Federal Constitutional Court - Press office -

Press release no. 67/2012 of 12 September 2012

Judgment of 12 September 2012
2 BvR 1390/12
2 BvR 1421/12
2 BvR 1438/12
2 BvR 1439/12
2 BvR 1440/12
2 BvE 6/12
(Extracts from the decision in Englisch)

Applications for the issue of temporary injunctions to prevent the ratification
of the ESM Treaty and the Fiscal Compact unsuccessful for the most part


Today, the Federal Constitutional Court pronounced its judgment 
regarding several applications for the issue of temporary injunctions. 
The main objective of the applications is to prohibit the Federal 
President from signing the statutes passed by the Bundestag and the 
Bundesrat on 29 June 2012 until the decision in the principal 
proceedings; by signing the statutes, the Federal President would create 
the precondition for the ratification of the international agreements – 
the Treaty establishing the European Stability Mechanism (ESM Treaty) 
and the Treaty on Stability, Coordination and Governance in the Economic 
and Monetary Union (known as the Fiscal Compact) – which are approved 
therein. 

Press Release no. 47/2012 of 2 July 2012 provides information (in 
German) on the facts of the proceedings. It can be retrieved on the 
Federal Constitutional Court’s website. Extracts from the decision are 
available in English on the Federal Constitutional Court’s website as 
well. 

The Second Senate of the Federal Constitutional Court refused the 
applications for the issue of temporary injunctions with the proviso 
that the ESM Treaty may only ratified if at the same time it is ensured 
under international law that 
1. the limitation of liability set out under Article 8 (5) sentence 1 of 
the ESM Treaty (TESM) limits the amount of all payment obligations 
arising to the Federal Republic of Germany from this Treaty to its share 
in the authorised capital stock of the ESM (EUR 190 024 800 000) and 
that no provision of this Treaty may be interpreted in a way that 
establishes higher payment obligations for the Federal Republic of 
Germany without the agreement of the German representative, 
2. the provisions of the ESM Treaty concerning the inviolability of the 
documents of the ESM (Article 32 (5), Article 34 and Article 35 (1) 
TESM) and the professional secrecy of all persons working for the ESM 
(Article 34 TESM) do not stand in the way of the comprehensive 
information of the Bundestag and of the Bundesrat. 

The Federal Republic of Germany must express that it does not wish to be 
bound by the ESM Treaty in its entirety if the reservations made by it 
should prove to be ineffective. 

In essence, the decision is based on the following considerations: 

I. Extent of review/Admissibility of the main action 
1. Diverging from the usual extent of review in temporary injunction 
proceedings, the Senate did not restrict its review in the present 
temporary injunction proceedings to a mere weighing of the consequences 
of its decision. Instead, it performed a summary review of the 
challenged Acts of assent and of the accompanying laws under the aspect 
of whether the violations of their rights which the applicants 
admissibly assert can indeed be established. A summary review of the 
legal position was required because with the ratification of the 
Treaties, the Federal Republic of Germany will enter commitments under 
international law whose cancellation would not be easily possible in the 
event that violations of the constitution should be established in the 
principal proceedings. If a summary review in temporary injunction 
proceedings were to establish a high probability that there is indeed 
the alleged violation of the precept of democracy, which Article 79 (3) 
of the Basic Law (Grundgesetz – GG) lays down as the identity of the 
constitution, a serious detriment to the common good would result in the 
temporary injunction not being issued. The economic and political 
disadvantages which could result from a deferred entry into force of the 
challenged statutes cannot be weighed against this. 

2. The Senate only regarded the principal proceedings as admissible to 
the extent that the applicants, relying on Article 38 GG, assert a 
violation of the overall budgetary responsibility of the German 
Bundestag, which is entrenched in constitutional law through the 
principle of democracy (Article 20 (1) and 2, Article 79 (3) GG). 

To the extent that the applicants in proceedings 2 BvR 1421/12 object to 
euro rescue measures taken by the European Central Bank, in particular 
to the acquisition of government bonds on the secondary market, arguing 
that the measures, as what is known as “ausbrechende Rechtsakte”, 
transgress the framework of authorisation established by the German Acts 
of assent to the European Union Treaties, their application for a 
declaration to this effect is not encompassed by the application for the 
issue of a temporary injunction and therefore can only be reviewed in 
the principal proceedings. 

II. Standard of review 
As the Senate already held in its decision regarding the aid to Greece 
and the European Financial Stability Facility of 7 September 2011, 
Article 38 GG in conjunction with the principle of democracy (Article 20 
(1) and (2), Article 79 (3) GG) demands that as a fundamental part of 
the ability of a constitutional state to democratically shape itself, 
the decision on public revenue and public expenditure must remain in the 
hand of the German Bundestag. As elected representatives of the people, 
the Members of the German Bundestag must retain control of fundamental 
budgetary decisions even in a system of intergovernmental governing. In 
this respect, the German Bundestag is prohibited from establishing 
mechanisms of considerable financial importance which may result in 
incalculable burdens with budget significance being incurred without the 
mandatory approval of the Bundestag In this context, the Bundestag, as 
the legislature, is also prohibited from establishing permanent 
mechanisms based on international treaties which are tantamount to 
accepting liability for decisions by free will of other states, above 
all if they entail consequences which are hard to calculate. The 
Bundestag must individually approve every large-scale federal aid 
measure on the international or European Union level made in solidarity 
resulting in expenditure. Sufficient parliamentary influence must also 
be ensured on the manner of dealing with the funds provided. 

The overall budgetary responsibility of the German Bundestag is also 
safeguarded by the design as a stability union that the monetary union 
has to date been given under the Treaties, in particular by the 
provisions of the Treaty establishing the European Union and of the 
Treaty on the Functioning of the European Union (TFEU). However, a 
democratically legitimised change of the stability requirements under 
European Union law is not from the outset incompatible with Article 79 
(3) of the Basic Law. The Basic Law does not guarantee the unchanged 
further existence of the law in force but those structures and 
procedures which, also in the context of a continuous further 
development of the monetary union with the objective to comply with the 
stability mandate, keep the democratic process open and at the same time 
safeguard parliament’s overall budgetary responsibility. In this 
context, obliging the budget legislature to pursue a specific budget and 
fiscal policy is not from the outset contrary to democracy; such an 
obligation can also take place on the basis of European Union law or 
international law. 

III. Subsumption 
Measured against these standards, the applications prove to be unfounded 
for the most part. 

1. The Act of assent to the insertion of Article 136 (3) TFEU does not 
impair the precept of democracy. Article 136 (3) TFEU, which was 
provided for by the European Council decision of 25 March 2011, contains 
the authorisation to establish a permanent mechanism for mutual aid 
between the Member States of the euro currency area. Admittedly, this 
changes the present design of the economic and monetary union in such a 
way that it moves away from the principle of the independence of the 
national budgets which has characterised the monetary union so far. 
This, however, does not relinquish the stability-oriented character of 
the monetary union because the essential elements of the stability 
architecture, in particular the independence of the European Central 
Bank, the commitment of the Member States to observe budget discipline 
and the autonomous responsibility of the national budgets remain intact. 
The possibility of establishing a permanent stability mechanism, which 
is opened up under European Union Law by Article 136 (3) TFEU, does not 
result in a loss of national budget autonomy because through the 
challenged Act of assent, the German Bundestag does not yet transfer 
budget competences to bodies of the European Union or to institutions 
created in connection with the European Union. Article 136 (3) TFEU 
itself does not establish a stabilisation mechanism but merely opens up 
to the Member States the possibility of installing such a mechanism on 
the basis of an international agreement. The requirement of ratification 
for the establishment of a stability mechanism makes a participation of 
the legislative bodies a precondition before the stability mechanism 
enters into force. 

2. The challenged Act of assent to the ESM Treaty essentially takes 
account of the requirements set out under constitutional law with regard 
to the safeguarding of the overall budgetary responsibility of the 
German Bundestag. 

a) However, it is required to ensure in the framework of the 
ratification procedure under international law that the provisions of 
the ESM Treaty may only be interpreted or applied in such a way that the 
liability of the Federal Republic of Germany cannot be increased beyond 
its share in the authorised capital stock of the ESM without the 
approval of the Bundestag and that the information of the Bundestag and 
the Bundesrat according to the constitutional requirements is ensured. 

Admittedly, it can be assumed that the express limitation of the 
liability of the ESM Members to their respective portions of the 
authorised capital stock, which is provided for in Article 8 (5) 
sentence 1 TESM, bindingly limits the Federal Republic of Germany’s 
budget commitments undertaken in connection with the activities of the 
ESM to EUR 190 024 800 000; this ceiling can also be assumed to apply to 
all capital calls made according to Article 9 TESM, including the 
“revised increased” capital calls according to Article 25 (2) TESM, 
which in the case of the payment shortfall of an ESM Member may be made 
to the remaining Members that are able to pay, and which will 
correspondingly increase the burden on them. However, it cannot be ruled 
out that the ESM Treaty is interpreted in the sense that in the case of 
a revised increased capital call, the ESM Members cannot rely on the 
liability ceiling because the wording of Article 25 (2) TESM does not 
contain a limitation of the amount and because the provision is intended 
to secure the creditworthiness of the ESM, and to maintain its ability 
to act, even in unexpected emergency situations. To meet the 
constitutional requirement of determining the burdens on the budget in a 
clear and definitive manner, the Federal Republic of Germany must ensure 
the required clarification in the ratification procedure, and it must 
ensure that it is only bound by the Treaty in its entirety if no payment 
obligations that go beyond the liability ceiling can be established for 
it without the consent of the Bundestag. 

Such a reservation in the ratification procedure is also required with 
regard to the provisions of the ESM Treaty on the inviolability of the 
documents (Article 32 (5), Article 35 (1) TESM) and on the professional 
secrecy of the legal representatives of the ESM and of all persons 
working for the ESM (Article 34 TESM). Admittedly, a good argument can 
be made that these provisions are above all intended to prevent a flow 
of information to unauthorised third parties, for instance to actors on 
the capital market, but not to the parliaments of the Member States, 
which must bear political responsibility for the commitments based on 
the ESM Treaty vis-à-vis their citizens also during further treaty 
implementation. However, the provisions do not explicitly address the 
information of the national parliaments by the ESM; with a view to the 
fact that the situation under constitutional law as regards the 
parliament’s rights of participation and its rights to be informed is 
different in the Member States, an interpretation is therefore 
conceivable which would stand in the way of sufficient parliamentary 
monitoring of the ESM by the German Bundestag. A ratification of the ESM 
Treaty is therefore only permissible if the Federal Republic of Germany 
ensures an interpretation of the Treaty which guarantees that with 
regard to their decisions, Bundestag and Bundesrat will receive the 
comprehensive information which they need to be able to develop an 
informed opinion. 

b) In other respects, the other provisions of the ESM Treaty are 
unobjectionable according to the summary review. 
Admittedly, the provision under Article 4 (8) TESM, according to which 
all voting rights of an ESM Member are suspended if it fails to fully 
meet its obligations to make payment vis-à-vis the ESM, is not 
unproblematic with a view to its potentially far-reaching consequences 
under the aspect of overall budgetary responsibility because for so long 
as the default continues, the Member concerned can no longer influence 
the decisions of the ESM. Consequently, the participation of the German 
Bundestag in the decisions of the German representative in the bodies of 
the ESM, which is provided for at national level, would fail, and the 
context of legitimation between parliament and the ESM would be 
interrupted during this period. However, the provision does not violate 
the overall budgetary responsibility of the Bundestag because the latter 
can, and must, see to it that the German voting rights are not 
suspended. It must make the budgetary arrangements necessary in this 
context to ensure that it will be possible at any time to completely pay 
in Germany’s shares in the authorised capital stock of the ESM. 

Furthermore, it cannot be established that the amount of the payment 
obligations entered into through the participation in the ESM of a total 
nominal value of EUR 190 024 800 000 exceeds the limit of the burden on 
the budget to such an extent that the budget autonomy effectively fails. 
This also applies taking into account Germany’s overall commitment 
undertaken with regard to the stabilisation of the European monetary 
union. When examining whether the amount of payment obligations and 
commitments to accept liability will result in the Bundestag 
relinquishing its budget autonomy, the legislature has broad latitude of 
assessment, which also applies to the assessment of the future soundness 
of the Federal budget and the economic performance capacity of the 
Federal Republic of Germany, including the consideration of the 
consequences of alternative options of action. The legislature’s 
assessment that the risks involved with making available the German 
shares in the European Stability Mechanism are manageable, while without 
the granting of financial assistance by the ESM the entire economic and 
social system would be under the threat of unforeseeable, serious 
consequences, does not transgress its latitude of assessment and must 
therefore be accepted by the Federal Constitutional Court. 

The objection that the ESM can become the vehicle of unconstitutional 
state financing by the European Central Bank cannot be raised against 
the ESM itself. As borrowing by the ESM from the European Central Bank, 
alone or in connection with the depositing of government bonds, would be 
incompatible with the prohibition of monetary financing entrenched in 
Article 123 TFEU, the Treaty can only be taken to mean that it does not 
permit such borrowing operations. The European Stability Mechanism is 
one of the institutions specified in Article 123 (1) TFEU to which no 
loans may be granted by the European Central Bank. A depositing of 
government bonds by the ESM with the European Central Bank as a security 
for loans would also infringe the ban on the direct acquisition of debt 
instruments of public entities. Here, it can remain open whether this 
would constitute a direct acquisition of debt instruments of state 
issuers on the primary market or whether after their intermediate 
acquisition by the ESM it would be tantamount to an acquisition on the 
secondary market. For an acquisition of government bonds on the 
secondary market by the European Central Bank aiming at financing the 
Members’ budgets independently of the capital markets is prohibited as 
well, as it would circumvent the prohibition of monetary financing. To 
what extent the decision taken by the Governing Council of the European 
Central Bank on 6 September 2012 on a programme concerning the purchase 
of government bonds of financially weak Member States whose currency is 
the euro complies with these legal requirements was not a matter for 
decision in the present proceedings for the issue of temporary 
injunctions, proceedings which exclusively relate to the Acts of assent 
to the ESM Treaty and the Fiscal Compact and to the respective 
accompanying laws. 

3. The provisions on the involvement of the German Bundestag in the
decision-making processes of the ESM, which result from the Act of 
assent to the ESM Treaty and from the ESM Financing Act 
(ESM-Finanzierungsgesetz – ESMFinG), also essentially comply with the 
requirements placed on the safeguarding of the principle of democracy at 
national level. This applies to the elaboration of the rights of 
participation of the German Bundestag as well as with regard to its 
rights to be informed and to the personal legitimation of the German 
representatives in the bodies of the ESM. They are to take part in the 
meetings of the bodies of the ESM and to implement the resolutions of 
the German Bundestag. The ESM Financing Act presumes that the German 
representatives are bound by the resolutions of the Bundestag and are 
accountable to it. 

a) Admittedly, it is questionable whether the participation of the 
Bundestag also with regard to the issuing of shares of the ESM’s 
authorised capital stock higher than at par (Article 8 (2) sentence 4 
TESM) is sufficiently provided for at national level, or whether in this 
respect, the possible far-reaching consequences on the Federal budget 
require express authorisation by a Federal statute, as is the case with 
an increase of the capital stock of the ESM. If § 4 (1) ESMFinG is 
interpreted in conformity with the constitution, the approval of an 
issuing of shares higher than at par is reserved to the plenary session 
of the Bundestag, no temporary injunction is required in this respect. 

b) With regard to the allocation of the rights of participation to the 
plenary session, the budget committee and the special committee, the 
legislature took the criteria as a guideline which the Federal 
Constitutional Court detailed in its judgment of 28 February 2012 (2 BvE 
8/11; see Press Release no. 14/2012, which is available in English on 
the Federal Constitutional Court’s website) However, it does not appear 
to be ruled out that the ESM Financing Act assigns powers to the budget 
committee which due to their implications are to be exercised by the 
plenary session, for instance decisions on material changes of the 
procedure and of the conditions of the ESM’s capital calls. In this 
respect, however, a temporary injunction is not required either. For the 
plenary of the German Bundestag can counter objections raised against 
the constitutionality of the allocation of rights of participation to 
the budget committee at any time by assuming to itself the powers of the 
budget committee, thus exercising its right under § 5 (5) ESMFinG. 

4. The Act of assent to what is known as the Fiscal Compact (TSCG) does 
not violate the overall budgetary responsibility of the German 
Bundestag. 
a) The regulatory content of the Treaty, whose objective is to 
strengthen the economic and monetary union by fostering budgetary 
discipline, is for the most part identical with the existing 
requirements of the Basic Law’s “debt brake” (Article 109, 115 and 143d 
GG) and with the budgetary obligations arising from the Treaty on the 
Functioning of the European Union. In particular, the Contracting 
Parties’ obligation under Article 5 (1) TSCG to submit, in the event of 
an excessive deficit, a budgetary and economic partnership programme 
that requires approval has been incorporated into the excessive deficit 
procedure that has already been codified under primary law (Article 126 
TFEU). No direct “reach-through” of the bodies of the European Union to 
national budget legislation is provided for. 

b) The Fiscal Compact also does not grant the bodies of the European 
Union powers which affect the overall budgetary responsibility of the 
German Bundestag. 
To the extent that a correction mechanism is to be put in place by the 
Contracting Parties at national level in the event of significant 
deviations from the medium-term objective of submitting a balanced 
budget, on the basis of the principles to be proposed by the European 
Commission (Article 3 (2) TCSG), this provision only concerns 
institutional but not specific substantive requirements for the 
preparation of the budgets. Instead, the provision expressly clarifies 
that the prerogatives of the national parliaments shall be fully 
respected and thus precludes from the outset a partial transfer of 
budgetary responsibility to the European Commission. The competencies of 
the Court of Justice of the European Union, whose jurisdiction can be 
invoked according to Article 8 (1) TCSG in case of a failure to comply 
with the obligations arising from Article 3 (2) TCSG, also do not 
encroach upon the national legislature’s specific budgetary freedom. 

c) Finally, by ratifying the Fiscal Compact, the Federal Republic of 
Germany does not undertake an irreversible commitment to pursue a 
specific budget policy. It is true that the Treaty does not provide for 
a right of termination or resignation for the Contracting States. It is, 
however, recognised under customary international law that the 
resignation from a treaty by mutual agreement is always possible, and 
that unilateral resignation is at any rate possible in the event of a 
fundamental change in the circumstances which were relevant upon the 
conclusion of the treaty. 


This press release is also available in the original german version.