An overview of litigation in the context of financial assistance to Eurozone Member States
Summary (2 min read)
- A host of key crisis management mechanisms have been adopted at the supranational level during the Eurozone financial and economic crisis with the aim of improving the economic governance framework of the Economic and Monetary Union (EMU).
- These include the European Financial Stabilisation Mechanism (EFSM) and the European Financial Stability Facility (EFSF), both of which have been replaced by the European Stability Mechanism (ESM).
- Inter alia, these include the seminal Pringle5 and Gauweiler (OMT)6 judgments of the European Court of Justice (ECJ).
- With regard to the distinction between ‘bailout’ and ‘bail-in’, this has been explained as follows: “The term bail-out describes a rescue operation in which the onus is placed on external investors or the taxpayer.
34.1.1 Conditionality and Liability
- The starting point of the subsequent discussion is that financial assistance to Eurozone Member States in need can be provided only on the basis of strict conditionality.
- Such conditionality was attached to assistance given under the 2010 Greek bilateral loan, the EFSF and the EFSM, and applies also to assistance given under the ESM.
- ”14 Although Portugal, Greece, and Cyprus received assistance under different mechanisms, they all committed to fulfilling the economic policy conditions set out in the macroeconomic adjustment programme prepared for each country.
34.1.2 Litigation at the National Level
- Attempts to claim redress have taken place at the national level, where the most prominent case law has come from Greek and Portuguese courts, and concerned reductions in salaries and pensions.
- The applicants had argued that the contested Decrees impinged on their constitutionally guaranteed rights to property (Art. 23) and were violating the constitutional principle of equality and non-discrimination (Art. 28).
34.1.3 Litigation at the EU Level
- Some of the applicants in the above mentioned cases found their way before the CJEU to challenge the measures arising from the conditionality measures or claim damages for financial losses allegedly resulting from such measures.
- The link between EU law and MoUs or, more generally, between EU law and the conditionality for financial assistance to Eurozone Member States, has come to the spotlight more recently after recent judgments of the General Court (GC) in two sets of cases initiated by Cypriot depositors who suffered monetary losses as a result of the bail-in described previously.
- Five cases from this group are currently on appeal: Cases C-105/15P, Mallis and Malli v. Commission and ECB; C-106/15P Tameio Pronoias Prosopikou Trapezas Kyprou v. Commission and ECB; C-107/15P Chatzithoma v. Commission and ECB; C-108/15P Chatziioannou v. Commission and ECB, C109/15P Nikolaou v. Commission and ECB.
- According to the GC, the adoption of the MoU did not originate from the Commission and the ECB, since the two institutions do not have any powers to make decisions of their own under the ESMT.59 161.
- Eurozone Member States to guarantee that the MoU is in conformity with EU law” which allegedly arose out of the Commission’s role as the guardian of the Treaties under Article 17 TEU (Para. 49).
34.2 Concluding Remarks
- The two AG Opinions in Mallis and Ledra raise interesting points regarding the extent to which individuals can challenge the conditionality attached to financial assistance under the ESM.
- There is little value in speculating about the outcome of the appeals.
- The differences between the macroeconomic adjustment programmes designed for each 74 For a discussion of the two dimensions see A. Poulou, 2014, p. 1159.
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Frequently Asked Questions (2)
Q1. What have the authors contributed in "34 anoverviewoflitigation inthecontext of financial assistance to eurozone member states" ?
This contribution provides an overview of some of the most prominent litigation arising in the context of financial assistance given to Portugal, Greece, and Cyprus. Taking stock of these accounts, this article seeks to provide an updated picture of the most relevant case law, focusing on the position of the individual as a litigant. The article does not purport to provide an all-encompassing or comparative analysis of the litigation concerning the Eurozone bailouts. To this effect, the article first explains the concept of conditionality in the context of financial assistance ( i ).
Q2. What have the authors stated for future works in "34 anoverviewoflitigation inthecontext of financial assistance to eurozone member states" ?
In spite of this ‘ cautionary note ’, future country-by-country case studies mapping in depth the development of the national-, and EU-level case law could assist in drawing conclusions regarding the extent of judicial protection afforded to individuals by national and EU courts when it comes to challenging financial assistance conditionality. Future CJEU judgments could therefore further illustrate the role of the EU vis-à-vis conditionality for financial assistance, and especially the links, and the dividing lines, between the EU legal order and the ESMT.