A Legal Analysis of the Gauweiler Case

Abstract

In Gauweiler, in response to the first ever preliminary reference made by the German Federal Constitutional Court (Bundesverfassungsgericht; FCC), the Court of Justice gave the green light to the ECB's power to selectively purchase Eurozone government bonds in secondary markets (OMT programme). Whilst the Court of Justice sets some limits to European Central Bank's (ECB) authority relying on the golden standard of proportionality, it is a judgment of institutional empowerment. The tensions and instability arising from the separation of competences in monetary and economic policy gravitate to the advantage of the Union. By placing emphasis on the objectives rather than the effects of the programme and linking OMT power to conditionality, Gauweiler builds on Pringle providing normative legitimization to the austerity model whilst granting the ECB a distinct role not only in monetary policy but also in shaping the general economic policy of the Union. The Court of Justice's ruling also indicates a measured but firm response to the dialogue of conflict initiated by the FCC.

Intensity of Judicial Review of the European Central Banks’s Supervisory Decisions

“…It would therefore not be unreasonable to assume that, in principle, the intensity of judicial review of ECB acts will vary depending on whether the subject matter falls within the sphere of monetary policy or banking supervision (Zilioli, 2017;Lehmann 2017). The EU Courts might be expected to continue to adopt a deferent "light touch" approach to monetary policy matters, in line with the Gauweiler Case22 and, more recently, the Weiss Case23 (Tridimas and Xanthoulis, 2016;Goldmann, 2014). There are several reasons for this: the wide institutional mandate enjoyed by the ECB in pursuing the objective of price stability; the exquisitely lato sensu political nature of monetary measures, requiring a careful balancing of different interests; the fundamental need to preserve the stability and reliability of monetary decisions; and finally, the infungible nature of the macroeconomic assessments carried out by the monetary authority.…”

Dialogical Rule of Law and the Breakdown of Dialogue in the EU

“…Unless the OMT decision was interpreted in the light of the BVerfG's criteria, it stated that it would clearly be ultra vires. 108 Although the ECJ secured the position of the ECB in its judgment, its application by the BVerfG is a clear expression of the German constitutional protector's dislike of the manner in which it has been treated. 109 The 'crisis' might be averted, yet the conflict remains.…”

The Erosion of Sovereignty

“…But they also demonstrate the role that courts are able to perform in providing 'normative legitimization to the austerity model' being pursued within Eurozone governance and of legitimizing the ECB's role 'not only in monetary policy but also in shaping the general economic policy of the Union'. 62 They therefore provide illustrations of a general proposition that, although positive law might occupy a relatively independent domain, the court is likely to lose that autonomy the closer it intrudes on fundamental political matters. Such basic political questions, it has been claimed, ultimately 'can neither be decided by a previously determined general norm nor by the judgment of a disinterested and therefore neutral third party'.…”