Editorial of October 2016

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by Sophie Perez Fernandes, Junior Editor

Engaging EU liability within the European Stability Mechanism framework

Last September 20th, the European Court of Justice (ECJ) delivered two judgments regarding the role of the European Commission and, to a lesser extent, the European Central Bank, in the negotiation and signing of the Memorandum of Understanding concluded between the Republic of Cyprus and the European Stability Mechanism (ESM) during the 2012-2013 financial crisis, and, in particular, in the restructuring of the banking sector in Cyprus imposed as a condition for the grant of financial assistance.

In Mallis and Malli (Joined Cases C-105/15 P to C-109/15 P), actions were brought against the European Commission and the European Central Bank for the annulment of the Eurogroup’s statement of 25 March 2013 concerning, inter alia, the restructuring of the banking sector in Cyprus. In turn, in Ledra Advertising (Joined Cases C-8/15 P to C-10/15 P), depositors of two large Cypriot banks brought actions against the European Commission and the European Central Bank for the partial annulment of the Memorandum of Understanding of 26 April 2013 adopted jointly by the ESM and the Republic of Cyprus and also for compensation for damages allegedly suffered following the request for financial assistance and the ensuing restructuring of the two banks in question.

The ECJ had already been called upon to rule on judicial protection questions raised by the ESM framework. Created in order to provide, where needed, financial assistance to the Member States whose currency is the euro, the ESM was instituted through an international agreement between euro area Member States – the Treaty establishing the ESM, concluded in Brussels the 2th February 2012, in force since the 27th September 2012. Thus, the ESM Treaty is not part of the EU legal order, as confirmed by the ECJ in the famous Pringle judgment (C-370/12). As a consequence, when creating the ESM, or acting within its framework, Member States do not act within the scope of application of EU law for the purposes, in particular, of Article 51(1) CFREU. Individuals seeking to challenge Member States’ measures adopted pursuant the conditions laid down in a Memorandum of Understanding would not, therefore, find in the preliminary ruling mechanism an indirect means of access to the ECJ in order to assess their compliance with EU law and, in particular, the CFREU as the former was not in question and the latter was hence out of reach.

What the above mentioned judgments, and especially Ledra Advertising, emphasize is the link nonetheless existing between the ESM framework and the EU legal order. Quoting Alicia Hinarejos (EU Law Analysis), in order to carry out its functions, the ESM “borrows” two EU institutions, the European Commission and the European Central Bank, two thirds of the infamously known Troika. The question is whether (and, if so, when) EU institutions’ actions within the ESM framework might be reviewed and, when harmful, give rise to compensation under EU law and, in particular, in light of the CFREU.

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Social citizenship: quo vadis? – Inaugural Editorial

by Alessandra Silveira, Editor
and Sophie Perez Fernandes, Junior Editor

The European citizenship as the “the fundamental status of nationals of the Member States”[1] has been shaping the process of integration itself. Unquestionably linked to the protection of fundamental rights, European citizenship has always been focused on the approximation of the legal status of the nationals of Member States, providing the legal base to the eradication of legal gaps of protection and, therefore, contributing to the further development of the integration process. However, recent case law of the ECJ seems to be influenced by the current political-economic dynamics that characterise the current crucial momentum that we are facing, raising perplexity and concern when compared to past rulings which compose the jurisprudential acquis in matters of citizenship and fundamental rights – mainly in what concerns citizens that move in the Union seeking jobs and the maintenance of the status of migrant worker.

The Dano ruling of 2014[2] represents a setback in regard to the previous case law of the ECJ regarding the granting of special non-contributory cash benefits to citizens who are not economically active. Despite the fact that, in this concrete case, a residence certificate of unlimited duration was previously granted to the applicant – a fact apparently disregard by this ruling – the national court considered that the main proceedings concerned persons who could not claim a right of residence in the host State by virtue of Directive 2004/38/CE. The ECJ accompanied the reasoning of the national court stating that the access to social benefits is dependent on the residence in the host Member State as set out by Article 7 of the mentioned Directive – i.e. sufficient economic resources and health insurance[3]. The goal would be to prevent economically inactive citizens from becoming an unreasonable burden on the social assistance system of the host Member State[4], or from using the host Member State’s welfare system to fund their means of subsistence[5]. Admitting otherwise, according to the Court, would go against the objectives of the Directive[6].

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