CYIL 2014

THE INTERGOVERNMENTAL AVENUES OF EUROPEAN INTEGRATION… prominent instruments concluded outside the EU law framework and thus take us on avenues of international law. Nevertheless, both the EMS Treaty and the TSCG are closely linked to the EU acquis , and their purpose is to deepen cooperation in the EMU and/or Eurozone, which is a paradox worth exploring in more detail. Needless to say, taking an exit from the EU law speedway and entering an intergovernmental avenue inevitably leads to a number of legal questions as to the compatibility with EU law obligations. Indeed, both instruments mentioned above have already been challenged before the highest courts in competing jurisdictions: the Court of Justice of the EuropeanUnion (hereinafter as the “Court” or “CJEU”) ruled on the compatibility of the ESMTreaty with EU legal order in the seminal case C-370/12 Pringle , 5 and the German Federal Constitutional Court ( Bundesverfassungsgericht , hereinafter as the “FCC”) had to deal with a challenge against the ratification of both the ESM Treaty and the TSCG and to assess their compatibility with the German Basic Law (i.e. the constitution). We shall try to juxtapose these two judgements and find common elements in the reasoning of both courts. Finally, we shall give a thought to the future course of things and explore the possibilities of revisiting theEUlawhighway againby incorporating the intergovernmental instruments into the EU acquis , which is actually explicitly foreseen in the TSCG. In this context, we shall also briefly mention the most recent example of the intergovernmental method, which is the Agreement on the transfer and mutualisations of contributions to the Single Resolution Fund (hereinafter as the “SRF Agreement”), 6 perhaps another brick in the wall of sound economic and fiscal policy. 2. Treaty on European Stability Mechanism and its context Before we turn to the ESMTreaty wemust go back to 2010, a period of deteriorating economic situation related to the sovereign debt crisis and causing serious concerns in Greece, Ireland and Portugal, to name just a few. The EU had to respond quickly and improvise: the initial outcomes were two specific legal instruments, namely the European Financial Stabilisation Mechanism (EFSM) 7 and then the European Financial Stability Facility (EFSF). 8 However, as the legal controversies became politically charged and the German government was concerned about the constitutional complaints against 5 Judgement of 27 November 2012, C-370/12 Pringle , ECLI:EU:C:2012:756. 6 The SRF Agreement was signed in Brussels on 21 May 2014 by 26 EU Member States, with the exception of Sweden and the United Kingdom, and constitutes one of the elements of the so called ‘banking union’. The SRF agreement will complement an EU regulation on the creation of a single resolution mechanism (SRM), which establishes the fund and also features a central decision-making board. The single resolution fund will be fully financed by bank contributions, raised at the national level and transferred to the SRF, which will initially consist of compartments corresponding to each Contracting Party. These will be gradually merged over the eight-year transitional phase. For more details see Press Release of the Council, document No 10088/14 PRESSE 2 from 21 May 2014. 7 Council Regulation (EU) No 407/2010 of 11 May 2010 establishing a European financial stabilisation mechanism (OJ L 118, 12.5.2010, p. 1), based on Art. 122(2) TFEU. 8 A private joint stock company established under Luxembourg law, whose sole shareholders were the (then) 17 Member States of the Eurozone.

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