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The Weiss/PSPP story: Being disproportional with proportionality?

Marcus Klamert (University of Graz)

On 5 May 2020, the Second Senate of the German Federal Constitutional Court (hereafter “the FCC”) handed down a judgment in a constitutional challenge against the Public Sector Purchase Programme (PSPP) established by the ECB (“PSPP Judgement”). The FCC declared ECB decisions as well as the ECJ judgment in Weiss reviewing (and approving) these Decisions to be ultra vires and thus as not binding in Germany. On 29 April 2021, the same FCC Senate held two applications for an order of execution regarding the 2020-judgement to be inadmissible and in any case also to be unfounded (2 BvR 1651/15, 2 BvR 2006/15) (“PSPP Order”). The background and some possible consequences have already been discussed on this blog (Bonini).

The concern that the PSPP Judgement would serve as a template for similar ultra vires declarations by national courts in Member States with ‘re-nationalised’ court systems seems not to have materialised until now (see, eg, Biernat). This might be because of the considerable backlash against the PSPP Judgement, including in Germany. However, this could easily change in the future. It is doubtful that critics of the EU and of the ECJ will refrain from being lured by the ‘talking points’ provided in the PSPP Judgement and instead take account of the much less dramatic (likely) final act in the PSPP Order.

One reason for this is arguably that the Judgement, the Order and their relation to each other are hard to comprehend without knowledge of German constitutional law including the Federal Constitutional Court Act (BVerfGG) on which the action leading to the PSPP Order is based. While the PSPP Judgement has already raised a number of constitutional questions such as regarding the admissibility of an actio popularis before the FCC, the present Order raises many questions regarding the scope and criteria for assessing an order sought under Section 35 BVerfGG (see Nettesheim).

In the PSPP Judgement, the FCC found that a central part of the Weiss judgment by the ECJ was “simply not comprehensible” (paras 116 and 118) and “objectively arbitrary” (para 118). The FCC therefore reviewed “independently” whether the ECB Decisions were covered by the competences conferred by the EU Treaties (para 164). On this basis, it found that the ECB decisions suffered a “manifest” violation of “the principle of proportionality” (para 165) because an adequate assessment of the “economic policy effects” was missing (headnotes 6b).

Now, in the PSPP Order, the FCC held that the German Federal Government and the Bundestag “enjoy a wide margin of appreciation, assessment and manoeuvre in this context and it was not for the Court to decide in the present case whether the ECB’s proportionality assessment satisfies the substantive requirements deriving from Art. 5(1) second sentence and Art. 5(4) TEU in every respect” (para 109). According to the FCC, the Federal Government and the Bundestag neither failed to take any action at all nor were the measures taken by both organs manifestly inadequate or completely insufficient to meet the obligation, set forth in the PSPP Judgment, to ensure a proportionality assessment of the PSPP.

It appears that the ECB Decisions have ceased to be ultra vires because of two short paragraphs in decisions taken by the ECB Governing Council on 3-4 June 2020 (see PSPP Order, paras 3, 100, and 109) and because of the disclosure of confidential ECB documents that likely were the basis of the ECB Decisions in dispute to the Bundestag via the German Finance Ministry (see PSPP Order, paras 6, 103-104). Any actions by the German Federal Government or the German Parliament, while referred to at length in the PSPP Order, in contrast, could not possibly have had an impact on the legal existence of the ECB Decisions declared ultra vires in the PSPP Judgement.

It is fair to ask, all ambiguity of reasoning in both PSPP Judgement and Order aside, whether all the trouble was in any way proportional to the outcome, both in legal and practical terms.

 

Marcus Klamert is Professor of European Law at University of Graz, Legal advisor at the Federal Chancellery of Austria.

The views expressed in this blog reflect the position of the author and not necessarily that of the Brexit Institute Blog.

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