EU to hit back over German ruling dubbed ‘declaration of war’

Germany faces legal action after the nation’s top court delivered a ruling about the European Central Bank dubbed by an academic as a “declaration of war” on EU judges.

The European Commission is poised to kickstart a so-called infringement case as soon as Wednesday, two EU officials said on the basis of anonymity because the decision isn’t official yet.

The move - a year in the making - follows a landmark ruling by Germany’s constitutional court that accused the EU’s top tribunal of overstepping its powers when it backed the ECB’s controversial quantitative easing policy.

The German court ruling from last May sparked an unprecedented counterattack from the EU Court of Justice, which said its entire purpose is to make sure EU law is properly applied across the 27-nation bloc. It said it “alone” has the “jurisdiction to rule that an act of an EU institution is contrary to EU law.”

The EU escalation, reported earlier by DPA, would be the first step in a longer process, which could ultimately end up in a case at the bloc’s top court in Luxembourg.

Germany’s economy ministry, which handles infringement cases for the country, said it can’t immediately comment. The ECB declined to comment.

In its ruling last year, the German constitutional court said the ECB’s €2.7 trillion asset-purchase program, which was started in 2015, might be unconstitutional, and gave the central bank three months to prove that the policy is proportionate to its impact on the economy.

The decision was seen as a warning shot that could have threatened ECB efforts to counter the economic turmoil of the Covid-19 pandemic.

A December 2018 ruling by the EU Court of Justice that QE was in line with EU rules was “objectively arbitrary” and is “methodologically no longer justifiable,” the German judges said.

The ruling was a direct challenge to the supremacy of the EU court, whose rulings are binding across the 27-nation bloc. The German court said this no longer applies in extreme examples when the EU tribunal fails in its duties.

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