Legitimacy through Adjudication: The ESM Treaty and the Fiscal Compact before the National Courts

Abstract

National constitutional courts are often seen as stumbling blocks to further European integration. Indeed, they often pose limits as to how far European integration may proceed under their respective constitutions. Nevertheless, these limits may be exceeded or even set aside by the respective constituent powers. Moreover, the constitutional courts also play another role in the integration process. They facilitate the current functioning of the EU in several respects and may help to legitimise new steps in European integration. We encounter all these different roles in the judgments of the national (constitutional) courts on the Treaty Establishing the European Stability Mechanism (ESM Treaty) and the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (Fiscal Compact), as will be argued in this contribution. The ESM Treaty and the Fiscal Compact are two of the main integration instruments developed during the Eurocrisis. They are in several respects related. As to their form, both treaties fall outside the EU structure and are ‘ordinary’ international treaties, but substantively they concern EU issues and pursue EU objectives. Also, various EU institutions (Council, Commission, European Central Bank [ECB], Court of Justice [ECJ]) participate in their execution. In addition, both were introduced to combat the Eurocrisis: the ESM Treaty by establishing a permanent fund for euro area states whose financial distress threatens the stability of the euro area, the Fiscal Compact by (slightly) accentuating the required budgetary discipline of the euro area Member States and by requiring those states to guarantee compliance with a balanced budget rule in national legislation. Therefore, both innovate: the ESM Treaty by establishing a form of permanent financial solidarity which, until recently, was anathema in the Economic and Monetary Union (EMU), the Fiscal Compact by outsourcing and nationalising the supervision of compliance with the treaty’s budget rule (and indirectly also with an EU budget rule). All in all, the treaties thus ‘are complementary in fostering fiscal responsibility and solidarity within the [EMU]’. The fact that only euro area Member States which have correctly implemented the Fiscal Compact are eligible for ESM support is the strongest expression of this complementarity.