The German Constitutional Court’s recent ruling on the European Central Bank (ECB) sent shockwaves across Europe. By explicitly defying the Court of Justice of the European Union (CJEU) and calling the bank’s bond-buying powers into question, the Karlsruhe-based court simultaneously shook the foundations of both the eurozone’s monetary policy and the EU’s legal order. Of the two, the second is much more vulnerable: all member states support some form of bond buying, but they do not all share the same view of rule of law.
While Berlin could barely conceal its frustration with the judgment, the Polish and Hungarian governments flaunted their delight with it. Yet, by exposing fault lines in the construction of the EU’s legal order and Europeans’ divergent views on the supremacy of EU law, the German court may have inadvertently have done the EU a favour. Everything depends on how governments that care about the rule of law react.
The future of the rule of law in Europe – and, by extension, the future of the EU – is at the heart of the conflict between the union and the Polish government. In the last four years, the ruling Law and Justice party (PiS) has systematically dismantled the independence of Poland’s judiciary. This is bad for Poland and deeply damaging for the EU. Judicial independence is fundamental to the rule of law and the application of EU law. This is why the CJEU has read the requirement into Article 19 of the Treaty on European Union, which obliges member states to “ensure effective legal protection” and apply EU law nationally.
The EU is, first and foremost, a set of rules. The union only works – which is to say, only really exists – if national institutions, including courts, can be relied upon to apply commonly agreed rules: EU law. So, while Article 19 of the Treaty on European Union reads like a highly technical provision, it is the keystone of the EU. It is the cog that makes all the other cogs turn. It is the article that makes the EU a union and not just another international organisation.
The European Commission has already opened several infringement procedures to protect the independence of the country’s judiciary. In November last year, the CJEU spelled out the requirements of judicial independence, leaving little doubt that Poland had failed to meet them. The Polish government has rejected this EU “interference” as illegitimate and, early this year, rushed through a “muzzle law” prohibiting Polish judges from applying the CJEU’s ruling, in a blatant breach of Article 19. In April, the Polish Constitutional Court legitimised these steps.
It would be wrong – and self-defeating – to assume that the German Constitutional Court’s ruling will automatically empower autocrats.
Dismissing the CJEU’s prior ruling as “incomprehensible”, the German Constitutional Court effectively declared itself the ultimate arbiter of EU law in Germany. The ruling was music to the PiS government’s ears. Indeed, Prime Minister Mateusz Morawiecki praised it as “one of the most important judgments in the history of the European Union”. On cue, the Polish Constitutional Court’s president, Julia Przylebska, confirmed that “national constitutional courts are the courts with the final word”.
Clearly, this is not a universalisable principle. Context, however, is everything. The German Constitutional Court’s ruling applies an argument about the division of competences between the CJEU and national courts to a specific question about the powers of one EU institution – the ECB. It leaves precisely the kind of space for interpretation and political manoeuvre that national Kompetenz-Kompetenz rulings have always produced. However, the Polish government, supported by its loyal Constitutional Court, is applying the same argument about the supremacy of national law not to how far one cog in the EU machine should turn, but to whether that machine should operate at all. This is a fundamental difference.
It would be wrong – and self-defeating – to assume that the German Constitutional Court’s ruling will automatically empower autocrats. This is a defining battle for the EU. It would be quite remarkable if this battle were lost because the PiS was more determined to undermine the rule of law than its fellow EU governments were to defend it.
The EU’s institutions and member states must support the CJEU. But words – and more infringement procedures – will not be enough. The EU must also gain the power to deny funding to member states that violate the laws that allow it to function. The Commission has put forward a proposal, which the European Parliament has amended. But neither offers a workable system. What such a system needs is a clear, objective, and automatic trigger for sanctions that is linked not to nebulous values, but to indisputable breaches of the EU’s most fundamental laws.
There is one measure that meets these criteria: the failure to implement CJEU judgments finding a violation of Article 19(1). There have only ever been two such rulings to date – both of them related to Poland’s judicial reforms. Poland has grudgingly implemented these rulings, neither of which went to the heart of its ambitions. But it has not shown the same inclination to do so in pending infringement proceedings on its systems for appointing and disciplining judges. These cannot be allowed to stand. Only the certainty of serious consequences, so painfully lacking till now, will change its mind.
The political implications of the German Constitutional Court’s ruling may be even more far-reaching than its legal ones. The ruling signals an end to an era in which member states outsourced fundamental decisions for the EU to technocratic institutions. Member states allowed the ECB to stabilise the EU economy with monetary policy (rather than fiscal policy), while leaving the Commission and the CJEU to protect the rule of law. Now, the time of political reckoning has come. Instead of hiding behind EU institutions, member states must clearly state what they want from the EU in economic policy and, even more fundamentally, in the defence of the union’s legal order. If they take the right decisions, they may even be grateful to the German Constitutional Court for the wake-up call.
John Dalhuisen is senior fellow at the European Stability Initiative.
The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.