This week in the Supreme Court will be dominated by the hearing in Pringle v. Government of Ireland. The Independent TD from Donegal South West, Thomas Pringle, challenges the legal basis of the European Stability Mechanism. Recognizing the case’s urgency and significance, the Supreme Court has put seven judges on the appeal, super-fast-tracked the hearing, and laid aside four days for it. (By the way, the Court will also deliver judgments in two cases this week, including the wholewheat brown bread packaging case, McCambridge v Brennan’s, which I previewed here).
The Pringle case has moved fast through the Irish courts. It was filed in the High Court in April. Judge Laffoy was more or less finished with the case by 17th July, and within a matter of days it’s being heard by the Supreme Court. (It’s worth pointing out that the proposed intermediate civil Court of Appeal has the potential to slow cases down on their way to the Supreme Court. The new system should probably allow exceptional cases to “leapfrog” the new Court of Appeal.) We may have a decision from the Supreme Court before the end of the term on 31st July (Tuesday of next week), though it’s unlikely that we’ll have full written judgments by then. Speaking of written judgments, Judge Laffoy has apparently produced a 140-page written judgment — but it’s not available yet. For the moment, we have to make do with her brief summary of 9th July, accessible on Thomas Pringle’s website (link here).
Didn’t we already have a referendum to settle the validity of the new Eurozone arrangements? Not this part. The Irish people voted “yes” to the Fiscal Stability Treaty at the end of May. The Fiscal Stability Treaty is an intergovernmental treaty that requires its signatories (all the EU Member States but the UK and the Czech Republic) to keep their budgets in balance. Deputy Pringle successfully called for a referendum on the Fiscal Stability Treaty, but ultimately lost the referendum campaign (his constituency was one of the few to vote “No”). But this court case is about the ESM, on which there has been no referendum.
What is the ESM, anyway? Well, it doesn’t really exist yet, but the ESM will be a permanent international organization whose purpose is to provide bailouts of Eurozone Member States. Since the Euro crisis began, States have been bailed out in various haphazard and legally dubious ways. The Irish bailout is provided and monitored by an ad hoc “Troika” — the European Commission, the European Central Bank, and the IMF. (The UK also helped us out with a smaller loan.) The ESM will provide a permanent standing mechanism for future bailouts. It will have its own Managing Director, a Board of Directors, and a Board of Governors. The ESM will be able to raise its own funds and give loans to struggling Member States. Ireland may need to apply to the ESM for another bailout. Of course, the loans by the ESM from Member States will come with strings attached. It’s partly the attachment of strings — spending restrictions and enforced austerity — that Deputy Pringle doesn’t like.
European leaders have been burned by Treaty referendums before, so they tried to design the ESM’s legal architecture in such a way as to avoid the need for Member State governments to seek the approval of their people. The legal framework for the ESM involved a two-step process, and Pringle challenges both steps.
First, the European Council — the Heads of Government of the EU Member States – provided a basis for the ESM in EU law by amending the Treaty on the Functioning of the EU. This Council Decision didn’t provide any detail on how the ESM was to work. It was just a skeleton, inserting the following text into Article 136 of the TFEU:
3. The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.
Again, it’s the ‘strict conditionality’ on which Deputy Pringle is none too keen. He also doesn’t like the fact that Ireland is obligated to pay into the bailout fund, but won’t be able to veto future bailouts. He contends that all this is contrary to European law, saying that it contravenes other parts of the TFEU. Vincent Browne and Gavin Barrett discuss some of these arguments here and here.
There’s a jurisdictional point here: national courts don’t have the power to declare European Union legislative acts invalid as a matter or European law. So if the Supreme Court were to accept one of Pringle’s European law arguments against the Council Decision, they’d have to send him to the Court of Justice for the EU (CJEU) for its views on the matter. But the Irish courts do have the power to reject a challenge to a European Union legislative act, and may declare the Council Decision valid if they reckon it’s undoubtedly so.
Pringle also says — citing Crotty – that the Council Decision is ineffective in Irish law without a referendum. To which the government says: the Council decision doesn’t transfer sovereignty from Ireland to the EU, and anyway the people already approved this kind of amendment to the TFEU by Council Decision when they voted for the Lisbon Treaty. Gavin Barrett discusses some of these arguments here.
Second, the seventeen Member States of the Eurozone actually entered into the ESM treaty in February of this year. The Treaty puts plenty of flesh on the bones. A copy of the Treaty (it’s actually the second version of the ESM treaty, but never mind that) is available here in pdf. The arguments against the Treaty are partly parallel to the arguments against the Council Decision. Pringle argued in the High Court that the ESM Treaty is inconsistent with other provisions of European Union law. He also argued that Ireland can’t ratify the ESM Treaty without getting the permission of the people via a referendum. So one of the big questions is whether the ESM Treaty constitutes a surrender of Irish sovereignty sufficiently great as to amount to a constitutional amendment. Darren O’Donovan provides a very useful assessment of this argument here.
Pringle raised many arguments in the High Court, and I have touched only one some of them. In the High Court, Judge Laffoy didn’t accept any of them, but she did say that one fairly technical question — concerning the timing of ratification by Eurozone members — should be referred to the CJEU. John Rogers SC , former Attorney General from the 1980s, speaks for Pringle. He may choose to focus his fire, rather than renewing all his contentions in the Supreme Court. Michael Cush SC represents the Government. The Supreme Court of Ireland, of course, isn’t so forward-looking as to allow a camera or even a microphone into the courtroom. So we’ll have to rely on the newspapers for reports of the hearing. I imagine we’ll get one or two every day.