Ireland

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 Ireland encounter in the negotiation of the amendment of article 136 TFEU?

No significant political or legal difficulties were encountered in the negotiation of the amendment of Article 136 TFEU.

Statements by Government Ministers in both Houses of Parliament during the debate on the Act of ratification suggest that the Irish Government was very much in favour of the adoption the Decision and the amendment of the Article 136 TFEU. The Government’s argument in favour of the Article 136 TFEU amendment was linked to the ESM itself.[1] The Government’s strong position in favour of the ESM arose from the particular political and economic position of Ireland at the time. Suggestions had been raised that Ireland would experience difficulties raising funds on the financial markets upon exit from the programme of financial assistance at the end of 2013. The ESM was seen as essential for avoiding such a situation and for providing a secure source of financing beyond 2013 in the event that international financial markets could not be accessed.

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

The Article 136 TFEU Amendment has been ratified in Ireland though a legislative act of Parliament. The European Communities (Amendment) Act 2012 amended the European Communities Act 1972 to include the European Council Decision amending Article 136 TFEU in the definition of ‘treaties governing the European Union’ for the purposes of Irish law. The Act received the signature of the President on the 3 of July 2012, notification of ratification was transmitted to the European Council on the 1 of August 2012.

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

The Article 136 TFEU amendment was firstly raised in the context of the referendum on the Fiscal Compact and secondly during the parliamentary debates on the 2012 Act itself.

During the referendum campaign opponents of the Fiscal Compact argued that the amendment of Article 136 TFEU provided the Irish government with leverage in their approach to the Fiscal Compact and in obtaining an improved package of financial assistance. They argued that the amendment of Article 136 TFEU was necessary for the ESM to come into effect. As the European Council Decision amending that article required approval by all Member states it was argued that Ireland could effectively veto the amendment of Article 136(3) TFEU and consequently the creation of the ESM by not approving the amendment. This ‘veto’ supposedly gave Ireland political leverage to be used against the ‘blackmail clause’ of the ESM/Fiscal Compact (see s. IX on the Fiscal Compact) and in securing an improvement on the terms of the programme of financial assistance.

During the course of the referendum on the Fiscal Compact a statement by the Referendum Commission (charged with providing objective information and analysis to the public on issues pertinent to a referendum) to the effect that Ireland did not in fact retain any choice in approving a decision validly adopted was challenged before the High Court by a Sinn Féin TD, Pearse Doherty (see below).

Parliamentary debates on the ratification of the decision took place in the wake of the Fiscal Treaty referendum and in parallel with debates to ratify the ESM Treaty and the three issues were not treated separately by the majority of contributors. A number of TDs  and Senators raised complaints surrounding the short period (four hours) allocated by the Government for debate on the amendment.

There was generally widespread support for the 2012 Act in Parliament. Most parties saw the amendment as supporting the establishment of the ESM, an instrument that was seen as vital for the successful exit of Ireland from the programme of financial assistance at the end of 2013 and/or to securing funding subsequently. The debate on Decision 2011/199/EU was therefore very much linked to discussions on the ESM. The act of ratification enjoyed cross-party support with the exception of a small number of independent TDs (members of the lower house of Parliament) and the United Left Alliance grouping (ULA).[2] Sinn Féin supported the principle of a permanent bail-out fund while opposing the specific form it took in the ESM. It therefore voted in favour of ratification. The supposed de facto ‘veto’ represented by Decision 2011/199/EU on the establishment of the ESM was raised by a number of independent and ULA members. This assessment was rejected by government members, relying on the fact that the ESM would come into existence upon the ratification by states paying 90% of its capital, whereas Ireland was to pay only 1.59%.[3] Finally, some concerns were raised regarding the democratic accountability of the ESM and the transparency of its operations in the context of the debate on the amendment.

Case law         
V.4

Is
there a (constitutional) court judgment in Ireland on the 136 TFEU Treaty amendment?

There are three relevant cases (see for an analysis below and Annex I.2-I.4):

  1. Doherty v Referendum Commission [2012] IEHC 211 (Annex I.2)
  2. Pringle v Government of Ireland and others [2012] IEHC 296 [High Court] (Annex I.3)
  3. Pringle v Government of Ireland and others [2012] IESC 47 [Supreme Court] (Annex I.4)

Doherty v Referendum Commission [2012] IEHC 211

Name of Court:High Court of Ireland (Hogan J)

Parties:Pearse Doherty TD (Plaintiff) v The Referendum Commission (Defendant), Attorney General (Intervener)

Type of Action/Procedure: Judicial Review of a statement by the Referendum Commission.

Admissibility Issues: Three questions of admissibility were raised.

Firstly whether the Referendum Commission (the Commission) was a body corporate and hence a judicial person that could be sued. The Chairperson of the Commission, Feenly J, was listed as a defendant in his personal capacity in the event that the Commission was found not to be a body corporate. Nonetheless, despite the fact that the Act establishing the Referendum Commission did not explicitly specify its status, it did in fact have juridical capacity. Feenly J was therefore struck from the list of defendants.

Secondly it was questioned whether the statements of the Commission were in fact amenable to judicial review. While the orthodox position, based on a desire not to interfere with political matters, may have been that such statements were not amenable to legal standards of review, Hogan J found that given the legislative and constitutional framework of referenda and the role played therein by the Commission, its statements could be subject to review. Nonetheless, given the sensitive nature and discretion enjoyed by the Commission, a high threshold was established. Its statements, in order to be successfully challenged in judicial review proceedings would have to be ‘plainly wrong’.

Finally it was claimed that Mr Doherty had exercised undue delay, introducing the proceedings on the eve of the referendum on the Treaty on Stability, Coordination and Growth (TSCG). Given the importance of the issues Hogan J agreed to accept the proceedings despite reservations.

Legally Relevant Factual Situation:

Following a series of challenges to the use of public funds by the Government to promote a particular outcome in a referendum[4] a Referendum Commission was established in order to make impartial information and analysis publically available during the course of a referendum.[5]

During the referendum on the TSCG the Chairman of the Commission, Mr Justice Feenly, made an oral statement and the Commission issued a written statement to the effect that while Ireland had had a veto when the Decision was adopted by the European Council, once that Decision had been adopted it was now under an effective obligation to ‘approve’ the amendment contained in that Decision.[6] Mr Doherty contested this assessment claiming that the Government in fact retained a discretion to approve or not approve the Decision.

Legal Questions:

Aside from the admissibility questions referred to above there were two substantive legal questions, namely whether the Commission in making its statement was acting ultra vires (outside its powers) and whether the Commission’s statements were ‘plainly wrong’.

Arguments of the Parties:

The arguments of the parties in relation to the first question are not detailed in the judgment.

The arguments of the parties in relation to the second question turned on the appropriate interpretation to be given to the meaning of ‘approved by Member States in accordance with their respective constitutional requirements’ contained in Article 48(6) TEU and in particular whether this implied that Member States retained a discretion to refuse to approve a European Council Decision validly adopted under Article 48(6) TEU.

Mr Doherty argued that the Decision was to be treated as a normal international agreement under Article 29 of the Irish Constitution. Accordingly it was entirely within the Government’s executive power to ratify or not ratify the agreement.

The Attorney General argued that Ireland no longer had any discretion to approve the Decision. This was based on a joint reading of Article 228(4) TFEU stating that decisions are binding and Article 4(3) TEU establishing a duty of sincere cooperation. In fact she maintained that the references to the constitutional requirements of the Member States was a pure formality. She argued that the Decision was already ‘approved’ by Ireland within the meaning of Article 48(6) TEU and that the Bill then before the Parliament was simply necessary to introduce the decision into Irish law.

The Commission adopted a slightly different position. It argued, similarly to the Attorney General, that Ireland no longer retained any discretion in approving the decision. Nonetheless it maintained that the constitution required approval through an Act of Parliament in line with Article 29.4 of the Irish Constitution on the exercise of executive powers in foreign affairs.

Conclusion and Reasoning of Court:

In relation to the first question, that is whether the Commission in making the statements on the ESM and the Decision acted ultra vires, the Court found that it had in fact acted within its remit as defined by s. 3 of the Referendum Commission Act 1998 as amended by the s. 1 of the Referendum Commission Act 2001 given that ‘the ESM and the TSCG are inextricably interlinked’ and that ‘certainly, one could not realistically seek to explain the likely impact of the TSCG without reference to the question of the ESM.’[7] In fact, this point was so obvious that the Court refused to admit this claim beyond the initial application.

The second question, and in particular the assessment of the correctness or otherwise of the Commission’s statement was more complex. The Court did not decide on the substantive question of whether Ireland retained a discretion under Article 48(6) TEU to approve the Decision. Rather it came to the opinion that all three positions of the parties were valid and worthy interpretations. Any definitive judgment would require a reference to the Court of Justice under Article 267 TFEU. Given the complexity and novelty of the legal question the opinion as stated by the Commission was not “plainly wrong”.

Legal Effects of the Judgment:

The claim was dismissed.

Main Outcome and Broader Implications:

The claim was dismissed. There was no conclusive statement by the Court on the substantive claim that Ireland retained a veto on the Decision and indirectly on the establishment of the ESM (see above). The claim was still made in the context of the parliamentary debate on the Act approving the Decision.

On other issues it would appear that the Commission has juridical capacity and can sue and be sued before the Courts. Furthermore, its statements are in fact subject to review. Nonetheless, it would appear that a strict test will not be applied to the Commission’s statements. A potential complainant will have to prove that such statements are ‘plainly wrong’ in order successfully challenge a statement.

In addition to Doherty v the Referendum Commission there was a single case directly challenging Decision 2011/199/EU. Thomas Pringle, an independent TD, initiated proceedings challenging the decision alongside the Fiscal Compact and the ESM on 13 April 2012. After approval of the Fiscal Compact by referendum on 31 May 2012 that aspect of the challenge was dropped. Justice Laffoy in the High Court rejected most of the claims of the plaintiff while agreeing to refer a single question regarding the relationship between the Decision and the ESM Treaty to the Court of Justice.[8] The decision of the High Court was appealed to the Supreme Court. A hearing was held during the week of the 23 July 2012 and judgement on those issues it deemed urgent, namely the compatibility of the ESM with the Irish constitution, was delivered on 31 July 2012.[9] On the same day the Supreme Court referred those matters relating to EU law to the Court of Justice.[10] The use of the urgent procedure was requested and granted by order of the President of the Court on 4 October 2012, a hearing was held on 23 October 2012. Judgment was delivered on 27 November 2012 upholding the legality of both the Decision and the ESM itself.[11]

Pringle v Government of Ireland and others [2012] IEHC 296 [High Court]

Name of Court:High Court of Ireland

Parties: Thomas Pringle v Government of Ireland and the Attorney General

Ref No:[2012] IEHC 296

Date: 17 July 2012

Type of Action:

Admissibility Issues: The Defendant raised an issue regarding the standing of the plaintiff to contest the validity of Decision 2011/199/EU. It was claimed that the plaintiff was directly and individually concerned by the decision and should have contested the decision by a direct action under Article 263 TFEU. Given the nature of the Act as one of general application across the Union, Laffoy J was not satisfied that the plaintiff could have been considered ‘individually and directly concerned’ for the purposes of Article 263 TFEU (paras 164 -179) and allowed the plaintiff to challenge the validity of Decision 2011/199/EU via a preliminary reference procedure.

Legally Relevant Factual Situation: As part of a broader effort to reform the governance of the Euro zone in late 2011 and early 2012 a number of instruments were adopted. The European Stability Mechanism (ESM) is established by Treaty and is intended to be a permanent rescue fund intended to replace the temporary instruments, the European Financial Stability Fund (EFSF) and the European Financial Stability Mechanism (EFSM). In order to ensure the ESM’s compatibility with the European Treaties it was decided to amend the Treaties by inserting a new paragraph into Article 136 TFEU providing for the establishment of a mechanism such as the ESM. Finally the ‘Fiscal Compact’ was adopted by all but two EU Member states and introduces constitutional or equivalent rules on budgetary discipline. Thomas Pringle, an independent member of the lower house of Parliament (Dáil) challenged three related instruments, namely the ESM Treaty, the Decision amending Article 136 TFEU and finally the Fiscal Compact before the High Court. The challenge to the Fiscal Compact was dropped following a positive result in the Fiscal Compact referendum (see question IX.2).

Legal Questions:

1.      Whether the ESM is compatible with Union law and with the Irish constitution.

2.      Whether the decision of the European Council to amend Article 136 TFEU was compatible with Union law and with the Irish constitution.

3.      What, if any, impact the delay in the entry into force of the decision to amend Article 136 TFEU would have on the legality of the ESM under Union law.

4.      If the plaintiff was entitled to an interlocutory injunction restraining the government from ratifying the ESM Treaty and from giving effect to Decision 2011/199/EU.

Arguments of the Parties:

Before the High Court Mr Pringle claimed that the Council Decision breached both Union law and the Irish constitution. In relation to Union law he maintained that the creation of an ESM-type institution would in fact alter the competences of the Union, in particular those relating to economic and monetary matters. As a consequence, Article 48(6) TEU was an inappropriate means of amending the Treaties. He furthermore argued that by breaching Union law it also breached the Irish constitution by virtue of the special status afforded Union law in the Irish constitution. Finally, he argued that as an act that delegated sovereignty the decision should have been adopted in Ireland by an amendment of the constitution and hence by popular referendum rather than by legislation. The act ratifying the decision (European Communities (Amendment) Act 2012) was therefore unconstitutional.

The Government argued that the Decision merely confirmed a pre-existing power of the Member States. It did not expand the competences of the Union, was merely technical in nature and was therefore correctly adopted on the basis of Article 48(6) TEU. As with the plaintiff’s arguments this assessment depended on an analysis of the ESM itself. Similarly as an ESM type institution did not violate Union law by affecting the competences of the Union the Decision itself did not violate Union law. In its submissions the Government relied on the opinions on the amendment issued by Union institutions in particular the European Parliament and the European Central Bank. Furthermore, it contended that an amendment to the TFEU adopted pursuant to that Article did not require a referendum in Ireland. The amendment of the constitution as part of the adoption of the Treaty of Lisbon had made the use of Article 48(6) TEU compatible with the Irish constitution and no further referendum was required in order to give effect to amendments adopted under that Article.

Answer by the Court to the legal questions and legal reasoning of the Court:

Laffoy J, accepted for the most part the arguments of the defence and found that Council Decision 2011/199/EU, enabling as it did the establishment of an extra-Union institution, did not increase the competences of the Union. It was therefore correctly adopted under Article 48(6) TEU. Accordingly Decision 2011/199/EU was ‘completely valid’ within the meaning of Foto-Frost and the High Court was not under an obligation to make a reference to the Court of Justice. As to the question of the appropriate means to give effect to the European Council Decision in Irish law the High Court found that subsequent to the adoption of the Treaty of Lisbon no constitutional amendment was required for amendments to the Treaties adopted under the simplified revision procedure.

In considering the question of legal standing for the plaintiff, Laffoy J. rejected the contention of the Government that Mr Pringle was time-barred by the rule in TWD. In particular she found that he could not be considered individually and directly concerned by Decision 2011/199/EU and thus could not have challenged the decision via Article 263 TFEU (para 176).

While accepting the submissions of the Government on almost all issues Laffoy J was troubled by what she termed the ‘temporal’ aspect of the interaction of the European Council  Decision and the ESM, noting that while the Decision was intended to facilitate the creation of the ESM, that Decision did not enter into force until 1 January 2013 at the earliest, ie subsequent to the establishment of the ESM. In particular she was unsure of the binding nature of the Council Decision and what the effect of non-notification by one or more Member states would be on the legality of the ESM. Accordingly she decided to refer the matter to the Court of Justice.

After considering both the domestic (Campus Oil) and Union (Zuckerfabrik and Atlanta) tests for the granting of an interlocutory injunction she found that the balance of convenience favoured refusal and accordingly did not restrain the government from ratifying the ESM Treaty.

Legal effects of judgement:The judgment was appealed to the Supreme Court (see below) by the plaintiff. In the appeal the High Court’s finding on the standing of the plaintiff was not contested by the defence.

 

Main Outcome of judgment and political implications:The judgement was appealed to the Supreme Court (see below).

Pringle v Government of Ireland and others [2012] IESC 47 [Supreme Court]

Name of Court:Supreme Court of Ireland

Parties:Thomas Pringle (appellant) v Government of Ireland, Ireland and the Attorney General (defendants)

Ref No:[2012] IESC 47

Date:19th of October, 2012

Type of Action/procedure:Appeal

Admissibility Issues:N/A

Legally Relevant factual situation:See above summary of High Court decision.

Legal Questions:

1.      Whether the European Council Decision was in fact validly adopted.

 

2.      Whether an EU Member State is entitled under the Union treaties to enter an agreement such as the ESM.

 

3.      Whether any such entitlement is dependent on the validity of the European Council Decision and its entry into force.

 

Arguments of Parties:

Mr Pringle argued that the European Council Decision is invalid in light of its adoption using the simplified revision procedure. He alleged that the decision amends the provisions of the Treaty in relation to economic and monetary policies in particular by allowing Member states to establish an institution outside the main body of Union law. It thus alters the competences of the Union in relation to the definition and conduct of the single currency. He argued that the Council decision is contrary to general principles and tenets of Union law by circumventing prohibitions on bailouts contained in Article 125 TFEU. He alleged that any such change should be adopted through the ordinary revision procedure. For similar reasons he alleged that the ESM is incompatible with Union law, in particular that it circumvents prohibitions contained in Article 125 TFEU and breaches the allocation of competences between national and Union legal orders.

Answer and legal reasoning of Court:

The court divided the issues into three groups. Those issues relating solely to Irish law that were deemed urgent were dealt with directly, namely the question of the compatibility of the ESM with the Irish constitution.  Those issues relating to Union law were referred to the Court of Justice. Finally the remaining issues, in particular the question of the appropriate means of giving effect to the ESM in Irish law, were not considered urgent and were postponed to a later date. The substance of the Supreme Court judgment focused on the compatibility of the ESM with the Irish constitution and is summarised in question VIII.4 below. 

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

No other relevant information.


[1]                ‘Throughout the referendum campaign the Government made clear our strong view that the coming into force of the ESM is very much in Ireland’s interests. It follows logically that providing for the amendment to Article 136 of the TFEU, which underpins it, is also strongly in our national interest’, comments of Tánaiste (deputy Prime Minister) and Minister for Foreign Affairs, Eamon Gilmore, Dáil Debates, 6 June 2012, Vol 767 No 1, 72-73. 

[2]               See ibid, 70 ff.

[3]               See comments of Eamonn Gilmore Minister for Foreign Affairs and Trade, ibid.

[4]               McKenna v An Taoiseach (No. 2) 2 IR 10.

[5]               The Referedum Act 2001.

[6]               Counsel for the plaintiff did make the claim that there was some discrepancy between the two statements. However in light of the Commission’s role to provide general information to the public Hogan J found that broadly speaking the Commission’s communications were to the effect that Ireland had had a veto but, now that the Decision was validly adopted, it was under an obligation to approve it.

[7]               Doherty v The Referendum Commission [2012] IEHC 211, para 29.

[8]               Pringle v The Government of Ireland [2012] IEHC 296.

[9]               Pringle v Government of Ireland [2012] IESC 47.

[10]             Pringle v Government of Ireland [2012] IESC 47 (Reference by the Supreme Court to the Court of Justice of the European Union, 31 July 2012).

[11]             Case C-370/12 Pringle v Government of Ireland and others (Court of Justice, 27 Novemeber 2012).