The Euro Crisis: Challenges to the ESM Treaty and the Fiscal Compact Treaty before the German Constitutional Court

Written by Paul Gallagher SC

30 August 2012

In “Challenges to the ESM Treaty and the Fiscal Compact Treaty before the German Constitutional Court”, Paul Gallagher SC considers the basis of the Constitutional Court’s concerns about the ESM breaching the German Constitution. Mr Gallagher SC explains, “The pivotal role played by the Court can only be understood in the context of Articles 23(1) and Article 79(3) of the Constitution of Germany (“the Basic Law”).” Article 23(1) commits Germany to the European project and is the constitutional basis for the ratification of the ESM Treaty. The challenge to the legality of the ESM is based upon article 79(3), the ‘Eternity Clause’, which was introduced by the framers of the 1949 German Constitution to prevent the establishment of dictatorship through legal measures as happened at the end of the Weimar Republic. Mr Gallagher SC considers the development and questionable validity of the use of this clause by the Constitutional Court. He argues that the these legal problems result in “large part from the terms of the Court’s earlier ruling on the Lisbon Treaty where it ventured into many issues that it was not required to decide.” He concludes, “it is to be hoped that the Court will rule in favour of the ESM and the Fiscal Compact Treaty”, arguing that the “rule of law must be respected but this does not require the Court to engage in an expansive interpretation of…the Basic Law.”