„Absolutely unsustainable“ – the German Federal Constitutional Court´s ruling on the Public Sector Purchase Programme (PSPP)

With its decision of 5 May 2020 (2 BvR 859/15 ua) on the Public Sector Purchase Programme (PSPP), the German Federal Constitutional Court (BVerfG) not only has ruled on the legal question apparently being the subject matter of the legal proceedings, if the ECB by executing this programme on the purchase of public debt on the secondary market, as well as the ECJ by estimating the ECB´s behaviour as compatible with Union law in the case Weiss (EGJ, judgement of 11 December 2018, Case C-493/17) has infringed the limits on the transfer of competence to the organs of the European Union laid down in the German Constitution. The BVerfG affirmed this infringement in very harsh words, (dis)qualifying the ECJ´s judgement in the preceding preliminary ruling as „absolutely unsustainable (par. 116) and „objectively arbitrary (par. 112)“.

The formal defendants in the proceeding before the BVerfG, the German Parliament (Bundestag) and the German Government (Bundesregierung) are set the task to use their best efforts to make the ECB (which was created as a Union organ independent from all political organs of the EU or the Member States, particularly because the former German Government insisted on it, vid. Art. 130 TFEU) prove within a very short time period of 3 months that while performing the monetary measures taken during the programme, it had proceeded to an examination of its proportionality being compliant with the legal criteria now established by the BVerfG.

Certainly, the legal questions on monetary and fiscal policy underlying the BVerfG´s judgement do not affect LEXPORTATEU´s field of activity and consequently are not treated here. However it seems remarkable to us that in truth, not the German Parliament and Government were „in the dock“ before the BVerfG in Karlsruhe, but rather the ECB and particularly the ECJ, even though in an implicit manner. Contrary to the usual way to proceed in a State under the rule of law, upon completion of the preliminary ruling initiated by the BVerfG itself in the Case Weiss, during the legal proceedings on the constitutional complaint, the ECJ was not given the opportunity to make any statements on the charges brought against it, nor has it been given the “last word” usually granted in condemnations of such historical significance. This casts a poor light on a Constitutional Tribunal that justifies its crushing verdict with the need to preserve inalienable principles of the rule of law.

Not only in a procedural way the ECJ is deprived from the „last word“, but also in substance, because the BVerfG is explicitly overriding the binding force of rulings pronounced by the ECJ in preliminary rulings pursuant to Art. 267 TFEU, provoking a press release of the ECJ following the BVerfG´s judgement, rather uncommon in this kind of proceedings. In addition, the BVerfG questions fundamental pillars of the EU, such as the primacy of Union law and the ECJ´s construction monopoly with regard to the final interpretation of Union law.

Although the BVerfG´s ruling does not have any immediate consequences for International company law and the law of corporate groups, its mediate consequential effects could turn out to be disastrous and are not yet predictable. Because both the German and the European organs are trapped in an indissoluble conflict of legal competence, which cannot be solved by legal means. Because neither are the German Parliament and Government enabled to openly ignore the BVerfG´s interpretation of the German Constitution, nor are the ECJ or the ECB able to follow the “instructions” received from Karlsruhe. Citing the words of the BGH´s Presiding Judge Meier-Beck, this would not only end up in the end of the EU as a legally constituted community of European democracies, but furthermore from a political point of view intensify impressions in other Member States of a preferential treatment of the German institutions at the EU-level à la „am deutschen Wesen soll Europa genesen“ already made in the past, consequently lead to new disaffection similar to the Brexit and also inspire hostile tendencies towards the rule of law in the jurisdictions of other Member States, whose courts could refuse to follow the ECJ´s case law in whichever legal field, just by invoking principles laid down in its domestic Constitution.

Consequently, it remains to be hoped for International company law that the conflict can be settled through cooperation in a face-saving way for all involved institutions. This must be achieved primarily by a revision of the Constitutional Court´s jurisprudence in a future constitutional complaint raised before it, as well as by the ECB by acting more transparently on the reasons which justify its monetary policy, it goes without saying without restricting its independence. At the end of the day, we cannot help feeling that the BVerfG intended primarily to put an end to an expansive monetary policy, but not to eliminate Union law or to disavow the ECJ.

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