EU Judges Hit Back at ‘War Declaration’ by Top German Court

(Bloomberg) -- The European Union’s top court hit back at the German judges who delivered the most stinging criticism in the EU tribunal’s 68-year history as part of a ruling on the European Central Bank’s powers.

In an unprecedented counterattack on Friday, the EU Court of Justice said its entire purpose is to make sure EU law is properly applied across the 27-nation bloc. It said it “alone” has the “jurisdiction to rule that an act of an EU institution is contrary to EU law.”

The EU tribunal was responding to the landmark May 5 ruling by Germany’s constitutional court on ECB’s controversial quantitative-easing program. In the decision -- dubbed “a declaration of war” by a law professor -- the German judges lashed out at their EU counterparts, saying they’d overstepped their powers when they backed the ECB’s policy in a previous ruling.

In Friday’s statement, the EU court warned that such “divergences between courts of the member states” would be “liable to place in jeopardy the unity of the EU legal order and to detract from legal certainty.”

Wolfgang Schaeuble, Germany’s former finance minister, and Jean-Claude Juncker, the previous European Commission president who has been a life-long promoter of EU unity, also spoke out about the German decision this week.

Schaeuble said it poses a threat to the future of the common currency.

“It’s very possible that the existence of the euro is now put into question in other European Union member states, because every national constitutional court can decide for itself,” Schaeuble, who now presides over Germany’s lower house of parliament, told Redaktionsnetzwerk Deutschland. “This situation makes nobody happy.”

Germany’s constitutional court said this week that the ECB’s 2.7 trillion-euro ($2.9 trillion) asset-purchase program, which was started in 2015 and is still running, might be unconstitutional, and gave the central bank three months to prove that the policy is proportionate to its impact on the economy.

According to German magazine Der Spiegel, Finance Minister Olaf Scholz has asked his staff to look into whether the ECB’s new 750 billion-euro bond-buying program to fight the coronavirus shock would pass such a test. The evaluation was positive and officials found nothing to fault, the magazine said on Friday.

Schaeuble acknowledged that as finance minister he was also dissatisfied with some of the ECB’s decisions, saying independent institutions without democratic legitimacy must stick strictly to their mandates. That means it’s “not easy to refute” the German decision.

However, he said it’s also “difficult” if the German constitutional court can’t accept a decision by the EU Court of Justice.

ECB President Christine Lagarde has a close bond with Schaeuble. Her first speech as president -- after she succeeded Mario Draghi -- was at a ceremony to praise him.

Asked on Thursday about the German ruling, she said the central bank is “undeterred” in its mission to revive euro-area inflation, and by extension the economy, in line with its mandate.

Juncker also criticized the German judges for breaking with the assessment of the EU’s top court.

“For the first time in the EU’s jurisprudence history, a national jurisdiction openly attacks the European jurisdiction,” he said in a radio interview on Friday, adding that the decision could lead other countries to ignore the Luxembourg-based court as well. “We will realize in the coming years what a grave mistake it was, unless it’s corrected.”

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