses für die Angelegenheiten der Europäischen Union (21. Ausschuss) zu dem Gesetzesentwurf der Fraktionen CDU/CSU und FDP  – Drucksache 17/9047 – und zu dem Gesetzentwurf der Bundesregierung – Drucksachen 17/9373, 17/9670, Drucksache 17/10159, 27.06.2012, p. 7.

[71] See Deutscher Bundestag. Beschlussempfehlung und Bericht des Ausschusses für die Angelegenheiten der Europäischen Union (21. Ausschuss) zu dem Gesetzesentwurf der Fraktionen CDU/CSU und FDP  – Drucksache 17/9047 – und zu dem Gesetzentwurf der Bundesregierung – Drucksachen 17/9373, 17/9670, Drucksache 17/10159, 27.06.2012, p. 1-8.

[72] Resulting, the Committee on the Affairs of the EU took part in the expert hearing of the Budget Committee on May 7, 2012 and the expert hearing of the Bundesrat on April 25, 2012. See Deutscher Bundestag. Beschlussempfehlung und Bericht des Ausschusses für die Angelegenheiten der Europäischen Union (21. Ausschuss) zu dem Gesetzesentwurf der Fraktionen CDU/CSU und FDP  – Drucksache 17/9047 – und zu dem Gesetzentwurf der Bundesregierung – Drucksachen 17/9373, 17/9670, Drucksache 17/10159, 27.06.2012, p.7.

[73] Deutscher Bundestag. Haushaltsauschuss, Protokoll Nr. 17/88, 88. Sitzung, 7.Mai 2012, p. 13.

[74] See Deutscher Bundestag. Haushaltsauschuss, Protokoll Nr. 17/88, 88. Sitzung, 7.Mai 2012, p. 13.

[75] Deutscher Bundestag. Haushaltsauschuss, Protokoll Nr. 17/88, 88. Sitzung, 7.Mai 2012, p. 16.

[76] These are the introduced petitions: ‘Rejection of the Ratification of the Fiscal Compact – Initiation of cause-oriented Policies for Crises Management’ (Drucksache 17/9147); ‘Rejection of the ESM-Treaty – Initiation of a European Investment Program’ (Drucksache 17/9246) and finally ‘Implementing Fundamental Reforms of the EU Treaties and Preventing the Modification of Article136 TFEU’ (Drucksache 17/9148).

[77] Deutscher Bundestag. Plenarprotokoll 17/186, 186. Sitzung. 27.06.2012. p. 22221 D.

[78] Deutscher Bundestag. Plenarprotokoll 17/186, 186. Sitzung. 27.06.2012. p. 22222 B.

[79] See Spiegel Online, ‘The Coming EU Summit Clash: Merkel Vows ‘No Euro Bonds as Long as I Live’. 27.06.2014. Online available at: http://www.spiegel.de/international/europe/chancellor-merkel-vows-no-euro-bonds-as-long-as-she-lives-a-841163.html.

[80] Deutscher Bundestag. Plenarprotokoll 17/186, 186. Sitzung. 27.06.2012. p. 22226 A.

[81] Deutscher Bundestag. Plenarprotokoll 17/186, 186. Sitzung. 27.06.2012. p. 22226 D.

[82] Deutscher Bundestag. Plenarprotokoll 17/186, 186. Sitzung. 27.06.2012. p. 22227 C.

[83] See Spiegel Online, ‘SPD- und FDP- Politiker wollen Abstimmung verschieben’, 29.06.2012. Online available at http://www.spiegel.de/politik/deutschland/esm-abstimmung-politiker-von-spd-und-fdp-fordern-verschiebung-a-841744.html.

[84] See Euro Area Summit Statement, Brussels, 29 June 2102, available at: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/131359.pdf

[85] See Volkery, Carsten, ‘Die Nacht, in der Merkel verlor’, in: Spiegel Online, 29.06.2012. Online available at: http://www.spiegel.de/politik/ausland/angela-merkel-erleidet-bei-eu-gipfel-niederlage-a-841653.html

[86] She said that the Fiscal Compact is a ”groundbreaking integration step” as it is the first time that EU nations unite to keep the common currency as stable as possible. Furthermore, she depicted the close integration of the ESM Treaty and the Fiscal Compact as a legal link between “solidarity and solidity.” Finally, she thanked all Bundestag parties for their cooperation and stated that the adoption of the EU measures Germany will send a “signal of unity and determination […] that clarifies that we see our future in Europe.”

[87] See Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p. 22700 B.

[88] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p. 22715 B.

[89] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p. 22702 C.

[90] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p. 22703 D.

[91] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p. 22705 D.

[92] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p. 22706 B.

[93] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p. 22708 D.

[94] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p. 22708 A.

[95] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p. 22734 C.

[96] See for instance: Focus, ‘Merkel verfehlt bei ESM drei Mal Kanzlermehrheit’. 20.06.2012. Online available at:

http://www.focus.de/tagesthema/eu-merkel-verfehlt-bei-esm-drei-mal-kanzlermehrheit_aid_775400.html.

[97] See Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p.22736 C.

[98] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p.22740 C.

[99] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p.22744 D.

[100] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p.22743 D.

[101] Deutscher Bundestag. Plenarprotokoll 17/188, 188. Sitzung, 29.06.2012, p.22747 B.

[102] See http://www.bundespraesident.de/SharedDocs/Pressemitteilungen/DE/2012/06/120621-Mitteilung.html;jsessionid=3CBAD287936F1B888E06090F0A4B6009.2_cid388