explained-why-a-recent-verdict-of-germanys-top-court-has-sent-shockwaves-across-eu

Context: Germany’s constitutional court sent shockwaves through the European community as it questioned the legality of a past ruling of the European Court of Justice (ECJ).

More about the news:

  • The judgment from Germany, which mainly takes aim at a bond-buying scheme of the European Central Bank (ECB).
  • It is challenging the long-settled hierarchy of European Union (EU) judiciary.

Judiciary in the European Union

  • The Court of Justice of the European Union (CJEU) interprets EU law to make sure it is applied in the same way in all EU countries, and settles legal disputes between national governments and EU institutions.
  • In terms of hierarchy, the national courts of member countries are understood to be below the ECJ in matters of EU law.
  • It was founded in 1952 after the Treaty of Paris.
  • Location: Luxembourg

Composition

The CJEU is divided into 2 courts:

  1. Court of Justice – deals with requests for preliminary rulings from national courts, certain actions for annulment and appeals.
    1. The European Court of Justice (ECJ), a supranational institution, is a part of the Court of Justice of the European Union (CJEU).
    2. It is the European Union’s supreme court in matters of EU law.
    3. It settles legal disputes between national governments and EU institutions.
    4. The Luxembourg-based court ensures that EU law is interpreted and applied the same in every EU country, and ensures that countries and EU institutions abide by EU law. 
  2. General Court – rules on actions for annulment brought by individuals, companies and, in some cases, EU governments. In practice, this means that this court deals mainly with competition law, State aid, trade, agriculture, trade marks.

Members:

  • Court of Justice: 1 judge from each EU country, plus 11 advocates general
  • General Court: 2 judges from each EU country

Appointment of judges: Each judge and advocate general is appointed for a renewable 6-year term, jointly by national governments. 

  • In each Court, the judges select a President who serves a renewable term of 3 years.

Background of the controversy: The issue is related to  the division of competences between the European Union and the Member States.

German court vs ECJ

  • In 2018, the ECJ had ruled that a EUR 2 trillion bond-buying scheme of the European Central Bank (ECB), aimed at reinvigorating the EU economy after the multi-year European debt crisis, was legal as per EU law.
  • In Germany, opponents of the scheme had for years complained to the German Constitutional Court, the country’s highest.
  • Finally, the German court ruled that the ECJ’s 2018 ruling was “ultra vires”, meaning beyond the latter’s legal authority, and said that it did not properly address whether the ECB scheme was justifiably suited for the EU economy.
  • The German court has now given the ECB three months to prove that the bond-buying scheme was proportionate as per the EU’s actual needs.
  • The European Commission underlined the supremacy of the ECJ, saying, “we reaffirm the primacy of the EU law, and the fact that the rulings of the European Court of Justice are binding on all national courts.”

Concerns for the EU

  • Undermining the EU law: Critics of the German verdict say it could strike at the legal foundations of the 27-member zone, and the ensuing power struggle between the two courts could lead to a rewriting of EU treaties.
  • Power tussle between EU organs and the member states: If the Member States were to completely refrain from conducting any kind of ultra vires review, they would grant EU organs exclusive authority over the Treaties.
    • Experts believe that national courts in Poland and Hungary could now follow the precedent set by Germany in challenging the EU court’s orders.
    • Some economists have also slammed the judges’ understanding of monetary policy– of both the German and EU courts.

About European Union 

  • It is a coalition of 27 European countries, designed to tear down trade, economic and social barriers and promote flourishing in these areas.
  • Established in 1993, the European Union's headquarters are currently located in Brussels, Belgium.

The Maastricht Treaty

  • On Feb. 7, 1992, the European Union was officially formed via the Maastricht Treaty. 
  • The treaty was comprised of three principle components: The European Communities, security and foreign policy, and cohesive domestic affairs and justice standards.
  • European Union vs. Eurozone: Still, the European Union is not the same thing as eurozone - which, created in 2005, is simply the collection of all the countries that use the euro.

How Is the European Union Governed?

  • The European Union is governed by three main bodies - the EU Council, the EU Parliament and the EU Commission.
  • The Council's main job is to create and propose new policies and legislation for the European Union; it operates under a different EU president every six months.
  • The Parliament then debates and passes the laws proposed by the Council, electing members once every five years.
  • Finally, the Commission enforces and operates the laws for the European Union
  • Additionally, the European Central Bank services the EU's financial needs and manages things like inflation rates and foreign exchange reserves.

Sources: 

https://europa.eu/european-union/about-eu/institutions-bodies/court-justice_en

https://indianexpress.com/article/explained/explained-why-a-recent-verdict-of-germanys-top-court-has-sent-shockwaves-across-eu-6401049/