The European Court of Justice is the only legal body able to determine if an EU institution violated bloc law, the Luxembourg-based tribunal said on Friday (8 May), as the fallout from the German Constitutional Court’s European Central Bank ruling continued.
“In order to ensure that EU law is applied uniformly, the Court of Justice alone – which was created for that purpose by the member states – has jurisdiction to rule that an act of an EU institution is contrary to EU law,” the judiciary body said in a statement.
Earlier this week, Germany’s Constitutional Court questioned the proportionality of the ECB bond-buying programme launched in 2015, and which was considered as a critical part of the EU’s response to the financial crisis.
The German judges claimed that the ECB exceeded its remit and dismissed an ECJ ruling from 2018 that backed the programme, claiming wrongdoing in the assessment and insisting that it was “not bound” by the EU court’s decision.
The Luxembourg-based body recalled that “a judgment in which the Court gives a preliminary ruling is binding on the national court” and said warned that “divergences between courts of the member states as to the validity of such acts would indeed be liable to place in jeopardy the unity of the EU legal order and to detract from legal certainty.”
The ECJ also insisted that national courts and governments “are required to ensure that EU law takes full effect”, adding that it is “the only way of ensuring the equality of member states in the Union they created”.
A legal and economic threat
The ruling created a political, legal and economic headache as it questions the prevalence of ECJ rulings over national courts when it comes to EU law, whether the ECB acted within its mandate and urged the Bundesbank to no longer participate in the programme.
From both a legal and a political point of view this could lead to other countries such as Poland or Hungary questioning the court’s authority, given that some of their decisions have fallen foul of the tribunal’s legal assessments.
Poland’s Deputy Minister for Justice Sebastian Kaleta praised the German decision and said it showed that the Polish government was right in its dispute over the reform of the judiciary that has been subject to ECJ scrutiny.
“We will consistently defend this position,” he said during a press conference.
European Commission Vice-president and High Representative Josep Borrell has acknowledged the gravity of the ruling and warned of the potential consequences for the EU’s ability to act.
Recalling Mario Dragi’s ‘whatever it takes’ watershed moment that preceded the bond-buying programme, Borrell said “that magic sentence saved the euro” and that “markets need to know if the ECB is an independent institution acting within its mandate and without limits”.
ECB to stick to whatever it takes
Institutions are so far rallying around the ECJ, defending both the prevalence of the Court when it comes to assessing the compliance of action with the legal framework of the bloc and the independence of the ECB.
The Commission reaffirmed “the primacy of EU law,” and mirrored the ECJ’s statement that “the rulings of the ECJ are binding on all national courts”, Economy Commissioner Paolo Gentiloni said on Wednesday (6 May).
The Italian official also added that the EU executive has always “respected and fully support the independence of the ECB”.
The bank’s governing council took note of the ruling but also reiterated that its actions were backed by the ECJ.
During the Frankfurt-based lender’s weekly press conference on Thursday (7 May), President Christine Lagarde confirmed a commitment to continuing on with work: “We are independent. We will continue doing whatever is needed, whatever is necessary to deliver on our mandate. Undeterred.”
[Edited by Sam Morgan]