Federal Constitutional Court - Press office -
Press release no. 38/2010 of 10 June 2010
Order of 9 June 2010 – 2 BvR 1099/10 –
Application for a temporary injunction
to prevent the euro rescue package unsuccessful
In the interest of the financial stability of the entire euro area, the
states of the euro group in May 2010, at the request of Greece, declared
their willingness to make considerable financial aids available – in
connection with a three-year programme of the International Monetary
Fund (IMF) – to support Greece with their own bilateral loans, in
addition to financing by the International Monetary Fund (see on this in
greater detail Federal Constitutional Court, order of the Second Senate
of 7 May 2010 – 2 BvR 987/10 –, Neue Juristische Wochenschrift (NJW)
2010, p. 1586, press release no. 30/2010 of 8 May 2010).
On 7 May 2010, the Heads of State or Government of the euro group met in
Brussels and agreed, among other things, that the EU Commission should
propose a European stabilisation mechanism to preserve stability in the
European financial markets (“euro rescue package”). The Economic and
Financial Affairs Council (ECOFIN Council) therefore decided to
establish a European stabilisation mechanism, consisting of the European
Financial Stabilisation Mechanism (EFSM) on the basis of a EU Regulation
on the one hand, and of the European Financial Stability Facility
(EFSF), a special purpose vehicle for providing loans and credit lines
based on an intergovernmental agreement of the euro group Member States,
on the other hand. The European Central Bank (ECB) joined the new rescue
programme on 10 May 2010 by deciding to itself purchase government bonds
from then on.
Council Regulation (EU) No 407/2010 of 11 May 2010 establishing a
European financial stabilisation mechanism (OJ L 118/1) is based on
Article 122(2) of the Treaty on the Functioning of the European Union
(TFEU). According to this provision, a Member State which is in
difficulties or is seriously threatened with severe difficulties caused
by exceptional occurrences beyond its control may be granted financial
assistance by the EU. The Council holds the view that the exceptional
situation consists in the deepening of the global financial crisis
having led to a severe deterioration of the borrowing conditions of
several euro group Member States beyond what can be explained by
economic fundamentals.
Apart from introducing the EFSM, the Heads of State or Government of the
euro group committed to rendering financial assistance via a special
purpose vehicle, the EFSF, which is being founded at present. The EFSF’s
future purpose was laid down as the issuance of bonds and the grant of
loans and credit lines to cover the financing requirements of euro group
Member States in difficulties subject to certain conditions. The
guarantees for the special purpose vehicle to the amount of 440 billion
euros are distributed among the euro group Member States on a pro rata
basis according to their participation in the ECB capital. In addition,
a framework agreement was to be concluded between the participating euro
group Member States and the planned special purpose vehicle to regulate
further details concerning the issuance of bonds in the capital market
by the special purpose vehicle, the guarantee commitment made by the
euro group Member States and the details of the grant of loans (see EFSF
Framework Agreement, which has since been modified several times, draft
of 20 May 2010). According to Germany’s participation in the ECB
capital, the German share of the guarantee amount was to be set at 123
billion euros; in the case of unforeseeable and irrefutable need, it was
possible to exceed the amount by another 20 per cent (see Bill of the
CDU/CSU and FDP parliamentary groups, Bundestag printed paper
(Bundestagsdrucksache – BTDrucks) 17/1685, p. 1), which would lead to a
maximum volume of approximately 148 billion euros.
To create the preconditions at national level for rendering financial
assistance via the special purpose vehicle (EFSF), the German Bundestag
adopted on 21 May 2010 the challenged Act Concerning the Giving of
Guarantees in the Framework of a European Stabilisation Mechanism
(Gesetz zur Übernahme von Gewährleistungen im Rahmen eines europäischen
Stabilisierungsmechanismus, hereinafter: Euro Stabilisation Mechanism
Act, Federal Law Gazette (Bundesgesetzblatt – BGBl) I p. 627), which was
approved by the Bundesrat on the very same day and was promulgated on 22
May 2010.
After the approval of the Euro Stabilisation Mechanism Act by the
Bundesrat, the complainant lodged a constitutional complaint on 21 May
2010 challenging a violation of his fundamental rights under Article
38.1, Article 14.1 and Article 2.1 of the Basic Law (Grundgesetz – GG),
and made an application for the issuing of a temporary injunction.
The Second Senate of the Federal Constitutional Court did not grant the
complainant’s application for the issuing of the temporary injunction
sought. The result of the weighing of consequences which is required for
the issuing of a temporary injunction is that the general public would
be under the threat of serious disadvantages if the temporary injunction
were issued and the authorisation to give the guarantee were to prove
permissible under constitutional law later on. The “euro rescue package”
and the purchase of government bonds by the ECB are intended to
counteract a loss of confidence in individual euro group Member States’
ability to pay. According to its economic performance, the Federal
Republic of Germany takes a considerable share in the safeguarding
measures. If due to the issuing of the temporary injunction sought, the
Federal Republic of Germany, which is regarded as unrestrictedly solvent
in the financial markets, had to suspend, if only temporarily, its
commitments, this would, according to the Federal Government’s
assessment, already result in a decrease of confidence on the markets
whose consequences would be unforeseeable.
This assessment of the Federal Government is not shared by the
complainant, who rather regards the measures as additional risks exactly
to the stability of the European currency. The Federal Constitutional
Court, however, cannot, and indeed need not, clarify this issue in the
temporary injunction proceedings. When it comes to assessing
foreign-policy situations, which in this context include the situation
of the international financial markets, the Federal Government, in a
system characterised by the separation of powers, has, due to its
competence for the subject-matter, to its special proximity to the issue
and its political responsibility, a prerogative of assessment which must
be respected by the Federal Constitutional Court, provided that its
assessment is not definitely refuted (see Decisions of the Federal
Constitutional Court (Entscheidungen des Bundesverfassungsgerichts –
BVerfGE 97, 350 (376); Federal Constitutional Court, order of the Second
Senate of 7 May 2010, loc. cit., p. 1587).
A withdrawal, even a temporary one, of Germany from the rescue measures
would not only reduce the volume of the “euro rescue package”
proportionally. In the Federal Government’s view, such withdrawal might
call into question the entire realisability of the rescue package, from
the financial markets’ perspective at any rate. This would probably
create serious economic disadvantages for the general public. Should the
objective pursued by the euro stabilisation mechanism be missed, i.e.
should it not be possible to prevent a possible threat of illiquidity in
important trade centres of European government bonds, the stability of
the entire European Monetary Union would, in the view of the Federal
Government, be endangered. The Federal Constitutional Court has no
sufficient indications which would oblige it to assume that the Federal
Government’s currency-policy and financial-policy assessment is
erroneous (see BVerfGE 26, 259 (264); 29, 179 (182); 88, 173 (181)).
In comparison, the disadvantages carry less weight which ensue if the
temporary injunction is not issued but making use of the authorisation
to give the guarantee proves impermissible later on. The mere
possibility of the Federation being burdened in the event of the
European financial stabilisation mechanism being made use of, i.e. in
the case of an imminent situation of financial emergency of a euro group
Member State, an event whose probability of realising is regarded as
minor by the Federal Government, will not cause substantial damage to
the common good. The complainant has not submitted any specific
indications to substantiate that in comparison, his fundamental rights
and rights equivalent to fundamental rights, especially his right under
Article 14 of the Basic Law, could already be directly impaired in a
serious and irreversible manner precisely as a consequence of a possible
giving of loan guarantees or of the purchase of government bonds by the
ECB. Insofar as the complainant argues that the disappointment of the
confidence in the law caused by the violation of the European Treaties
alleged by him will result in irreversible damage to the Community
currency, he contradicts the Federal Government’s assessment, which the
Federal Constitutional Court must respect for the reasons specified.
This press release is also available in the original german version.
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