V – 136(3) TFEU

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Austria | Belgium | Bulgaria | Croatia | Cyprus | Czech Republic | Estonia | Finland | France | Germany | Greece | Hungary | Ireland | Italy | Latvia | Lithuania | Luxembourg | Malta | Netherlands | Poland | Portugal | Romania | Slovakia | Slovenia | Spain | Sweden | United Kingdom |

Austria

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

Overall, the main position of the government (see question IV.1 for details) was favoring the introduction of Art. 136 (3) TFEU (and the ESM) (see also question VIII.1 and question I.1). From the opposition parties, the Greens were siding with the government whereas the far-right parties FPÖ and BZÖ were strongly opposing it.[1] The fact that the Greens were siding with the government was essential because a 2/3 majority (see question V.2) was necessary and could not be reached only by the governing parties.

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

Generally, treaties are ratified through signature of the Federal President (Art. 65 (1) B-VG). Political treaties and treaties leading to the amendment or completion of laws need to be approved by the National Council prior to the ratification (Art. 50 (1) 1 B-VG). This approval passes as ‘decision’ and not as ‘law’. If the treaty in question touches competences of the provinces (Länder), it also has to be approved by the Federal Council.[2] Treaties that amend or complete the constitution need to be approved by qualified majorities (in both chambers, at least half of the deputies have to be present and have to reach a 2/3 majority, Art. 44 (1) and (2) B-VG). Furthermore, a treaty amending the foundations of the European Union would also need approval by the higher majorities in the National and in the Federal Council (Art. 50 (1) 2 and Art. 50 (4) B-VG). The Federal Chancellor (Head of Government) has to publish the treaty after its ratification through the Federal President in the Federal Law Gazette. The Federal President, however, does not have the right to review the substance of the approval, as opposed to Germany (see also the discussion of the ESM case at the constitutional court in Annex I.1), his sole task is to check the procedure of how in this case the decision or generally a law came about. From the day following the publication, the treaty is considered in force – unless specified differently in the treaty, as it is the case here in Art. 48 TESM.

According to Art. 23i (4) B-VG[3] decisions of the European Council or the Council of the European Union that enter into force only after the approval by the single Member States have to approved according to Art. 50 (4) B-VG.: The approval comes in the form of a “decision”. Then the decision of the National Council and the Federal Council is then signed by the president, counter-signed by the Chancellor and published in the Federal Official Gazette. Under certain circumstances, the approval of treaties can be reviewed by the Constitutional Court.

For details on the general treaty ratification procedure in Austria, please see question VIII.2, for details on constitutional review of treaties see Annex I.1 on the Constitutional Court decision on the ESM treaty.

The Constitutional Committee of the National Council recommended in its report the approval of the European Council Decision 2011/199/EU.[4] The National Council voted on July 4, 2012 with 125 votes for and 52 against it[5]. The Federal Council voted on July 6, 2012, with 43 votes for and 12 against it.[6] It was signed by the Federal President and the European Council was notified about Austria’s approval on July 30, 2012. It was further published in the Federal Law Gazette on May 13, 2013.[7]

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

The main issues debated were connected to the debate of the TESM. The pros argued by SPÖ, ÖVP and Greens were that Austria needed a stable EMU and a stable Euro for its export-oriented economy, that letting Eurozone members default was not an option. A permanent European stabilization mechanism would be the only way of dealing with the crisis. Specific issues related to the Art. 136 (3) TFEU and to the simplified treaty revision procedure were not raised, not even at the expert hearing that had been convened at the National Council on June 28, 2012 upon initiative of the Constitutional Committee to debate the ESM (see question VIII.1). The counter-arguments of the FPÖ and the BZÖ were in particular the criticism of the establishment of a ‘transfer union’, the reproach that Austrian taxpayer money was going to be wasted and the loss of budgetary sovereignty. For the FPÖ, the budgetary sovereignty issue remains, however, much more of a problem for the Fiscal Compact.

Case law        
V.4

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

 There is a constitutional court judgment on the ESM from March 16, 2013.[8] References to Art. 136 (3) TFEU do exist in that judgment but since it was not yet in force at the time when the judgment was rendered, they are rather minor. Please see Annex I.1 for a detailed analysis of the case. Here, it remains to be mentioned that the applicant invoked some “EU law questions” about the legality of the TESM, in particular the fact that it had been signed and ratified without a proper basis in EU law because Art. 136 (3) TFEU was not yet in force at the time of its signature. The applicant argued that the TESM collides with Art. 125 TFEU. Therefore, the National Council should have treated the TESM as a treaty that amends EU law. For a ratification of such a treaty, higher majorities in the National and in the Federal Council would have been necessary (Art. 50 (4) B-VG). Instead, the TESM had been approved by simple majorities.[9] For details on this, see question VIII.2. The court, however, says that in as far as the applicant invokes some “EU-law-questions”, it is not within the court’s competence to render decisions about them.

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

No other relevant information.

 

[1]              Summary of the Positions in the  meeting of the Constitutional Committee of the National Council from July 2, 2012, available at: http://www.parlament.gv.at/PAKT/PR/JAHR_2012/PK0574/; summary of the debate in the Plenary Session No. 164 of the National Council from July 4, 2012 (when the amendment and the TESM were approved), available at: http://www.parlament.gv.at/PAKT/PR/JAHR_2012/PK0587/; Stenographic Protocol of that Plenary Session of the National Council No. 164, XXIV. Legislative Period, at http://www.parlament.gv.at/PAKT/VHG/XXIV/NRSITZ/NRSITZ_00164/fname_276567.pdf. 

[2]              Öhlinger, Verfassungsrecht, 2005, p. 78. The Federal Council is the chamber of the parliament that consists of representatives of the nine Länder.

[3]              Supra section IV, note 7. 

[4]              Final Report of the Constitutional Committee no. 1877 on government’s proposition no. 1716 regarding the decision of the European Council to amend Art. 136 (3) TFEU from July 2, 2012,  available at: http://www.parlament.gv.at/PAKT/VHG/XXIV/I/I_01877/fname_258128.pdf

[5]              Decision of the National Council to approve the amendment of Art. 136 TFEU from July 4, 2012, at http://www.parlament.gv.at/PAKT/VHG/XXIV/BSE/BSE_00001/fname_258886.pdf

[6]              Report of the Committee for Constitution and Federalism from July 5, 2012, on the proposed amendment of Art. 136 TFEU at http://www.parlament.gv.at/PAKT/VHG/BR/I-BR/I-BR_08755/fname_258959.pdf and the decision of the Federal Council on the same issue from July 6, 2012, at: http://www.parlament.gv.at/PAKT/VHG/XXIV/BSE/BSE_00001/fname_259208.pdf.

[7]              Approval of the amendment of Art. 136 TFEU as published in the Federal Law Gazette, BGBl III 132/2013, at http://www.ris.bka.gv.at/Dokumente/BgblAuth/BGBLA_2013_III_132/BGBLA_2013_III_132.pdf.

[8]              Österreichischer Verfassungsgerichtshof (VfGH), Decision SV 2/12-18 from March 16, 2013, at: http://www.vfgh.gv.at/cms/vfgh-site/attachments/1/0/8/CH0003/CMS1364972071410/esm_sv2-18.12_endg.pdf; Press release in English at: http://www.vfgh.gv.at/cms/vfgh-site/attachments/3/4/1/CH0003/CMS1364972214030/esm_presseinformation_english.pdf

[9]              Supra section IV, note 13, pp. 11-12.

Belgium

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

None. Conversely, Belgium was an active proponent of the amendment at the European level. Belgium chaired the Council in the fall of 2010 and submitted the formal request to amend article 136 TFEU. The explanation offered by the Minister of Foreign affairs refers to the constitutional objections of the Bundesverfassungsgericht that necessitated an amendment of the TFEU.[1]

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

The first legal issue that arose is the classification of the amendment in the internal distribution of powers related to foreign affairs. Belgian federated entities, Regions and Communities enjoy large powers in the external sphere, following the adage ‘in foro interno, in foro externo’.[2] In other words, when Regions and Communities are competent within the national sphere to – predominantly exclusively – regulate a matter, this competence is extended to foreign affairs. Whereas monetary affairs is an exclusive federal matter, the stringent conditions mentioned in the proposed article 136(3) TFEU could have repercussions on economic and budgetary policy of the Regions and Communities. Hence, the intergovernmental negotiating committee, the Committee Mixed Agreements of the Intergovernmental Conference for Foreign Policy[3], decided to qualify the amendment as a mixed treaty, hence requiring approval of all parliamentary assemblies of Regions, Communities and the federal state.[4]

The table below indicates the formal approval per parliament:

Level

Assembly

Date of approval
(formal act)

Document nr.

Federal

House

Law of July 9, 2012[5]

53K2189

Senate

5S1536

Regions

Parliament of the Flemish Region

Decree of July 6, 2012[6]

1520

Parliament of the Brussels Region

Ordinance of April 26, 2012[7]

A228

Parliament of the Walloon Region

Decree of January 12, 2012[8]

501

Communities

Parliament of the Flemish Community

Idem Flemish Region

Parliament of the French Community

Decree of December 20, 2011[9]

277

Parliament of the German Community

Decree of March 19, 2012[10]

95

United Assembly of the Community Commissions (Brussels)

Ordinance of April 26, 2012[11]

B46

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

The Council of State had no objections.[12]

Case law         
V.4

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

No substantive challenges were brought before the Constitutional Court.[13]

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

None.

[1] Parl. Doc. House, 2011-12, nr. 53K1536/2, p. 2. http://www.dekamer.be/FLWB/PDF/53/1536/53K1536002.pdf

[2] Article 167 Const.: “§ 2. The King concludes treaties, with the exception of those regarding matters described in § 3. These treaties take effect only after they have received the approval of the Houses.

§ 3. The Community and Regional Governments described in Article 121 conclude, each one in so far as it is concerned, treaties regarding matters that fall within the competence of their Parliament. These treaties take effect only after they have received the approval of the Parliament.” http://www.const-court.be/en/basic_text/belgian_constitution.pdf

[3] In Dutch: “werkgroep gemengde verdragen, adviesorgaan van de Interministeriële Conferentie Buitenlands Beleid”.

[4] See Parl. Doc. Flemish Parl., 2011-12, nr. 1520/1, p. 9; https://docs.vlaamsparlement.be/docs/stukken/2011-2012/g1520-1.pdf ; see also Parl. Doc.  Parl. Brussels Region, 2011-12, nr. A228/2, p. 5 where the Minister pointed out that budgetary consequences, and possible sanctions, would implicate all governments.

[5] http://www.ejustice.just.fgov.be/mopdf/2012/10/02_1.pdf

[6] http://www.ejustice.just.fgov.be/mopdf/2012/08/17_1.pdf

[7] http://www.ejustice.just.fgov.be/mopdf/2012/05/07_1.pdf

[8] http://www.ejustice.just.fgov.be/mopdf/2012/01/26_1.pdf

[9] http://www.ejustice.just.fgov.be/mopdf/2012/01/24_1.pdf

[10] http://www.ejustice.just.fgov.be/mopdf/2012/04/18_1.pdf

[11] http://www.ejustice.just.fgov.be/mopdf/2012/05/07_1.pdf

[12] Parl. Doc. House, 2011-12, nr. 53K1536/1, p. 14. http://www.dekamer.be/FLWB/PDF/53/1536/53K1536001.pdf

[13] Direct constitutional challenges to an Act assenting to a Treaty can only be brought within 60 days of publication: see article 3(2) of the Special Act on the Constitutional Court. Indirect challenges (prejudicial questions posed by ordinary judges) to assenting Acts concerning the TEU, TFEU and ECHR are not allowed (article 26, §1bis of the Special Act on the Constitutional Court).

Bulgaria

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

No political or legal difficulties were found during the research on the Bulgarian. The position of the Government during the negotiations was not made publicly available and, consequently, there were no debates at the National Assembly on the negotiating position of Bulgaria. The Decision of the European Council on 25 March 2011 was taken during the 24-25 March meeting when the Euro-Plus Pact was adopted. As it will be seen below, the Prime Minister only appeared in the National Assembly in the morning of 24 March 2011, right before his flight to Brussels, to state that Bulgaria will approve the Euro-Plus Pact but did not discuss the question of the amendment of Article 136 TFEU.

An official position of the Government, albeit post-negotiations, can be distilled from the explanations to the Decision of the Council of Ministers with which the Council of Ministers proposed to the National Assembly to ratify the European Council Decision on the amendment of Article 136 TFEU.[1] These explanations state that with the amendment of Article 136 TFEU it would be possible for the Eurozone Member States to establish a stability mechanism which can be used when needed to guarantee the stability of the Eurozone as a whole. It was also pointed out that the amendment of Article 136 TFEU is part of the measures taken for managing the Euro crisis. In that context, some of the paragraphs read:

“Bulgaria notes the importance of the single currency for the European political and economic project and the significance of the commitment made by all Member States in support of the stability of the Eurozone.

Bulgaria supports the strengthening of the economic governance in the Eurozone with aim of managing the current debt crisis and creating sustainable solutions for avoiding such crises in the future. Considering the high level of integration of the European economies and their interconnectedness, the stability of the Eurozone is a question of primary importance for our State.

[…]

Bulgaria notes that the European Stability Mechanism will provide the necessary means of action in situations threatening the financial stability of the Eurozone as a whole as well as assist in preserving the economic and financial stability of the Union itself.”[2]

These paragraphs can be seen as an expression of the position of Bulgaria towards the perceived role of the amendment of Article 136 TFEU.

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

The ratification process in Bulgaria

In order to contextualise this answer, an overview of the ratification procedure for international treaties in Bulgaria needs to be provided. This overview will include all actors that can be involved in it, even though not all of them were actually involved in the ratification process of the amendment of Article 136 TFEU.

According to the CRB, international agreements that are ratified in accordance with the constitutionally established procedure, promulgated and have come into force with respect to Bulgaria, form part of the domestic legislation of Bulgaria.[3] These international agreements enjoy primacy over the national law norms which contradict them.[4] The constitutionally established procedure is dispersed across several Articles, each of which deals with one of the actors. These Articles are supplemented by a law, where the CRB so requires.

To start with, the international agreements to which Bulgaria is a party are, procedurally, divided in two types – the ones that require ratification and the ones that do not. The international agreements which require ratification fall within the exclusive competence of the National Assembly provided in Article 85 CRB to ratify or denounce international instruments. Article 85(1) lists exhaustively nine situations in which the National Assembly must exercise its ratification powers.[5] Those situations are when the international instruments:

 “1. are of a political or military nature;

2. concern the Republic of Bulgaria’s participation in international organizations;

3. envisage corrections to the borders of the Republic of Bulgaria;

4. contain obligations for the treasury;

5. envisage the state’s participation in international arbitration or legal proceedings;

6. concern fundamental human rights;

7. affect the action of the law or require new legislation in order to be enforced;

8. expressly require ratification;

9. (new, SG 18/05) confer to the European Union powers ensuing from this Constitution.”[6]

A special provision in Article 85(2) is dedicated to the last situation dealing with conferral of powers to the EU. In particular, it states that the ratification of such international treaty is to be adopted by a two-thirds majority of all members of the National Assembly. Article 85(3) states that international agreements ratified by the National Assembly are to be amended or denounced only by the procedures provided therein or in compliance with universally accepted norms of international law. Finally, Article 85(4) states that where an amendment to the Constitution is required by a conclusion of on international agreement such amendment must precede that conclusion. However, there is one caveat to the exclusive competence of the National Assembly, which relates to the power of the Grand National Assembly (GNA)[7] to “resolve on any changes in the territory of the Republic of Bulgaria and ratify any international instrument envisaging such a change”[8] How this relates to Article 85(1)(3) CRB is not going to be discussed here.

The Law on International Agreements[9] (the LIA) further elaborates on the ratification procedure. Article 14 LIA exhaustively lists the different ways in which Bulgaria may express its will to be bound by international agreements. This can happen through ratification, affirmation, acceptance, accession, signing without the need for further ratification or affirmation, and through exchange of the instruments that comprise the international agreement. Where international agreements require ratification in accordance with the CRB, the Council of Ministers proposes to the National Assembly to ratify the international agreement through law.[10]

Since the ratification happens through the adoption of a law by the National Assembly, the constitutional provisions relating to the procedure of adoption of laws is also applicable mutatis mutandis. According to Article 88 CRB, laws have to undergo two readings and be voted upon twice. However, exceptionally, the National Assembly may decide to conjoin the two voting procedures during a single session. The details for this exception are further elaborated in the Rules for the Organisation and the Activity of the National Assembly (the Rules).[11]

However, before going into the voting procedures in the Rules, it is useful to take a look at the provisions governing the introduction of the draft laws in the National Assembly. In the current version of the Rules, Article 73(1) states that draft laws and their explanations are deposited to the President of the National Assembly. The explanations must include the expected consequences from the application of the proposed law.[12] Where the draft laws relate to the membership of Bulgaria in the EU, the explanations must also point to the part of EU law requiring the legislation in question.[13] The allocation of the draft laws to the permanent Committees is done by the President of the National Assembly.[14] The President of the National Assembly also determines the leading Committee for each draft law.[15] The leading Committee is leading in the sense that it has an increased role in the procedural management of a particular law during the procedure for its adoption as well as after its adoption.[16]

Now, turning to the voting, Article 77(2) of the Rules states that the National Assembly can exceptionally decide to conjoin both voting procedures in one session.[17] However, it continues, this rule is to be applied only when during the debate no proposals for amending the draft law have been put forward. No special voting rules apply for the decision to conjoin the voting procedures. With respect to the ratification process, Article 84 of the Rules is also worth mentioning. It is the only one dealing with ratification of international agreements. It states that in the case of draft laws for the ratification of international agreements, the text of the international agreement itself cannot be modified. Furthermore, reservations to multilateral agreements can be made only insofar as the agreements in question allow for reservations to be made. When Articles 77(2) and 84 of the Rules are read together it appears why international agreements are prone to be ratified within one session. The final touch on the ratification law is its promulgation in the SG by the President on the basis of Article 98(4) CRB, as is the procedure for laws in general. This promulgation is not, however, a defining point for the international agreement to become binding on Bulgaria. As such, the President cannot interfere with the will of the National Assembly to be bound at the point of promulgation.

The international agreements which do not require ratification have a less straightforward procedure to follow. According to Article 106 CRB, the Council of Ministers shall inter alia “affirm or denounce international treaties when authorized to do so by law”. However, Article 98 CRB states that the President of the Republic shall inter alia “conclude international treaties in the circumstances established by the law”. This division is an expression of the underlying principle of separation of powers and checks and balances in the CRB, which prevent the domination over the State functions by the political interests of the majority of the day.[18] Again, the LIA provides further clarifications on the procedure and the actors involved in it. According to Article 9 LIA, international agreements can be concluded by the President and the Council of Ministers. In the case of the President, the conclusion happens after concordance with the Council of Ministers, depending on the importance and the subject of the international agreement or in accordance with the agreement reached between States on the status of the State authorities that will sign the international agreement in question.[19] In the other case, the conclusion of an international agreement is done by the Council of Ministers taking into consideration the subject matter of the agreement and its provisions.[20] Accordingly, while the competence to conclude the agreements is shared, the Council of Ministers seems to have the leading role. This leading role is subject to the competences of the two institutions as provided by the CRB.

The leading role of the Council of Ministers is further exemplified by three other provisions in the LIA. First, in Article 15(2) it is stated that when the CRB does not require for an international agreement to be ratified, the Council of Ministers affirms it. Secondly, in Article 17 it is stated that when an international agreement is meant to binding after a signature or accession without being followed by a ratification or affirmation the consent is given by the Council of Ministers and it is to be included in the decision for approving the agreement. Thirdly, in Article 18 it is stated that when an international agreement becomes binding on account of the exchange of instruments comprising this agreement the exchange is executed by the Minister of Foreign Affairs on the basis of a decision by the Council of Ministers.

Irrespective of whether an international agreement requires ratification or not, all international agreements may be subject to constitutional scrutiny before the BCC. The constitutional judicial review can be ex ante as well as ex post the ratification/conclusion of the international agreement. However, this is not readily evident when one looks at the CRB. This is because in Article 149(1)(4) CRB it is stated that the BCC has the power to rule on inter alia “the compatibility between the Constitution and the international instruments concluded by the Republic of Bulgaria prior to their ratification” (Emphasis added). The explanation for the ex post powers of the BBC is to be found in Decision 9 of 1999.[21] In this Decision the BCC stated that the duly ratified and promulgated international agreements “can acquire the status and force of laws” and “[as with] all the laws in the state, these ratified international treaties should be subject to constitutional control under Article 149(1)(2) of the Constitution”.[22] Accordingly, the BCC based its power of ex post constitutional review of international agreements on Article 149(1)(2) CRB which sets out the power to rule on the constitutionality of laws and other acts passed by the National Assembly. In the view of the BCC, the power in Article 149(1)(4) CRB to review the constitutionality ex ante does not preclude the power of ex post review. To the contrary, the former supplements the latter. The BCC continued by saying that

“the ratification act incorporates the international agreement and together they must be considered as one complete act which can be challenged for unconstitutionality in its entirety. In that respect it is rightfully maintained that the eventual unconstitutionality of the international agreement makes its act of ratification also unconstitutional”.[23]

Finally, it is worth observing the position of the Bulgarian nationals in the framework of the ratification process. There are generally two ways in which the people of a given State could directly participate in a ratification process. These are to (1) initiate proceedings before a Constitutional Court or (2) to initiate and/or vote in a referendum. In Bulgaria only the second possibility is available as the right to initiate proceedings before the BCC is still limited to public institutions.

With regard to referendums, the CRB states very little. Article 42(2) CRB provides that the organisation and procedure for holding elections and referendums shall be established by law. The law dealing with referendums regulates also other rights to participate in the governance of the State and the regions such as the citizen’s initiative.[24] However, only the part dealing with referendums is relevant for the present discussion. In Article 9(4) of that law it is stated that referendums which concern issues regulated by international agreements that Bulgaria has concluded can be convened only before the ratification of such agreements. Unfortunately, this law addresses neither the situations where an international agreement does not require ratification, nor the question whether the initiation of collection of signatures or other procedures that can lead to convening a referendum has a freezing effect on the ratification procedure.

The question of who can initiate a referendum is answered in Article 10 of that law. Proposals to the National Assembly for a referendum can be made by the Council of Ministers, the President, at least one-fifth of the national representatives, at least one-fifth of the municipal councils in Bulgaria, or by an initiative committee of citizens with voting rights, which has collected at least 200 000 signatures of citizens with voting rights. No special voting rules apply for the decision of the National Assembly to accept or not a proposal. The National Assembly is only obliged to adopt a decision for convening a referendum where the initiative committee has collected at least 500 000 signatures.

The ratification of the amendment of Article 136 TFEU

Having explained the constitutionally established procedure for ratification or otherwise acceptance of international agreements by Bulgaria, it is now pertinent to turn to the specific case of the amendment of Article 136 TFEU. The amendment was subject to ratification and as such (since it did not relate to changes in the territory of Bulgaria), on the one side, the relevant institution involved was the National Assembly. On the other side, it was the Council of Ministers and not the President that concluded the agreement. Furthermore, the ratification did neither include recourse to the BCC nor a referendum.

On 25 March 2011 the Prime Minister – Boyko Borissov – supported the Decision of the European Council for amending Article 136 TFEU.[25] More than a year later, on 15 June 2012, the Council of Ministers adopted a Decision with which it approved the European Council Decision and proposed to the National Assembly to ratify it.[26] The constitutional basis for the proposed ratification was Article 85(3) CRB. As explained supra this Article states that Treaties ratified by the National Assembly are to be amended or denounced only by the procedures provided therein or in compliance with universally accepted norms of international law. As such the ratification of the Decision was seen as, in constitutional terms, for exactly what it was – an amendment of an international agreement though the procedure provided therein. It was not viewed as a new international agreement on its own. Furthermore, it was also not viewed as an international agreement conferring powers stemming from the Constitution to the EU which requires a two-thirds majority in the National Assembly under Article 85(2) CRB.[27]

In the National Assembly, the draft ratification law was discussed in the Committee on Budget and Finance, on External Policy and Defence and on European Affairs and Oversight of the European Funds of which the latter was the leading one. All three Committees in their reports proposed to the National Assembly to ratify the European Council Decision on the basis of Article 85(3) CRB. In its plenary session on 13 July 2012, the National Assembly approved the proposed draft law and ratified the European Council Decision on the proposed legal basis. The result of the first vote was 89 ‘for’, 2 ‘against’ and 16 ‘abstaining’.[28] As there were no amendments proposed to the draft law, the National Assembly, on the basis of Article 70(2) of the then applicable version of the Rules,[29] conjoined the two voting procedures within the same session. The result of the second vote was 84 ‘for’, 2 ‘against’ and 14 ‘abstaining’.[30] The law ratifying the European Council Decision was promulgated in the SG[31] by the President on the basis of Article 98(4) CRB on 23 July 2012.[32]

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

The ratification of the amendment of Article 136 TFEU went through the whole process without problems or controversies in either of the institutions involved. It went so smooth that after the draft law was presented in the plenary session of the National Assembly no national representatives joined the discussion and the draft law went straight to voting. As explained supra, even the two voting procedures were conjoined in one session. However, in the opinion of the author, it is still interesting and worth looking at the explanations to the draft law provided by the Council of Ministers, the reports of the three Committees that considered the draft law as well as what was said in the National Assembly when the draft law was presented.

In the explanations attached to Decision № 497 of the Council of Ministers, it is stated that Bulgaria recognises the importance of the single currency for political and economic European project as well as the importance of the commitment made by all Member States for stability in the Eurozone. It is also stated that that Bulgaria supports the increase in economic governance in the Eurozone, which is meant to manage the debt crisis and to create stable solutions for avoiding the repetition of such crisis. For Bulgaria, the stability of the Eurozone    is an issue of primary importance, considering the high level of integration and interconnectedness of the economies within the EU. The ratification of the amendment of Article 136 TFEU is seen in the explanations as an expression of support for the strategy of the EU for overcoming the debt crisis, which includes the European Stability Mechanism (ESM) and stabilizing the Eurozone. On the basis of these explanations the Committees considered the ratification proposal.

The first report was adopted by the Committee on Budget and Finance on 28 June 2012.[33] The draft law was presented by the Director General for European Affairs in the Ministry of Foreign Affairs. The report largely reiterated the explanations to the draft law without adding anything new. The verbatim record of the meeting shows that only question asked was from Plamen Oresharski (Coalition for Bulgaria).[34] The question was why the amendment is being considered when Bulgaria is not a Eurozone Member State? In the answer of the presenter it was underlined that the amendment of Article 136 TFEU, while connected to the ESM, does not entail that Bulgaria is getting involved in the latter by ratifying the former. The amendment procedure in the Lisbon Treaty requires the approval of all Member States, including Bulgaria, and Bulgaria supports it because it is needed to pave the way for the ESM Treaty,[35] which concerns the Eurozone Member States only. After the question was answered, the draft law was voted upon and the results were 13 ‘for’, 1 ‘against’ and 6 ‘abstaining’. No explanations of the negative or abstaining votes were provided.

The other two reports were adopted on 4 July 2012 in a joint session. The draft law was presented by the Deputy Minister of Foreign Affairs. As the report was adopted in a joint session the verbatim record of the two Committee meetings is the same. As such it is better to consider the results of the work of the two Committees together. The report of the Committee on External Policy and Defence[36] reiterated almost word by word the explanations of the draft law and then concluded by saying that the draft law does not contradict the principles of the foreign policy of Bulgaria. The report of the leading Committee on European Affairs and Oversight of the European Funds[37] also restated to a great extent the draft law explanations. Two other things were also mentioned. First, it was pointed out that the Bulgarian currency – the Lev – is fixed to the Euro and that the stability of the Euro and its resistance towards future negative influences is of great importance for the Bulgarian economy and finances. Secondly, the report concluded that the proposed ratification law corresponds to the obligations of Bulgaria flowing from its full membership in the EU. 

The verbatim record, however, is more insightful. While there were no questions posed after the draft law was presented, one of the Committee members made an explanatory statement on why he was going to vote against the ratification. The author considers that a translated quotation in full of this statement is needed in order to avoid any confusion as to what was said. The Committee member stated that:

“Political party ‘ATAKA’ will vote against this ratification. I will state our motives. We are consistent in our position. The reason to vote against the ratification is that in this way with the accession of Bulgaria to the Fiscal Pact (sic!) the sovereignty of Bulgaria is violated – the National Assembly and the Government appear redundant. Besides, lately the Chancellor Merkel as well as the President Hollande and David Cameron stated clearly that the Fiscal Pact is not the panacea which will solve the debt crisis. This is our conclusion. We are led by the idea that Bulgaria must have the possibility for self-development and not to join the scheme of Europe on different speeds – two or three or more. We are against a budget deficit being fixed at 3% from the GDP and a sovereign debt not going higher than 60%. In this way we consider that this decision does not correspond to our demands to have immediate quick increase of the income of the population. These are our motives in short; we will present them in further detail in the plenary hall.”[38]

The President of the Committee, before she put the proposal to a vote, responded to this statement with a clarification. She suggested to the Committee members while preparing for the plenary hall to keep in mind that what was being considered was an amendment to the TFEU and not the Fiscal Pact. Furthermore, she pointed out that through this ratification Bulgaria gives its support for the collective effort to stabilise the Euro and overcome the debt crisis and that the amendment was ratified by 19 Member States already, at that time. Following these exchanges the draft law was voted upon and the results were 9 ‘for’, 0 ‘against’ and 2 ‘abstaining’. The voting results in the Committee on External Policy and Defence were 9 ‘for’, 1 ‘against’ and 3 ‘abstaining’. No explanations of the abstaining votes in the two Committees were provided.

These reports were read in the National Assembly when the draft law was presented in plenary. The Minister of Foreign Affairs Nikolay Mladenov presented the law with a comprehensive statement.[39]  In his statement the Minister started by noting the legal stability that the amendment to Article 136 TFEU provided to the ESM Treaty which is one of the two most fundamental instruments (the other being the Fiscal Pact) for dealing with the Euro crisis. The Minister also pointed out that the two very important questions of (1) competence extension of the EU and (2) the financial obligations of Bulgaria are both answered in the negative. Having said that the Minister highlighted that Bulgaria has a great interest in the stability of the Euro and will, to the maximum extent, follow closely all developments in that regard.

Then, the Minister turned to a few issues not directly related to the ratification. Firstly, the national representatives were urged to follow the discussions for the future of the Economic and Monetary Union (EMU), such as the ones on the banking union, bank supervision and deposit guarantees within the Eurozone. Secondly, the Minister stated that in the beginning of the negotiations on these proposals Bulgaria took the constructive position that there must be clear rules which include all 27(now 28) Member States in the discussion for the future of the EMU. The position was against mechanisms which would permanently exclude some Member States from the decision-making process. Thirdly, the Minister stated that, while the discussions how to solve the Euro crisis will continue on, Bulgaria must be attentive to the, crucial for it, question of how the proposals from the Member States or the Commission will contribute to the stability of the internal market. It was in the interest of Bulgaria that the internal market was not only stabilised but also extended to new areas, particularly, the single market of digital services. The reason for the Minister to go beyond the scope of the draft law was explained to be that when the ratification decision is being made there should be a clear understanding of the broader picture within which it stands. After this introduction the draft law was voted and adopted, as explained in the answer to Question V.2. It should be noted that the promise of ATAKA’s national representative in the Committee on External Policy and Defence to further explain the party’s motives for voting against was not kept and no explanations of the negative or abstaining votes was provided.

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

The amendment of Article 136 TFEU has not been litigated at the BCC.

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

No other relevant information.

[1] Council of Ministers, Decision № 497 of 15 June 2012 for a proposal to the National Assembly to ratify the Decision of the European Council of 25 March 2011 amending Article 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for Member States whose currency is the euro. 

[2] Translation by the author.

[3] Constitution of the Republic of Bulgaria, art 5(4).

[4] Ibid.

[5] However, the BCC has ruled that there is nothing prohibiting the National Assembly to decide to ratify another international agreement which does not fall in the listed categories. In the words of the BCC, this stems from the general competence of the National Assembly to adopt laws with the only limitation that they do not contradict the Constitution. The BCC found that there was no limitation posed by the Constitution to the power of the National Assembly in that regard. However, and strangely enough, the BCC did not discuss the special nature of the ratification laws and their relationship to the binding international commitments of Bulgaria. For example, what would be the legal consequence when an international agreement concluded by Bulgaria which requires only a signature to create binding legal obligations and does not fall within the listed categories is nevertheless subjected to a ratification vote by the National Assembly and the ratification fails? See Decision № 9 of 1999 in Case № 8 of 1999, SG 57 of 25 June 1999.

[6] Constitution of the Republic of Bulgaria, art 85(1).

[7] The GNA is a Bulgarian constitutional organ with specific powers in the area of constitutional amendments and the adoption of new Constitutions. The requirement for convening a GNA is an element of extreme rigidity in the Constitution. In the history of Bulgaria only seven GNAs have been convened and every time this has been done at a turning point in the Bulgarian history. The last time a GNA was convened was in 1991. On the question whether the constitutional amendments relating to the member ship of Bulgaria in the EU required a GNA to be convened the BCC answered in the negative.

[8] Constitution of the Republic of Bulgaria, art 158(2).

[9] Law on International Agreements, SG 97 of 13 November 2001.

[10] Ibid. art 15(1).

[11] Rules for the Organisation and the Activity of the National Assembly, SG 97 of 25 November 2014, as amended SG 13 of 17 February 2015.

[12] Ibid. art 73(2).

[13] Ibid. art 73(3).

[14] Ibid. art 74(1).

[15] Ibid. art 74(2).

[16] This increased role is set out in a number of provisions in the Rules for the Organisation and the Activity of the National Assembly. For example, during the draft stages of a law, the leading Committee has increased reporting responsibility at the different procedural steps (arts 34, 41 and 74-81), while after the adoption of the law the leading Committee can adopt a position in a case before the BCC where a law it has managed is being challenged (art 90(1)) and also representatives when the President vetoes a law the Committee has the obligation to report the veto and its explanations to the national representatives (art 83(1)).

[17] The use of this procedure for ratification of international agreements has been challenged before the BCC in Decision № 9 of 1999 in Case № 8 of 1999, SG 57 of 25 June 1999. The BCC held that the use of this exception is a prerogative of the National Assembly and that it is not for the BCC to look into the reasons why the National Assembly decided to rely on the exception.

[18] Decision № 11 of 2011 in Case № 8 of 2011, SG 95 of 2 December 2011.

[19] Law on International Agreements, SG 97 of 13 November 2001, art 9(1).

[20] Ibid. art 9(2).

[21] Decision № 9 of 1999 in Case № 8 of 1999, SG 57 of 25 June 1999. 

[22] Translation by E Tanchev and J Peteva, ‘The Impact of EU Accession on the Legal Orders of Bulgaria’ in A Kellerman and others (ed) The impact of EU accession on the legal orders of new EU member states and (pre-) candidate countries: hopes and fears (Final Conference Matra Multi Country Project, TMC Asser Press, The Hague 2006) 36-37. Of course, this does not go to say that international agreements have the legal value of statutes. They stand higher than statutes in the hierarchy of norms but lower than the Constitution. 

[23] Translation by the author. Decision № 9 of 1999 in Case № 8 of 1999, SG 57 of 25 June 1999.

[24] Law for direct participation of the citizens in the State power and the regional self-governance, SG 44 of 12 June 2009, as amended SG 100 of 21 December 2010, SG 9 of 28 January 2011, SG 42 of 5 June 2012, SG 20 of 28 February 2013, SG 66 of 26 July 2013, SG 19 of 5 March 2014.

[25] European Council Decision 2011/199 amending Article 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for Member States whose currency is the euro [2011] OJ L 91/1.

[26] Council of Ministers, Decision № 497of 15 June 2012 for a proposal to the National Assembly to ratify the Decision of the European Council of 25 March 2011 amending Article 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for Member States whose currency is the euro.

[27] This was expressly underlined in the explanations attached to Council of Ministers Decision № 497 and later on reiterated in the reports of three Committees which considered the draft law.

[28] In favour – GERB (74), Coalition for Bulgaria (4), the Blue Coalition (4), ATAKA (2) and independents (5); against independents (2); abstaining Coalition for Bulgaria (6) and DPS (10).

[29] Rules for the Organisation and the Activity of the National Assembly, SG 58 of 27 July 2009, as amended, SG 60 of 30 July 2009, SG 98 of 11 December 2009, SG 100 of 15 December 2009, SG 43 of 8 June 2010.

[30] In favour – GERB (72), Coalition for Bulgaria (3), the Blue Coalition (3), ATAKA (2) and independents (4); against independents (2); abstaining Coalition for Bulgaria (5) and DPS (9).

[31] Law for the ratification of the Decision of the European Council of 25 March 2011 amending Article 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for Member States whose currency is the euro, SG 57 of 27 July 2012.

[32] Presidential Decree № 283 of 23 July 2012, SG 57 of 27 July 2012.

[33] Committee on Budget and Finance Report of 28 June 2012.

[34] Committee on Budget and Finance, Protocol № 18 of 28 June 2012.

[35] However, as it became known from the judgment of the Court of Justice of the European Union in the Pringle case the amendment was actually declaratory and not constitutive of the powers of the Member States to adopt the ESM Treaty. Case C-370/12 Thomas Pringle v Government of Ireland, Ireland and The Attorney General [2012] ECR I-00000.

[36] Report of the Committee on External Policy and Defence of 4 July 2012.

[37] Report of the Committee on European Affairs and Oversight of the European Funds of 4 July 2012.

[38] Translation by the author.

[39] National Assembly, Stenographic records of the 375th meeting, 13 July 2012.

Croatia

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

At the time of negotiations of the amendment of article 136 TFEU, Croatia was not a member of the EU, so it was not involved in the negotiation process. The article 136 TFEU per se was not a subject of the discussion in Croatian Parliament or at the sessions of the Croatian Government.

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

Article 136 TFEU applies in Croatia together with any other article of the TFEU since 1 July 2013, the date of Croatian accession to the European Union.

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

Since Croatia was not a Member State of the European Union at the time of the approval of the 136 TFEU Treaty amendment, it was not supposed to approve/ratify the Treaty amendment. In accordance with this, no relevant debates have arisen since there was no ratification process. No debate took place during negotiations on this issue.

 


Case law          
V.4

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

No, there is not a judgment of any court in Croatia, including its Constitutional Court, regarding the 136 TFEU Treaty amendment.

In general, there was no decision of the Constitutional Court of Croatia regarding the Croatian accession into the European Union with the exception of one Decision, which is rather irrelevant since it does not deal with the substantial aspects of EU accession, but with monitoring of the referendum for accession into the EU.  By this Decision, the Constitutional Court of Croatia rejected the request of the opponents of Croatian accession into the European Union in which the opponents required the Constitutional Court to monitor the constitutionality and legality of the referendum of the EU accession on the ground that prerequisites for such request are missing.[1]       

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

Not applicable.

[1] The decision is available only in Croatian with summary in English at: http://sljeme.usud.hr/usud/prakswen.nsf/Pojmovi/C12570D30061CE54C1257988003799E8?OpenDocument

Cyprus

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

The Minister of Foreign Affairs of Cyprus and the Cypriot government were favourable of the creation of a permanent stability mechanism and a Treaty amendment, as a last resort (necessary) solution. The Minister of Foreign Affairs in 2010, Mr. Markos Kyprianou had noted that ‘it is a reasonable suggestion, yet the possibility of creating a permanent assistance mechanism should be first evaluated under a scenario without a Treaty amendment. If this is deemed impossible, then we should consider all possibilities’.[1]

The Parliamentary Committee on Foreign and European Affairs evaluated the relevant Draft Bill (‘Law on the amendment of the TFEU 2012’) in a meeting held on 25 May 2012,[2] where delegations of the Ministry of Foreign Affairs, Economics and the Office of the General Attorney of the Cypriot Republic participated. The goal of the act under discussion was the approval of Decision 2011/199/EU of the European Council, which amends Article 136 TFEU, in accordance with Art. 169 (2) of the Cypriot Constitution.

Amongst the other issues the Parliamentary Committee took into account in the preparation of the act; was the pressing need for the creation of the ESM. After the Committee ascertained that the amendment at issue did not increase the competences attributed to the EU by the Treaties, the representative of the Ministry of Foreign Affairs notified the Committee that the approval of the Decision was necessary for the (subsequent) ratification of the ESM Treaty.

All the participants agreed with the objectives of the suggested Act, whereas a few ‘leftish’ parties, both in government and opposition (‘Democratic Party’, the ‘leftish’ coalition ‘AKEL- Left- Nees Dynameis’ together with the member of the Social Democrats’ Movement (EDEK)) reserved their right to take position on the matter during the discussion of the Act at the House of Parliament. The aforementioned parties eventually voted in favour of the new Draft Bill, after pointing out, however, that they disagreed with the way the decision on the Treaty amendment and the creation of a permanent stability mechanism was taken at a European level, in particular in light of the disregard of the voices of the ‘peoples of Europe’ and the lack of a referendum.

During the discussion in the House of Parliament no objections were raised by any of the Parliamentarians as to the Act. As such all the relevant Articles (1-5) were approved and the (ratification) ‘Law on the Amendment of the TFEU 2012’ was submitted for vote in the Parliament, where it was eventually enacted.

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

The approval Law of the Treaty amendment (Article 136 TFEU) is Law 13 (III) of 2012, as published in the Official Gazette of the Republic of Cyprus (Issue 4164/ 15 June 2012). The ‘Law on the Amendment of the TFEU 2012’ (Article 136 TFEU) was approved by simple majority by the House of Representatives on 31 May 2012, after it was discussed in the Full House of Assembly. No objections arose during the discussion as the representative of the Ministry of Foreign Affairs pointed out that the Treaty amendment does not increase the powers of the EU and is absolutely necessary for the establishment of the ESM. The legal basis for the ratifying Law is Article 169 (2) of the Constitution of the Republic of Cyprus, according to which:

‘Subject to the provisions of Article 50 and paragraph 3 of Article 57- […]

 (2) any other treaty, convention or international agreement shall be negotiated and signed under a decision of the Council of Ministers and shall only be operative and binding on the Republic when approved by a law made by the House of Representatives whereupon it shall be concluded;’[3]

The ratification was notified to the EU Council on 3 July 2012 (for more on Article 169 (2) of the Constitution of the Republic of Cyprus, see Question VIII.2).

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

In view of the fact that the Cypriot government (together with the majority of the political parties) was particularly favourable of the creation of the European Stability Mechanism, no debate arose during the ratification procedure. The House of Representatives approved the amendment of Article 136 TFEU and the ESM Treaty on 30 May 2012. The amendment of Article 136 TFEU was ratified by Law 13 (III)/2012 (Official Journal of the Republic of Cyprus 4164/ 15 June 2012) and the ratification was completed on the 3rd July 2012. (See also Question II.1)

Case law          
V.4

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

No constitutional judgment on the 136 TFEU amendment exists.

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

Not applicable.

 

[3] Translation drawn from: http://www.presidency.gov.cy/presidency/presidency.nsf/all/1003AEDD83EED9C7C225756F0023C6AD/$file/CY_Constitution.pdf <accessed on 12 December 2013>. See also the relevant Article 169 (3): ‘Treaties, conventions and agreements concluded in accordance with the foregoing provisions of this Article shall have, as from their publication in the official Gazette of the Republic, superior force to any municipal law on condition that such treaties, conventions and agreements are applied by the other party thereto.’

Czech Republic

V       Treaty amendment article 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 the Czech Republic encounter in the negotiation of the amendment of article 136 TFEU?

The Parliament gave a preliminary consent to the Government to agree to the draft European Council Decision on Art. 136 Amendment.[1] On March 16, 2011, the Chamber of Deputies of the Parliament mandated the Government to agree to a compromise that would not differ substantially from the original draft, that would respect the basic framework set by the Statement by the Eurogroup of Nov. 28, 2010, and that would be in compliance with Art. 48/6 TEU.[2] The Government then conditioned its consent to the plan – a Treaty amendment would be strictly limited to the aim sought and would not transfer new competences to the EU (the second condition, however, follows from the limitations of the simplified procedure itself). Under these two conditions, CR agreed to the use of the simplified procedure.

In the Parliamentary debate, Prime Minister (PM) Nečas emphasized that the Amendment does not transfer new competences to the EU, that there is no obligation for CR to financially participate on the ESM operations and at the same time nothing prevents CR to voluntary participate on the mechanism ad hoc. He reassured that strong Euro is essential for the Czech economy and that CR supports the draft Amendment and the ESM in general.[3] There was no substantial opposition to the Amendment.[4] The preliminary consent to the government position was given by 120 votes in favour to 2 against (170 out of 200 deputies were present).[5]

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

The European Council Decision was considered a “presidential” international treaty falling within Art. 49 of the Czech Constitution.[6] The ratification therefore required an assent of both chambers of Parliament and ratification in the narrow sense by the President (Art. 63 of the Constitution). There was little discontent about the required majority. Given that the Amendment does not transfer new competences to the EU, simple majority would suffice. However, the EC Decision was finally considered under Art. 10a of the Constitution (which has been regularly used as a constitutional basis for the previous EU Treaties changes),[7] requiring three-fifth majority of all Deputies and three-fifth majority of Senators present (Art. 39/4 of the Constitution). The Parliament opted for this solution in order to build and declare broader consensus on the issue. The Senate agreed to the EC Decision by 49:9 votes (62 out of 81 Senators present) on April 25, 2012.[8] The breakdown of votes was as follows: Social Democrats: 29 in favour, 10 not present, 1 abstention; Civic Democrats: 9 in favour, 6 against, 8 not present, 1 abstention; Christian Democrats: 5 in favour, 1 against; TOP 09: 4 in favour, 1 abstention; non-attached Members: 1 in favour, 2 against, 2 abstentions.[9] The Chamber of Deputies agreed to the EC Decision by 140:18 votes (189 out of 200 Deputies present) on June 5, 2012.[10] The breakdown of votes was as follows: Social Democrats: 47 in favour, 3 not present, 3 abstentions, 1 authorized absence; Civic Democrats: 41 in favour, 4 against, 4 not present, 2 abstentions; TOP 09: 41 in favour; Communists: 1 against, 1 not present, 24 abstentions; Public Affairs: 1 in favour, 11 against; non-attached Members: 10 in favour, 2 against, 1 not present, 2 abstentions, 1 authorized absence.[11]

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

The ratification process of the European Council Decision (introducing the Article 136(3) TFEU) was stalled due to a refusal of President Václav Klaus to sign it. President Klaus set the precedence with his initial refusal to sign the Lisbon Treaty.[12] On the legal ground, the debate centred on the meaning of the provision of the Czech Constitution regulating the ratification process. The Constitution provides that the President of the Republic “negotiates and ratifies international treaties” (Art. 63(1)(b)) and that “[t]he assent of both chambers of Parliament is required for the ratification of [qualified] treaties” (Art. 49).[13] The President has interpreted these provisions literally – the President ratifies the Treaty and the Parliament gives assent, meaning that the ratification of a treaty is in the hands of the President with his signature to the treaty being the constitutive moment (unlike in the case of statutes). “Ratification” was thus interpreted as the act of signing a treaty by the President with the Parliament giving the assent before the actual ratification.[14] In President Klaus’s view, the President is responsible for the ratification of an international and may refuse to ratify it.[15] President Klaus eventually ratified the Lisbon Treaty.

However, he repeated this approach with the European Council Decision, despite the fact that both Chambers of Parliament had gave their assent to it. This time, the pressure from the EU partners was lower given that the mechanisms sought after by the European Council Decision have been already operational. As the Art. 136 TFEU Amendment does not create any immediate obligations for the Czech Republic and before taking any obligations arising thereof, another decision (to join the Euro) would have to be taken, there was no intention to submit the amendment to the Constitutional Court for a review. According to Klaus, the Art. 136 TFEU Amendment and the ESM were “horrifying and absurd.”[16]

As the conflict between the President on the one hand and the Government and the Parliament on the other hand escalated, the Senate passed a motion calling the President to sign the ratification instrument promptly.[17] In January, the President issued a decree providing for a broad amnesty. This led to a considerable political turmoil. The Senate took an unprecedented step and lodged a constitutional action against the President. According to Art. 66 (2) of the Constitution, “[t]he President of the Republic may be prosecuted for high treason before the Constitutional Court on the basis of a charge brought by the Senate.”[18] Although an amnesty decree issued in January 2013 was the main focus, charges of gross violation of the constitutional order included President’s refusal to ratify the European Council Decision. In fact it was listed as the first charge in the constitutional action.[19] However, before the Court decided, Klaus’s term of office expired and the Court ruled, for that reason, the constitutional action inadmissible.[20]

The political discourse took a new turn with the Czech presidential elections in January 2013.[21] The idea of direct presidential elections has been discussed for a decade and the first elections were widely followed by general public. Miloš Zeman was an “independent” candidate (meaning he collected 50 thousands voters’ signatures instead of being nominated by a Parliamentary party). This gave him more freedom in the campaign, including on EU issues. Both main candidates, Karel Schwarzenberg[22] and Miloš Zeman, took pro-European rhetoric, however with Zeman being more nationalistic.[23]

Shortly after Miloš Zeman was elected, he announced a new course towards the EU[24] – that he would sign the European Council Decision promptly, while emphasizing the Treaty does not create any new obligations for the Czech Republic. He took the office on March 8, 2013 and signed the Decision on April 3, 2013. As the Czech Republic was the last Member State to ratify, upon the conclusion of the ratification process in the Czech Republic, the EC Decision amending the Treaty entered into force on May 1, 2013. The Schwarzenberg’s party TOP 09 tried to exploit the new pro-European course of the President and called for the Government to join the Fiscal Compact, threatening to leave the Government otherwise. However, this effort dissipated.

Case law  
V.4

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

No. In general, an amendment to the Constitution adopted in anticipation of the Czech accession to the EU entrusted the Constitutional Court with review of conformity with constitutional acts of international treaties. Prior to the ratification of a qualified treaty (a treaty transferring powers to international organization or institution and treaties requiring ratification of Parliament), the Constitutional Court has jurisdiction to decide concerning the treaty’s conformity with the constitutional order. A treaty may not be ratified prior to the Constitutional Court giving judgment (Art. 87 (2) of the Constitution). A petition, may be submitted by one of the chambers of Parliament, as of the moment when the treaty is submitted to it for its consent to ratification, until the moment when the treaty receives that consent; a group of at least 41 Deputies or a group of at least 17 Senators, from the moment when the Parliament has given its consent to the ratification of the treaty, until the moment when the President of the Republic ratifies the treaty; a group of at least 41 Deputies or a group of at least 17 Senators, from the declaration of the results of a referendum in which consent to the ratification of a treaty is given, until the moment when the President of the Republic ratifies the treaty; and the President of the Republic, from the moment when the treaty was submitted to him for ratification.[25] The court reviews only provisions of a treaty contested by the petitioner, not a treaty in its entirety. That means, a decision on compliance with the constitutional order of a treaty does not represent res iudicata and other authorized persons may submit their own petitions with different argumentation or for provisions not contested yet. So far, only the Lisbon Treaty was subject to the review (twice).

 

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

Not applicable.

[1] A preliminary consent procedure was adopted with the ratification of the Lisbon Treaty. Sec. 109i lit. b) of the Law No. 90/1995 Coll., Rules of Procedure of the Chamber of Deputies, a Sec. 119k lit. b) of the Law No. 107/1999 Coll., Rules of Procedure of the Senate.

[2] Chamber of Deputies of the Parliament, Resolution No. 368/1 of March 16, 2011 on the Draft European Council Decision on Art. 136 Amendment.

[3] PM Petr Nečas, stenographic protocol, Chamber of Deputies of the Parliament of the Czech Republic, March 16, 2011. Available at: http://www.psp.cz/eknih/2010ps/stenprot/014schuz/s014053.htm.

[4] MP Dana Váhalová only urged for broader involvement of private sector and worried about the fact that the new mechanisms of stability is established outside the EU institutions, while the current crisis would need rather deepening of EU integration. Stenographic protocol, Chamber of Deputies of the Parliament of the Czech Republic, March 16, 2011. Available at: http://www.psp.cz/eknih/2010ps/stenprot/014schuz/s014055.htm.

[5] Ibid.

[6] Art 49 of the Constitution reads: “The assent of both chambers of Parliament is required for the ratification of treaties: a) affecting the rights or duties of persons; b) of alliance, peace, or other political nature; c) by which the Czech Republic becomes a member of an international organization; d) of a general economic nature; e) concerning additional matters, the regulation of which is reserved to statute.”

[7] Art. 10a of the Constitution reads: “(1) Certain powers of Czech Republic authorities may be transferred by treaty to an international organization or institution. (2) The ratification of a treaty under paragraph 1 requires the consent of Parliament, unless a constitutional act provides that such ratification requires the approval obtained in a referendum.

[8] Stenographic Protocol, Senate of the Parliament, April 25, 2012, available at: http://www.senat.cz/xqw/xervlet/pssenat/htmlhled?action=doc&value=64331.

[9] Voting No. 17, April 25, 2012, available at: http://www.senat.cz/xqw/xervlet/pssenat/hlasy?G=12721&O=8. The Government Coalition at the time consisted of Civic Democrats and two junior parties TOP 09 and LIDEM. LIDEM was a group of MPs who had left former Government Coalition party Public Affairs. LIDEM did not have enough Ms to create its own political group and so their votes are registered under non-attached members.

[10] Stenographic protocol, Chamber of Deputies of the Parliament, June 5, 2012, available at: http://www.psp.cz/eknih/2010ps/stenprot/040schuz/s040022.htm#r4.

[11] Voting No. 12, June 5, 2012, available at: http://www.psp.cz/sqw/hlasy.sqw?g=55930&l=cz.

[12] Shortly before the Lisbon Treaty ratification process, a constitutional amendment was adopted creating a new procedure for constitutional review of an international treaty allowing the Constitutional Court to review its constitutionality before ratification. The Treaty was not found in conflict with the Constitution (there were two decisions – Lisbon I and Lisbon II; the first initiated by a group of MPs and joined by the President and the second review initiated by a group of Senators). After these decisions, the legitimacy of the Presidents’ refusal to sign the Treaty was considerably low – the Government and both chambers of the Parliament assented to the ratification and the Constitutional Court found the Treaty in compliance with the Constitution.

[13] The Constitution of the Czech Republic is available in English at http://www.usoud.cz/en/constitution-of-the-czech-republic/.

[14] The majority of Czech constitutional and international law scholars had an opposite view – the President cannot refuse to ratify a treaty unless it deviates from the text, which the Czech Republic agreed to and became bound from international law point of view (that is the text the Government representative signed on the international level). See e.g. P. Šturma, V. Balaš, J. Syllová, V. Jirásková, Selected problems of international treaties, negotiation and ratification process, 2010 (prepared for the Ministry of Foreign Affairs in connection with the Lisbon Treaty ratification process). Part 3.3, available at: http://www.mzv.cz/file/570095/Vybrane_problemy_sjednavani_mezinarodnich_sm_luv_res.pdf.

[15] The alternative interpretation was that the President is obliged to ratify given that all other constitutional actors agreed to the ratification (the Government by negotiating the Treaty, the Constitutional Court by founding the Treaty not in conflict with the Constitution, and especially the Parliament by agreeing with three-fifth majorities in both Chambers). Moreover, the President is responsible for negotiating international treaties and he delegates this competence to the Government. Although this construction is rather theoretical, as in practice, it is the Government who negotiates international treaties, it allows for an argumentation that it was the President who negotiated the Treaty (via Government) and therefore it is incoherent with such constitutional construction for him to refuse ratification.

[16] Klaus: Euroval považuji za zrůdnou věc, nepodepíšu jej, E15.cz, Dec. 7, 2012, available at: http://zpravy.e15.cz/domaci/politika/klaus-euroval-povazuji-za-zrudnou-vec-nepodepisu-jej-938718.

[17] Stenographic protocol, Senate of the Parliament, Dec 6, 2012, available at: http://www.senat.cz/xqw/xervlet/pssenat/hlasovani?action=steno&O=9&IS=4898&D=06.12.2012#b13494.

[18] The Constitution has been amended in connection with the introduction of direct elections of the President to make the impeachment more difficult procedurally (the indictment now requires consent of three-fifth majorities in both Chambers of the Parliament; while until then simple majority was required), while at the same time the reasons for indictment were extended. The amendment has not been in force yet at the time of the impeachment of President Klaus.

[19] Constitutional Court of the Czech Republic, Decision on the Senate Constitutional Action against the President of the Republic, Pl. ÚS 17/13 [2013].

[20] This opinion was contested given that the Constitution stipulates that the consequence of being found committing treason is also that the person is loosing his eligibility to acquire the office again (Vaclav Klaus can, in theory, candidate for the President in the future). The reasons for the Constitutional Court decision are not clear. The constitutional charge was highly controversial and supported by narrow majority in the Senate. Both the Prime Minister and the President-elect condemned the charge.

[21] Elections took place on January 11-12, 2013 (first round) and January 25-26, 2013 (second round). The elections were for the first time direct elections with candidates either being nominated by a political party with members in one of the Chambers of the Parliament (Parliamentary party) or securing 50 thousands signature of eligible voters.

[22] Schwarzenberg’s party TOP 09 was a liberal, the most pro-European party in the centre-right government lead by Civic Democratic leader Prime Minister Petr Necas.

[23] Zeman is a former Prime Minister (1998-2002), who headed Social Democratic Party and managed to establish it as the main party on the left. However, since presidential elections of 2003 (the President was elected by both chambers of the Parliament at the time), in which Zeman was a nominee of the Social Democrats, but lost due to a “coup” by leaders of his own party and President Klaus was elected instead (re-elected in 2008), Zeman withdraw from politics and has been at odds with the Social Democrats since. In 2013 elections, Social Democrats nominated their own candidate, a young and pro-European Social Democrat Jiri Dienstbier. Zeman, who appealed to the same electorate, thus needed to differentiate himself, taking more nationalistic tone. Then President Klaus has been discredited by introducing a controversial amnesty and the majority of the contenders for the office distanced themselves from Klaus on a variety of matters, the EU issues being one of them, though not dominant.

[24] The signing ceremony was attended by the Commission President Barroso.

[25] Sec. 71a of the Constitutional Court Act.

Estonia

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

There was no controversy in Estonia as to whether the amendment of Article 136 TFEU should take place or not.

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

Pursuant to § 25 subsection 1of the Foreign Relations Act, a treaty shall be amended pursuant to the same procedure as it was concluded unless otherwise prescribed in the treaty. Since the TFEU has been ratified by the Riigikogu, an amendment made to it, too, must be ratified by the Riigikogu pursuant to § 20 clause 6 of the Foreign Relations Act, and § 25 subsection 1 and § 121 clause 5 of the Constitution.

The amendment was approved by Riigikogu on 8 August 2012 with 86 votes in favour, two abstentions, five MPs present did not participate in the vote. Ratification was published on 16 August 2012 and notified to the Council on 7 September 2012.

During the second reading of the Bill on ratification of the amendment a referendum was not considered necessary by the Constitutional Committee of the Riigikogu because the amendment was not perceived as adding competences to the European Union.[1] Moreover, pursuant to § 106 of the Constitution, issues regarding the ratification and denunciation of international treaties shall not be submitted to a referendum.

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

No political or legal difficulties were countered during the ratification procedure.

Case law  
V.4

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

No.

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

Not applicable.

[1] Second reading of the Bill on Ratification of the Amendment to the Treaty on the Functioning of the European Union 237 SE, Riigikogu, 8 August 2012.

Finland

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 Finland 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.

The Government explained its position to Parliament on 2 October 2010 (E 86/2010 vp). According to the Government position, even if the amendment was found legally unnecessary, its necessity related to the possibility to do away with fears and doubts expressed relating to the lawfulness of past decisions. For Finland it was important that Article 125 TFEU was not amended, and that the sanctions pertaining to the membership right which were discussed earlier could not be amended in the planned procedure.

The Parliament supported the views of the Government (Statement of the 15 October 2010 of the Grand Committee of the Parliament, SuVL 11/2010 vp).

In addition, the Constitutional Law Committee considered the matter in abstract in the context of the six-pack discussions (See PeVL 49/2010 vp), pointing out that the proposed framework of developing the coordination of economic policies has in recent discussions been repeatedly found insufficient. The new ideas presented would, however, presume Treaty changes. While it still seemed uncertain what amendments would be made, it was evident that the idea was to amend Article 136 TFEU to specify that a mechanism could be established by the euro area Member States to coordinate their economic policies more effectively. Also the possibility of including the main features of the mechanism in Article 136 TFEU had been mentioned. The Committee noted the agreement among the Member States that the amendment should fall under the simplified amendment procedure under Article 48(6), but would still presume national ratification. Based on the information received from the Government, it seemed that the envisaged amendment could fall under Article 48(6), but no final findings could be made on this issue as long as the proposed changes remained uncertain. The Committee stressed that no new competences could be added to the Union under this procedure. This meant for example that sanctions involving the loss of voting rights by a Member State could not be introduced under this procedure.

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

The Government proposal (No 12/2011 vp, eduskunnalle Euroopan unionin toiminnasta tehdyn sopimuksen 136 artiklan muutoksen hyväksymisestä) was presented on 22 July 2011. It was announced in the Parliament on 6 September 2011 and sent to the Committees of the Parliament on 14 September 2011. After the Committee handling it was returned to the plenary for consideration and was discussed on 3 May 2012. The act was approved by the Parliament on the 9 May 2012 (aye 120 – no 33, with the True Finns voting against the adoption[1] ) and by the President on 25 May and the Council of State (the Government) issued the decree (324/2013) bringing the amendment in force in Finland on 6 May 2013.

The Treaty amendment was accepted by the Parliament according to the Section 94.1 of the Constitution of Finland. (Sec. 94.1, first sentence: “The acceptance of the Parliament is required for such treaties and other international obligations that contain provisions of a legislative nature, are otherwise significant, or otherwise require approval by the Parliament under this Constitution.”)

The key aspect in the consideration o the Constitutional Law Committee (PeVL 6/2011 vp) related to whether the amendment, which was considered rather technical and declaratory in character, would be taken to the Parliament for approval. Treaties or other international obligations usually require the approval of Parliament on the grounds that they contain provisions of a legislative nature. According to the Constitution of Finland, a matter is legislative in case it affects the rights and obligations of private individuals (Section 80 of the Constitution) or if the Constitution otherwise requires for an act to be adopted. Further, the parliament’s Constitutional Law Committee has clarified that a matter is of a legislative nature if it affects the foundations of an individual’s rights or obligations; if the same matter is currently regulated in an Act of Parliament or if there is a general understanding that the matter should be regulated by such Act (PeVL 11/2000 vp, PeVL 12/2000 vp, and PeVL 45/2000 vp). Provisions in international obligations that are of a legislative nature and other significant commitments also fall within the parliament’s competence (Section 95).

The Article 136 TFEU amendment was, however, not understood by the Committee to be ‘legislative’ in character or substance, but was instead presumed to require the Parliament’s approval because of being ‘otherwise significant’ under Section 94.1 of the Constitution. Such a decision when not affecting the Constitution or a transfer of powers to the Union is made by a majority of the votes cast in Parliament. The Constitutional Law Committee motivated this interpretation given to the Constitution by stating that although being rather technical, the amendment did touch the Treaty system, which had in its turn previously been approved by the Parliament, and was of a particular importance for the Union in the current turbulent situation (PeVL 6/2011 vp). The Parliament ultimately approved the amendment without further ado.

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

From the perspective of Finnish constitutional law the said amendment did not provide for particular difficulties. Of course, there were voices both within the Parliament and outside it who saw such an amendment of the TFEU as conferring new competence on the Union, and considered that the simplified revision procedure (Art. 48(6) and (7) TEU) could and should not be invoked for this purpose (PeVL 6/2011 vp, see in particular the attached dissenting opinion).

Case law         
V.4

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

See in general about the absence of a constitutional court in Finland and about the ex ante consideration of crisis measures by the Constitutional Law Committee of parliament, question IV.5. For the Constitutional Law Committee’s findings on the 136 TFEU treaty amendment, see questions V.9 and V.10.

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

In Finland, the government’s and Constitutional Law Committee’s characterisation of the amendment followed largely the same logic that the CJEU later adopted in discussing the measures in its Pringle ruling, focusing on how the amendment did not confer any new competence on the Union and how the ESM Treaty was compatible with the relevant provisions of the TFEU. The Government did not intervene in the proceedings, but the ruling was still met with a certain degree of relief, since another outcome – even if perceived as unlikely – would have caused obvious embarrassment.

[1] The vote is registered in  the plenary records 49/2012 vp, available at http://www.eduskunta.fi/faktatmp/utatmp/akxtmp/ptk_49_2012_p.shtml#kohta_linkki1 .

France

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

The process of negotiation of the amendment of article 136 TFEU appears to have been led by the executive with relatively little involvement of the Parliament – which was regretted by the opposition[1].

Initially, French President Nicolas Sarkozy was against a reform of the EU Treaties. He eventually agreed to amending article 136 TFEU in a compromise reached with German Chancellor Angela Merkel in Deauville, on 18 October 2010[2]. France thus respected the German concerns – emphasised by the German Constitutional Court – over the legality under EU law of the anti-crisis stability mechanisms.

As part of the compromise, France obtained that sanctions for States that would not comply with the rules of the EMU should not be automatic, but that it would remain a political decision taken at the Council[3].

Another point of the compromise regarded the contribution of the private sector in the resolution mechanism. The French position on this topic appears to have been cautious, arguably in order not to upset investors, leaving the details of this participation to later measures[4].

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

The approval of the 136 TFEU Treaty amendment was submitted as an Act, through an “accelerated procedure”, by the President of the Republic Nicolas Sarkozy to the vote of both Houses of Parliament. The same Act authorised the ratification of the ESM Treaty[5].  The government submitted the proposal of Act to Parliament for approval/ratification, as required under article 53 of the Constitution[6].Under article 53 of the Constitution, “Peace Treaties, Trade agreements, treaties or agreements relating to an international organization, those committing the finances of the State, those modifying provisions which are the preserve of statute law, those relating to the status of persons, and those involving the ceding, exchanging or acquiring of territory, may be ratified or approved only by an Act of Parliament”.

An “accelerated procedure” (see annex) was used which shortens the procedure of adoption of the Act, in particular by limiting the number of readings of the Act to one in each Houses[7]. Adopted by both Houses after one reading, the Act authorising the approval of the amendment of article 136 TFEU was published in the Official Journal on March 8, 2012[8].

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

The debates which arose during the process of approval of the amendment of article 136 TFEU were tightly intertwined with more general arguments over the French and European response to the crisis, in particular over the ESM Treaty and the Fiscal Compact. The context of ratification facilitated this connection.

First, the proposal of Act authorizing the approval of the amendment of article 136 TFEU was examined jointly with the proposal of Act authorizing the ratification of the ESM Treaty, and voted immediately one after the other.

Second, the participants underlined that the ESM Treaty contained a political commitment to make the benefit of the Stability Mechanism depend on the ratification of the Fiscal Compact. Therefore, debates over the amendment of article 136 TFEU and the ESM Treaty also involved considerations over the Fiscal Compact. This explains how justifications given for abstention votes (mainly PS and associates) and votes against (mainly far left GDR[9] and CRC[10], and ecologists) the approval of the amendment of article 136 TFEU drew on more varied and comprehensive issues.  These included: the opportunity to renegotiate the Fiscal Compact; the focus on austerity of the current instruments in comparison with concerns over growth; the brutality of the conditionality imposed on bail-out countries, in a process leading to the subordination of sovereign States to other States or bureaucrats; sovereignty and democratic issues, in particular the role of the national and European Parliament(s); wishes for more ambitious EU Treaty reforms; the Franco-German relationship, and different assessments of the German role in the management of the Eurozone crisis.

These more comprehensive issues constituted the background to the main obstacles to the draft law in both Houses of Parliament. The PS and its associates abstained from voting the Act, in both Houses – including the Senate where a PS led coalition had won a small majority in September 2011 (see question I.1 on the political context for more information on majority changes). The far left and ecologists voted against the Act. A prior “rejection proposal” was introduced before the National Assembly, as well as an “objection of inadmissibility” in the Senate. Both had been lodged by the far left, and both were rejected. In the end, the draft law was adopted after the first reading by both Houses[11], with centre and right-wing votes, in virtue of an “accelerated procedure” that had become common use under President Sarkozy even before the crisis[12]. The parliamentary debates show that it was important to the French government to be the first to ratify these instruments, so as to set an “example” and give momentum to a process of ratifications that could face difficulties across Europe[13].

While the approval procedure of the 136 TFEU amendment implied wide-ranging debates over the Euro-zone crisis as a whole, the focus will here be on the arguments dealing directly with the amendment itself (for the other parts of the debate see also questions VIII.3 and IX.3).

Concern was raised over the simplified procedure used by the European Council to adopt the decision to amend art.136 TFEU. A parliamentary question to the government raised this issue as soon as January 2011[14], arguing that substantial changes to the organisation of the powers of the EU should have triggered the ordinary procedure for Treaty modification, considered less intrusive on sovereignty and democracy. The answer given by the right-wing government was twofold: first, the amendment does not expand competences of the EU, the ESM being an international organisation, based on a treaty that would need to be ratified by the Parliament; second, the 136 TFEU amendment would also need to be approved by the Parliament[15].

However, this criticism was maintained throughout the debate in February 2012 in both Houses. The far left, especially, considered that using the simplified revision procedure was illegal under art. 48(6) TFEU, as the art.136 TFUE amendment would de facto enhance the competences of the European Commission, of the ECB and of the European Court of Justice, through their participation in the European Stability Mechanism[16]. The “objection of inadmissibility” lodged at the National Assembly by the far left (CRC)[17] put forward that the amendment of article136 TFEU was a key element in a mechanism jeopardizing greatly budgetary sovereignty. It also read that the amendment was illegal under EU law, as the simplified procedure would not be fit for a disposition leading to an expansion of the competences of the EU. However, this objection was voted down by center and right wing MPs, Socialist Party MPs abstaining from the vote.

Regarding the broader issue of the diminution of the role of the parliaments, the Report by a PS-led left coalition for the European Affairs Committee at the National Assembly, presented by socialist MP Elizabeth Guigou, stressed that recourse to the simplified procedure ruled out the use of a Convention to modify the Treaty, and de facto deprived national parliaments of the role that would have been theirs in that forum. According to the Report, it participated in a more general trend of marginalisation of both European and national parliaments[18].

More generally, it was argued that national parliaments should be involved more closely in the negotiations on budgetary coordination, as such issues lied at the heart of their prerogatives[19].  However, the proposition of a European resolution “on European recovery and the strengthening of democratic control”, put to the vote in the National Assembly by the centre-left coalition, was defeated by the right wing majority.

The president of the Foreign Affairs Committee at the Senate, Jean-Louis Carrère (PS), criticised the repeated use (19 times since October [2011]) of “accelerated procedures” by the French government to deal with the crisis, thus constraining the role of the Parliament.[20]

Opacity of the intergovernmental process, even for parliaments, was criticised by the centre-left[21] and the far left[22]. According to them, the government viewed the Parliament as simple “Houses of registration”, while its Constitutional role as well as the 1789 French Declaration of the Rights of Man and the Citizen made it “Houses of decision”.[23]

By contrast, UMP senator Marie-Hélène Des Esgaulx opposed the view that parliamentary control was undermined by the activity of the Executive branch in the European forum. Instead, she argued for an institutional re-balancing in the EU in favour of more inter-governmentalism, understood as more fit to State sovereignty and Parliaments’ rights[24].

The far left deplored also that the French Constitutional Court was not consulted by the Government or the right wing majority on these amendments and treaties, while core budgetary power issues were at stake[25]. At the Senate, CRC Eliane Assassi unsuccessfully invited the PS[26] to use article 54 of the French Constitution allowing 60 senators or 60 members to ask the Constitutional Court if the adoption or the ratification of an international undertaking was contrary to the Constitution, in which case authorization to adopt of ratify the undertaking would be subject to prior amendment of the Constitution[27].

One leading justification in favour of the amendment of art.136 TFEU was that it would enhance legal certainty over the relationship between the ESM Treaty and the “no bail-out” clause enshrined in art.125 TFEU. Still, it was generally specified at the same time that such amendment was adopted on German insistence[28]. At the National Assembly, Jean-Marc Roubaud (UMP) considered that, even if useful, it was not a necessary amendment[29]. However, senator Nicole Bicq (PS) underlined in a Report for the Finances Commission that a possible incompatibility between the ESM and art.125 TFEU could have important consequences, according to the interpretation of the German Constitutional Court regarding the conformity of the ESM to the EU Treaties[30].

Arguments from the PS implied however that the process of approval of an amendment of art.136 TFEU would also contribute to a “climate of uncertainty[31] on the markets and for the citizens regarding the European responses to the crisis, as it would need to be ratified by all EU Member States, including the UK – an outcome considered uncertain.

Developing further on the role of the French and German governments in the adoption of the amendment, the President of the Foreign Affairs Committee at the National Assembly, Axel Poniatowski (UMP) argued that the approval/ratification of both the 136 TFEU amendment and ESM Treaty, as well as the Fiscal Compact (TSCG), sealed and founded anew the Franco-German alliance, in a constructive relationship where no-one imposed its views on the other. He also mentioned how France had convinced Germany to accept the principle of a “European IMF” such as the ESM[32]. In this perspective, these treaties would constitute a salutary inflexion in the history of the construction of the EU, with the idea more and more broadly accepted of a multiple speed Europe, where differentiated cores of countries would be allowed to take integration further[33].

The turn taken by European integration was however not accepted by all, especially by the far left. The conditionality enshrined in art.136 was perceived by GDR Jean-Pierre Brard as interfering with European States’ sovereignty, and its manifestations in the practice of the bail-outs considered brutal. UMP Pascale Gruny’s answered that conditionality was only a counterpart for solidarity and financial help, and a duty of the lender to see how the money is used and if it can be reimbursed[34].

On a more technical account, the Rapporteur to the Foreign Affairs Committee at the National Assembly on the draft law authorising the approval of the 136 TFEU amendment – and the ratification of the ESM Treaty – underlined that there was no calendar difficulty in setting up the ESM before the 136 TFEU amendment enters into force, as the amendment was not necessary to habilitate the government to create the mechanism, but only to recognise that it could do so[35].

Case law         
V.4

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

There is no decision by the Constitutional Council on the amendment of article 136 TFEU. However, the French Government has sought and received advice from the Council of State (Conseil d’Etat), the highest administrative court in the French legal system, on the legality of the article 136 TFEU Treaty amendment[36] (see also question VIII.4).

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

Not applicable.

[1] See for instance the position of Rapporteur Elizabeth Guigou (PS, opposition) in the Compte rendu de la Commission des Affaires européennes de l’Assemblée nationale, 7 February 2012 : « Mes chers collègues, je vais vous présenter une proposition de résolution européenne du groupe Socialiste relative à la relance économique et au renforcement du contrôle démocratique. Pourquoi est-il utile de présenter un tel texte ? Parce que trois projets de traité vont nous être présentés pour ratification, et que les négociations se sont déroulées jusqu’à présent sans association des parlements nationaux alors que leur souveraineté budgétaire est affectée. » […] « Les parlements nationaux vont être saisis de trois projets de traité au seul stade de la ratification. Ce n’est pas acceptable, compte tenu de leur objet. Il est indispensable que les parlements soient beaucoup plus impliqués ». The three « proposals of treaties » referred to are the amendment of article 136 TFEU, the ESM, and the Fiscal Compact. http://www.assemblee-nationale.fr/13/europe/c-rendus/c0239.asp#P20_1253 (pdf : www.assemblee-nationale.fr/13/pdf/europe/c-rendus/c0239.pdf )

[2] http://www.assemblee-nationale.fr/13/europe/c-rendus/c0170.asp#P11_550 ;  http://www.assemblee-nationale.fr/13/europe/c-rendus/c0172.asp#P7_304 ; http://www.assemblee-nationale.fr/13/europe/c-rendus/c0180.asp#P16_378 ; http://www.assemblee-nationale.fr/13/europe/c-rendus/c0181.asp#P22_585 ; http://www.euractiv.com/future-eu/merkel-sarkozy-agree-eu-treaty-c-news-498902 ; http://www.liberation.fr/economie/2010/10/29/merkel-sarkozy-pacte-d-instabilite_689979  ; http://www.presseurop.eu/en/content/article/365691-merkel-sarkozy-hijack

[3]See MP Christophe Caresche (PS), member of the European Affairs Committee at the National Assembly, on 27 October 2010 :  « La déclaration de Deauville est très importante car elle marque un accord entre la France et l’Allemagne. Il en ressort tout d’abord que la majorité qualifiée inversée n’est pas retenue par les gouvernements français et allemand : la France a obtenu l’accord de l’Allemagne pour que dans le nouveau système le Conseil n’ait pas simplement le pouvoir de bloquer une sanction, mais dise, à la majorité qualifiée, s’il engage une procédure de sanction ou pas ; on s’éloigne ainsi du système quasi-automatique de la Commission. » http://www.assemblee-nationale.fr/13/europe/c-rendus/c0170.asp#P11_550

[4] See the position taken by State Secretary of European Affairs Pierre Lellouche before the European Affairs Committee at the National Assembly on 10 November 2010 : « un débat va s’ouvrir sur la contribution du secteur privé et du Fonds monétaire international à ce mécanisme pérenne de gestion de crises. Le sujet est extrêmement sensible ; il ne me revient pas de le trancher devant vous aujourd’hui mais, comme le disent nos collègues allemands, il ne me semble pas anormal de « convier » ceux qui spéculent sur les dettes souveraines à participer au fonds commun de garantie, car on ne saurait envisager une situation telle que les profits sont privatisés et les dettes nationalisées. Toutefois, la mise en œuvre de ce principe doit être très soigneusement pensée pour éviter des effets négatifs sur les marchés ». .

[5] http://www.senat.fr/dossier-legislatif/pjl11-393.html.  

[6]http://www.assemblee-nationale.fr/13/projets/pl4337.asp; http://www.senat.fr/rap/l11-395/l11-3954.html#toc182

[7] http://www.assemblee-nationale.fr/connaissance/fiches_synthese/septembre2012/fiche_32.asp

[8] http://www.legifrance.gouv.fr/jopdf/common/jo_pdf.jsp?numJO=0&dateJO=20120308&numTexte=8&pageDebut=04314&pageFin=04314

[9] http://www.assemblee-nationale.fr/14/tribun/xml/effectifs_groupes.asp

[10] http://www.senat.fr/grp/index.html

[11]For the details of the votes: http://www.assemblee-nationale.fr/13/scrutins/jo0860.asp; http://www.senat.fr/scrutin-public/2011/scr2011-108.html; http://www.senat.fr/scrutin-public/2011/scr2011-109.html

[12] http://www.lemonde.fr/politique/article/2009/03/04/assemblee-le-gouvernement-abuse-t-il-de-la-procedure-d-urgence_1163251_823448.html

[13] http://www.assemblee-nationale.fr/13/rapports/r4348.asp; http://www.assemblee-nationale.fr/13/cri/2011-2012/20120133.asp

[14] http://questions.assemblee-nationale.fr/q13/13-98186QE.htm; http://www.senat.fr/seances/s201202/s20120228/s20120228_mono.html  intervention of Nicole Bricq (PS)

[15] Idem.

[16] http://www.assemblee-nationale.fr/13/cri/2011-2012/20120133.asp, both interventions of Jean-Pierre Brard and Martine Billard; also at the Senate intervention of MRC “sovereignist” Jean-Pierre Chevènement, and of CRC Eliane Assassi: http://www.senat.fr/seances/s201202/s20120228/s20120228_mono.html

[17] http://www.senat.fr/amendements/2011-2012/393/jeu_classe.html

[18] http://www.assemblee-nationale.fr/13/rapports/r4328.asp

[19] Idem.

[20] http://www.senat.fr/seances/s201202/s20120228/s20120228_mono.html

[21] http://www.senat.fr/seances/s201202/s20120228/s20120228_mono.html Intervention of PS Nicole Bricq.

[22] http://www.assemblee-nationale.fr/13/cri/2011-2012/20120133.asp, intervention of Jean-Pierre Brard, for the GDR.

[23] http://www.assemblee-nationale.fr/13/cri/2011-2012/20120133.asp intervention of Martine Billard for the far left Front de Gauche; see also intervention of Eliane Assassi at the Senate: http://www.senat.fr/seances/s201202/s20120228/s20120228_mono.html

[24] http://www.senat.fr/seances/s201202/s20120228/s20120228_mono.html

[25] http://www.assemblee-nationale.fr/13/cri/2011-2012/20120133.asp; see also intervention of MRC senator Jean-Pierre Chevènement: http://www.senat.fr/seances/s201202/s20120228/s20120228_mono.html

[26] http://www.senat.fr/seances/s201202/s20120228/s20120228_mono.html

[27] http://www.conseil-constitutionnel.fr/conseil-constitutionnel/root/bank_mm/anglais/constiution_anglais_oct2009.pdf

[28] http://www.assemblee-nationale.fr/13/rapports/r4348.asp; http://www.assemblee-nationale.fr/13/projets/pl4337-ei.asp

[29] http://www.assemblee-nationale.fr/13/cri/2011-2012/20120133.asp

[30] http://www.senat.fr/rap/l11-395/l11-395.html

[31] http://www.assemblee-nationale.fr/13/rapports/r4328.asp

[32] http://www.assemblee-nationale.fr/13/cri/2011-2012/20120133.asp

[33] Idem.

[34] http://www.assemblee-nationale.fr/13/cri/2011-2012/20120133.asp

[35] http://www.assemblee-nationale.fr/13/rapports/r4348.asp

[36]http://www.conseil-etat.fr/fr/dossiers-thematiques/finances-publiques-red.html. However, I was not able to find the text of this advice online: see http://www.conseil-etat.fr/fr/se-procurer-les-actes-du-conseil-d-etat/#4 , where the Council of State explains that his advice is not public, and the government decides to make it public or not.

Germany

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

Greece

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

There were no major political/legal difficulties in the negotiation of the amendment of article 136 TFEU. This was presented by the Greek Government (PA.SO.K.) as the result of a difficult negotiation, as a success in the effort to save the State from bankruptcy and as a symbol of the decisiveness of the European partners of Greece to support the country.[1] However, concerning the concrete structure of the Stability Mechanism, the Prime Minister Giorgos Papandreou emphasized the need to preserve the autonomy and the equality of States, independent of the size of their national debt, as well as the need for growth provisions.[2]

The content of the amendment of the TFEU has been debated shortly in Parliament, on the 28th of March 2012,[3] and only in relation with the agreement for the creation of the ESM. Especially concerning the amendment, the main issue debated in Parliament concerned the approval procedure. Indeed, during its negotiation, the deputies of SY.RIZ.A. and other academic and political cycles demanded a referendum in order for this amendment to enter into force.[4] The Prime Minister responded that he had mentioned to the European Heads of State the possibility for him to organize a referendum in case the changes concerning the EU and the Eurozone are very important.[5]

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

The Greek Constitution contains several rules concerning the approval of treaties and treaty amendments.

In particular, article 36 of the Greek Constitution declares:

 “1. The President of the Republic, complying absolutely with the provisions of article 35 paragraph 1, shall represent the State internationally, declare war, conclude treaties of peace, alliance, economic cooperation and participation in international organizations or unions and he shall announce them to the Parliament with the necessary clarifications, whenever the interest and the security of the State thus allow.

2. Conventions on trade, taxation, economic cooperation and participation in international organizations or unions and all others containing concessions for which, according to other provisions of this Constitution, no provision can be made without a statute, or which may burden the Greeks individually, shall not be operative without ratification by a statute voted by the Parliament.

3. Secret articles of an agreement may in no case reverse the open ones.

4. The ratification of international treaties may not be the object of delegation of legislative power as specified in article 43 paragraphs 2 and 4.”[6]

Moreover, article 28 declares:

“1. The generally recognised rules of international law, as well as international conventions as of the time they are sanctioned by statute and become operative according to their respective conditions, shall be an integral part of domestic Greek law and shall prevail over any contrary provision of the law. The rules of international law and of international conventions shall be applicable to aliens only under the condition of reciprocity.

2. Authorities provided by the Constitution may by treaty or agreement be vested in agencies of international organizations, when this serves an important national interest and promotes cooperation with other States. A majority of three-fifths of the total number of Members of Parliament shall be necessary to vote the law sanctioning the treaty or agreement.

3. Greece shall freely proceed by law passed by an absolute majority of the total number of Members of Parliament to limit the exercise of national sovereignty, insofar as this is dictated by an important national interest, does not infringe upon the rights of man and the foundations of democratic government and is effected on the basis of the principles of equality and under the condition of reciprocity.”[7]

An interpretive statement added with the constitutional reform of 2001 declares that “Article 28 is the basis for the participation of the Country in the procedures of European integration.”

Thus, article 28 of the Constitution in combination with the EU treaties, habilitate the EU institutions to exercise constitutional competences and, under certain conditions, to restrict the national sovereignty of Greece. Therefore, this article is considered by the majority of the doctrine to have a “tacit constitutional reform function”.[8] In the case of the amendment of article 136 TFEU it was the Prime Minister, Giorgos Papandreou, who represented the country by participating in the meeting of the Council where this amendment was decided.

The statute approving the amendment of Article 136 TFEU was voted according to the regular parliamentary procedure of articles 70 f. of the Constitution. The constitutional basis invoked by the Government for the following of this procedure was article 28 paragraph 1 of the Constitution, which states that “The generally recognised rules of international law, as well as international conventions as of the time they are sanctioned by statute and become operative according to their respective conditions, shall be an integral part of domestic Greek law and shall prevail over any contrary provision of the law. The rules of international law and of international conventions shall be applicable to aliens only under the condition of reciprocity.”[9] An interpretive statement added to the constitutional reform of 2001 declares that “Article 28 is the basis for the participation of the Country in the procedures of European integration.” The article, however, does not specify the majority required for the vote of the statute ratifying the treaty.[10]

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

There have been no major legal/political problems during the approval of the amendment of article 136 TFEU. This amendment has been presented as a habilitation for the creation of a mechanism for the financial help of countries like Greece. Thus, it has been considered by most political parties (PA.SO.K., N.D., LA.O.S., DIM.AR., DI.SY.) the symbol of enhanced cooperation and solidarity in the European Union, and a step towards the redistribution of budgetary resources between Eurozone member states and towards further European integration. The rest of the parties (SY.RIZ.A. and K.K.E.) have criticized this amendment only in relation to the following Euro-crisis legal instruments (the ESM and the Fiscal Compact).[11]

However, things have been more complicated as far as the approval procedure is concerned, the debates for which took place during the campaign for the elections of the 6th May 2012. The amendment of the TFEU treaty was part of a more general draft bill, which also contained the ratification of the ESM and the Fiscal Compact. Therefore, debates concerning the constitutionality of the bill, and especially of the procedure of voting, were sometimes focused on these texts (see also questions VIII.2, VIII.3 and IX.3). The bill approving the Treaty amendment was drafted on March 15th, 2012 and was debated and voted in Parliament on March 28th, 2012.[12] It was voted in one day, with a majority of 194 deputies out of the 253 present voting in favor (total of deputies is 300). The deputies of PA.SO.K. and N.D., the two parties of the government coalition at the time, voted in favor. The members of SY.RIZ.A., DIM.AR., LA.O.S., and DI.SY. voted against. However, the members of DIM.AR. did not disapprove the treaty amendment itself, for which they declared “present”. Instead they voted against the statute in principle. It is interesting to note that LA.O.S. had participated in the government at the time of the decision of 9 December 2011(the political decision leading to the 136 TFEU amendment and the Fiscal Compact).[13]

During the parliamentary debates on 28 March 2012, the deputies of the opposition accused the PA.SO.K./ND Government of hiding these treaties from the Greek people, through the concise parliamentary procedure mobilized for their ratification. In general, especially the deputies of SY.RIZ.A. and LA.O.S., repeatedly criticized the functioning of the Parliament and the negligence to the parliamentary procedure and monitoring by the Government. In response, the deputies of PA.SO.K. claimed that they were “not acting in absentia of the Greek people because, by voting these treaties, [they were] supporting the basic choice of the Greek people, which is that the country remains in the Eurozone.”[14]

More precisely, deputies from LA.O.S. objected that the statute in question, because of its crucial importance for Greece and for Europe in general, and because of the fact that it attributes constitutional competences concerning fiscal and budgetary policy to organs of international organizations, should be voted according to the procedure defined in paragraph 2 of article 28. According to this paragraph, “Authorities provided by the Constitution may by treaty or agreement be vested in agencies of international organizations, when this serves an important national interest and promotes cooperation with other States. A majority of three-fifths of the total number of Members of Parliament shall be necessary to vote the law sanctioning the treaty or agreement.”[15] (180/300). The members of LA.O.S. argued that it was the Fiscal Compact that imposed a qualified majority for ratification in order to enter into force. They argued that the treaties under ratification change the structure and the decision-making procedure inside the Eurozone, and thus constitute a concession of constitutional competences to the Eurozone organs.[16] Thus, in order to preserve the validity of the voting procedure and to prove that the statute had been adopted by the qualified majority required, they demanded the procedure of nominal vote, which was followed at the end.[17]

The members of SY.RIZ.A. rejected the competence of Parliament to amend the treaties of the European Union. Reiterating objections already raised during the negotiation of the amendment of article 136 TFEU (see question V.1),[18] they argued that this amendment, as well as the ESM and Fiscal Compact entailed an amendment of the Constitution. Thus, a constitutional reform or a referendum was required, following the example of other European countries, like Ireland. In order to support the argument, the deputies invoked article 3 paragraph 2 of the Fiscal Compact. Thus, they invited the government to proceed to a referendum for the ratification of these provisions, or, at least, to wait for the elections, which were scheduled for the 6th of May. In any case, they argued that the government did not want to follow the special procedure of article 28 paragraph 2, even though it possessed the qualified majority needed, because it did not want to create a precedent for future voting procedures.[19] Mobilizing these arguments, the deputies of SY.RIZ.A. raised an objection of unconstitutionality before the Parliament, which was rejected by a raising vote, according to article 100 paragraph 2 of the Standing Orders of Parliament.[20]

Finally, the deputies of DIM.AR. emphasized the fact that the majority required was the absolute majority of the total number of deputies (151/300), according to paragraph 3 of article 28. According to this paragraph, “Greece shall freely proceed by law passed by an absolute majority of the total number of Members of Parliament to limit the exercise of national sovereignty, insofar as this is dictated by an important national interest, does not infringe upon the rights of man and the foundations of democratic government and is effected on the basis of the principles of equality and under the condition of reciprocity.”[21] The deputies of DIM.AR. alleged that paragraph 1 of article 28 of the Constitution, invoked by the government, was only interpretive and did not require a specific procedure for the ratification of European treaties, which have been always voted according to the third paragraph of this article. Indeed, according to them, the European Union is not an international organization but a union which they would like to be federal.[22]

The deputies of the governing parties (PA.SO.K. and N.D.) argued, however, that the Treaty amendment, the Fiscal Compact and the ESM do not expand the competences of the European Union. To support their argument they invoked the simplified procedure of Treaty revision followed.[23] In addition, the deputies of N.D. argued that European Union is not an international organization, according to the terms of article 28 paragraph 2 of the Greek Constitution, but a sui generis state organization.[24]

The Greek constitutional doctrine has been divided on the subject.[25] Most scholars, however, before the Eurozone crisis, considered that for the ratification of European Treaties and their amendments in general (and not with the simplified procedure followed), the Constitution requires a combined application of the procedural conditions of paragraph 2 and the substantial conditions of paragraph 3. Nevertheless, they emphasized that “the solution will not become definitive, until the broad until now parliamentary majority for the support of the European course of the country breaks.”[26]

Case law        
V.4

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

No, there is no court judgment on the 136 TFEU Treaty amendment. Indeed, in Greece there is no general possibility to directly attack legal statutes before the court.[27] Instead, judicial review of the legislator is diffused among all jurisdictions of the civil and administrative order, and is finally concentrated in the Supreme Administrative and Judiciary Courts (Council of State – “Symvoulio tis Epikrateias” and Areios Pagos respectively). Each justiciable possessing a legitimate interest, in the occasion of a litigation before a judge, can raise an objection of unconstitutionality of a legal statute applied in the case, both in case this statute is applied directly, and in case it is the legal basis of another act. According to article 93 paragraph 4 of the Constitution, “The courts are obliged to preclude the application of a legal statute, whose content is contrary to the Constitution.” Courts apply the same constitutional basis, in combination with article 28 paragraph 1, in order to monitor the compatibility of ordinary law with international conventions. Indeed, article 28 paragraph 1 declares: “The generally recognised rules of international law, as well as international conventions as of the time they are sanctioned by statute and become operative according to their respective conditions, shall be an integral part of domestic Greek law and shall prevail over any contrary provision of the law. The rules of international law and of international conventions shall be applicable to aliens only under the condition of reciprocity.”[28] The result of unconstitutionality/unconventionality is the non-application of the statute in the concrete case before the judge. Courts in general refuse to examine the respect of the rules of parliamentary procedure, which is considered interna corporis of the legislator.[29] In any case, given that the TFEU amendment was approved in 2012 and given the time-consuming character of Greek judicial procedures, there is no court judgment on the 136 TFEU Treaty amendment.

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

Not applicable.

[1] See the press conference of Giorgos Papandreou after the completion of the works of the European Council in Brussels, on the 25th of March 2011, available at http://archive.pasok.gr/portal/resource/contentObject/id/2d87c92c-84a6-411a-a67f-e00197e48071. See also “G. Papandreou: «No» to a suppression of vote, «yes» to a permanent support mechanism” [in Greek], Eleftherotypia, 29 October 2010, http://www.enet.gr/?i=news.el.article&id=218194.

[2] See question VIII.1 concerning the ESM negotiations.

[3] See the parliamentary debates of the 28th of March 2012, Πρακτικά Βουλής (Ολομέλεια), Συνεδρίαση ΡΙΣΤ’, Τετάρτη, 28 Μαρτίου 2012, 8004 available at http://www.hellenicparliament.gr/Praktika/Synedriaseis-Olomeleias?search=on&DateFrom=28%2F03%2F2012&DateTo=28%2F03%2F2012

[4] See the question of Alexis Tsipras in the parliamentary debates of the 10th of December 2010, in Πρακτικά Βουλής, Συνεδρίαση ΛΘ’, Παρασκευή 10 Δεκεμβρίου 2010, 2732 available at http://www.hellenicparliament.gr/UserFiles/a08fc2dd-61a9-4a83-b09a-09f4c564609d/es20101210.pdf. See also, Notis Marias, “Referendum for the Amendment of the Lisbon Treaty” [in Greek], Epikaira, 24 March 2011, http://www.epikaira.gr/epikairo.php?id=15885.

[5] See the response of Giorgos Papandreou to the question of Alexis Tsipras in the debates cited above.

[6] Source of the translation: http://www.hellenicparliament.gr/UserFiles/f3c70a23-7696-49db-9148-f24dce6a27c8/001-156%20aggliko.pdf. In general, this source is not used for the translation of the provisions added or amended with the constitutional amendments of 2001 and 2008, because it is not updated.

[7] Source of translation: http://www.hellenicparliament.gr/UserFiles/f3c70a23-7696-49db-9148-f24dce6a27c8/001-156%20aggliko.pdf.

[8] Cf. Antonis Manitakis and Lina Papadopoulou (eds.), H προοπτική ενός συντάγματος για την Ευρώπη [The Perspective of A Constitution For Europe]  (2003 Athina-Thessaloniki: Ant. N. Sakkoulas) 160 ff. See also citations for the relevant literature.

[9] Source of translation: http://www.hellenicparliament.gr/UserFiles/f3c70a23-7696-49db-9148-f24dce6a27c8/001-156%20aggliko.pdf

[10] See the parliamentary debates of the 28th of March 2012, Πρακτικά Βουλής (Ολομέλεια), Συνεδρίαση ΡΙΣΤ’, Τετάρτη, 28 Μαρτίου 2012, 8004 available at http://www.hellenicparliament.gr/Praktika/Synedriaseis-Olomeleias?search=on&DateFrom=28%2F03%2F2012&DateTo=28%2F03%2F2012, 8030.

[11] See question V.1. See the parliamentary debates of the 28th of March 2012.

[12] Legal Statute 4063/2012, ΦΕΚ Α’ 71, published on 30 March 2012.

[13] See the parliamentary debates of the 28th of March 2012, 8030.

[14] See the speech by Konstantinos Geitonas in the parliamentary debates of the 28th of March 2012, 8043.

[15] Source of translation: http://www.hellenicparliament.gr/UserFiles/f3c70a23-7696-49db-9148-f24dce6a27c8/001-156%20aggliko.pdf

[16] See the parliamentary debates, 8020, 8030, 8037, 8057.

[17] Ibid, 8063.

[18] See the question of Alexis Tsipras in the parliamentary debates of the 10th of December 2010,  in Πρακτικά Βουλής, Συνεδρίαση ΛΘ’, Παρασκευή 10 Δεκεμβρίου 2010, 2732 available at http://www.hellenicparliament.gr/UserFiles/a08fc2dd-61a9-4a83-b09a-09f4c564609d/es20101210.pdf

[19] See the parliamentary debates of the 28th of March 2012, cited above, 8020, 8032, 8050, 8058, 8063.

[20] Ibid, 8035. Traditionally there is no judicial review of the procedure followed by the Parliament, which is considered interna corporis. However, especially concerning the application of article 28 of the Constitution, the Supreme Administrative Court (Council of State), in its decision 668/2012 accepted to review the ratification of the Memorandum of Understanding by the Parliament. Cf. question X.9.

[21] Source of translation: http://www.hellenicparliament.gr/UserFiles/f3c70a23-7696-49db-9148-f24dce6a27c8/001-156%20aggliko.pdf

[22] Ibid., 8033, 8038, 8060, 8063.

[23] See the parliamentary debates.

[24] Ibid. 8037. See also the parliamentary debates of the 25th of October 2006, in the Commission for the Constitutional Reform, in Πρακτικά Επιτροπής Αναθεώρησης του Συντάγματος, Συνεδρίαση ΣΤ’, Τετάρτη 25 Οκτωβρίου 2006, available at http://www.hellenicparliament.gr/UserFiles/a08fc2dd-61a9-4a83-b09a-09f4c564609d/25102006.pdf. In fact, the vagueness of article 28 concerning the European Treaties has led to discussions on its amendment in 2006. However, also because of the disagreement between parties, the amendment was abandoned.

[25] It is interesting to note that constitutional lawyers are very often political personalities in Greece. For example, the president of PA.SO.K. is Professor of Constitutional Law in the University of Athens. Similarly, the Minister of Administrative Reform and Electronic Governance is Professor of Constitutional Law in the University of Thessaloniki.

[26] See Cf. Antonis Manitakis and Lina Papadopoulou (eds.), Η προοπτική ενός συντάγματος για την Ευρώπη, [The Perspective of A Constitution For Europe](2003 Athina-Thessaloniki: Ant. N. Sakkoulas) 160 ff., esp. 173. See also citations for the relevant literature. In the same direction are the arguments of Theodora Antoniou, especially as far as the TFEU amendment is concerned, in «Η απόφαση της Ολομελείας του Συμβουλίου της Επικρατείας για το ΜνημόνιοΜια ευρωπαϊκή υπόθεση χωρίς ευρωπαϊκή προσέγγιση [The Decision by the Plenum of the Council of State on the Memorandum – A European Affair Without A European Approach]», ToΣ, 1/2012, 197.

[27] There is, however, the High Special Court, instituted according to article 100 of the Constitution, which can monitor the constitutionality of a statute, in the case of contrary decisions on the matter by the two supreme courts, Council of State (administrative) and Areios Pagos (judiciary).

[28] Source of translation: http://www.hellenicparliament.gr/UserFiles/f3c70a23-7696-49db-9148-f24dce6a27c8/001-156%20aggliko.pdf

[29] However, in the case concerning the ratification of the Memorandum of Understanding, the judge accepted to enter into the examination of the procedure of ratification. See the relevant question.

Hungary

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

The amendment was initiated just before Hungary started its half year presidency of the EU on January 1st, 2011. Enikő Győri, State Secretary for European Affairs said: ‘Budapest would not like to re-negotiate the treaty of Lisbon’. According to her, Hungary could support only minor amendments to the Treaty. ‘Nobody was interested in opening Pandora’s box.’[1]

After these statements the Government (probably under German pressure) changed its opinion and supported the amendment, without any major change in the text. Some Hungarian governmental politicians said that they were supporting it in the beginning; it was only the press that misinterpreted their statements.

During the negotiation process the Government was free to act according to its own standards, because there was no debate in the Parliament about the issue.

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

In Hungary, the implementation of European norms is carried out by the Parliament. According to Article E Paragraph 4 of the Fundamental Act of Hungary, the authorization to recognize the binding nature of an international agreement in which Hungary exercises its national sovereignty jointly with the European Union requires a two-thirds majority of the votes of the Members of Parliament. The paragraph names the Founding Treaties as such international treaties.

The amendment of the 136 TFEU Treaty was introduced into the Hungarian legal system by Act IX of 2012[2], voted on 27 February 2012[3]. During the application procedure debates were limited: the act was proposed by the Government, and was accepted without amendments, with 320 for it, 40 against it and 0 abstentions. All the votes against the act came from the eurosceptic, far right party Jobbik.

The Treaty Amendment is an international treaty that delegates parts of national sovereignty to the European Union and therefore it has to be incorporated into the Hungarian legal system by a parliamentary act voted by the two-third majority.[4] This criterion was fulfilled and the cardinal act (see also on this concept question III.1) was accepted by the required majority.

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

Before approving the amendment, the Hungarian Parliament debated the issue. The Governing parties supported the amendment during the debate on 27 February 2012. The debate and the approval took place on the same day.

As the proposer of the act, the Government emphasized that the mechanism incorporated in the European law by the amendment is only binding on Eurozone member states, therefore the ratification imposes no legal commitments on Hungary[5] until it joins the Eurozone in the future. The Government supported the amendment on the basis that it provides a strong mechanism to reach economic and monetary stability for Eurozone member states, which must be a high priority for Hungary as well. The Government pointed out that the amendment would not widen the scope of powers of the European Union.

During the parliamentary debate, members of Jobbik criticized the amendment because according to their views it was a major step towards the forming of a United States of Europe, which is contrary to the interests of Hungary[6]. The Jobbik Party argued that the voting of the amendment caused a political crisis in Slovakia and even though the amendment is not binding on Hungary yet, it will be at the moment the country joins the Eurozone, and then Hungary will be the subject of strong liabilities introduced by the amendment. The reasoning of Jobbik was inaccurate, since the amendment became binding on Hungary after the ratification, however ESM would be binding on Hungary after a future ratification following its join to the Eurozone.

Other parties in the Parliament supported the government on the issue, on the basis that a strong Eurozone is a priority for Hungary because of its dependence onother member states.[7]

The importance of the issue for MPs is demonstrated by the fact that the act approving the 136 TFEU Treaty amendment was accepted after a debate in which three MPs and the under-secretary for Foreign Affairs held speeches for approximately 20 minutes all together.

The Government argued in Parliament that the treaty amendment increases the role of national Parliaments and opens up the opportunity for democratic debate. The Minister of Foreign affairs said: ‘there is no real alternative for Hungary but supporting the Treaty amendment’.[8]

Case law        
V.4

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

No, there is not any.

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

No other relevant information.

[1]http://www.euvonal.hu/index.php?op=hirek&id=6753

[2] The text of the act is available here: http://www.complex.hu/kzldat/t1200009.htm/t1200009.htm

[3] See the details on the Webpage of the Hungarian Parliament: http://www.parlament.hu/internet/plsql/ogy_szav.szav_irom?P_CKL=39&P_DATUM_TOL=2012.02.27&P_DATUM_IG=2012.02.27&P_SZAVMOD=5

[4]Article E Paragraphs 2 and 4 of the Hungarian Fundamental Law:

(2) In order to participate in the European Union as a Member State, and on the basis of an international treaty, Hungary may, to the extent necessary to exercise the rights and fulfill the obligations set out in the founding treaties, exercise some of its competences deriving from the Fundamental Law jointly with other Member States, through the institutions of the European Union.

(4) The authorisation for expressing consent to be bound by an international treaty referred to in paragraph (2) shall require the votes of two-thirds of all Members of Parliament.

 

[5]http://www.parlament.hu/internet/plsql/ogy_naplo.naplo_fadat?p_ckl=39&p_uln=166&p_felsz=195&p_szoveg=&p_felszig=195

[6]See the parliamentary debate here: http://www.parlament.hu/internet/plsql/ogy_naplo.naplo_fadat?p_ckl=39&p_uln=166&p_felsz=191&p_szoveg=&p_felszig=191

[7]This was said by independent, left wing MP Csaba Molnár during the debate: http://parlament.hu/internet/plsql/ogy_naplo.naplo_fadat?p_ckl=39&p_uln=166&p_felsz=193&p_szoveg=&p_felszig=193

[8]http://parlament.hu/internet/plsql/ogy_naplo.naplo_fadat?p_ckl=39&p_uln=162&p_felsz=247&p_szoveg=136&p_felszig=247

Ireland

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).

Italy

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

 Both in relation to the dynamics within the government and in the Parliament, Italy faced no particular difficulties in the negotiation of the amendment, in terms of serious obstacles to the actual feasibility of the approval.

This has to do with a common feature of the Italian politics in relation to what one can call, in general terms, «European affairs» (also including the regular international treaties concluded in the Euro zone crisis, namely the Fiscal Compact and the ESM Treaty, see question VIII.1): a certain (until now) stable bi-partisan favorable approach, by main center-left and center-right parties, in the approval of the related measures.

This was surely the case of the procedure of authorization by Law 23 July 2012, n. 115 of the 136 TFEU Treaty amendment: in fact, it is interesting here to highlight, as a first point and talking about general political/legal difficulties and related debates, that

§  the negotiation took place under the Berlusconi IV government (but in any case with the political approval of large part of the center-left opposition), and the ratification under the «technical» Monti government (with bi-partisan support)

§  in both parliamentary Chambers, and in their Committees in charge of the first review, the procedure in question was joined with the other procedures related to the Fiscal Compact and the European Stability Mechanism (ESM), as it is clear from the attached documents: (http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=Resaula&leg=16&id=667367, http://documenti.camera.it/leg16/resoconti/assemblea/html/sed0669/stenografico.pdf, so called «joint discussion», «discussione congiunta»; see also http://www.europarl.europa.eu/webnp/webdav/site/myjahiasite/users/fboschi/public/esm%20tscg/art.%20136%20ESM%20fiscal%20compact%20ratprocess.pdf).

In this joint discussion, no particular point was raised on the matter of the amendment of Art. 136 TFEU, since the focus was not on the technical legal aspects of the three measures (for instance, the problem of competence or of legal basis of the Treaty reform), but mainly on the broad macroeconomic perspectives.

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

It is probably relevant to highlight that, in both the Chambers, and for both the initial part in front of the competent Parliamentary Committees and the discussion in the Chamber, the procedure of authorization by law of the Fiscal Compact was joined with the other procedures related to the Treaty amendment article 136(3) TFEU and the European Stability Mechanism (ESM).

In fact, given the aforementioned «joint discussion» (see question V.1) in the Italian Parliament in relation to the 136 TFEU Amendment, the Fiscal Compact and the European Stability Mechanism (ESM), the answer will be common for the 136 TFEU Amendment (here), the Fiscal Compact (see question VIII.2) and the ESM Treaty (see question IX.2).

The legal process through which these measures have been approved/ratified in Italy was the typical process dictated by articles 80 and 87(8) of the Constitution.

According to art. 80, the two Chambers of the Parliament (Camera dei Deputati and Senato della Repubblica) «authorize by law the ratification of international treaties which are of a political nature, or which call for arbitration or legal settlements, or which entail changes to the national territory or financial burdens or changes to legislation».

Art. 87(8) Const. reads: «The President shall: authorize the introduction to the Houses of bills initiated by the Government, promulgate the laws and issue decrees having the force of law as well as regulations, call popular referenda in the cases provided for by the Constitution, appoint State officials in the cases provided for by law, accredit and receive diplomatic representatives, and ratify international treaties which have, where required, been authorized by the Houses». So the final step of the ratification procedure – and, formally speaking, the ratification itself – is an act of the President of the Republic. In any case, it is important to highlight that this is a typical act that, in the categorization of the President’s acts, is normally qualified as “formally but not substantially” presidential: this means that the act involves the formal role of the President as the highest representative of the Republic, especially in international relations, but this does not imply his substantive role, nor his liability, for the related political choices, which are in the sphere of the Government in terms of negotiation, and of the Parliament for the authorization, as already seen.

No referendum was held on the 136 Treaty amendment (or Fiscal Compact or ESM Treaty). In fact, art. 75(2) Constitution excludes this possibility for the ratification of international treaties as it reads «Referenda are not admissible in the case of tax, budget, amnesty and pardon laws, or laws authorizing the ratification of international treaties».

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

The legal process through which the 136 TFEU Treaty amendment has been approved in Italy was the typical process dictated by articles 80 and 87(8) of the Constitution.
This means that Italy had an authorization law adopted, through the regular legislative procedure of art. 72 of the Constitution, by both the two Chambers of the Parliament, and the formal act of ratification issued by the President of the Republic (see question V.2, and in more detail on the procedure question IX.2 on the ratification of the Fiscal Compact).

It is relevant here to highlight again, talking about general political/legal difficulties and related debates, that, in both the parliamentary Chambers, and in their Committees in charge of the first review, the procedure of authorization by law of the 136 TFEU Treaty amendment was joined with the other procedures related to the Fiscal Compact and the European Stability Mechanism (ESM), as it is clear from the attached documents.


The other important point to highlight is that in the Italian political system, the two major parties of the center-right and center-left coalitions (Popolo della Libertà e Partito Democratico, respectively) are both strong pro-European movements, with really few, and scarcely relevant, exception among their members (see also question I.1 on the political context of Italy during the Eurozone crisis). This can be considered (at least until now) as a traditional element of the Italian party system, probably one of the few rooted elements in a period of possible changes like the present. This has historically had an impact on the quantity and quality of the Italian debate on European issues: the related bills are normally adopted in the Parliament jointly by these two parties (and a large part of the satellite-parties),[1] with relatively scarce, and normally apologetic, debate, and again relatively scarce echo in the general public debate.


This has only slightly changed with the Eurozone crisis, and the ratification procedure of the 136 TFEU Treaty amendment (and of the other international measures, as aforementioned) constitutes evidence of that. The bill for authorization of the 136 TFEU Treaty amendment was presented by the competent ministers of the Berlusconi IV government on 19 September 2011, and then discussed and approved (jointly), by the same Chambers, in July 2012 under the Monti government. This means that, at the time of the presentation, there was a political system in place with a strong center-right governing coalition with the biggest parliamentary majority in the Italian history, and the center-left coalition in opposition; at the time of the discussion and the approval, both coalitions supported the new Monti government (as a kin
d of “große Koalition” pushed by the choices of the President of the Republic after PM Berlusconi’s resignation in November 2011, linked itself to the Eurozone crisis, see question I.1), and only some small parties formally in opposition.
The “stenographic reports” attached show that the rapporteurs in charge of the different bills were members both of the centre-right parties and of the center-left (symbolizing a kind of joint endorsement).[2]

The parliamentary debates (held in the upper house[3] between 14 December 2011 – first exams in the Committees – and 12 July 2012 – final approval – and in the lower house[4] between 17 July 2012  – first exams in the Committees – and 19 July 2012 – final approval) were obviously influenced by the joint discussion on the three different ratification/approval procedures.

The rapporteurs themselves emphasized the difference with the old times in which the ratification of the EU-related bills was seen as an only “technical” debate, with no political echo nor particular resistance. But the debates seem to be a general discussion of the typical, historical problems of the so called democratic deficit in the European Union, with strong arguments, from both center-right and centre-left, for the need of a more “political” federal Union.
Sometimes the discussion touches on the German “expansionist” commercial policy in Europe and in the Mediterranean countries, because of the macroeconomic and monetary dynamics helping German exports in comparison with the Italian ones.

But in general, the real technical discussion relevant for this question is linked to the problems of the financial inadequacy of the European stability mechanism, and the important concerns for the possible great costs for the Italian budgetary system.[5]

Since the plenary debates took place in mid-2012, real strong resistance to the approval of the bill came only from the relatively small parties of the new opposition under the Monti government, and in particular by the Lega Nord group (a federalist and regionalist political party rooted in the Northern part of Italy, which some months before voted in favor of the Greece related bilateral measures, with the idea that that would strengthen their “fiscal federalism“ projects – see question IV.8).

In this respect, some (relatively scarce) broad concerns are raised on the constitutionality of the measures, and the sovereign attributions on fiscal and budgetary policy:[6] for instance by emphasizing how the ESM «takes away from the Parliament, and therefore from the citizens, the responsibility of the national budget by handing it to an executive power without constitutional legitimacy, namely the Council of Finance Ministers of the countries of the European Union (…) and the European Central Bank»;[7] or how these measures themselves, for their implied economic burden, would go contrary to the rationale of the golden rule of the renewed article 81 of the Constitution on the financial coverage of every law of the State.[8]

A PdL member suggested that, in view of the constitutional significance of such measures, the special “aggravated” procedure for constitutional reform should have been used.[9]

A general emphasis was put on the forthcoming important judgment of the German Constitutional Court, at the time still awaited, as evidence of a more structured and serious debate on these themes in other Member states.[10]

Some of the opponents actually tried to discuss the issue of a possible referendum on the new European measures,[11] but it is important to highlight in this respect that no “consultative referendum” of this kind is foreseen in the Italian Constitution, and the only way to establish it would be by adopting a special “constitutional law” enabling such a referendum (legge costituzionale), used only once in the history (but precisely on EU-related issues, in 1989).

Last point to mention: some important, even if only symbolic and numerically irrelevant, defections came for the center-right coalition from some traditionally liberal members, based on concerns for new possible increases in taxes.

Case law        
V.4

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

 No. This was not surprising, given the limited possible modalities of access to the Italian Constitutional Court (see under Question IV.5).

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

No other relevant information

[1]               See, for instance, the majorities at the Camera dei Deputati at the page http://parlamento16.openpolis.it/votazione/camera/ratifica-ed-esecuzione-della-decisione-del-consiglio-europeo-2011199ue-che-modifica-larticolo-136-del-trattato-sul-funzionamento-dellunione-europea-relativamente-a-un-meccanismo-di-stabilit%C3%A0/39316.

[2]               http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=Resaula&leg=16&id=667367.

[3]               http://leg16.senato.it/leg/16/BGT/Schede_v3/Ddliter/37365.htm.

[4]               http://leg16.camera.it/126?tab=&leg=16&idDocumento=5357&sede=&tipo=.

[5]               See for instance, MP D’Amico, plenary discussion at the Camera dei Deputati, 11 July 2012: http://leg16.camera.it/410?idSeduta=0668&tipo=stenografico#sed0668.stenografico.tit00110, p. 60.

[6]               An highly debated point at least by some constitutional lawyers in the country, somehow disregarded in the parliamentary debates.

[7]               MP Boldi, joint plenary discussion of the Senato, 11 July 2012: http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=Resaula&leg=16&id=667367.

[8]               MP D’Amico, joint plenary discussion of the Camera dei Deputati, 18 July 2012, http://leg16.camera.it/410?idSeduta=0668&tipo=stenografico#sed0668.stenografico.tit00110.

[9]                 MP Azzolini, joint plenary discussion of the Senato, 11 July 2012: http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=Resaula&leg=16&id=667367.

[10]              MP Evangelisti, joint plenary discussion of the Camera dei Deputati, 19 July 2012, http://leg16.camera.it/410?idSeduta=0669&tipo=stenografico#sed0669.stenografico.tit00020.

[11]              MP Mazzatorta, joint plenary discussion of the Senato, 11 July 2012: http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=Resaula&leg=16&id=667367.

Latvia

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

There were no political or legal difficulties during the negotiations on the amendment of Art 136 TFEU.

On 10 December 2010 in the sitting of the Parliamentary Committee for European Affairs (PCEA) the Minister for Foreign Affairs (G.V. Kristovskis) presented the Government’s position.[1]

In the position Latvia indicated that it supports the amendments, which were regarded as necessary for creating a system for overcoming the crisis. Latvia agreed that the mechanism based on these Treaty amendments would be formed by the Eurozone countries by concluding intergovernmental agreements but the non-euro countries will be able to decide on joining the mechanism, if they wish to do so. As essential was seen the participation of non-euro states in the discussions concerning the establishment and financing of the mechanism,[2] probably, in light of the fact that Latvia was planning to join the Eurozone in 2014 which in the meantime has happened. The position was approved.[3]

As well from the meeting of 23 March 2011 it is clear that Latvia supported the coming into force of the Art 136 TFEU amendment on 1 January 2013.[4]

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

There are two ratification procedures depending on whether or not an international treaty delegates part of national competences to international institutions. According to Art 68 of the Constitution:

“All international agreements, which settle matters that may be decided by the legislative process, shall require ratification by the Saeima.

Upon entering into international agreements, Latvia, with the purpose of strengthening democracy, may delegate a part of its State institution competencies to international institutions. The Saeima may ratify international agreements in which a part of State institution competencies are delegated to international institutions in sittings in which at least two-thirds of the members of the Saeima participate, and a two-thirds majority vote of the members present is necessary for ratification.

Membership of Latvia in the European Union shall be decided by a national referendum, which is proposed by the Saeima.

Substantial changes in the terms regarding the membership of Latvia in the European Union shall be decided by a national referendum if such referendum is requested by at least one-half of the members of the Saeima.”[5]

In the case of the Art 136 TFEU amendment there were some discussions concerning the appropriate procedure for approval. The Parliament consulted its legal services and the Ministry of Foreign Affairs and in the end agreed that the amendments do not expand the scope of EU competences and no new competences are being delegated to the European institutions. Hence it was decided that the draft law on “The Decision of the European Council amending Article 136 of the Treaty on the Functioning of the European Union dealing with stabilization mechanism for countries whose currency is euro” can be adopted by using a simple ratification procedure (with a vote of simple majority).[6] Thus, the draft law was adopted in two readings and by simple majority. Two instead of three readings is an exception provided for inter alia international treaties according to the Art 114(2)(3) of The Rules of Procedure of the Saeima.[7]

In total there are 100 places in the Latvian Parliament. In the first reading there were 79 MPs present; 78 MPs out of those voted in favour and one abstained. Therefore the draft law was convincingly approved in the first reading.[8] In the second reading 79 MPs out of 79 who were present voted in favour and no one abstained or voted against, therefore the draft law was unanimously adopted in the second reading by all the MPs who were present at the reading.[9]

The President announced the law on 9 May 2012 and the ratification was notified to the EU Council on 24 May 2012.

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

In general, no real difficulties were encountered during the ratification process of the 136 TFEU Treaty amendments. However, there were some debates in the Parliament.

Before the draft law ratifying amendment of Art 136 TFEU reached the Parliament there were some discussions about the necessity of a qualified majority in this case in accordance with Art 68 Constitution. At the time the coalition had only 56 (out of 100) votes in the Parliament and the Union of Greens and Farmers (ZZS) at the time was in the opposition. In January 2012 the Prime Minister expressed an opinion that there will likely be a need for a two-thirds majority concerning several questions connected with European financial stabilization.[10] As well the Speaker of the Parliament (Solvita Āboltiņa, coalition, Vienotība) stated that the discussions for ensuring a two-thirds majority will be carried out with the two biggest forces in the opposition – ZZS and SC in order to convince them that this is a question not for political quarrels but instead a question of „the future existance of Latvian state”.[11] ZZS, being in the opposition, used this opportunity and the unclear situation concerning the necessary amount of votes and proposed a deal where it will support the initiatives for strengthening the fiscal discipline only if it will get two minister places in the coalition.[12]

In response to the deal proposed by the ZZS the Government indicated that a broadening of the coalition is not on the agenda and in reaction the ZZS later revoked its demands.[13] However, on 29 February 2012 in order to gain Parliamentary support inter alia for the amendment of Art 136 TFEU the Prime Minister signed an agreement with ZZS where he undertook to get bigger direct payments to Latvian farmers starting from 2014 and no less cohesion funding than in the previous planning period.[14] In return, the ZZS promised to support the Fiscal Compact and associated changes in national laws (this includes as well the support for ratification of the amendment of article 136 TFEU), except for potential changes in the Constitution. The agreement provides that the Prime Minister in the discussions concerning the EU multiannual budget for 2014-2020 will “strongly insist” on ensuring that in the context of the Common Agricultural Policy Latvian farmers will get significantly greater support, reaching around 80% of the average level of payments in the EU while at the same time the funding for rural development will not be reduced.[15]

In the end when Art 136 TFEU amendment reached the Parliament, it was decided that in this particular case a two-thirds majority is not necessary (see Question V.II). Nevertheless, in fact, after all the discussions preceding the ratification, the amendment gained such a level of support.

After the ratification Prime Minister Valdis Dombrovskis expressed satisfaction that the “opposition puts the national interests of Latvia in higher regard than the borderlines between coalitionand opposition”.[16] He continued that “These [Fiscal Compact] Treaties are important instruments to ensure the stability of Latvia and the whole of Europe. The Latvian position in these questions will determine whether we will join the core [countries] leading European development.”[17]

During the ratification process when the draft law ratifying amendment of Art 136 TFEU was discussed in the Committee of Foreign Affairs in the Parliament the Minister of Foreign Affairs, Edgars Rinkevičs, stressed that even though the Treaty amendments providing for establishment of the ESM have to come into force on 1 July 2012, Latvia will have to join the ESM and start the payments only after joining the Eurozone in 2014.[18] It was planned that the Latvian payment would be around 144.29 million LVL during a five-year-period.[19]

In the Parliamentary session on 26 January 2012 V. Zatlers (previously the President of Latvia, at the time one of the leaders of the coalition political force Reform Party (RP)) emphasized that there is a need to build both an economically and politically stronger European Union (EU) internally in order to gain greater influence and competitiveness at the global level. Therefore, the Art 136 TFEU amendment and Fiscal Compact in Latvia are on top of the agenda. He stressed that there are no doubts that by strengthening the euro and the EU Latvia strengthens its own economy and, thus, in fact is protecting its own economic and national interests.[20]

The draft law ratifying Article 136 TFEU Treaty amendment was adopted in two readings. In the first reading on 8 March 2012 the Parliament voted for the draft law almost unanimously. The representative from the Foreign Affairs Committee (Ojārs Kalniņš, coalition, Vienotība) explained that with the help of these changes to the Lisbon Treaty a concrete mechanism will be created for fighting such economic problems as Greece and other Member States were facing at the moment:

“The payments to this new stabilization mechanism are similar to insurance. We do not know whether there will be an accident, however, for the sake of security we buy insurance in order to cover potential losses. Similarly, the Eurozone countries with the help of this new mechanism will secure themselves against liquidity problems in the future”.[21]

Only one MP (K. Engelis, Coalition, ZRP) participated in the debates during the final (second) reading and expressed an opinion that this vote will have a symbolic meaning and will have an impact on how the joining the Eurozone will be decided by the Parliament and whether a simple vote in the Parliament will be enough then as well. He stated that already by joining the EU Latvia has expressed its willingness and determination to introduce the euro and this vote can be seen as a vote for the euro. He insisted that unanimity would be very important because it would be a clear signal both to the society of Latvia and its partners in the EU that a strong euro belongs to the national interests of Latvia. He added that it will be easier for Latvia to survive potential crises in the future, if it will be part of the Eurozone.[22]

Case law  
V.4

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

No, there has not been such a judgment.

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

Not applicable.          

[1] Annex XXV_Saeimas 10 Protokols 15 10_12_2010, p. 2.

[2] Ibid.

[3] Ibid.

[4] Annex XXVII_Saeimas 10 Protokols 26 23_03_2011,  p. 2.

[5]  Please see the English version of the Constituion of the Republic of Latvia. Available under: http://www.saeima.lv/en/legislation/constitution (last visited 23 June 2013).

[6] Minutes of the Parliament session, 8 March 2012 concerning „Par Eiropadomes lēmumu, ar ko Līguma par Eiropas Savienības darbību 136.pantu groza attiecībā uz stabilizācijas mehānismu valstīm, kuru naudas vienība ir euro”. Available under: http://titania.saeima.lv/LIVS11/saeimalivs11.nsf/0/66F8393F6A9274FFC22579C00031C183?OpenDocument (last visited 23 June 2013) and see as well Art 114The Rules of Procedure of the Saeima (http://likumi.lv/doc.php?id=57517).

[7] According to Art 114The Rules of Procedure of the Saeima A draft law shall be deemed adopted and shall become a law if it has been considered in three readings or, if it is recognized as urgent, it is a draft budget law or contains amendments to the state budget or it is a draft law on the ratification of international agreements, in two readings, and, if having been put to a vote in its entirety, it has received an absolute majority of votes of the Members present.

[8] Minutes of the Parliament session, 8 March 2012 concerning „Par Eiropadomes lēmumu, ar ko Līguma par Eiropas Savienības darbību 136.pantu groza attiecībā uz stabilizācijas mehānismu valstīm, kuru naudas vienība ir euro”. Available under: http://titania.saeima.lv/LIVS11/saeimalivs11.nsf/0/66F8393F6A9274FFC22579C00031C183?OpenDocument (last visited 23 June 2013).

[9] Minutes of the Parliament session, 19 April 2012 concerning „Par Eiropadomes lēmumu, ar ko Līguma par Eiropas Savienības darbību 136.pantu groza attiecībā uz stabilizācijas mehānismu valstīm, kuru naudas vienība ir euro”. Available under:http://titania.saeima.lv/LIVS11/saeimalivs11.nsf/0/8A632236D5F23615C22579EA0024C05D?OpenDocument (last visited 23 June 2013).

[10] Laikraksts: ZZS piedāvā “darījumu” valdības koalīcijai. Available under: http://www.ir.lv/2012/1/16/laikraksts-zzs-piedava-darijumu-valdibas-koalicijai (last visited 11 November 2013).

[11] Ibid.

[12] Ibid.

[13]  DELFI, Ārlietu komisija konceptuāli atbalsta Lisabonas līguma ‘finanšu stabilitātes’ grozījumus. 29 February 2012. Available under: http://www.delfi.lv/news/national/politics/arlietu-komisija-konceptuali-atbalsta-lisabonas-liguma-finansu-stabilitates-grozijumus.d?id=42170714 (last visited 23 June 2013).

[14] Brigmanis: Dombrovska vienošanās ar ZZS par ES budžetu nav izpildīta un notikusi piekāpšanās ES diktātam. Available under:  http://www.delfi.lv/news/national/politics/brigmanis-dombrovska-vienosanas-ar-zzs-par-es-budzetu-nav-izpildita-un-notikusi-piekapsanas-es-diktatam.d?id=43044272#ixzz2kKLiJb7f (last visited 11 Novermber 2013).

[15]  DELFI, ZZS premjeram nesola balsot par fiskālās disciplīnas stiprināšanas grozījumiem Satversmē. Available under: http://www.delfi.lv/news/national/politics/zzs-premjeram-nesola-balsot-par-fiskalas-disciplinas-stiprinasanas-grozijumiem-satversme.d?id=42170070 (last visited 23 June 2013); ZZS premjeram nesola balsot par fiskālās disciplīnas stiprināšanas grozījumiem Satversmē. Available under: http://www.delfi.lv/news/national/politics/zzs-premjeram-nesola-balsot-par-fiskalas-disciplinas-stiprinasanas-grozijumiem-satversme.d?id=42170070#ixzz2kKNV554v (last visited 11 November 2013). It is interesting to not that in February 2013 the ZZS declared that  the agreement has not been fulfilled by the Prime Minister and Latvia has yielded to the European dictatum. The situation concerning the direct payments to farmers has remained the same – until 2020 it has been planned that Latvia will achievereceive the payments which amount to 80% of the average payment levels in the EU (Brigmanis: Dombrovska vienošanās ar ZZS par ES budžetu nav izpildīta un notikusi piekāpšanās ES diktātam. Available under : http://www.delfi.lv/news/national/politics/brigmanis-dombrovska-vienosanas-ar-zzs-par-es-budzetu-nav-izpildita-un-notikusi-piekapsanas-es-diktatam.d?id=43044272#ixzz2kKQ72xSd (last visited 11 November 2013).

[16] DELFI, ZZS premjeram nesola balsot par fiskālās disciplīnas stiprināšanas grozījumiem Satversmē. Available under: http://www.delfi.lv/news/national/politics/zzs-premjeram-nesola-balsot-par-fiskalas-disciplinas-stiprinasanas-grozijumiem-satversme.d?id=42170070 (last visited 23 June 2013).

[17] Ibid.

[18]  DELFI, Ārlietu komisija konceptuāli atbalsta Lisabonas līguma ‘finanšu stabilitātes’ grozījumus. 29 February 2012. Available under: http://www.delfi.lv/news/national/politics/arlietu-komisija-konceptuali-atbalsta-lisabonas-liguma-finansu-stabilitates-grozijumus.d?id=42170714 (last visited 23 June 2013).

[19] Ibid.

[20] Minutes of the Parliament session, 26 January 2012. Available under: http://saeima.lv/lv/transcripts/view/104 (last visited 23 June 2013).

[21]  DELFI, Saeima konceptuāli atbalsta Lisabonas līguma ‘finanšu stabilitātes’ grozījumus. 8 March 2012. Available under: http://www.delfi.lv/news/national/politics/saeima-konceptuali-atbalsta-lisabonas-liguma-finansu-stabilitates-grozijumus.d?id=42190854 (last visited 23 June 2013).

[22] Minutes of the Parliament session, 8 March 2012 concerning „Par Eiropadomes lēmumu, ar ko Līguma par Eiropas Savienības darbību 136.pantu groza attiecībā uz stabilizācijas mehānismu valstīm, kuru naudas vienība ir euro”. Available under: http://titania.saeima.lv/LIVS11/saeimalivs11.nsf/0/66F8393F6A9274FFC22579C00031C183?OpenDocument (last visited 23 June 2013)

Lithuania

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

No difficulties were publicly reported. I requested the Ministry of Finance to provide information on the issues concerning negotiations of the eurocrisis instruments under the Law on the Right to Obtain Information from State and Municipal Institutions. The Ministry replied via email on 7 September 2015. In its reply to this particular question the Ministry of Finance indicated the following: ‘Lithuania was not an eager supporter of the amendment, however, for the sake of compromise and in the interest of EU financial stability Lithuania did not object to a partial amendment of article 136 TFEU, which would include a provision enabling establishment of the stability mechanism, and would be based on strict conditionality. Lithuania’s primary interest was transparency of further consultations on the permanent mechanism of crisis management, which would be held in cooperation with all EU Member States and their national parliaments.’[1]

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

The amendment was approved on 12 June 2012 by the Seimas adopting a Law ratifying the amendment of Art. 136 TFEU with regard to a stability mechanism for Member States whose currency is the euro, made by the decision no. 2011/199 of the European Council.[2]

The explanatory memorandum of the Law[3] argued that it was an important measure facilitating the creation of a permanent crisis management mechanism, which would be used when the need would arise to safeguard the financial stability of the eurozone as a whole. The amendment was presented as a clear legal ground to establish the ESM, which would be created by the agreement of the Member States. It further emphasized that the new provision reflects the ability to create the ESM to the eurozone Member States without suggesting that in the absence of such a provision of the TFEU it would not be permissible to establish the ESM. It further emphasized that although it was the primary duty of the eurozone Member States to solve their fiscal problems, and that the ESM would not apply to the States which are not party to the eurozone, it was in the interest of all EU Member States to ensure stability of the eurozone. These arguments were reiterated during the discussions before ratification.  

The question of legal basis to ratify the treaty did not raise any public discussions. It was presented as a technical issue and was accepted as such without further consideration. It was agreed that the ratified document is an amendment of the TFEU, despite the fact that the amendment itself was made by a decision of the European Council.

The technical issue of whether it was a treaty or a European Council decision which needed to be ratified was raised by the Parliament’s legal department:[4] the draft of the ratification law referred to the decision of the European Council of the European Union. It was agreed that even though the amendment of the TFEU was made by a European Council decision, the amendment was still a treaty amendment, therefore the document to be ratified was the TFEU, not the decision of the European Council.

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

No difficulites were encountered. During the discussions no serious argument against ratification of this Law was voiced. In support of ratification Kęstutis Glaveckas, a chairman of the Parliamentary Budget and Finance Committee, argued that ratification of the Law would show solidarity with the eurozone Member States, whereas failure to ratify would destroy everything that Lithuania sought to achieve during the past eight years.[5]

The Minister of Foreign Affairs A.Ažubalis argued that failure to ratify would mean that [Lithuanian Seimas] creates a hurdle to stabilization of the vulnerable situation in the financial markets and does it without clear reasons.[6] P.Auštrevičius noted the potential benefit to Lithuania to have resort to the fund in the future in case of need.[7]

Members of the political group Order and Justice Julius Veselka and Egidijus Klumbys argued against ratification on the ground that the document was irrelevant to Lithuania which was not yet a member of the eurozone. E. Klumbys added that ratification of this law contradicted the Constitution of the Republic of Lithuania.

The amendment was ratified with 81 votes for, 0 against and 8 abstentions.

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

No.

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

The Law ratifying an amendment of Art. 136 of the TFEU was subsequently amended on 23 January 2014. The need for an amendment arose because the ratifying Law used the term ‘euro’ with a Lithuanian ending, and was written in the following way: ‘euras (euro)’. This did not comply with the formal EU requirements that the name of the common currency should be identical in its nominative singular use. The government proposed this amendment in view of the planned entry to the eurozone the year after so that the European Central Bank would not have a ground to criticize Lithuania in its opinion.[8] On 23 January 2014 the amendment was approved by Seimas with a vote of 102 in favour, one against and one abstention.

 

 

 

[1] A. Jonušas, „Fw: Dėl informacijos pateikimo“ Message to Loreta Šaltinytė“, 7 September 2015. Email in Lithuanian. Translated by L. Šaltinytė.

[2]  LR įstatymo dėl Sutarties dėl Europos Sąjungos veikimo 136 straipsnio, kiek tai susiję su stabilumo mechanizmu, taikytinu valstybėms narėms, kurių valiuta yra euras (euro), pakeitimo, priimto 2011 m. kovo 25 d. Europos Vadovų tarybos sprendimu 2011/199/ES, ratifikavimo [The Law on ratification of the amendment of Art. 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for Member States whose currency is the euro], 2012-06-12 Nr. XI-2058; Pakeitimo įstatymas, 2014-01-23 Nr. XII-763. An official translation in English is available at https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/a6e453d08d9211e39e3c992f044525a9?jfwid=cxhrnxzkm, [last accessed on 23 November 2015].

[3] Užsienio reikalų ministerija, Lietuvos Respublikos įstatymo Dėl 2011 m. kovo 25 d. Europos Vadovų Tarybos sprendimo 2011/199/ES, kuriuo iš dalies keičiamas Sutarties dėl Europos Sąjungos veikimo 136 straipsnis, kiek tai susiję su stabilumo mechanizmu, taikytinu valstybėms narėms, kurių valiuta yra euras, ratifikavimo Projekto nr. XIP-3638, Aiškinamasis raštas [Explanatory memorandum on draft Law no. XIP-3638], 2011-09-26.

[4] LR Seimo kanceliarijos teisės departamentas, Išvada dėl Lietuvos Respublikos įstatymo „Dėl 2011 m. kovo 25 d. Europos Vadovų Tarybos sprendimo 2011/199/ES, kuriuo iš dalies keičiamas Sutarties dėl Europos Sąjungos veikimo 136 straipsnis, kiek tai susiję su stabilumo mechanizmu, taikytinu valstybėms narėms, kurių valiuta yra euras, ratifikavimo” projekto [Seimas’ Chancellery, Department of law, Conclusion on draft Law No. XIP-3638, 10 October 2011].

[5] Seimo rytinio posėdžio stenograma. 2012-06-12 [Transcript of Seimas’ 12 June 2012 morning session].

[6] Ibid.

[7] Ibid.

[8] Įstatymo „Dėl Sutarties dėl Europos Sąjungos veikimo 136 straipsnio, kiek tai susiję su stabilumo mechanizmu, taikytinu valstybėms narėms, kurių valiuta yra euras (euro), pakeitimo, priimto 2011 m. kovo 25 d. Europos Vadovų Tarybos sprendimu 2011/199/ES, ratifikavimo” pakeitimo įstatymo projekto aiškinamasis raštas [Explanatory memorandum of the Law on ratification of Art. 136 of the Treaty on the Functioning of the European Union with regard to the Stability mechanism for Member States whose currency is the euro] XIIP-1344.

Luxembourg

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

No difficulties known.

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

The amendment was ratified on the basis of the ‘Loi portant approbation de la décision du Conseil européen du 25 mars 2011 modifiant l’article 136 du traité sur le fonctionnement de l’Union européenne en ce qui concerne un mécanisme de stabilité pour les Etats membres dont la monnaie est l’euro’[1] . It was approved by the Chambre des Députés by a majority of 66,7% on 26 June 2012, granted by the Grand Duc du Luxembourg on 3 July 2012 and published in the official gazette on 5 July 2012.[2] 48 members of Parliament voted in favour (all members of the parliamentary groups supporting the government (Christian Democrats and Social Democrats) as well as all members of the opposition parties déi gréng (the Greens) and DP (Conservative Liberals)). 5 MPs voted against the law (ADR (National Conservatives) and déi Lénk (Democratic Socialists)).[3] This law consists of one unique Article, which contains the approval of Luxembourg to Council decision 2011/199/EU. In addition, the mentioned Council decision is attached and forms part of the national law. The approval by a qualified majority was necessary because the Luxembourg Constitution demands such a majority for those laws, which transfer competences to an international institution.

Luxembourg laws, which transfer competences to an international institution, must be adopted by a qualified majority (Articles 49bis, Article 37 (2), Article 114 (2) of the Luxembourg constitution). In the case of a conflict between the national norm and a norm of international law, which has direct effect, the international rule prevails. The same rule is applied in a conflict between national and EU law because the Luxembourg Conseil d’Etat has decided that the European Treaties have created a new legal order and that the Member States have limited their competences in favour of this new order.[4]

Luxembourg has a monistic tradition which means that rules of international law apply in the same way as national legal acts. However, Luxembourg has to approve the international treaty. Thereby, it is important to distinguish between the ratification and the internal legal force. The ratification act simply states that the international treaty is hereby approved which authorises the government to ratify the treaty, but it does not create any legal effect of the rules contained in the international treaty. The ratification is an approval and does not transpose the rules laid down in the international treaty. In order to enter the international treaty into force as part of Luxembourg’s internal law, three conditions have to be fulfilled: (1) Luxembourg must have ratified the treaty, (2) the treaty must be in force on the international level and (3) the wording of the treaty must be published in the public gazette such as prescribed for national legal acts. Even though many acts of ratification contain the approval as well as the text of the international treaty as part of the national law, these two steps (ratification and internal legal force) must be distinguished. The publication of the ratification act is legally different from the publication of the text of the international treaty required by Article 37 of the Luxembourg Constitution, even though these two steps are often made in the same national legal act.

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

Even though the amendment of Article 136 TFEU does not itself create financial obligations, the government reasoned the amendment of Article 136 TFEU by the need to introduce the ESM, which causes financial obligations for Luxembourg. In the view of all Luxembourg institutions (government, parliament, Conseil d’Etat, etc.), the amendment of Article 136 TFEU and the creation of the ESM are closely linked.[5] All debates about the amendment of the European Treaties also refer to the establishment of the ESM itself.

The Luxembourg Conseil d’État agreed on the law, which contains the approval of Luxembourg to Council decision 2011/199/EU, but also expressed some critique (for more details about the role of the Conseil d’Etat and its competences under the Luxembourg Constitution see question II.2).[6] Several points were criticised by the Conseil d’Etat. Firstly, the law did not contain a financial schedule (fiche financière), which is compulsory for all laws burdening the budget (Article 79 (1) of Loi du 8 juin 1999 sur le Budget, la Comptabilité et la Trésorerie de l’État). A fiche financière is an overview containing the expected short, middle and long term effects on the budget. In addition, the type, duration and impact of the expenses must be mentioned. Secondly, the Conseil d’État was not convinced that the ESM would achieve the highest rating from rating agencies and would be an effective rescue mechanism because the main part of the monetary volume of the ESM (Euro 620 billion out of Euro 700 billion) has to be raised at the financial market under the support of guarantees by all Eurozone-Members, including those which – at least for a certain period of time – do not have access to the financial market. Thirdly, it was criticised that political decisions simply follow the economic and financial realities and do not lead them. Fourthly, the Conseil d’Etat emphasised (by agreeing to the position of the ECB) that the ESM shall lead to a European and not an intergovernmental mechanism. Fifthly, the Conseil d’Etat had some doubts whether the amount of Euro 700 billion is sufficient to bring enough reassurance into the financial market because the necessary financial needs are significantly higher. Sixthly, the Conseil d’Etat mentioned the systemic dimension of the debt crisis and emphasised the necessity to reduce public debts and increase the competitiveness of the European economy. The Conseil d’Etat regretted that the government did not include its analysis of Luxembourg’s position within this economic surrounding.

The parliamentary Committee for Financial and Budgetary Affairs (Commission des Finances et du Budget) discussed both legislative proposals (approval to the amendment of Article 136 TFEU and to the ESM) in the same session. In its meeting on 20 March 2012 the Minister for Finance Luc Frieden from the Christian Democrats (SVP) emphasised that the capital for the ESM will be financed by budgetary expenses, but that this will not influence the estimation of the public debt in view of the Maastricht criteria (ESA95) because Member States receive a real economic equivalent. In view of these criteria the participation is neutral.[7] Furthermore, it is not clear how ESM and EFSF shall cooperate during the period of time when both of them are in force.[8] Moreover, in the case of a request for financial assistance of a Member State, parliament shall be informed before taking a decision at the EFSF-level, which was approved by the government. However, there is no right to approval for the parliament.[9]

The law approving the amendment of Article 136 TFEU was discussed in a parliamentary plenary session on 26 June 2012 along with two other laws concerning the approval to and the implementation of the ESM (see question VIII.2).[10] The rapporteur of the Luxembourg Article 136 TFEU-law[11] (Michel Volter from the Christian Democrats) emphasised that the participation of Luxembourg is slightly higher than its shared capital of the ECB (0.2497%). Due to the situation in countries such as Estonia, Slovakia, Slovenia, Malta and Cyprus the shared capital amounts to 0.2504%, which is equivalent to a capital of Euro 1.7528 billion.[12] Luxembourg has to deposit Euro 200 million as paid-in capital to the ESM. This was made clear in the public session, because the Conseil d’Etat had asked for clarification.[13] The total participation of Luxembourg in ESM and EFSF covers the sum of Euro 3.7528 billion.[14] The representative of the LSAP (Social Democrats) was of the opinion that the ESM is not satisfying, but an important step onwards.[15] He also mentioned that the six biggest countries are able to overrule the rest because of the ESM-voting-system, which is seen as highly problematic. The weak part of the ESM was seen in its reduced possibilities for the parliament to intervene in the decisions.[16] Gast Gibéryen from the ADR (National Conservatives) criticized that the ESM means the transfer of sovereignty rights to an undemocratic EU.[17] Furthermore, the voting-right of Luxembourg in the ESM is nearly inexistent because it has a participation of 0.25%, while countries like Germany and France have more than 20% and can block every decision in the ESM council.[18] He also emphasised that the Luxembourg Central Bank has receivables of Euro 120 billion in the TARGET2-System, which increases the public debt.[19] The participation of Luxembourg in the ESM (guarantees and paid-in capital) reaches the sum of Euro 1.75 billion, which means 3.305 Euro for every citizen in Luxembourg, while other countries have lower sums per capita.[20] Serge Urbany from déi Lénk (Democratic Socialists) raised the question whether a second constitutional vote should be made before the adoption of the ESM-laws.[21] However, the president of the parliament did not arrange a separate vote.[22]

At the same session three motions were presented. A member of the party déi gréng (the Greens) introduced a motion which demands from government to take care that banks work in a way achieving social and economic goals such as credits on a sustainable level for small and medium enterprises, to fulfil the goals of the EU 2020 strategy, to make sure that economic policy in the EU also fulfils social goals laid down in the Treaties and to ask the European Court of Justice whether the ESM is in line with the social goals of the ESM.[23] However, the motion was refused (8 votes in favour, 43 against the law and 9 abstentions).[24] Also the second motion of déi gréng was refused (10 yes, 39 no, 1 abstention).[25] The second motion aimed at increasing the coordination of economic policy on the European level, making sure that money is used for social goals, using the interests of the credits from ESM for the sectors mentioned in the EU 2020 strategy and pleading for a banking licence for the ESM.[26] The third motion, also introduced by déi gréng, was approved[27] and demanded from government to increase the transparency of the ESM. It obliges the government to present the position of the Luxembourg Governor at the ESM before the ESM Council of Governor’s meeting. In addition, the government must report to the parliamentary Commission for Financial and Budgetary Affairs (Commission des Finances et du Budget), explaining the financial impact on Luxembourg of decisions taken at the level of the ESM, the conditions offered to the benefitted country and the relation to reports of the Commission.[28]

Because of the severe financial engagement of Luxembourg, two members of the opposition (Gast Gibéryen, from the National Conservatives, and Serge Urbany, from the Democratic Socialists) claimed that it is necessary to have a qualified majority in order to pass the law. In the view of the two MPs, the financial engagements resulting from the adoption of the law authorising the ratification of the Art. 136 TFEU amendment (in combination with the ESM) are seen as permanent international engagements, which need the support of a two-third majority in the parliament because the Luxembourg Constitution (Article 49bis, Article 37 (2), Article 114 (2)) requires such a majority for the transfer of competences to an international institution (for more details on this constitutional background see question V.2).[29] Alex Bodry from the Social Democrats (LSAP) which was part of the government at this time also argued in favour of a qualified majority voting in the Luxembourg parliament because it is not clear whether this decision does not mean an abandonment of sovereignty.[30]

However, the government represented by the Minister for Finance Luc Frieden (Christian Democrats) was not of the opinion that this law has to be passed by a qualified majority because the law does not confer sovereign powers to an international institution.[31]

Case law        
V.4

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

No. The opinions of the Conseil d’Etat cannot be considered as constitutional court judgments (see question II.2).

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

Not applicable.

[1] http://www.chd.lu/wps/portal/public/!ut/p/b1/04_SjzQ0NTI2NjEyMLLQj9CPykssy0xPLMnMz0vMAfGjzOJdjFzCgjyBKtzNA00MjLxcvcxDg_2MLdyNgQoigQqMLCyCg9wdfV0tLUOdDDwNnA2DXQOdjAw8jYjTb4ADOBoQ0u_nkZ-bqp8bleNm4aioCAAk2luC/dl4/d5/L0lDU0lKSWdrbUEhIS9JRFJBQUlpQ2dBek15cXchLzRKQ2lEb01OdEJqdEJIZmxDRUEhL1o3X0QyRFZSSTQyMEdWTTEwMkJJM1FKUDkzOEUxLzA!/?PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_action=doDocpaDetails&id=6334&filter_action=doDocpaDetails&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_displayLink=true&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_numPage=1&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_positionInHistory=&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_display=9&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_numPageTop=1&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_numPageBottom=1#Z7_D2DVRI420GVM102BI3QJP938E1

[2] MEMORIAL – Journal Officiel du Grand-Duché de Luxembourg, Recueil de Legislation, A – N° 135, p. 1706-1708, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/129/168/112687.pdf.

[3] Chambre des Députés, Bulletin de Vote, 26 June 2012, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/122/133/112312.pdf

[4] See the annotations to Article 49bis in the Luxembourg Constitution.

[5] See, for example, the opinion of the Minister for Finance Luc Frieden from the Christian Democrats in the meeting of the Commission for Financial and Budgetary Affairs, 20 March 2012, p. 3, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/101/134/110303.pdf.

[6] Avis du Conseil d’État, 06 March 2012, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/196/014/109153.pdf.

[7] Rapport de la Commission des Finances et du Budget, 22 June 2012, p. 6, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/129/145/112484.pdf.

[8] Commission des Finances et du Budget, Procès-verbal de la réunion, 20 March 2012, p. 4, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/101/134/110303.pdf.

[9] Commission des Finances et du Budget, Procès-verbal de la réunion, 20 March 2012, p. 4-5, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/101/134/110303.pdf.

[10] Chambre des Députés, Séance 34, 26 June 2012, p. 436-444, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[11] The original title is ‘Loi portant approbation de la décision du Conseil européen du 25 mars 2011 modifiant l’article 136 du traité sur le fonctionnement de l’Union européenne en ce qui concerne un mécanisme de stabilité pour les Etats membres dont la monnaie est l’euro’, http://www.chd.lu/wps/portal/public/!ut/p/b1/04_SjzQ0NTI2NjEyMLLQj9CPykssy0xPLMnMz0vMAfGjzOJdjFzCgjyBKtzNA00MjLxcvcxDg_2MLdyNgQoigQqMLCyCg9wdfV0tLUOdDDwNnA2DXQOdjAw8jYjTb4ADOBoQ0u_nkZ-bqp8bleNm4aioCAAk2luC/dl4/d5/L0lDU0lKSWdrbUEhIS9JRFJBQUlpQ2dBek15cXchLzRKQ2lEb01OdEJqdEJIZmxDRUEhL1o3X0QyRFZSSTQyMEdWTTEwMkJJM1FKUDkzOEUxLzA!/?PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_action=doDocpaDetails&id=6334&filter_action=doDocpaDetails&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_displayLink=true&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_numPage=1&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_positionInHistory=&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_display=9&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_numPageTop=1&PC_Z7_D2DVRI420GVM102BI3QJP938E1019404_numPageBottom=1#Z7_D2DVRI420GVM102BI3QJP938E1.

[12] Chambre des Députés, Séance 34, 26 June 2012, p. 436, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[13] Chambre des Députés, Séance 34, 26 June 2012, p. 436, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[14] Chambre des Députés, Séance 34, 26 June 2012, p. 436, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[15] Chambre des Députés, Séance 34, 26 June 2012, p. 438, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[16] Chambre des Députés, Séance 34, 26 June 2012, p. 439, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[17] Chambre des Députés, Séance 34, 26 June 2012, p. 441, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[18] Chambre des Députés, Séance 34, 26 June 2012, p. 442, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[19] Chambre des Députés, Séance 34, 26 June 2012, p. 442, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[20] Chambre des Députés, Séance 34, 26 June 2012, p. 442, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[21] Chambre des Députés, Séance 34, 26 June 2012, p. 442, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[22] Chambre des Députés, Séance 34, 26 June 2012, p. 444, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[23] Motion de Francois Bausch from the Greens, Assurer le respect explicite des objectifs de l’emploi, de la protection sociale élevée et de lutte contre le changement climatique dans les conditionnalités de politiques économiques du Mécanisme Européen de Stabilité, 26 June 2012, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/123/132/112321.pdf

[24] http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/123/133/112322.pdf.

[25] Chambre des Députés, Bulletin de Vote, 26 June 2012, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/123/131/112320.pdf.

[26] Motion de Francois Bausch from the Greens, Renforcer l’Action du Mécanisme Européen de Stabilité, 26 June 2012, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/122/140/112319.pdf.

[27] Motion de Francois Bausch from the Greens, Veiller à la transparence de la gouvernance du Mécanisme Européen de Stabilité vis à vis de la Chambre des Député-e-s, 26 June 2012, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/122/139/112318.pdf.

[28] Motion de Francois Bausch from the Greens, Veiller à la transparence de la gouvernance du Mécanisme Européen de Stabilité vis à vis de la Chambre des Député-e-s, p. 2, 26 June 2012, http://www.chd.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/122/139/112318.pdf.

[29] Chambre des Députés, Séance 34, 26 June 2012, p. 442, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[30] Chambre des Députés, Séance 34, p. 438, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

[31] Chambre des Députés, Séance 34, 26 June 2012, p. 443, http://www.chd.lu/wps/PA_RoleEtendu/MergeServlet?lot=C-2011-O-034-0005.

Malta

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

The Maltese Prime Minister emphasised in his speech in the Maltese House of Representatives on 4 April 2011[1] , that Malta – together with Cyprus – has added their interpretation of the new Article 136 (3) TFEU in the meeting of the Council. The wording is as follows:

Joint Declaration by Cyprus and Malta to the minutes of the European Council of 24 – 25 March 2011, concerning the decision amending article 136 of the TFEU with regard to the setting up of the European Stability Mechanism

Without  prejudice to the provision of article 125 of the treaty on the functioning of the European Union (TFEU), the reference in the proposed amendment of  article 136 of the TFEU that “the ESM will be activated by mutual agreement, if indispensable to safeguard the financial stability of the euro area as a whole” does not ipso jure preclude that the mechanism be used to provide financial assistance to any Member State whose currency is the Euro, since financial stability of the euro area as a whole is inextricably linked to its integrity and the financial stability of all its members.

In addition, Malta added some notes to the minutes of the Council meeting, which made it clear that Malta has a specific interest in its competence to determine national taxes. The statement is as follows:

Declaration of Malta to be attached to the minutes of the European Council of 24-25 March 2011

Malta:

– Notes that the Heads of State or Government of the Eurozone have agreed that “Developing a common corporate tax base could be a revenue neutral way forward to ensure consistency among national tax systems while respecting national tax strategies” in the Pact for the Euro;

 – Holds that a common corporate tax base would only be revenue neutral if it respects the comparative and competitive advantage of Member States;

 – Underlines that the Heads of State or Government of the Eurozone refer to a common corporate tax base and not a common consolidated corporate tax base;

– Holds that the Commission’s proposal on a common consolidated corporate tax base would distort the comparative and competitive advantage of Member States and penalise those economies where productivity is relatively high and/or that have moved to higher value-added economic activities and/or where market size is limited.

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

The approval is based on an order of the Prime Minister in the sense of Article 2 (2) of the Maltese European Union Act. The Prime Minister was granted the competence to declare that a (European) treaty or a Decision of the European Council made after the 16th April 2003 – which is the day on which the accession treaty of Malta to the EU had been signed – is in conformity with Malta’s ‘European Union Act’. Such a competence is known as ‘Delegated or Subsidiary Legislation’ in the Maltese Legal System.[2] Since the amendment of Article 136 TFEU is based on the Simplified Revision Procedure introduced by the Lisbon Treaty (Article 48 (6) TEU), Malta had to adapt its ‘European Union Act’ (see question V.5).

This order had to be approved by resolution of the Maltese parliament because Article 2 (2) of the Maltese ‘European Union Act’[3] requires that an order can only be made when a draft thereof has been approved by resolution of the House of Representatives. The Order was presented to the House of Representatives on 22 June 2012. Debate in the Foreign and European Affairs Committee (FEAC) took place and the FEAC Chairman sent the report to the Parliament on 2 July 2012. Debate in the House of Representatives took place on 2 October 2012. The Order was accepted unanimously as Subsidiary Legislation 460.28 under the title ‘European Union Act (Approval of Treaty Amendment Decision) Order’[4] on 3 October 2012. There is no requirement of further assent by Parliament in the Maltese legal system, so that the Order became valid via publication on 9 October 2012.

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

The Maltese Parliament required that Clause 3 of the Order, having the following text:

“For the purposes of article 2(2) of the Act, it is hereby declared that the Specified Decision shall be regarded as one with the Treaty”

is supplemented by the following words:

“while stating the Government’s understanding that where the Treaty refers to financial stability of the Euro Area, this should be interpreted to mean the Euro Area as a whole or one of its Member States in isolation, whatever its size.”

The expression ‘one with the Treaty’ expresses that the Specified Decision which is 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 Member States whose currency is the euro (Council Decision 2011/199/EU) is in conformity with the European Treaties. The additional words included by the Maltese Parliament after a recommendation of the Foreign and European Affairs Committee were seen as being necessary to make it clear, that the rescue mechanism is not only activated, when the Eurozone as a whole needs support, but also when a single Member State needs assistance to solve fiscal difficulties. For Malta, this is important, because their economic impact on the Eurozone is marginal.

Malta’s position in a (hypothetical) rescue situation, was also the main topic of discussion during the ratification process. At the meeting of the Foreign and European Affairs Committee on 2 July 2012[5] , opposition (Labour Party) demanded that the government (Nationalist Party) ensures that the rescue mechanism must also be activated, if small countries with a very low influence on the whole Eurozone need financial assistance. Opposition (Labour Party), in particular Alfred Sant, was not convinced that the wording ’Eurozone as a whole and of its Member States’ was clear enough to guarantee that also a single Member State, which does not play a central role in the Eurozone, has the right to receive financial assistance. The discussion dealt with the question whether an ‘or’ would have been more adequate than an ‘and’. The Minister of Foreign Affairs (Nationalist Party) reminded the Committee that even if Malta would not receive support under Article 136 (3) TFEU, it would receive financial assistance under Article 122 (2) TFEU. In addition, members of the government emphasised that Cyprus would be in the same situation such as Malta and the situation of small countries was discussed on the European level leading to the conclusion that the new Article 136 (3) TFEU would comprise the right of small Member States to receive financial assistance. Alfred Sant (Labour Party) was not convinced of this argument because countries like Cyprus can rely on the support by closely connected, bigger states such as Greece. In addition, he emphasised, that the assistance clause of the International Monetary Fund explicitly mentions that also single states can request assistance, which is not the case for the Treaty amendment.

In the framework of this discussion, opposition recommended sending a side letter with the ratification which makes the Maltese interpretation of the wording evident. The Maltese Foreign Minister Tonio Borg was not sure whether such a side letter would not place Malta in a weaker position because it could be interpreted as if Malta would have some doubts about its own decision.[6]

Furthermore, it was discussed whether the amount of financial assistance is limited by the amount of the contribution by Malta. The Minister for Finance made it clear that the amount of financial assistance is not bound to the contribution key.

In addition, the Foreign and European Affairs Committee discussed whether the treaty amendment is intended to be a fund or whether the term ‘mechanism’ allows for more diverse arrangements. The Maltese Minister of Finance Tonio Fenech (Nationalist Party) said that the new Subsection 3 of Article 136 TFEU allows different arrangements such as a fund or a bank. At the moment, only the ESM is intended to be installed, but the amended version of the Treaty also allows for other arrangements.

Case law  
V.4

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

No constitutional judgment on the 136 TFEU amendment exists.

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

Malta had to modify its ‘European Union Act’, which is the national legal act allowing Malta to join the European Union, in order to make Article 2 (2) European Union Act applicable to the New Simplified Revision Procedure introduced by the Treaty of Lisbon. The old wording was:

“If the Prime Minister by order declares that a treaty specified in the order being a treaty entered into by Malta after the 16th April, 2003 is to be regarded as one with the Treaty as herein defined, the order shall be conclusive that it is to be so regarded:”

The amended version goes as follows:

“If the Prime Minister by order declares that a treaty specified in the order being a treaty entered into by Malta after the 16th April, 2003, or that a decision specified in the order, being a decision that amends the Treaty, is to be regarded as one with the Treaty as herein defined, the order shall be conclusive that it is to be so regarded:”       

This amendment became necessary, because the prior version simply referred to the wording ‘Treaty’, which would not completely meet the legal nature of the Simplified Revision Procedure. This is why Malta decided to amend its ‘European Union Act’ by the ‘European Union Amendment Act’ (Act VII of 2012)[7] . The amended Act entered into force on 22 June 2012.

[1]              Transcript of Sitting 334 of the Plenary Session of the House of Representatives on 4 April 2011, p. 623 et seq., http://www.parlament.mt/file.aspx?f=18155

[2]              See for further information David Joseph Attard, The Maltese Legal System, Volume I, 2012, p. 56 to 61

[3]              http://justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=8926

[4]                       http://www.justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=11942&l=1

[5]              Transcript of Sitting 74 of the Foreign and European Affairs Committee on 2 July 2012, p. 4 et seq., http://www.parlament.mt/file.aspx?f=31661

[6]              Transcript of Sitting 74 of the Foreign and European Affairs Committee on 2 July 2012, p. 14 et seq., http://www.parlament.mt/file.aspx?f=31661

[7]                       http://www.parlament.mt/file.aspx?f=23444

Netherlands

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 The Netherlands encounter in the negotiation of the amendment of article 136 TFEU?

There were no difficulties encountered in the negotiation of the amendment of article 136 TFEU. The position of the government is that the amendment embodies no changes of significance and, in fact, is not necessary but was proposed solely because some other countries feared that a structural stability mechanism could be perceived as problematic when compared with the old formulation of article 136 TFEU.[1] The EU level negotiations on the Treaty amendment in themselves were not debated in parliament. Parliament got involved seriously only in the ratification process. 

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

The amendment of the Treaty article was ratified in The Netherlands on the basis of art. 91 (1) of the Dutch Constitution. Article 91 states that the Kingdom shall not be bound by treaty without prior approval of parliament, except for those cases where the law determines no such approval is necessary. Such approval may be tacit (Subarticle 2). Despite this, if no reservations of approval are made on conclusion of the treaty, or the treaty contains a ratification clause, treaties are according to international law binding upon conclusion. Subarticle 3 determines that if a treaty conflicts with the Constitution, it has to be approved by a two-thirds majority of both the House of Representatives and the Senate. Whether such conflict exists is decided by both the House of Representatives and the Senate. It is furthermore relevant to note the Parliamentary motion Brinkhorst of 1980 on the relationship between the Dutch Constitution and European law. This Parliamentary motion stipulated that the interpretation of the Dutch Constitution should always be made in a way that the EU integration process is not frustrated.[2] This motion has recently been repealed by Parliamentary motion Van der Staaij that stipulates that interpretation of the Dutch Constitution should exclusively be made on the basis of the intentions of the Dutch legislator.[3] The government response to this repeal is neither the motion Brinkhorst nor the recent repeal of that motion change any of the EU relevant legal obligations for The Netherlands that came into existence autonomously as a direct consequence of the accession to the European Union.[4]

By referring to art. 91 (1) of the Dutch Constitution, the implementation act, implicitly, qualified the amendment as a Treaty. The amendment of the Treaty was passed through parliament as a law and it followed the ordinary legislative procedure.

The general legislative procedure in The Netherlands is – in a nutshell – as follows: 1. Draft legislation is submitted to an organ of the State called Raad van State (“Council of State”) that provides a critical assessment of the law and reports on it. This can then lead to changes in the proposed law or a so-called ‘further report’ that responds to the comments. 2. The proposed law is then submitted to the House of Representatives (Tweede Kamer) where it is first directed to a relevant Committee by the chair of the house and debated there. Members of the House of Representatives can table amendments. 3. After the committee has concluded its scrutiny with a report the bill is debated in the plenary. 4. When the House adopts the bill, it is sent to the Senate (Eerste Kamer). The senate discusses the bill in its committees as well and – not always – in the plenary afterward. Senators in the Netherlands cannot amend a bill. The Senate can only adopt or reject the bill. After a bill passes the senate the bill needs to be ratified by the government (article 87 Dutch Constitution) and after an extra contraseign it is promulgated by the Minister of Justice.

There is no judicial control over the ratification of treaties, nor are referenda provided for by the Constitution (the 2005 referendum on the Constitutional Treaty was organized on the basis of a law, adopted solely for the ratification of that treaty).

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

The Treaty was ratified in July 2012.[5]   Political and legal difficulties over the ratification of 136 TFEU in The Netherlands could have been expected in view of the political situation in The Netherlands at that time. The political situation in The Netherlands during the ratification shared an important characteristic with the period in which the EFSF and EFSM were negotiated (see answer to question IV.1): the absence of a full functioning government. The (minority) government fell in April 2012 because the main right wing Party for Freedom (the PVV of Geert Wilders) withdrew support for the Liberal and Christian Democrats led (VVD and CDA) government after failed negotiations on government cuts. New government was formed in November 2012. According to customary Dutch constitutional law, within this interim period April-November, government can only deal with current affairs and is not allowed to decide on any ‘controversial’ affairs.  Nevertheless, both the ratification of Art 136 TFEU amendment and the ESM Treaty took place within this period. Both were adopted with broad parliamentary support from the centre left and right that traditionally strongly support the European Union project. The main political parties that were against consisted of the SP – socialist party – and the Party for Freedom (PVV – the populist Geert Wilders party).[6]

The parliamentary debates on the topic of the 136 TFEU amendment were held simultaneously with the ESM Treaty discussions. As a result these parliamentary debates somehow focussed mainly on the ESM Treaty and marginally on the Art 136 TFEU amendment. Below I provide the relevant debates with respect to the Treaty Amendment. The ESM Treaty is discussed further in the designated section of this questionnaire.

The Council of State report was overall positive but advised to explain more clearly in the so called Memorie van Toelichting (a legislative document accompanying draft laws that explains the purpose and background of the law in more detail) why there has been made a choice to provide for a Treaty amendment that allows a permanent stability fund outside of the EU legal and institutional order.[7] This advice has been implemented in the Memorie that now explains that the preference for an intergovernmental set up was mainly fuelled by concerns that a EU based solution would not have been possible on the basis of the simplified revision procedure. In addition the Council advised to explain more clearly why Member States do no infringe the TFEU rules by setting up a permanent stability mechanism.[8] The reply to this concern – that was also raised in the Parliamentary commission and debates – from the government was that the creation of a permanent stability mechanism was a necessary mechanism to ensure stability of the Eurozone and the non implementation could have potentially led to enormous financial and economic consequences. A collective that exists between the Member States on the basis of the ESM and the strict conditionality’s attached to it therefore does not infringe the no bail-out clause.[9]

The comments of the Parliamentary committee focussed on (i) the relationship between 136 TFEU and the no bail out clause, (ii) the relationship between 136 TFEU and the ESM Treaty and (iii) the potential transfer of sovereignty through the amended article.[10] The government response on these points was that the Treaty amendment was in fact from a legal point of view unnecessary and merely confirming, enforcing or clarifying a legal situation that was already possible on the basis of the existing TFEU. The reason for the amendment according to the Dutch government was that certain Member States felt that there would be more legal certainty if there would be an amendment of the Treaty.

Case law        
V.4

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

No.

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

Not applicable.

[1] 02 Treaty 136 – explanatory memorandum government, page 3.

[2] 02 Treaty 136 – Parliamentary motion Brinkhorst 1980

[3] 02 TFEU 136 – Parliamentary repeal motion Brinkhorst

[4] 02 Treaty 136 – Government response to Parliamentary repeal of motion Brinkhorst

[5] Wet van 5 juli 2012 houdende goedkeuring van het Besluit van de Europese Raad van 25 maart 2011 tot wijziging van artikel 136 van het Verdrag betreffende de werking van de Europese Unie met betrekking tot een stabiliteitsmechanisme voor de lidstaten die de euro als munt hebben (Trb. 2011, 143). See 02 Treaty 136 – The Law.

[6] 02 TFEU 136 – voting overview Treaty amendment

[7] 02 Treaty 136 – Advice Council of State, page 2.   

[8] Ibid., page 3.

[9] Ibid.

[10] 02 Treaty 136  – preparatory parliamentary report.  

Poland

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

During the Sejm’s European Affairs Committee meeting on 8.04.2011, the government reported on the Belgian presidency of 2010.[1] With regard to the Treaty amendment, the Undersecretary of State in the Ministry of Foreign Affairs underlined that Poland actively participated in the discussions, despite of not being a Member of the Eurozone.[2] In the view of the Undersecretary of State, ‘the possibility for the non-Eurozone Member States to participate in the activities within the framework of the mechanism was a consequence of Poland’s intensive actions.’ This was highly appreciated by other non-Eurozone Member States.[3] The issue was later repeated at the plenary sitting on 28.04.2011.

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

The Polish Constitution foresees three types of international agreements demanding ratification.

First, so-called “big ratification” pursuant to Art. 89 par. 1 PC demands a consent of parliament granted by statute, if an international agreement concerns, 1) peace, alliances, political or military treaties; 2) freedoms, rights or obligations of citizens, as specified in the Constitution; 3) the Republic of Poland’s membership in an international organization; 4) considerable financial responsibilities imposed on the State; 5) matters regulated by statute or those in respect of which the Constitution requires the form of a statute. Pursuant to Art. 89 par.1 PC, the ratification of international agreements demands a simple majority vote, in the presence of at least half of the statutory number of MPs (Cf. Art. 120 PC) and a similar majority in the Senate (Art. 124 PC). Art. 89 par.1 PC does not foresee a national referendum to grant consent for ratification of an international treaty.

Second, so-called “small ratification” pursuant to Art. 89  par. 2 PC demands that  the Prime Minister informs the Sejm of any intention to submit for ratification by the President of the Republic any international agreements whose ratification does not require consent granted by statute (international agreement not covered by Art. 89 par. 1 PC).

Third, Art. 90 PC regulates ratification of international agreements which delegate to an international organization or international institution the competence of organs of State authority in relation to certain matters. According to Art. 90 par. 2 PC, the consent for ratification of such an international agreement must be expressed in the Sejm by a two-thirds majority vote in the presence of at least half of the statutory number of Deputies, and in the Senate by a two-thirds majority vote in the presence of at least half of the statutory number of Senators. Moreover, Art. 90 par. 3 PC provides that the consent for ratification of international agreements that delegate to an international organization or international institution competences of state organs in relation to certain matters may also be granted in a national referendum. According to Art. 90 par. 4 the Sejm choses, by an absolute majority vote taken in the presence of at least half of the statutory number of Deputies, which procedure (2/3 majority by Sejm and Senat or a national referendum) for granting consent to ratification will be applied. 

The ratification procedure on the basis of Art. 90 was applied earlier only to the Accession Treaty (national referendum) and the Lisbon Treaty (2/3 majority vote in both chambers). Although in 1997 the Constitution drafters created Art. 90 for the purpose of Poland’s EU accession, this article does not refer specifically to EU Treaties. So in fact other treaties, which fulfil the conditions specified in this provision, can be ratified by 2/3 majority of the parliamentarians.

The government’s bill of the Ratification Act[4] indicates the legal basis for the ratification and undergoes later three readings and a vote in the parliament, where it can be rejected.[5]

The Sejm and the Senat approved the Ratification Act for the Treaty change on the basis of Art. 89 par. 1 PC.[6] On, 11 May 2012, in the Sejm out of 460 MPs: 294 MPs voted in favour of the Ratification Act (centre-right PO, centrist-agrarian PSL, social-democratic SLD, liberal Ruch Palikota), 155 MPs voted against (conservative PiS and SP and an indep. MP), 1 MP abstained (SLD), 10 were absent.[7] On 30 May 2012, in the Senat out of 100 Senators: 55 voted in favour (51 PO senators, 1 PSL senator, 3 independent senators), 30 against (29 PiS and 1 SP senator), 15 were absent.[8]

On 26 June 2012 the president signed the Ratification Act.

The division on the appropriate procedure for the Treaty change is also visible in the opinions of the legal scholarship (Cf. Question V.3).[9]

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

In general, the procedure of approval of the Treaty amendment itself was the main point of the discussion. The issue at stake was whether the agreement to the Treaty amendment would delegate to an international organization or international institution the competence of organs of State authority in relation to certain matters. To pass the ratification act of such a treaty, Art. 90 par. 1 of Polish Constitution demands a 2/3 majority vote in the presence of at least half of the Sejm MPs and 2/3 majority vote in the presence of at least half of the Senators in the Senat. Otherwise, the Constitution demands just a simple majority (as in Art. 89 ust. 1 of Polish Constitution, Cf. Answer to Question V.2).

Sejm

The first reading of the government’s bill of the Ratification Act for the Treaty Amendment took place on 11 January 2012.[10] The Undersecretary of State in the Ministry of Foreign Affairs highlighted that in the opinion of the government the correct way to ratify the treaty amendment is pursuant to Art. 89 par. 1 PC (Ratification of an international agreement which concerns Poland’s membership in an international organisation) that demands a simple majority vote.[11] In this regard, the PiS (conservative party in the opposition) criticised the choice of Art. 89 par.1 and emphasised that the correct ratification procedure is the one expressed in Art. 90 PC, as Poland delegates the competence of State organs in relation to certain matters.[12] In this regard, the PiS opposition highlighted that it submitted a resolution to the Sejm’s Marshal stating that the ratification act should be ratified according to the conditions indicated in Art. 90 PC. Additionally, in the view of the PiS opposition any Treaty amendment implies furthering of EU integration and, in consequence, a further transfer of competences to EU.[13] Moreover, the PiS opposition highlighted that ratification of the ESM Treaty before Poland joins the Eurozone would also demand a ratification procedure according to Art. 90 PC. In this regard the party proposed an amendment to the Ratification Act at stake, expressing an obligation that the future ESM Treaty shall be ratified pursuant to the Art. 90 PC procedure.[14]

To counter the opposition’s arguments, the Undersecretary of State in the Ministry of Foreign Affairs pointed at the recent changes of the Treaty, namely that the accession of Romania and Bulgaria and the “Spanish protocol” (concerning the EP) were ratified on the basis of Art. 89 par. 1 PC.[15] Moreover, in the view of the Minister, the ratification of the Treaty amendment did not transfer any competence to the EU and Poland will not be able to join the ESM without being in the Eurozone.[16]

On 25 April 2012, the joint meeting of the EU Affairs Committee and Foreign Affairs Committee in the Se