If the European leaders agreed on a never-before-seen recovery plan of 750 billion euros in June 2020, the obstacles for its actual implementation are accumulating. Indeed, the German Court hit pause on the German ratification of the European plan, but finally agreed to the process on April 21, 2021.
As a reminder, the Recovery Plan Next Generation EU foresees the distribution of 360 billion euros in loans and 390 billion euros in subventions to member states, thanks to a loan taken by the European Commission in the name of the 27 member States. This common debt mechanism was never used before, which explains why the Commission needs the Member states’ Parliaments to approve the project by a national ratification law. This one should authorize the Commission to raise its own resources ceiling (Bouvet & Brzeski, March 29 2021).
This ratification process had been stopped in Germany. Indeed, the founder of the extreme right-wing party AFD Bernd Lucke filed a complaint against the recovery plan, arguing that this one would be violating the treaties of the Union (Martin, April 9 2021).
The German Court of Karlsruhe is well known to be one of the most critical courts regarding the European Integration. In the course of its case law, the judges of Karlsruhe have developed a threefold test to assess the legality of acts taken by the Union.
The threefold test of the German Court to control the Union’s acts
The first level of this test is the control of the respect of fundamental rights. This control was developed following the “Solange” Case law of 1974 (BVerfG, May 29 1974, BvL 52/71.) and 1986 (BVerfG, October 22 1986, BvR 197/83.). In 1974, the Court declared itself competent to assess the conformity of Community legislation with the fundamental principles recognized by the German Constitution as long as the Union does not have a catalogue of fundamental rights ('Solange' in German) whose protection is equivalent to that offered by the German Basic Law (BVerfG, May 29 1974, BvL 52/71.). Then, in 1986, the case law “Solange II” stated that the Court will not review the constitutional conformity of European acts as long as the European protection of fundamental rights provides the same level of protection (BVerfG, October 22 1986, BvR 197/83.). The case law of the Bundesverfassungsgericht "Bananen" of 2000 affirmed the almost outdated character of such a control by the German Court by affirming that the character of equivalence of protection between the national order and the European order does not presuppose a perfect alignment (BVerfG, June 7 2000, BvL 1/97, "Bananen"). Thus, a one-off discrepancy between the two levels of protection does not justify the refusal to apply Union law (Grewe & Rideau, 2010). As a result, German control of the conformity of Community acts with the fundamental rights set out in its Basic Law is now quite rare.
The second and third layer of the German constitutional triple test is the privileged way today to contest the legality of a European act. The ultra vires test is responsible for verifying the competence of the Union on the basis of the principle of democracy. The German judges of the Bundesverfassungsgericht retain jurisdiction to declare inapplicable in national law a Community act which would violate the limits of the competence conferred by the German people on the Union (Langenfeld, 2019). As the German Court pointed it out in the case law Lisbon of 2009, the consequence of such a review by German judges is that a Community act deemed "ultra vires" would remain unenforceable in Germany (BVerfG, June 30 2009, BvE 2/08, "Lissabon").
In addition to the ultra vires review, the Court introduced the possibility of a second review, aimed at protecting German constitutional identity. The German judges claim the right to have the "last word" because the people must be able to decide fundamental questions concerning their own identity, as identified in article 79§3 of the German fundamental law (Mayer, 2011). The eternity clause, and more specifically the values to which it refers, lends itself to being interpreted quite broadly by including a number of principles, including the democracy principle, the fundamental rights, the rule of law, the republican form and the federal state, and the social state. Just as for the ultra vires test, the violation of one of the principles of German constitutional identity leaves the act unenforced in Germany (Grewe & Rideau, 2010).
The recovery plan facing the German Court’s triple test
With regard to the recovery plan, it is precisely these last two aspects of the triple test that came into play.
The applicants argued that the Recovery Plan exceeded the Union's competences as defined by articles 311 and 122 TFEU. Indeed, article 311 TFEU foresees a balanced budget for the Union, and excludes a priori the possibility of a common debt. One criticism is that the recovery plan would turn Europe into a fiscal union by the emission of a common debts, creating of a policy of financial transfers between Member States without a sufficient legal basis (Vilain, 2021). Moreover, the areas of action of the plan, particularly those related to ecology and digital are not directly related to the recovery from the health crisis and are therefore not justified under article 122 TFEU (Martin, April 9 2021).
The second argument mentioned is the violation of Germany’s constitutional identity. More precisely, the recovery plan could infringe the Bundestag’s rights of regard on budgetary matters (Vilain, 2021). In its case law of 2009 concerning the ratification law to the Lisbon treaty, defining the essence of Germany’s constitutional identity, the Court retained that decisions on revenue and expenditure, including the use of loans, were among the core areas of democratic action (BVerfG, June 30 2009, BvE 2/08, "Lissabon"). It is therefore important that the Bundestag be fully involved.
The German Court had therefore two options.
The court could have either decided to retain its competence (and thus commit a serious breach of the principle of primacy, as the CJEU is the only body that can interpret EU law), and possibly add conditions to the German participation in the recovery plan; or choose to refer the decision to the Court of Justice of the European Union.
Following the case law of the 5th of May 2020 (BVerfG, May 5 2020, BvR 859/15), in which the German Court questioned the asset purchase policy of the European Central Bank (ECB) in violent terms, this affair could have been yet another episode in the long saga of the Eurosceptical approach of the German Court trying to stop or undermine European integration.
The fact was that this decision could have beard a high risk of delaying, if not derailing, the crown jewel of the EU’s economic reaction to the current crisis. And yet Europe, mired in a health and economic crisis, needs the funds as soon as possible.
The decision of the German Court on April 21st is therefore a great relief. The German court has indeed renounced to block the ratification of the european recovery plan. "A summary examination does not reveal a strong probability of violation" of the fundamental law, explains the highest court on its website (Bundesverfassungsgericht, s.d.). The Court of Karlsruhe will continue its examination but rejects the request for an emergency suspension, considering that "the disadvantages" of a delay in ratification outweigh any other consideration (Bundesverfassungsgericht, s.d.). Indeed, the Court admitted that a delay in the entry into force of the recovery plan would "compromise the economic policy objective" given the urgency of the recovery from the Covid-19 pandemic’s economic consequences.
Bibliography
Bouvet, A., & Brzeski, C. (March 29 2021). Karlsruhe we have a problem: a new challenge to the EU recovery fund. ING Economic and Financial Analysis.
Bundesverfassungsgericht, A. 2. (n.d.). Retrieved from https://www.bundesverfassungsgericht.de/SharedDocs/Pressemitteilungen/DE/2021/bvg21-029.html
BVerfG, June 30 2009, BvE 2/08, "Lissabon". (n.d.).
BVerfG, June 7 2000, BvL 1/97, "Bananen". (n.d.).
BVerfG, May 29 1974, BvL 52/71. (n.d.).
BVerfG, May 5 2020, BvR 859/15. (n.d.).
BVerfG, October 22 1986, BvR 197/83. (n.d.).
Grewe, C., & Rideau, J. (2010). « L’identité constitutionnelle des Etats membres de l’Union européenne : flash-back sur le coming-out d’un concept ambigu », in Chemins d’Europe, Mélanges en l’honneur de Jean-Paul Jacqué.
Langenfeld, C. (2019). La jurisprudence récente de la cour constitutionnelle allemande relative au droit de l’union européenne. Les cahiers du conseil Constitutionnel, Title VII, 2019/N°2., p. 73.
Martin, A. (April 9 2021). L'allemagne fait obstacle au plan de relance européen. Alternatives économiques.
Mayer, F. (2011). L’identité constitutionnelle dans la jurisprudence allemande in L’idéntité constitutionelle saisie par les juges en Europe under the direction of Laurence Burgorgue-Larsen.
Vilain, Y. (2021, April 13). Plan de relance en Allemagne, 3 questions à Yoan Vilain. (W. u. EU!, Interviewer)
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