BVerfG Judgment regarding ECB’s Public Sector Purchase Programme (PSPP)

Author Details
Author (Corporate)
Publication Date 2019-2020
Content Type

Summary:

Judgment released by the Second Senate of the Germany's Federal Constitutional Court (Bundesverfassungsgericht) on 5 May 2020 relating to several complaints directed against the Public Sector Purchase Programme (PSPP) of the European Central Bank (ECB).

Further information:

The Court found that the Federal Government and German Parliament (Bundestag) failed to take steps challenging that the ECB - in its decisions on the adoption and implementation of the PSPP - neither assessed nor substantiated that the measures provided for in these decision satisfy the principle of proportionality.

In its Judgment from December 2018, the Court of Justice of the European Union (CJEU) took a different stance in response to the request for a preliminary ruling from the Federal Constitutional Court. The Federal Court argues that the review undertaken by the CJEU with regard to whether the ECB’s decisions on the PSPP satisfy the principle of proportionality is not comprehensible - to this extent, the judgment was thus rendered ultra vires.

As regards the complainants’ challenge that the PSPP effectively circumvents Art. 123 TFEU, the Federal Constitutional Court did not find a violation of the prohibition of monetary financing of Member State budgets.

The Federal Court also highlighted that this Decision does not concern any financial assistance measures taken by the European Union or the ECB in the context of the COVID-19 (coronavirus) crisis.

The CJEU reacted on 8 May 2020 by restating its exclusive competence to declare if an EU institution violated EU law. The President of the European Commission stated on 10 May that "(...) the final word on EU law is always spoken (...)" by the CJEU.

Related Link(s)
Commentary and Analysis
Bloomberg, 31/07/2019: The ‘Collateral Damage’ of ECB’s QE Worries Top German Judges https://www.bloomberg.com/news/articles/2019-07-31/the-collateral-damage-of-ecb-s-qe-worries-top-german-judges
Reuters, 05/05/2020: German court ruling ties ECB's hands - now and in the future https://www.reuters.com/article/idUSKBN22H1SH
Bloomberg, 05/05/2020: German Court Issues a Dangerous Verdict for the ECB https://www.bloomberg.com/opinion/articles/2020-05-05/german-constitutional-court-issues-a-dangerous-verdict-for-ecb
Politico, 05/05/2020: German court lays down EU law https://www.politico.eu/article/german-court-lays-down-eu-law/
Bruegel: Podcast, 05/05/2020: An analysis of the German Constitutional Court’s ruling on the ECB QE programme https://www.bruegel.org/2020/05/an-analysis-of-the-german-constitutional-court-ruling-on-the-ecb-qe-programme/
Verfassungsblog, 06/05/2020: Some Preliminary Remarks on the PSPP Decision of the German Constitutional Court https://verfassungsblog.de/some-preliminary-remarks-on-the-pspp-decision-of-the-german-constitutional-court/
European Law Blog, 06/05/2020: The PSPP judgment of the German Constitutional Court: An Abrupt Pause to an Intricate Judicial Tango https://europeanlawblog.eu/2020/05/06/the-pspp-judgment-of-the-german-constitutional-court-an-abrupt-pause-to-an-intricate-judicial-tango/
OSW: Analyses, 06/05/2020: Germany’s Federal Constitutional Court opposes the ECB and the Court of Justice of the European Union https://www.osw.waw.pl/en/publikacje/analyses/2020-05-06/germanys-federal-constitutional-court-opposes-ecb-and-court-justice
The Economist, 07/05/2020: Germany’s highest court takes issue with the European Central Bank https://www.economist.com/europe/2020/05/07/germanys-highest-court-takes-issue-with-the-european-central-bank
Euro|topics, May 2020: ECB bond-buying: row between Brussels and Berlin https://www.eurotopics.net/en/240037/
IISS: Survival Editors' Blog, 07/05/2020: Germany’s coming constitutional turmoil https://www.iiss.org/blogs/survival-blog/2020/05/germany-coming-constitutional-turmoil
ING Think: Article, 08/05/2020: Europe’s top court hits back at German ECB ruling https://think.ing.com/articles/europes-top-court-hits-back-at-german-ecb-ruling/
Social Europe, 11/05/2020: German court decision ends treaty pretences https://www.socialeurope.eu/german-court-decision-ends-treaty-pretences
UK in a Changing Europe: Analysis, 11/05/2020: The Karlsruhe choice https://ukandeu.ac.uk/the-karlsruhe-choice/
UKCLA: Blog, 13/05/2020: Thomas Horsley: Karlsruhe Bites Back: The German Federal Constitutional Court’s PSPP Judgment https://ukconstitutionallaw.org/2020/05/13/thomas-horsley-karlsruhe-bites-back-the-german-federal-constitutional-courts-pspp-judgment/
Politico, 13/05/2020: German judges take ECB fight to court of public opinion https://www.politico.eu/article/german-judges-take-ecb-fight-to-court-of-public-opinion/
The Irish Times, 13/05/2020: German court ruling may mark the turning point towards EU’s disintegration https://www.irishtimes.com/business/economy/german-court-ruling-may-mark-the-turning-point-towards-eu-s-disintegration-1.4252331
Verfassungsblog, 13/05/2020: Is it a Dance or is it Chicken? https://verfassungsblog.de/is-it-a-dance-or-is-it-chicken/
UKCLA: Blog, 14/05/2020: Theodore Konstadinides: The German Constitutional Court’s decision on PSPP: Between mental gymnastics and common sense https://ukconstitutionallaw.org/2020/05/14/theodore-konstadinides-the-german-constitutional-courts-decision-on-pspp-between-mental-gymnastics-and-common-sense/

News
Bloomberg, 30/07/2019: German Judges Reopen Old Wounds Over Scope of ECB Powers https://www.bloomberg.com/news/articles/2019-07-30/german-top-court-rejects-suits-challenging-eu-s-banking-union-jypk5po2
Deutsche Welle, 31/07/2019: Germany's top court faces case of deja vu over ECB bond buying https://p.dw.com/p/3MuXu
Politico, 05/05/2020: German high court warns ECB that bond buying could be illegal https://www.politico.eu/article/german-high-court-warns-ecb-that-bond-buying-could-be-illegal/
BBC News, 05/05/2020: German court criticises European Central Bank crisis bond-buying https://www.bbc.co.uk/news/world-europe-52542993
Deutsche Welle, 05/05/2020: Top German court says ECB bond buying scheme partially contravenes the law https://p.dw.com/p/3bmRi
Bloomberg, 05/05/2020: EU Court Faces ‘Declaration of War’ From German Top Judges https://www.bloomberg.com/news/articles/2020-05-05/eu-court-faces-declaration-of-war-from-germany-s-top-judges
RTÉ News, 05/05/2020: German court hands ECB ultimatum to justify stimulus scheme https://www.rte.ie/news/2020/0505/1136652-german-court-ecb-bonds/
The Guardian, 05/05/2020: Jolt to eurozone as German court warns against central bank stimulus https://www.theguardian.com/business/2020/may/05/jolt-to-eurozone-as-german-court-warns-against-central-bank-stimulus
Kathimerini, 05/05/2020: German court hands ECB 3-month ultimatum to justify stimulus scheme https://www.ekathimerini.com/252360/article/ekathimerini/business/german-court-hands-ecb-3-month-ultimatum-to-justify-stimulus-scheme
Politico, 06/05/2020: France criticizes German court ruling on European Central Bank https://www.politico.eu/article/france-criticizes-german-court-ruling-on-european-central-bank/
Politico, 06/05/2020: Hogan: Brussels will ensure ‘supremacy’ of EU law after German ruling https://www.politico.eu/article/hogan-brussels-will-ensure-supremacy-of-eu-law-after-german-ruling/
EUObserver, 06/05/2020: German court questions bond-buying and EU legal regime https://euobserver.com/economic/148266
RFI News, 07/05/2020: ECB's Lagarde to seek 'diplomatic path' after German court ruling http://www.rfi.fr/en/wires/20200507-ecbs-lagarde-seek-diplomatic-path-after-german-court-ruling
Reuters, 07/05/2020: ECB is 'undeterred' by German court ruling against bond buys: Lagarde https://www.reuters.com/article/idUSKBN22J2CH
Deutsche Welle, 08/05/2020: European Court of Justice slams top German court's ECB ruling https://p.dw.com/p/3bwGv
EurActiv, 08/05/2020: ECJ reiterates that rulings are binding, as German court fallout continues https://www.euractiv.com/section/economy-jobs/news/ecj-reiterates-that-rulings-are-binding-as-german-court-fallout-continues/
RTÉ News, 08/05/2020: EU court hits back at German ruling on ECB support https://www.rte.ie/news/business/2020/0508/1137347-eu-court-hits-back-at-german-ruling-on-ecb-support/
Bloomberg, 09/05/2020: EU Risks Institutional Showdown After German ECB Ruling https://www.bloomberg.com/news/articles/2020-05-09/eu-may-sue-germany-over-ecb-court-ruling-von-der-leyen
Euronews, 10/05/2020: Von der Leyen: 'The final word on EU law is always spoken in Luxembourg' https://www.euronews.com/2020/05/08/eu-s-top-court-fires-back-over-german-ecb-ruling-as-primacy-of-eu-law-comes-into-play
Reuters, 10/05/2020: EU could open legal case against Germany over ECB bond-purchases ruling: Commission https://www.reuters.com/article/idUSKBN22M0KN
Politico, 10/05/2020: Von der Leyen considers infringement proceedings after German court ruling https://www.politico.eu/article/vera-jourova-eu-top-court-has-final-word-on-blocs-law/
The Guardian, 11/05/2020: Merkel intervenes in damaging row between Germany and Brussels https://www.theguardian.com/world/2020/may/11/merkel-intervenes-in-damaging-row-between-germany-and-brussels
EUObserver, 12/05/2020: Commission struggles with German court challenge https://euobserver.com/political/148329
EurActiv, 13/05/2020: German ECB ruling should ‘spur’ more eurozone integration: Merkel https://www.euractiv.com/section/future-eu/news/german-ecb-ruling-should-spur-more-eurozone-integration-merkel/
RFI News, 13/05/2020: Merkel urges euro integration as judges defend shock ECB ruling http://www.rfi.fr/en/wires/20200513-merkel-urges-euro-integration-judges-defend-shock-ecb-ruling

Official
German Federal Constitutional Court: Judgment of the Second Senate of 5 May 2020 http://www.bverfg.de/e/rs20200505_2bvr085915en.html
German Federal Constitutional Court: Press Release, 05/05/2020: ECB decisions on the Public Sector Purchase Programme exceed EU competences https://www.bundesverfassungsgericht.de/SharedDocs/Pressemitteilungen/EN/2020/bvg20-032.html
European Central Bank: Press Release, 05/05/2020: ECB takes note of German Federal Constitutional Court ruling and remains fully committed to its mandate https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200505~00a09107a9.en.html
Court of Justice of the European Union: Press Release, 08/05/2020: Press release following the judgment of the German Constitutional Court of 5 May 2020 https://curia.europa.eu/jcms/jcms/p1_2999150/en/
European Commission: Statement by President Von der Leyen relating to the Decision by the German Constitutional Court, 10 May 2020 https://ec.europa.eu/commission/presscorner/detail/en/statement_20_846

Subject Categories ,
Subject Tags
Keywords ,
Countries / Regions