Britain must back the EU in its fight with German judges

8 May 2020

3:37 PM

8 May 2020

3:37 PM

Germany’s highest court has plunged more than just the European Central Bank into crisis with its ruling on the legality of the ECB’s public sector purchase programme. The decision by the German constitutional court effectively means the Bundesbank won’t be able to participate in the ECB’s bond-buying programme, at least not unless either the law or the treaties are changed. This decision risks blowing up the EU’s entire legal setup. But the schadenfreude felt by some critics of the EU is nothing to celebrate. Instead, it’s vital that the UK sticks up for the EU in this messy dispute.

Until now the ECB has been independent of nation states and controlled by the EU (under EU law). The German position is that where the ECB acts on issues of monetary policy, the EU remains in charge. When however the issue is economic policy, Germany is; and if Germany thinks the ECB hasn’t acted in a way it thinks is right, then it won’t follow it.

If anyone truly understands the distinction between monetary and economic policy, then they have yet to speak. I suspect this will require many years of academic study. But it is a very big problem.

The entire point of the Lisbon Treaty is that it is the EU which dictates the extent of EU law – not that each of the then 28 have their own say. This is a point the UK conceded in 1972 and again in the withdrawal agreement. There will now be a stand-off between the EU and Germany, because it cannot follow that EU law is sovereign in 26 member states, and sovereign in the UK until 1 January 2021, but not sovereign in Germany. Worse, to demand EU law submits to German law, means all the 27 are subject to German law, which I suspect most will not tolerate.

I’ve often teased EU lawyers, because ‘EU law’ really was all along just international law with a bigger office and a nice flag. But what matters is that EU law is part of the international legal order. Honouring it is as important as honouring any other international treaty. Nobody in Britain should split here along any political fault line other than support for international law.

When friends get confused about what I do as a commercial lawyer, I tell them I am a watchdog for the economy; our judges are its shepherds. Our job is to make sure that contracts are honoured and that businessmen can have faith that they will be paid. I can do that because when a UK judge makes a decision, it is backed up by bailiffs, and if necessary the police or insolvency proceedings.

As international law has developed, it has tried to do the same. So when a dispute is international and uses arbitration rather than courts, it could appear less secure. But I can have full confidence because on 10 June 1958 in New York, the UN recorded the agreement of other countries (now 163) that they would support arbitration with the infrastructure of their domestic courts and their police; a sort of justice Airbnb.

Faith that promises will be kept is what keeps the economy going and allows it to grow. It is what gives clever entrepreneurs the confidence to take a risk. Yet Germany risks now fundamentally undermining that faith on a global level. This is about more than the euro. For if one international treaty can be changed to satisfy their domestic law then can others?

I know Germany well and admire and respect its people. I do not for a moment believe this is deliberate or anything other than a noble desire to ensure the ECB works. But it is a seminal moment that the German constitution has chosen to pick a fight with the EU.

While they both blink at each other from the shock of all this, the UK should make it clear we support the EU. We should do that solely because it is right to support international law. International law is fragile and you will miss it if it is gone. But Britain is also subject to EU law right now and we need to be wary.

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Steven Barrett is a commercial chancery barrister at Radcliffe Chambers

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