ECJ gives the green light for the European Stability Mechanism, Pringle, C-370/12

The European Council took Decision 2011/199/EU of 25/03/2011 amending Article 136 of the Treaty on the Functioning of the European Union (TFEU) with § 3 providing that the Eurozone Member States may establish a stability mechanism (§ 6). The Decision is accompanied with the European Stability Mechanism (ESM) Treaty that establishes the respective mechanism with a maximum lending capacity fixed at € 500 billion in order to help Member States threatened by severe financing problems (§ 11).

Thomas Pringle, left-wing independent Member of Irish Parliament, sued Ireland for implementing this initiative before the Irish Supreme court that made a reference to the EU Court of Justice (§ 2). The latter decided to judge in full Court of 27 judges, and on 27/11/2012 dismissed the action.

Mr Pringle claimed that Article 136 TFEU might not be amended pursuant to the simplified revision procedure provided by Article 48(6) TEU, since this amendment would directly encroach on the exclusive competence of the Union in relation to monetary policy (§ 25). Article 3(1)(c) TFEU states that the Union is to have exclusive competence in the area of monetary policy for the Eurozone. Thus, according to Pringle, the amendment would give Member States back the respective competence (§ 52).

The 27 judges replied in 2 steps. First, the TFEU contains no definition of monetary policy, and refers to the objectives, not to the instruments (§ 53). Second, under Articles 127(1) and 282(2) TFEU, the primary objective of the EU monetary policy is to maintain price stability, which is pretty different from safeguarding the stability of the euro (§§ 54 and 56). Thus the grant of financial assistance does not fall within monetary policy.

Mr Pringle argues that Article 48(6) TEU provides that the European Council can act in monetary area only after consulting the European Central Bank. In this case the European Central Bank gave its opinion on 17/03/2011, and this means that this is a monetary policy procedure. The ECJ replied that the Bank was consulted on the European Council’s own initiative, and not due to any legal obligation (§ 61).

Mr Pringle continues that the competence of establishing this kind of mechanism has been transferred to the Union level by Article 352 TFEU, and cannot be forwarded to a new institution called European Stability Mechanism by the simplified revision procedure. The full Court replies that the Union has not used powers under that Article and that, in any event, that provision does not impose on the Union any obligation to act (§ 67). I like this point because this is a bright case of indeterminacy in the EU case law. In this case, the Court followed Commission v Council, 22/70, § 95, but there are other cases (such as UK v Ireland) where this kind of reasoning was unambiguously dismissed.

The final point makes us smile. Mr Pringle says that the ESM Treaty may not be signed or ratified before the entry into force of Decision 2011/199 amending Article 136 TFEU (§ 183). The ECJ replies that this amendment is a simple confirmation of the legal order that has existed before (§ 184). In other words, the Court makes the completed amendment procedure senseless because anyway it always was like this.