The German Federal Constitutional Court overrules a decision of the European Court of Justice for the first time.

The judgment of the Federal Constitutional Court on May 5th, 2020 which partially accepted several constitutional complaints regarding the Government Bond Purchase Program (GBPP) of the European Central Bank (ECB) has received great media attention. In addition to specific questions of monetary and economic policy, European law issues relating to the distribution of competencies within the European Union are particularly relevant.

 In 2015, the ECB adopted the Government Bond Purchase Program (GBPP). The aim of the program is to expand the money supply in the economic cycle by buying government bonds and similar debt instruments, which should encourage investment and in the long term lead to an increase in the inflation rate to around 2%. The ECB is exposed to the ongoing criticism of not only pursuing the monetary policy it has been entrusted with, but also competing economically. The European Court of Justice  ruled on December 11, 2018 that the GBPP was within the competences of the ECB. The Federal Constitutional Court now had to decide on several constitutional complaints, including those against the failure of the Federal Government and the Bundestag to work towards the ECB's decisions regarding the Federal Constitutional Court being repealed or not being implemented.

 The subject of the complaint needs to be explained: while the complainants are likely to be concerned about the illegality of the ECB's decisions, they object to the failure of the Federal Government and the Bundestag. This is due to the fact that the constitutional complaint pursuant to the Federal Constitutional Court can only include acts of public authority, which means only German state authority.

 "The right to vote for the German Bundestag guaranteed to the individual in our Fundamental Law is not limited to a formal legitimation of the (federal) state authority. Citizens' right to democratic self-determination also applies with regard to European integration and protects them in the area of application of the Fundamental Law from obvious and structurally significant violations of competences by organs, institutions and other agencies of the European Union and from such Measures exceed the limits of the principles of Art. 1 or Art. 20 GG declared inviolable by Art. 79 (3) GG. "( Federal Constitutional Court v. 5.5.2020 - 2 BvR 859/15 et al., Margin no. 98)

The competence control by the Federal Constitutional Court is to be understood as a sub-case of identity control - the untouchable constitutional core, which according to the Fundamental Law also forms the yardstick for the control of Union action is affected when Union organs exceed their powers. Such an ultra-virus act is not sufficiently legitimized by the German voters, a violation of Article 38.1 sentence 1 of the Fundamental Law is possible.

The principle of limited individual authorization is to be observed: The EU institutions may only move within the framework of the competences that have been expressly assigned to them by the member states. If the competency order is disregarded, the Federal Constitutional Court  considers the Bundestag and the Federal Government to be obliged:

"If a measure by organs, institutions and other bodies of the European Union exceeds the limits of the integration program in an obviously and structurally significant way, the Federal Government and the Bundestag have to actively deal with the question of how the order of competences can be restored and to bring about a positive decision which paths should be followed. ”( Federal Constitutional Court of 5.5.2020 - 2 BvR 859/15 and others, margin no. 109)

If the Federal Constitutional Court now checks compliance with these obligations in the context of the constitutional complaint, the decisive factor is whether an ultra-viral act by a Union body actually exists. The following principles apply to ultra-viruses control:

"A violation of the principle of limited individual authorization can only be seen if the institutions, bodies and other bodies of the European Union have exceeded the limits of their powers in a way that specifically violates the principle of limited individual authorization, in other words, the violation of competence is sufficiently qualified. This presupposes that the acts of Union power that are contrary to competency are obvious and lead to a structurally significant shift within the structure of competences at the expense of competences of the member states. ”( Federal Constitutional Court v. 5.5.2020 - 2 BvR 859/15 and others, paragraph 110)

 This control must be exercised with caution and in a manner that is friendly to European law. To this end, the Federal Constitutional Court provides that the decision on whether to exceed the competency is primarily left to the ECJ and that its decision is respected as long as it can be traced back to methodological principles and does not appear to be objectively arbitrary. This is where the explosiveness of the present decision becomes clear: for the first time, the Federal Constitutional Court overrides a decision by the ECJ as part of the ultra-viruses control and criticizes this as methodologically incorrect and arbitrary.

 The Federal Constitutional Court also explains in detail why it is not bound by the decision of the CJEU of December 11, 2018, which had established compliance with the competency order with regard to the GBPP. It recognizes a fundamental link to the interpretation of the ECJ, but not in cases like the present one, in which the Federal Constitutional Court no longer considers the decision to be justifiable. By also ignoring the actual economic consequences in its assessment, the ECJ disregarded the principle of proportionality, so that the ECJ's decision should also be viewed in part as an ultra-virus act:

 "The opinion of the ECJ in its judgment of 11 December 2018 that the Governing Council's decision on the GBPP program and its amendments are still in line with competence, misjudges the importance and scope of the principle of proportionality, which must also be observed in the division of powers is obvious and is methodologically no longer justifiable due to the fact that the actual effects of the GBPP are excluded. The judgment of the Court of Justice of December 11, 2018 therefore obviously exceeds the mandate given to the ECB and causes a structurally significant shift in competences at the expense of the member states. Since it presents itself as an ultra-viral act, it has no binding effect in this respect. (…) The Court's approach to disregard the actual effects of the GBPP also in the context of the proportionality test and not to take an overall assessment fails to meet the requirements for a comprehensible review of compliance with the monetary policy mandate the ECB. As a result, the principle of proportionality can no longer fulfill the corrective function assigned for the protection of Member State responsibilities.

The Federal Government and the Bundestag are obliged to oppose the GBPP to be qualified as an ultra-viral act and to protect themselves from the right to democracy protected. To do this, they would have to work towards a proportionality check by the ECB. After a transition period of three months, the Deutsche Bundesbank is prohibited from participating in the implementation of the GBPP if the ECB has not yet adequately demonstrated the proportionality of the decisions in question.

 The Federal Constitutional Court overrules a decision of the ECJ for the first time. In addition to the in-depth examination of the decision, the basics of identity control in the context of the constitutional complaint should be repeated before the Federal Constitutional Court.

 Nevertheless, it is possible to review the actions of Union bodies within the framework of the constitutional complaint, to the extent that they form the basis of actions by German state bodies or trigger the following duties to act from the responsibility for integration. In such a case, the Federal Constitutional Court derives the individual's right to appeal from the possible violation of the German constitution.

Brussels, 16 May 2020

Dr Hubert Silly