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Legal action against ECB?

Daphne Grathwohl / nhSeptember 9, 2012

In Germany, the ECB’s plans to buy unlimited government bonds are being met with criticism. Some consider filing a suit against the ECB. But which criteria need to be fulfilled for such legal action to be successful?

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Image: AP

Members of Germany's ruling coalition of CDU/CSU and FDP are openly contemplating suing the European Central Bank (ECB). One of them, Peter Gauweiler (CSU), is an outspoken euroskeptic and has taken legal action in the past against the euro rescue funds EFSF and ESM before Germany's Constitutional Court.

Article 263 of the Treaty on the functioning of the European Union (TFEU) allows the filing of actions to annul decisions made by the ECB before the European Court of Justice. But citizens and associations – such as non-governmental organizations – have only limited scope to do so.

The first prerequisite is that the ECB has to have passed an act, which means that an actual decision with binding consequences must exist. Mere recommendations and statements by the ECB are not subject to actions for annulment.

Directly concerned?

An individual can institute proceedings against an act if the act that is the subject of the plaintiff's lawsuit is addressed to that person or is of direct and individual concern to them, pursuant to Article 263 (4) TFEU. That means the decisions have to have an immediate impact on the plaintiff and their legal status, "by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons," as stipulated in the article.

The European Court of Justice has handled this in a very restrictive manner in the past, unlike the possibilities of bringing European treaties before the German constitutional court, explained Franz Mayer from Bielefeld University, a specialist on European law. Whether the latest ECB plans differentiate individual people from all other persons, as required by the article, is far from clear, he said.

In addition, any citizen can take action if the decision is a regulatory act which is of direct concern to the applicant and which does not entail implementing measures. The European Court of Justice says this includes all legal acts which are universally valid, apart from legislative acts. But the jurisdiction of the European Court of Justice doesn't provide clear-cut answers regarding how to deal with these cases as yet.

Could Bundesbank file lawsuit?

European law expert Franz Mayer pointed out that national central banks could also take action if the European Central Bank's acts "concern" it directly in the way described above.

Franz Mayer Universität Bielefeld
Franz Mayer, European law expert at Bielefeld UniversityImage: privat

The European Parliament, the Council and the EU Commission can also file a suit against ECB acts.

Member states that decide to take the ECB to court can also bring action for annulment before the European Court of Justice in Luxemburg. But at the moment it's not looking like any member state intends to do so. Germany is the member state where the ECB's policies receive the most criticism. But on Friday (07.09.2012), German Chancellor Angela Merkel explicitly welcomed the bond buying plan announced by the ECB.