German Top Judges Stress Powers on Eve of ECB-Bond Case Hearing

  • Tribunal reiterates national constitution may trump EU law
  • Court to hear similar arguments in ECB bond case Feb. 16

Germany’s top court used a ruling in an extradition case to drop hints that it is willing to step in when there are fundamental conflicts between European Union law and the country’s constitution, weeks before it hears a case over the European Central Bank’s bond-buying program.

The Federal Constitutional Court in Karlsruhe on Tuesday disclosed a ruling ordering a new hearing in a case over the extradition of a U.S. citizen to Italy based on a European arrest warrant. In the document, the judges cited the argument that the court may declare EU acts inapplicable in Germany if they transgress powers granted under the bloc’s treaties and violate basic principles of the country’s constitution.

Coming three weeks before the court hears a case against the ECB’s Outright Monetary Transactions program, the decision may signal that the judges are sticking to the idea that German constitutional standards can trump EU acts. While the OMT program was cleared by the European Court of Justice last year with minor strings attached, the German judges will hear more arguments in the case. They had never ruled against any EU action, usually relying on the "EU-friendliness" of the German constitution.

Determining Limits

"You can only understand this ruling as saying OMT isn’t yet decided," said Christoph Ohler, a professor of constitutional law at Jena University. “The message is ‘We stick to our review powers and we determine ourselves where the limits are.”’

In the extradition decision released today, the court found that while a warrant usually needs to be reviewed and accepted only under EU rules, the claimant was convicted in absentia and that it wasn’t clear he could defend himself in an Italian court. The case now must be re-heard by a lower tribunal in Dusseldorf. The federal court also said the judgment was mainly based on applicable EU rules so the ruling doesn’t require to void any EU act.

The court will hear arguments Feb. 16 in the dispute over the OMT, a program that was never put into action. The German court first heard the case in 2013. In early 2014, the judges sent it to the European Union’s highest tribunal adding a list of demands to curb the program. The Karlsruhe-based court will now look at the guidelines it received and test them under the national constitution’s democracy principles.

The ECB announced details of the OMT plan in September 2012, as bets multiplied that the euro area would break apart, and after its president Mario Draghi promised to do “whatever it takes” to save the currency. The calming of financial markets produced by the still-untapped OMT program helped the euro area emerge from its longest-ever recession.

The case is: BVerfG, 2 BvR 2735/14.

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