CYIL 2014

THE INTERGOVERNMENTAL AVENUES OF EUROPEAN INTEGRATION… commitments. In the Court’s interpretation, this provision is not intended to prohibit either the EU or the Member States from granting any form of financial assistance to another Member State. 37 The aim of that provision is essentially to ensure that the Member States follow a sound budgetary policy by ensuring that they remain subject to the logic of the financial markets when they enter into debt. Accordingly, it does not prohibit the granting of financial assistance by one or more Member States to a Member State which remains liable for its commitments to its creditors, provided that the conditions attached to such assistance are such as to prompt that Member State to implement a sound budgetary policy. 38 The CJEU concluded that the ESM and the Member States who participate in it are not liable for the commitments of a Member State which receives stability support and do not assume liability within the meaning of the ‘no bail-out’ clause. 39 The Court also confirmed that the ESM was not in breach of the principle of sincere cooperation established in Art. 4(3) TEU, pursuant to which the Member States are to refrain from any measure which could jeopardise the attainment of the EU’s objectives. 40 Then the Court turned to the issue of ‘borrowing the EU institutions’, namely the allocation, by the ESM Treaty, of new tasks to the Commission, the ECB and the CJEU itself. It held that such allocation of new tasks was compatible with their powers as defined in the Treaties (Art. 13 TEU), since the duties conferred on the Commission and ECB within the ESM Treaty did not entail any power to make decisions of their own and that the activities pursued by those two institutions within the ESM Treaty solely committed the ESM. 41 As regards the Court itself, pursuant to Art. 273 TFEU it has jurisdiction in any dispute between Member States which relate to the subject-matter of the Treaties, if that dispute is submitted to it under 37 Ibid. , para. 130. However, some scholars offer much broader reading of Art. 125(1) TFEU, which would then cover not only guarantees, but also loans and other forms of financial assistance and make the ESM incompatible with the ‘no bail-out’ clause. See R. Palmstorfer: To Bail Out or Not to Bail Out? The Current Framework of Financial Assistance for Euro Area Member States measured against the Requirements of EU Primary Law, 37 European Law Review 771 (2012), pp. 775-778 (written prior to the Pringle judgement). 38 Ibid ., paras. 135-137. However, not ‘anything goes’ and the CJEU set limits as regards the compatibility with Art. 125 TFEU: “(…) the activation of financial assistance by means of a stability mechanism such as the ESM is not compatible with Article 125 TFEU unless it is indispensable for the safeguarding of the financial stability of the euro area as a whole and subject to strict conditions . ” (para. 136, emphasis added). For a thorough discussion of the ‘indispensability requirement’, see B. de Witte and T. Beukers, op. cit. in supra note 9, pp. 840-843. 39 Ibid. , para. 146. 40 Ibid. , paras. 151-152. 41 Ibid. , paras. 160-162. It should also be underlined that the CJEU unequivocally rejected the argument that the Member States should have established enhanced cooperation between themselves (under Art. 20(1) TEU) in order to be entitled to make use of the Union’s institutions within the ESM. The Court rightly pointed out that “ enhanced cooperation may be established only where the Union itself is competent to act in the area concerned by that cooperation ”, which is not the case of a permanent stability mechanism such as the ESM (paras. 167-168).

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