Judicial Review of Economic (and Monetary) Policy: The National Courts

This chapter examines the jurisprudence of national courts on crisis-related measures. The material presented in this chapter will be divided into two parts. First, this chapter will examine some of the most important judgments delivered by courts in lender states during the Euro crisis, the emphasis being on the jurisprudence of the German Federal Constitutional Court. These cases primarily focus on the effects of financial assistance mechanisms and revised EU fiscal governance rules on the principle of democracy, parliamentary prerogatives, and national budgetary powers. A further strand of case law focuses on the measures adopted by the European Central Bank. Second, this chapter will look at review by national courts in borrower states, the principal focus being on social challenges brought by austerity-hit litigants in Greece. The comparative analysis sheds light on the different types of challenge facing courts in borrower and lender states, as well as the different starting points and the subtle differences in the reasoning provided by courts in their judgments. As regards borrower states in particular, the twin challenge is to examine to what extent litigants had any success in challenging in national courts the bailout conditions; and the extent to which arguments about civil or socio-economic rights had purchase at national level. The chapter further looks at review by national courts in other jurisdictions, as well as review by supranational and international courts or bodies. Last, it puts forward a number of ideas on fundamental rights adjudication in times of economic crisis.

Democracy, Legitimacy, and Accountability in Euro Crisis Management

This chapter looks at democracy, legitimacy, and accountability in Euro crisis management. It looks at the main critiques of the EU’s response to the crisis. It will be shown that scholars in this area castigate the EMU governance framework for its shortcomings in terms of input, output, and social legitimacy. The chapter makes the case for increased democratic controls and intense inter-institutional dialogue in the functioning of the EMU. It demonstrates how the crisis-induced developments have impacted on the horizontal and vertical distribution of power in the EU and the Member States. First, more powers were conferred on the Commission, Council, and Eurogroup in the measures enacted to combat the crisis. Though the European Parliament was heavily involved in norm production and had a pretty good strike rate in getting its amendments included in the final legislation, its role in policy implementation remains minimal. Second, the EU legislature put much of its reforming faith in a new recruit to strengthen democratic control in the EMU—the national parliaments. The crisis-induced legal and economic developments have circumscribed their budgetary sovereignty in many ways, but the newly enacted rules also serve to empower them vis-à-vis the executive. Third, the de facto division between borrower and lender states might have a bearing on the intra-institutional balance of power in the EU, and the emerging patterns of geographical fragmentation threaten the unity of the EU-28. The chapter set outs concrete proposals on how to enhance transparency and accountability in the EMU.

The Crisis-Induced Developments in the Economic and Monetary Union

This chapter looks at the crisis-induced legal, institutional, and economic developments within the Economic and Monetary Union. It consists of two parts. First, there will be a brief sketch of the crisis-related developments. These include the setting-up of financial mechanisms, the European Central Bank’s interventions to combat the crisis, the enhanced oversight of national fiscal and economic policy, and the increased supervision over the financial sector. Second, there will be a ‘first assessment’ of their constitutional and structural implications. Two sets of issues will be examined here: issues of legal principle; and the bearing of the enacted measures on European economic integration. Three key arguments will be made in this chapter. First, it will be argued that the measures enacted have led to legislative fragmentation and have exacerbated problems of transparency and complexity which already existed in this area. Second, it will be shown that the chosen form of action has consequences for institutional balance in the EU, democratic control, and judicial review. Third, it will be argued that the enactment of measures which are only applicable to Euro area Member States has served to deepen economic integration within the Euro area and to further differentiate it from economic integration in non-Euro area Member States. Further, certain areas of the single market have integrated more deeply in the Euro area. It will be concluded that the various reforms which have been implemented have strengthened the EU economic governance framework from a legal, institutional, and economic perspective.

Introduction

This chapter outlines the scope and key arguments of the book. It further set outs the analytical framework that will inform the discussion on the accountability arrangements in the area of Economic and Monetary Union, including the Banking Union.

Recommendations

This chapter draws together the implications of the Euro crisis for the EU and its Member States and critically evaluates the shortcomings of the Treaty schema in terms of transparency and accountability. The discussion begins with the measures intended to ‘complete’ and ‘deepen’ the Economic and Monetary Union (EMU). It sets out the author’s own view regarding the key reforms that would be necessary, albeit one that is informed by the proposals made by the EU institutions. These include a reform of the EU fiscal rules; the provision of technical assistance to Member States implementing structural reforms; establishing a Euro area stabilization function; completing the Banking Union and making progress towards a Capital Markets Union; and strengthening the role of EU financial watchdogs. This chapter further puts forward a number of concrete proposals on how to bolster transparency and accountability in the area of EMU, the dividing line being between those proposals that could be implemented without a Treaty amendment and those reforms that would require a Treaty revision. It further addresses separately accountability (and transparency) in the Banking Union, as well as the role of EU courts in the EMU.

Judicial Review of Economic Policy: The EU Courts

This chapter seeks to unpack access to EU courts in the area of EMU, the emphasis being on the challenges facing austerity-hit litigants wishing to put their substantive case before the Court of Justice of the European Union (CJEU). The discussion will proceed as follows. First, it will be shown that aggrieved individuals might not always be able to locate a formally binding EU law measure which could form the basis of a direct or indirect challenge before the EU courts. Second, it will be seen that the judicial doors to an Article 263 TFEU challenge (action for annulment) are, nevertheless, firmly shut as most private persons will not be able to overcome the admissibility hurdles of direct and individual concern. Third, almost all Article 267 TFEU challenges (preliminary reference) have so far been declared inadmissible, which begs the question as to the legal quality of the bailout terms and its ripple effect on the scope of application of the EU Charter of Fundamental Rights. Fourth, though aggrieved individuals could in principle bring an Article 340 TFEU action for damages before the EU courts, litigants are likely to face an uphill struggle in trying to convince the CJEU that the relevant requirements for liability of the EU institutions for damages for breach of EU law were met. The final section of this chapter will focus on the scope of application of the EU Charter, which has formed the basis of many (unsuccessful, thus far) challenges to austerity measures.

Division of Power, Democratic Input, and Accountability Structures in the EU’s Banking Union

This chapter looks at the division of power and accountability structures in the European Banking Union, the principal emphasis being on political accountability. Other types of accountability are also examined where appropriate (e.g. budgetary, administrative, or legal accountability). The discussion begins with the division of competence between the national and EU authorities in the Banking Union. This is followed by examination of the role of the European and national parliaments, as well as the Council and Eurogroup, in holding the European Central Bank, the Single Resolution Board, and the national supervisory and resolution authorities to account for their actions in this area. The focus then shifts to the intra-institutional balance of power and the emerging patterns of geographical fragmentation. The penultimate section of the chapter focuses on access to information, which is crucial for all forms of accountability. The final section of this chapter offers a snapshot of some of the features of the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM) which may hamper the effectiveness of the Banking Union and place its output legitimacy in jeopardy. The chapter concludes with proposals on how to strengthen accountability and transparency in the Banking Union.

The Implications of the Revised EU Economic Governance Framework for National Economic Policy

This chapter looks at the effects of the crisis-induced legal and economic developments on the Member States, most notably in relation to their fiscal, economic, and social policy. It consists of three main parts. The first section of this chapter will analyse the substance and scope of the new EU economic rules. The second section of this chapter will look at the important changes that the EU legislation adopted during the crisis has brought about in EU economic surveillance. It will be argued that the new EU economic rules have redistributive effects in European societies and encroach on very sensitive areas of national policy, which underscores the need for a democratically legitimate EMU architecture. The third section of this chapter will look at the implementation of EU economic rules and assess the rigorousness of EU and independent national fiscal oversight. The principal default line is between lender states and borrower states. First, we will examine the bearing of the crisis-induced economic developments on Germany, as well as the EU economic guidance addressed to it in the context of the European Semester. Second, we will examine the bailout terms agreed with Greece in the context of the three rescue packages. It will be shown that these terms mandate far-reaching economic and social policy reforms, from which grave social repercussions have flown. In addition, it will be argued that there was very rigorous EU and independent national assessment of the progress Greece was making in relation to its economic adjustment programme.

Judicial Review of the European Central Bank’s Actions

This chapter focuses on judicial review of the European Central Bank’s actions by the EU courts. It does not purport to examine all issues related to the legal accountability of the ECB across its main domains of action. Instead, it focuses on the role of the Court of Justice of the European Union (CJEU) in reviewing general reforms, in the light of cases such as Pringle, Gauweiler, and Weiss, and asks: what should be the scope, test (or standard) and intensity of review of the ECB’s actions? When should the CJEU defer to the ECB’s assessment? Though the emphasis in this chapter is on monetary policy measures, the final section of the chapter also looks briefly at the role of the CJEU in reviewing the ECB’s actions in its ‘new fields of competence’, namely banking supervision and in the context of financial assistance programmes, where the ECB is a member of the ‘Troika’ (or ‘Quadriga’).