ECB OMT Challenge to Be Heard by EU Top Court on Oct. 14

European Union judges will review oral arguments in a German challenge to a European Central Bank bond-buying plan next month.

The European Court of Justice, the EU’s highest tribunal, will consider arguments in the case filed by a lawmaker and a group of German academics at an Oct. 14 hearing, the court said on its website.

Germany’s Federal Constitutional Court put the fate of the ECB’s Outright Monetary Transactions initiative, credited with easing the euro debt crisis, partly in the hands of the Luxembourg-based ECJ in February. The German court expressed doubts about the legality of the measure in a six to two vote and asked the EU judges to clarify some issues.

The Frankfurt-based ECB announced the details of its unprecedented bond-purchase plan in September 2012 as bets multiplied that the euro area would break apart and after ECB President Mario Draghi pledged to do “whatever it takes” to save the currency. The calming of financial markets that the still-untapped program produced helped the bloc emerge from its longest-ever recession in the middle of 2013.

While the German court didn’t seek a fast-track procedure, the ECJ scheduled the hearing for about eight months after the case was transferred. The EU tribunal takes an average of 16 months to rule on cases referred by national courts, according to the tribunal’s annual report for 2013.

Back to Germany

After a ruling from the EU court, the case will be sent back to the German judges who have to make a final ruling on the national cases pending over the issue.

The German court said in its February judgment that the OMT is likely to violate EU rules because it amounts to economic policy that is outside the ECB’s mandate. The plan may also be seen as monetary financing of governments, which the EU treaties ban, according to the German judges.

If the OMT were to be limited and placed under certain conditions, like banning debt cuts and unlimited purchases bonds of selected member states, then it could pass the test, the constitutional court said at the time.

The ECJ case is C-62/14 Gauweiler and others.

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