We have noted on ukscblog before that potentially the most significant legal action in Europe this year is the challenge at the German Constitutional Court (Bundesverfassungsgericht), the nearest equivalent to our own Supreme Court, by a group of German professors over the proposed European Union / IMF aid package for Greece.   The challenge was issued last Friday and in the first skirmishing in the case, the Court refused to grant interim relief to prevent the German government participating in the aid package, with financial guarantees worth 22.4 billion euro (approximately £19 billion).

The constitutional complaint was filed within hours after the Bundestag (the German parliament) had adopted a law which was particularly designed to allow for the German participation in the aid package which was agreed between EU Member States and the IMF to go ahead.  The complaint itself was combined with an expedited application to suspend the entering into force of the law until the Constitutional Court has delivered a final verdict on the complaint.

The expedited procedure is a special procedure of the Bundesverfassungsgericht for cases which call for an immediate decision of the Court.  The Court is able to deliver an interim decision within hours as was the case on Friday.  For this procedure the Court does not perform an in-depth legal analysis of the involved parties’ arguments.  Rather it delivers its preliminary judgment based on a consideration of consequences.  It compares the disadvantages of a situation where the legal act (here the law allowing for financial guarantees) enters into force now but will be declared illegitimate in the main proceedings with the disadvantages if the legal act is suspended now but proofs to be legitimate in the future decision.

After considering the options, the Bundesverfassungsgericht came to the conclusion that it would mean massive disadvantages for the public, if the German participation in the financial aid package for Greece was stopped now.  It stated that the European partners would rely on the German contribution and that if Germany withdrew from it now, the realisation of the entire plan to support Greece was at stake.  Moreover, there was no adequate indication that the political and financial evaluation of the German government which lead to the decision to participate in the aid package was erroneous.  The Court stated that on the other hand the five complainants (the original four professors were joined by Dieter Spethmann, a former director of Thyssen) had not presented precise indications for an irreversible infringement of their own rights if the support for Greece was granted.

The constitutional complaint itself is still pending and it will take at least several months before the German Constitutional Court will deliver a final decision and declare the German contribution to legitimate or illegitimate.  It can already be said that in the latter case, the effects on German and European financial policy would be incalculable.

Press reports of the decision can be found here, here and here.

Petra Kocken is a lawyer in the Public Infrastructure team in the Berlin office of Olswang.