Constitutional Review and the German Bailout Controversy

In recent weeks, the United States Supreme Court and Germany’s Federal Constitutional Court (FCC) have been at the storm center of their respective political systems. In the United States, the uproar has centered on the Court’s review of the Patient Protection and Affordable Care Act and the real possibility that a major health reform law, duly enacted by Congress, might be held unconstitutional. In Germany, the outcry stems from FCC rulings holding up the passage and ratification of European bailout treaties. These judicial interventions in highly sensitive areas of social and economic policy prompt comparisons between the political roles of two of the world’s most important constitutional tribunals.

These tribunals, however, are very different in the scope and intensity of their review powers. In assessing the validity of a federal law, the Supreme Court would never examine the circumstances of its enactment. As Otto von Bismarck famously remarked, “laws are like sausages and it is better not to see them being made.” Like Bismarck, the Supreme Court accepts the legislative process for what it is: a messy, log-rolling, power-wielding, and less than fully transparent affair in which a simple majority wins (at least in the House of Representatives). Any judicial policing of this process would be seen by Americans as an unprecedented act of meddling in the affairs of Congress. Similarly, in the making of treaties, the Supreme Court has no interest in the extent to which the president consults with the Senate. Its function in the first situation is simply to rule whether a law offends the Constitution. What counts in the second is whether the Senate has ratified a treaty by the required two-thirds vote.

In the German bailout controversy, by contrast, the FCC faulted the executive for failing to inform parliament adequately of the details of its negotiations over the European Stability Mechanism (ESM). Withholding such information from parliament, said the Court, deprives legislators of their rightful control over European budgetary matters. In a recent decision, the FCC even questioned— “in large part,” it said—the constitutionality of a nine-member parliamentary committee set up to provide “fast-track” approval of an urgently needed euro rescue fund. It suggested that a small, semi-secretive committee working in close tandem with the chancellor transforms parliament into an ancillary arm of the executive branch. In short, such “fast-track” procedures would breach the principle of parliamentary democracy. Leading German commentators agreed. “We can’t sacrifice democracy to save the Euro,” said one reporter. The Süddeutsche Zeitung spoke for several major newspapers in remarking that “democracy is not a ‘speedocracy.’” Suffice to say that the U.S. Supreme Court would have regarded such legislative practices as political questions unfit for judicial resolution.

From an American perspective, the most brazen judicial intervention in the euro-funding dispute was yet to come. On 22 June 2012, parliament overwhelmingly approved the fiscal compact and ESM bailout treaties, both championed by Chancellor Angela Merkel. The Bundestag approved the treaties by votes of 491-111 and 493-106, respectively; in the Bundesrat (Council of States), 15 of the Federal Republic’s 16 states voted to uphold the treaties. In the United States, a similar congressional vote favoring a treaty would have been the end of the matter, and any subsequent move by the Supreme Court to challenge the president’s paramount authority in making treaties would be regarded as an extraordinary act of judicial hubris. The FCC labors under no such restraint. Immediately following the passage of the euro treaties, the justices accepted petitions challenging their constitutionality, whereupon they took the bold—and rare—step of asking Germany’s president, Joachim Gauck, to refrain from ratifying the treaties pending a full judicial hearing on their legality. This would be analogous to the Supreme Court asking the president not sign a bill into law until the justices have had a chance to consider its constitutionality.

The German plaintiffs—the parliamentary Left Party, a conservative Bavarian legislator, and some 12,000 persons associated with the movement known as “More Democracy”—advanced arguments centering once again on the alleged lack of parliamentary involvement in the passage of the treaties. A related complaint was that the chancellor, in her haste to avoid financial market turmoil, failed adequately to negotiate with the parliamentary opposition. In response, the FCC announced that it would hear arguments on 10 July over whether to issue a temporary injunction against the implementation of the treaties, hoping to have a decision in three weeks. But after a marathon hearing of ten hours, the justices announced further that their ruling could not be expected until 12 September. The ESM treaty was to have entered into force on 1 July but would now be delayed by two months despite executive pleas of urgency. The Court is expected to uphold the treaties but not without reinforcing parliamentary control over euro zone policy and, perhaps more critically, not without exacerbating the euro zone’s financial crisis.

In assessing the propriety of judicial review over Germany’s European bailout policy, one needs to be reminded of the FCC’s exalted position in Germany’s constitutional order. First, the Court has defined itself as the ultimate “guardian of the constitution,” making clear that its guardianship extends to safeguarding the principles of both democracy and separation of powers. Second, the Basic Law explicitly authorizes the FCC to decide mere differences of opinion on constitutional matters among, and within, branches and levels of government. By contrast, the U.S. Supreme Court’s authority extends only to concrete cases that as a general rule can only arise within the framework of an ordinary law suit. Third, the Basic Law itself includes detailed provisions on taxation and budgetary management, including a recent amendment, ratified in 2009, requiring federal and state governments to balance their budgets. Americans would regard such details and policies as essentially legislative in nature and thus unfit for inclusion in a constitution, committed as they are to the famous Marshallian view that when it comes to a constitution, “only its great outlines should be marked [and] its important objects designated.”

Finally, and relatedly, the FCC can easily justify its reach in the euro crisis by reference to the Basic Law’s Article 23. One of its provisions requires the Bundestag and the Bundesrat to “participate in matters concerning the European Union” and obligates “the Federal Government [to] keep the Bundestag and the Bundesrat informed, comprehensively and at the earliest possible time.” The justices have seized on this language, together with the Basic Law’s complex budgetary articles, to fault the chancellor for acting too quickly on the euro treaties and to justify its enforcement of the principle of parliamentary democracy.

Yet, as a matter of judicial modesty, many Germans feel that the FCC should have stayed its hand in the currency crisis. As in so many other areas of German public life, the Court is behaving like a co-legislator or a co-executive, along with parliament, in the making of European policy. There is little doubt that the FCC could have avoided the donnybrook over its European role by simply denying the temporary injunction, thus creating space for a political resolution. However much the FCC tries to label the issue before it as legal or constitutional, it has not escaped the suspicion that it is in fact behaving politically. Not only that, but the FCC has opened itself to the charge that it is acting undemocratically, while simultaneously claiming that it is actually defending democracy.