12 September 2012

Extracts from the decision of the Federal Constitutional Court on the ESM - Applications for the issue of a temporary injunction

Applications for the issue of a temporary injunction 

The Federal Constitutional Court – Second Senate – on the basis of the oral hearing of 10 July 2012 by Judgement holds as follows:

The applications for the issue of a temporary injunction are refused with the proviso that the Treaty establishing the European Stability Mechanism (Bundestag printed paper (Bundestagsdrucksache – BTDrucks) 17/9045, pages 6 ff.) may only be ratified if at the same time it is ensured under international law that

1. the provision under Article 8 paragraph 5 sentence 1 of the Treaty establishing the European Stability Mechanism limits the amount of all payment obligations arising to the Federal Republic of Germany from this Treaty to the amount stipulated in Annex II to the Treaty in the sense that no provision of this Treaty may be interpreted in a way that establishes higher payment obligations for the Federal Republic of Germany without the agreement of the German representative;
2. the provisions under Article 32 paragraph 5, Article 34 and Article 35 paragraph 1 of the Treaty establishing the European Stability Mechanism do not stand in the way of the comprehensive information of the Bundestag and of the Bundesrat.

See link for full Extract from Grounds

Press release

See also Speech by Dr Wolfgang Schäuble during the deliberations on the European Stabilisation Mechanism in the German Bundestag (Extracts), 8.9.11

Key points:

• Cap of €190 billion on German ESM contribution, which can only be overturned by the Bundestag
• Both houses of German Parliament need to be adequately informed about all ESM decisions – something which needs to be enshrined in “international law"
• Reinforced that Bundestag approval needed for all activations of the ESM
• Explicit ban on ESM borrowing directly from ECB
• The German Government can terminate ESM at any time, as recognised under “customary international law”
• In its full ruling, expected in early 2013, the Court will also consider whether the ECB’s bond-buying programme, the OMT, has transferred illegal degrees of sovereignty to the EU-level.

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