Case C-62/14 Gauweiler, Judgment of 16 June 2015

Key point

  • This case showcased the conflict between the German Federal Constitution Court and the ECJ on issue of the primacy of EU law and the eventual resolution through a process of indirect ‘dialogue’ between the courts

Facts

  • Under a proposed Outright Monetary Transactions programme, the European Central Bank will purchase bonds issued by member states in the secondary market
  • Applicants in the main proceedings submit (i) that the OMT decisions form, overall, an ultra vires act inasmuch as they are not covered by the mandate of the ECB and infringe Article 123 TFEU and (ii) that those decisions breach the principle of democracy entrenched in the German Basic Law and thereby impair German constitutional identity
  • The German Federal Constitutional Court (FCC) made preliminary reference on the issue of the illegality of the OMT programme
  • In its opinion in which the preliminary reference was made, the FCC threatened to hold the OMT programme illegal under German constitutional law

Ruling (Court of Justice)

  • The OMT programme was compatible with EU law – it did not exceed the mandate of the ECB under Article 127(1) TFEU  and did not violate the prohibition of monetary financing under Article 123 TFEU
  • The Court held that the programme was legal so long as certain guarantees made by the ECB in its press release on the conduct of the OMT programme were complied with

Commentary

  • The ECJ did not mention threat by the FCC to assert the primacy of the German Basic Law but only asserted that a preliminary reference is binding on the referring court
  • But it did accommodate the unease of the FCC by including conditions on the legality of the OMT under EU law
  • When the case returned to the FCC for ruling after the preliminary reference, the FCC accepted the ruling of the ECJ and held that as long as the conditions formulated by the ECJ for the OMT programme are met, there is no exceeding of competences conferred to the ECB and no violation of the prohibition of monetary financing under 123 TFEU
  • However, the FCC asserted that the Bundesbank is under obligation not to participate in OMT if conditions are not met and German government and parliament are under obligation to monitor and take measures to prevent transgressions