CYIL 2014

209

THE INTERGOVERNMENTAL AVENUES OF EUROPEAN INTEGRATION…

4.2 The ESM Treaty

The Court also rejected the arguments that certain provisions of the TEU and

TFEU and the general principle of effective judicial protection precluded the conclusion,

between the Eurozone Member States, of an agreement such as the ESM Treaty. The

allegedly conflicting provisions were as follows: the TFEU provisions relating to the

EU’s exclusive competence for monetary policy [Art. 3(1)(c) TFEU and 127 TFEU]

and concluding of international agreements [Art. 3(2) TFEU], provisions of the TFEU

relating to the EU’s economic policy [Art. 2(3), 119 to 123, 125 and 126 TFEU], and

provisions of the TEU under which Member States have a duty of sincere cooperation

[Art. 4(3) TEU] and which provide that each institution of the EU is to act within

the limits of the powers conferred on it in the Treaties (Art. 13 TEU).

As regards the EU’s exclusive competence in the area of monetary policy for those

Member States whose currency is the euro [Art. 3(1)(c) TFEU and 127 TFEU], the

Court recalled that the objective of that policy was to maintain price stability. The

activities of the ESM did not fall within that policy, since it was not the purpose of

the ESM to maintain price stability but rather to meet the financing requirements of

ESM Members. To that end, the ESM was not entitled either to set the key interest

rates for the euro area or to issue euro currency; the financial assistance which the

ESM grants must be entirely funded from paid-in capital or by the issue of financial

instruments. Even if the activities of the ESM might influence the rate of inflation,

such an influence would constitute only the indirect consequence of the economic

policy measures adopted.

Concerning the EU’s exclusive competence to conclude international agreements

which might affect common rules or alter their scope [Art. 3(2) TFEU], the CJEU held

that no argument put forward on that point had demonstrated that an agreement such

as the ESMwould have such effects

and stated: “

Moreover, since neither Article 122(2)

TFEU nor any other provision of the EU and FEUTreaties confers a specific power on the

Union to establish a permanent stability mechanism such as the ESM (see paragraphs 64

to 66 of this judgment), the Member States are entitled, in the light of Articles 4(1) TEU

and 5(2) TEU, to act in this area

.”

Further in relation to the EU’s competence for the coordination of economic policy

[Art. 2(3), 119 to 121 and 126 TFEU], the Court reiterated that the Member States

Ibid.

, paras. 96-97.

The CJEU should have dismissed arguments related to the EU’s exclusive external competence under

Art. 3(2) TFEU, since this provision is clearly not applicable to international agreements concluded

solely among the EU Member States. As the Advocate General J. Kokott rightly observed: “

It must in

that regard be observed that Article 3(2) TFEU, as is clear when read with Article 216 TFEU, solely governs

the exclusive competence of the Union for agreements with third countries and international organisations.

Accordingly Member States are, under that provision, read together with Article 2(1) TFEU, prohibited only

from concluding such agreements with

third countries

. The parties to the ESMTreaty are however exclusively

Member States

.” (View of AG Kokott, 26 October 2012, para. 98). This ‘misreading’ of the TFEU text

is also highlighted by B. de Witte and T. Beukers,

op. cit.

supra

note 9, p. 834.

C-370/12

Pringle

, para. 105.