On May 5th the Bundesverfassungsgericht (Federal Constitutional Court of Germany; BVerfG) ruled that both (1) the ruling of the Court of Justice of the European Union (ECJ) in Weiss (C-493/17) and (2) the public sector purchase program (PSPP) of the European Central Bank (ECB) – in the context of which 2 trillion in government debt was bought – were ultra vires; and that the Bundesbank (Federal Central Bank of Germany) could only continue its participation in the PSPP after a transitional period of 3 months, if the ECB would undertake a more substantiated proportionality assessment in a new decision (initial decision) of the Governing Council.
This might sound impressive, but it is not. In essence, the BVerfG only requires the Governing Council of the ECB and ECJ to substantiate their decisions so that those decisions would become intelligible to the BVerfG. If this requirement is not fulfilled, the Bundesbank will not be allowed to implement the PSPP and the BVerfG will not abide by the ECJ’s ruling. As the demand for further clarification by the BVerfG is rather modest and easy to satisfy, there seems to be no reason to believe, as some commentators argued, that this judgement undermines the European legal order.
This is even more true since the judgement contains – from a legal point of view – nothing unprecedented. The judgement of the BVerfG
- is not the first to declare an ECJ’s ruling ultra vires;
- adheres to constitutional safeguards that
2.1 have been endorsed by the majority of constitutional courts within the EU,
2.2 have been part of the BVerfG’s case law for more than half a century, and
2.3 did not undermine the position of EU law in those member states and that time period;
- contains criticism of the ECJ’s approach that
3.1 was already included in the OMT-case,
3.2 less substantive than in its older ‘Solange I’-criticism, and
3.3 might improve the functioning of the EU legal order;
- contains conditions regarding the participation of the Bundesbank in the ECB program which
4.1 are not unprecedented, and
4.2 are less substantial that in the OMT-case;
- is part of the checks and balances of a multilevel legal order.
This blog discusses each of these points in more detail below.
Continue reading “Five remarks on the ruling of the Bundesverfassungsgericht in the PSPP-case”
At the invitation of Corporate Finance Lab, Professor Katharina Pistor (Columbia Law School) presented her book The Code of Capital: How the Law Creates Wealth and Inequality at the KU Leuven in Brussels on November the 4th 2019. You can find the video’s of the introduction by Professor Dirk Heremans, the lecture by Professor Katharina Pistor and Belgian responses by Professor Ludo Cornelis, Professor Koen Geens and Professor Joeri Vananroye on YouTube.
Continue reading “The Code of Capital – Video of the book presentation at KU Leuven”
Zaterdag 27 april 2019 organiseert het Instituut voor Filosofische en Sociaal-wetenschappelijke Educatie (Ifese) een seminarie over Law and Economics. Tijdens dit seminarie kunnen de deelnemers teksten van de hand van Ronald Coase, James Buchanan en Gary Becker bediscussiëren onder begeleiding van em. prof. dr. Boudewijn Bouckaert. De activiteit zal plaatsvinden in Antwerpen.
Continue reading “Seminarie over Coase, Buchanan en Becker”
1.745 Germans turned to the Bundesverfassungsgericht claiming that the European Central Bank (ECB) undermined democratic control of the use of state power in Germany. They believed that the new policies of the ECB usurped economic competences that should, according to their constitution and the Treaties, stay in the hands of the national parliament where they can be influenced by the voters. The German court followed the reasoning of the plaintiffs and asked the Court of Justice of the European Union (ECJ) to review the validity of the public sector purchase program (PSPP) that was established by the Governing Council of the ECB. The ECJ recently delivered her ruling in that case. It found that there was no reason to invalidate the program.
The alleged threat to democratic control of government is only mentioned once in the judgement, namely in the description of the claims before the referring court. The ECJ nowhere considers the principle of democratic control of government (in article 2 and 10.1 TEU) for the interpretation of the powers transferred to an independent central bank. The concerns of the Bundesverfassungsgericht remain unaddressed. The ECJ chose other methods of interpretation. This blog will provide a critical review of those choices made by the Court when trying to develop and enforce a standard of review for the compliance with the substantial constraints on monetary policy.
Although those choices of the Court are understandable when viewed separately, they lead to an overall unsatisfactory outcome. They transform substantial constraints into formal constraints, make judicial review of substantial constraints ineffective and undermine the capacity of a treaty to be used as a trust building commitment device. In so far as the participation in the Union, the transfer of powers to the Union and application of EU law in the Member States is conditioned on those substantial constraints by the political or legal constitution of the Member States, the Court, that seems to be unable or unwilling to grant effective protection to those substantial constraints, undermines the full effect, uniform application and further integration.
Continue reading “On the reasoning of the ECJ in the PSPP-case”
On November the 26th of 2018 a debate on the added value of Corporate Social Responsibility (CSR) took place in Leuven. Both prof. dr. Marieke Wyckaert (KU Leuven) and em. prof. dr. Viktor Vanberg (Albert-Ludwigs-Universität Freiburg and Walter Eucken Institut) gave a short lecture and subsequently comment on each other’s point of view. Prof. dr. Joeri Vananroye moderated the debate. You can find the video of this debate below.
Continue reading “Corporate Social Responsibility Debate”
On November the 27th of 2018 emeritus professor Viktor Vanberg of the University of Freiburg gave a lecture at the Research Unit Economic Law of the KU Leuven about the constitutional approach in economics. In his lecture he explained the rules-based approach defended by the Freiburg School of Ordoliberalism and the Viriginia School of Constitutional Economics. You can find the video of this lecture below.
Continue reading “The Economic and Monetary Constitution”
On Monday 26 November 2018 from 8 to 10 p.m., a debate on the added value of Corporate Social Responsibility (CSR) will take place in the aula Zeger Van Hee (DV1 91.56). Both prof. dr. Marieke Wyckaert (KU Leuven) and em. prof. dr. Viktor Vanberg (Albert-Ludwigs-Universität Freiburg and Walter Eucken Institut) will give a short lecture and subsequently comment on each other’s point of view. Prof. dr. Joeri Vananroye will provide an introduction and moderate the debate.
Continue reading “Debate on Corporate Social Responsibility: Leuven 26 November 2018”
The Advocate General Wathelet delivered his opinion in the case Weiss. The preliminary questions in that case relate to the extensive purchase of public sector debt (PSPP) by the ECB in the secondary market. According to the Advocate General those purchases didn’t transgress the ECB’s mandate and were in full compliance with the prohibition on monetary financing. This blog post makes a critical review of the main arguments made by the AG Wathelet. Continue reading “6 objections against the AG’s opinion in ECB case”
Een post door gastblogger Jitte Akkermans
Veertien vooraanstaande Franse en Duitse economen hebben een pakket hervormingsmaatregelen voorgesteld om de Eurozone opnieuw robuust en veerkrachtig te maken. Een aantal van die hervormingen tracht een kader te scheppen waarin de lidstaten van de Eurozone hun schuld op een ordelijke manier kunnen herstructureren. We lichten kort twee van die ideeën toe.
Continue reading “De schuldvraag in de Eurozone: Hoe kunnen lidstaten hun schuld ordelijk herstructureren?”