226 / 532
210
EMIL RUFFER
CYIL 5 ȍ2014Ȏ
had the power to conclude between themselves an agreement for the establishment of a
stability mechanism such as the ESMTreaty provided that the commitments undertaken
by the Member States who were parties to such an agreement were consistent with EU
law. The ESM is not concerned with the coordination of the economic policies of the
Member States but rather constitutes a financing mechanism.
32
Furthermore, the
strict conditionality to which all support is subject and which can take the form of a
macro-economic adjustment programme does not constitute an instrument for the
coordination of the economic policies of the Member States but is intended to ensure
that the activities of the ESM are compatible with,
inter alia
, the ‘no bail-out’ clause
in Art. 125 TFEU and the coordination measures taken by the EU. In addition, the
ESM Treaty does not affect the competence of the Council to issue recommendations
to a Member State in which an excessive deficit exists, in accordance with Art. 126(7)
and (8) TFEU.
33
The Court then elaborated on the relationship with Art. 122(2) TFEU, which
contains the competence
34
of the Council to grant EU financial assistance to a Member
State which is in difficulties or is seriously threatened with severe difficulties caused
by natural disasters or exceptional occurrences beyond its control. This provision, in
the CJEU’s view, did not preclude the Member States from establishing a stability
mechanism such as the ESM, provided that, in its operation, such mechanism
complied with EU law and, in particular, with measures adopted by the EU in the
area of coordination of the Member States’ economic policies. The ESM Treaty
contains provisions [Art. 13(3) and (4) ESM Treaty] which are intended precisely
to ensure that any financial assistance granted by the ESM would be consistent with
such coordinating measures.
35
Another issue which needed to be addressed was the prohibition on the ECB and
the central banks of the Member States from granting overdraft facilities or any other
type of credit facility to public authorities and bodies of the EU and of Member States
and from purchasing directly from them their debt instruments (Art. 123 TFEU).
That prohibition is also safeguarded, since it is addressed specifically and exclusively
to the ECB and the central banks of the Member States. The grant of financial
assistance by one Member State or a group of Member States to another Member
State, directly or through the ESM, is therefore not subject to that prohibition and
does not constitute an infringement of Art. 123 TFEU.
36
One of the central and most difficult elements of the challenge was the ‘no bail-
out’ clause under Art. 125 TFEU, which provides that neither the EU nor a Member
State are to be liable for the commitments of another Member State or assume those
32
Ibid.
, paras. 109-110.
33
Ibid.
, paras. 111 and 113.
34
Not an exclusive competence, though:
“Further, nothing in Article 122 TFEU indicates that the Union
has exclusive competence to grant financial assistance to a Member State.”
(C-370/12
Pringle
, para. 120).
35
Ibid
., para. 121.
36
Ibid
., paras. 125-126.