Law prof Jelena Bäumler offers the following thoughts on yesterday's decision by the German Federal Constitutional Court on CETA:
Yes, but…- for now!
The German Federal Constitutional Court’s judgment on CETA
On 13 October 2016, the German Federal Constitutional Court (the Court, FCC) issued its much-awaited judgment on the request for temporary legal protection against CETA. The court delivered a Solomonic, but somehow puzzling judgment.
First of all, it should be stressed that this is not the final judgment of the Court on the matter, but a judgment on a request for temporary legal protection on the basis that irreversible damages might occur in case measures were not taken by the court. The complainants argued in essence that a positive decision by the European Union to sign and provisionally apply CETA will violate their rights under the German constitution (namely Art. 38 para. 1 in connection with Art. 79 para. 3 and Art. 20 para. 1 and 2 GG). In short, their democratic rights could be violated as CETA interferes with powers that were not and cannot be transferred to the European Union level, thus constituting an act “ultra vires” by the EU. The complainants (altogether more than 200.000, among them the left wing party DIE LINKE, consumer protection organisations and an individual flute teacher – that the court combined to one proceeding) pledged the court to issue temporary measures disallowing the German member to approve CETA when the Council votes on the agreement with Canada expected for the 18th October 2016.
The Judgment or what we know so far
The court rejected the claim. Yet, it delivered one of its famous “yes, but…”-judgments. The FCC decided that the German representative may agree to CETA in the Council – in its view requiring unanimous voting, which in itself is a question not entirely undisputed among experts of EU law – but only if the following three conditions are met:
First, any decision by the Council regarding CETA must only concern those parts of the agreement that fall within the exclusive competence of the EU.
Second, until the final judgement of the FCC, the court requires sufficient “democratic backing” of any decision taken by the committees to be established by CETA.
Third, Article 30.7 para. 3 lit. c) CETA has to be interpreted as to allow the unilateral termination of the provisional application of CETA by Germany.
If the government of Germany adheres to these conditions, no grave detriments are to be expected for the complainants that would have required the court to issue preliminary measures.
In its reasoning, the court emphasized that a decision on temporary relief requires careful weighing of the detrimental effects for the complainants without any preliminary measures issued by the court and the consequences if the court ordered measures, in that case if it ordered the government to disapprove CETA in the Council voting. In that regard, an order of the court must be necessary in order to avert great detrimental effects and shall not anticipate the outcome of the main proceeding.
The court argued that on the one hand the restrictions on the German government to develop and to actively participate in the European-, foreign and trade policy as well as the detrimental consequences for the EU as a whole to negotiate and conclude trade agreements could be immense. A negative vote of the German representative in the Council on the signing and provisional application could in fact be irreversible and most probably effectively lead to the death of CETA, thereby seriously damaging the reputation and trust in the reliability of Germany as well as the EU. On the other hand, the consequences of an affirmative vote could lead to the provisional application of CETA, but – with regard to the alleged violated rights of the complainant – may not be irreversible in case CETA is incompatible with the German constitution, a question the judges expressly left open to be decided in the main proceedings.
Regarding the first condition, the provisional application appears acceptable if it only concerns those parts that fall – undoubtedly – under the exclusive competences of the EU. The court stressed that the German government itself declared not to agree to disputed areas. The FCC clarified that this might include regulations on investment protection including the dispute settlement system and portfolio investments (Chapter 8 and 13), maritime transport (Chapter 14 CETA), mutual recognition of professional qualifications (Chapter 11) and the Chapter on trade and labour (Chapter 23).
With regard to the second condition, the court argued that there appears to exist an imminent threat that any decision of the CETA committees could possibly lead to conflicts with the identity of the German constitution (“Verfassungsidentität”, Art. 79 para. 3 GG). The court thus requires that any decision by a committee may only be taken on the basis of a common position taken by the Council according to Article 218 para. 9 TFEU, requiring a unanimous vote in the Council and thereby effectively granting a veto right to all Member States on any decision to be taken in the respective committees.
On the last condition, the court suggests that should any of the dangers posed by CETA run risk to materialize, the German government should ensure the possibility to terminate the provisional application of CETA by a unilateral declaration. For that purpose, Germany should – in a way relevant in public international law (“in völkerrechtlich erheblicher Weise”) – notify its understanding of its interpretation of Article 30.7 para. 3 lit. b CETA, namely that Germany unilaterally may declare termination of CETA’s provisional application.
Some preliminary observations
Wow, the Court did it again. The FCC has become quite famous – one would even say notorious – for any decision on questions regarding the EU, though less for the real outcome – in the end, the FCC did not find OMT to constitute an act ultra vires and also it did not stop CETA – but for its reasoning.
The court did four remarkable things: To begin with, it put the German government on a tight leash. Germany may only approve CETA under three conditions that are not a mere nuisance, but require negotiating on the EU level, maybe even with Canada. For that matter, CETA is categorized as a mixed agreement and the court requires that all those regulations – and the court is not shy to suggest problematic areas – need to be excluded from the provisional application. It is nothing unusual that not the entire treaty is provisionally applied. The German constitutional court with regard to CETA however named entire chapters, namely 8, 11, 13, 14 and 23 of CETA, which might have to be excluded; this could be the safer but also the less desirable approach from the European commission’s as well as other Members and Canada’s point of view.
Furthermore, it entered into another dialogue with Luxemburg, this time not on the protection of human rights or the power of the ECB, but with regard to the delimitation of competences when it comes to the common commercial policy. It expressed its view as to what Karlsruhe finds to be fields of competences that might have remained within the sphere of competence of the Member states, especially with regard to investment protection. Whether one should go as far as to read this as a warning towards Luxemburg not to go too far in the upcoming EU-Singapore advisory opinion by finding any and all aspects of trade and investment to fall into the explicit or implicit competence of the EU is debatable. That it could have been less explicit and avoid naming those areas in order not to risk interfering with the competences of the Court of Justice of the European Union (CJEU) to interpret European law is however beyond doubt.
Another aspect is critical when it comes to the CETA committees. According to Article 218 para. 9 TFEU, which the court explicitly refers to in its requirement on the “democratic-backing” of the committees, a Council position may be required if an agreement sets up a certain body that may adopt acts that have legal effects. The FCC demands a unanimous decision. By invoking Art. 218 para. 9 TFEU the court not only identifies the committees in CETA to be bodies that would fall under said provision but interprets EU law and requires a certain voting procedure when it comes to those committees. These might be interpretations and suggestions overstepping the power of the German court and would rather have to be clarified by the CJEU.
Finally, it brought public international law into play. The court suggests that Germany should remain in a position to terminate unilaterally the provisional application of CETA. There are two options on approaching this task, depending on whether only the EU and Canada are parties to CETA, or the EU, Canada and all 28 Member States are parties.
In Article 30.7 para. 3 lit c) CETA provides:
“A Party may terminate the provisional application of this Agreement by written notice to the other Party. Such termination shall take effect on the first day of the second month following that notification.”
CETA refers to “a party” and allows termination by written notice to the “other” party. The CETA text suggests here that there are only two parties to CETA, namely the EU and Canada. However, if it is a mixed agreement – as suggested by the FCC – there will be 30 parties, namely the EU, Canada and 28 Member States (at least, so long as Britain remains in the EU). By its statement, the Court seems to suggest that Germany is a party to the agreement and is thus also in a position to terminate the provisional application. However, if CETA is provisionally applied by a decision of the Council for the “EU-only” parts of CETA, Germany might not be regarded a party but might only be bound via the general binding effect of EU law. Yet, does this mean that Germany could act on behalf of the EU, meaning that Germany by a unilateral act may terminate the application between the EU and Canada? Does this reflect the understanding that because a unanimous act is required in the council at any point in time any EU Member is in a position to unilaterally terminate the provisional application? Is it a unilateral actus contrarius to the affirmative vote in the council? Or would that not require a decision in the sense of an actus contrarius by the council? Would that require unanimity? Finally, does the court suggest that all other Member States could do the same and terminate the application of CETA at any point in time if they so declare or is only Germany in that position?
If one argued that there are 30 parties to CETA and thus applied Art. 25 VCLT-IO on the account that CETA is silent on the question of termination of provisional application of more than two parties, Art. 25 VCLT refers to the negotiating states and allows termination upon notification for a state in respect to the other states between which the treaty is being applied provisionally. Could Germany terminate the application as between itself and the other parties? But which parts would not apply if only “EU-only” parts are in force that are binding upon Germany by way of Article 216 TFEU? That would leave any notification of termination entirely pointless for Germany.
A solomonic puzzle
What became again apparent is that the whole idea of a “mixed agreement” is a nightmare for all involved, i.e. the EU and its organs, the Member States, the European people and the courts that have to deal with the construction. Negotiating an agreement as a single endeavor only to later divide and split it into parts and pieces might run counter of the spirit of any international agreement and does not pay enough attention to the fact that the parties agreed to the agreement as a single undertaking. Additionally, I am not sure the Court harmonized all too wisely the wide discretionary power of the German (or any other states’) government regarding the termination of the provisional application of CETA at any point in time with its reasoning in terms of the importance of the reliability of the EU as a negotiating party.
Any observer must admit that the court was in a difficult position, less because difficult legal questions were posed to it – that is very much the task of a constitutional court to resolve – but because the judgment was issued in a temporary legal protection complaint roughly 12 hours after the oral hearing took place. Any decision not cautious to the effects on all parties involved and affected could have detrimental consequences. Whether the court, with its explicit naming of chapters when it comes to the question of competences, its strange requirement on the “democratic backing” of the committees and its rather puzzling interpretation regarding the possibility to terminate the provisional application rests with any observer of this ruling of which we only have a very short press statement so far. The complainants as well as the government seemed somehow okay with the decision leaving the impression of a Solomonic puzzle to be resolved piece by piece in the upcoming days, months, years.
