Doubtful it Stood…: Competence and Power in European Monetary and Constitutional Law in the Aftermath of the CJEU's OMT Judgment

Abstract

Quite unsurprisingly, the CJEU has held that the ECB's OMT program does not violate EU law. In accordance with this holding, I argue in the first part of this note that the OMT program does not transgress the ECB's mandate under the Treaty, which is often interpreted too narrowly, in particular by German legal scholars. Furthermore, I argue that a violation of the prohibition of monetary financing of the member States as enshrined in article 123, para 1 TFEU cannot be inferred from the ECB's announcement of a program, which has never been implemented. In any case, there is clearly no manifest and grave transgression of EU competences which, according to the German Federal Constitutional Court's (FCC)Honeywelldoctrine, is required for an ultra vires finding. The second part of this note shows that the FCC's doctrine regarding transgressions of competences by EU organs (ultra vires review) is not only unconvincing as a matter of principle but also and worse (as on premises we can always reasonably disagree) not consistently applied to the OMT program. The note also objects to the Court's somewhat trendy blending of ultra vires and constitutional identity review of EU law through which it increasingly conceals its approach of applying the so-called constitutional constraints of European integration to the EU organs' conduct. The forthcoming FCC judgment is therefore less important as regards the quite foreseeable finding on the lawfulness of the OMT program but – hopefully – of vital importance as it might embody a more coherent relaunch of the FCC's standards of judicial review with regard to EU law.The judgment of the Court of Justice of the European Union (CJEU) on the European Central Bank's (ECB) 2012 announcement of future Outright Monetary Transactions (OMT) comes as no surprise. It had not been expected that the CJEU would interpret the European Economic and Monetary Union's (EMU) Treaty provisions the way the FCC had “suggested.” Neither had it seemed conceivable that the CJEU would reject the FCC's request for a preliminary ruling holding that a legally non-binding assessment of the EU action's lawfulness could not be requested under Article 267 TFEU. The judgment had nevertheless been awaited for with tension for two reasons: First, in the vigorous and in part very critical debate about the ECB's competences under the TFEU and its alleged ultra vires action a judgment by the CJEU was necessary to settle the fundamental European law issues at stake. This is all the more important with regard to the ECB's current Expanded Asset Purchase Program (EAPP) as well as its interconnection with the European Stability Mechanism's (ESM) financial assistance programs. The CJEU's holdings on the ECB's competences within the EMU framework are discussed in the first part of this note regarding the distinction between monetary and economic policy (infra section A.I.) and the interpretation of Article 123, paragraph 1 TFEU which prohibits monetary financing of the member States by the ECB (infra section A.II.). Second, it was clear that the judgment would shape the new stage in the changing and sometimes explosive on-off relationship between the CJEU and the FCC, the stage entered into by Karlsruhe's first ever request for a preliminary ruling. The FCC had fortified its ultra vires doctrine and clearly indicated its readiness not to follow the CJEU but to insist on the notorious “last word” of the German Constitution instead. Thus, the second part of this note discusses the constitutional legal premises of the FCC's approach and the procedural and substantial manner in which the FCC tries to scrutinize the ECB's OMT program (infra sections B.I. and B.II.). In this context, possible scenarios for the upcoming judgment (infra section C.I.) and consequences for European multi-level constitutionalism (infra section C.II.) will be discussed.