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Judging in Times of Economic Crisis: The Case Law on Austerity Measures in Comparative Perspective

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Constitutionalism Under Extreme Conditions

Part of the book series: Ius Gentium: Comparative Perspectives on Law and Justice ((IUSGENT,volume 82))

Abstract

The chapter addresses the role of the judiciary during the 2008 economic crisis, which affected Europe and its Member States. In particular, the chapter compares the attitudes of national constitutional courts in judging austerity measures adopted under emergency circumstances, identifying three main justifications of the courts’ attitude during the crisis: 1. national supreme courts acted in order to safeguard the constitutional core values threatened by the extraordinary circumstances posed by the economic crisis; 2. they acted as institutions engaged in a kind of “institutional competition” with other constitutional actors; 3. they acted in order to affirm the self-standing nature of national constitutional order, with respect to supranational and international interference. The chapter explores how in the future the EU should improve the virtuous relationship between its political and judicial actors in order to avoid the flaws and legal contradictions that have characterized its response to the economic emergency so far.

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Notes

  1. 1.

    The impact of the economic crisis both at national and supranation level has been described through the category of constitutioanl mutation or constitutional transformation, see Menendez A (2014) Editorial: An European Union in Constitutional Mutation?. European1 Law Journal, Vol. 20, no. 2:127–141; Martinico G (2014) EU crisis and constitutional mutations: a review article. Revista de Estudios Políticos (nueva época), n. 165:247–280. Against this narrative see de Witte B (2015) Euro crisis responses and the EU legal order: increased institutional variation or constitutional mutation? European Constitutional Law Review, Vol. 11, n. 3:434.

  2. 2.

    Joerges C (2014) Europe’s Economic Constitution in Crisis and the Emergence of a New Constitutional Constellation. German Law Journal, 15 no. 5:1024.

  3. 3.

    Böckenförde E W (2010) Kennt die europäische Not kein Gebot? Neue Züricher Zeitung. As Böckenförde argues: “Die Krise der Europäischen Union hat ihren Grund in Widersprüchlichkeiten und Strukturfehlern des EU-Vertrags seit der Einführung der Währungsunion im Vertrag von Maastricht. Sie war vorhersehbar und ist nicht einfach vom Himmel gefallen”.

  4. 4.

    Lütz S Kranke M (2014) The European rescue of the Washington Consensus? EU and IMF lending to Central and Eastern European countries. Review of International Political Economy, 21:2:310–338.

  5. 5.

    Nolan A (ed) (2014) Economic and Social Rights after the Global Financial Crisis. CUP.

  6. 6.

    On the role of Courts in adjudicating social rights see King J (2012) Judging Social Rights. CUP.

  7. 7.

    Hirschl R (2007) Towards Juristocracy. The Origins and Consequences of the New Constitutionalism. Harvard University Press.

  8. 8.

    On the role of the judiciary in time of crisis from a theoretical perspective, see in this volume Kuo M S From Institutional Sovereignty to Constitutional Mindset: Rethinking the Domestication of the State of Exception in the Age of Normalization. In particular, the Author argues that “the judiciary may help domesticate the beast of emergency powers by focusing the public mind on our current situation with the constitutional mindset”.

  9. 9.

    See Kilpatrick C (2015) Constitutions, social rights and sovereign debt states in Europe: a challenging new area of constitutional inquiry. 43 EUI Working Paper Law p 3.

  10. 10.

    Namely the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM).

  11. 11.

    On the different nature in the legal form of the mechanisms adopted, see Tuori K, Tuori K (2014) The Eurozone Crisis: A Constitutional Analysis. CUP, p 90.

  12. 12.

    Tomkin J J (2013) Contradiction, Circumvention, and Conceptual Gymnastic: the Impact of the Adoption of the ESM Treaty on the State of European Democracy. German Law Journal 14:169.

  13. 13.

    Ibid, 169.

  14. 14.

    Somma A (2014) Legal Change and Sovereign Debt Crisis. The Clash Between Capitalism and Democracy in the Western Legal Tradition, Paulus C G (ed.), A Debt Restructuring Mechanism for Sovereigns. C.H. Beck, Hart, Nomos, p 176.

  15. 15.

    See Brancati B (2015) Decidere sulla crisi: le Corti e l’allocazione delle risorse in tempi di “austerità”’ n. 16 Federalismi.it, available at www.federalismi.it.

  16. 16.

    Despite in Portugal a constitutional complaint may be triggered also in a concrete proceeding (by citizens), in our analysis we will focus only on abstract review proceedings, which can be filed by several institutional actors: among theme, the President of the Republic, the President of the Parliament, the Prime Minister and one-tenth of the Members of the Parliament.

  17. 17.

    Kilpatrick C (2015) Constitutions, social rights and sovereign debt states in Europe: a challenging new area of constitutional inquiry. 43 EUI Working Paper Law p 17.

  18. 18.

    Ibid, 19.

  19. 19.

    Fasone C (2014) Constitutional Courts Facing the Euro Crisis: Italy, Portugal and Spain in a Comparative Perspective. EUI MWP 2014/25 Working Paper.

  20. 20.

    Kilpatrick C (2015) Constitutions, social rights and sovereign debt states in Europe: a challenging new area of constitutional inquiry. 43 EUI Working Paper Law p 20.

  21. 21.

    Lane Scheppele K (2004) A Realpolitik Defense of Social Rights. Princeton Law and Public Affairs, Working Paper Series, Working Paper No. 05-004:9.

  22. 22.

    Cisotta C, Gallo D (2014) The Portuguese Constitutional Court Case Law on Austerity Measures: A Reappraisal, Kilpatrick C, de Witte B(eds) Social Rights in Times of Crisis in the Eurozone: the Role of Fundamental Rights’ Challenges. European University Institute LAW Working Paper 2014/05:94.

  23. 23.

    Dawson M (2015) The Legal and Political Accountability Structure of Post-Crisis EU Economic Governance. JMCS 53 5:986.

  24. 24.

    The peculiar attitude shown by Court should also be connected to the nature of social rights. The classical narrative has identified a kind of dualism between social rights—considered as positive rights, requiring a certain degree of public intervention for their realization—and civil and political rights—considered as negative rights, directly enforceable without a positive commitment by the State. Although the boundaries between civil and social rights have become more and more blurred, the double-sided nature of the rights is the still dominating paradigm, affecting not only the theoretical comprehension of the nature of rights, but above all the issue related to their effectiveness and enforcement.

  25. 25.

    Maduro M P, Frada A, Pierdominici L (2017) A Crisis Between Crises: Placing the Portuguese Constitutional Jurisprudence of Crisis in Context. E-pública, vol. 4, n.1 available at www.e-publica.pt.

  26. 26.

    Acórdão no. 396/2011, 21 September 2011, available at www.tribunalconstitucional.pt.

  27. 27.

    Acórdão no. 353/2012, available at http://www.tribunalconstitucional.pt/tc/acordaos/20120353.html.

  28. 28.

    Acórdão no. 187/2013 available at http://www.tribunalconstitucional.pt/tc/acordaos/20120353.html.

  29. 29.

    The Court ruled that “these measures will last for several years, but that does not allow us to question their transitory character, bearing in mind the nature and objectives pursued, which consist in a normative answer to an exceptional situation that is supposed to be corrected, urgent and briefly, back to normal standards”, Decision 396/2011 (State Budget 2011). See Canotilho M, Violante T, Lanceiro R (2015) Austerity measures under judicial scrutiny: the Portuguese constitutional case-law. European Constitutional Law Review, 11:161.

  30. 30.

    Ibidem, 163.

  31. 31.

    Ibidem, 163.

  32. 32.

    Kilpatrick C (2015) Constitutions, social rights and sovereign debt states in Europe: a challenging new area of constitutional inquiry. 43 EUI Working Paper Law p 12.

  33. 33.

    The norm under scrutiny concerned the suspension of the additional holiday month of salary for public administration staff (and also for teachers and researchers), the suspension of the holiday month of pensions for public and private sector retirees and the duty imposed upon the beneficiaries of unemployment subsidies to pay social security contributions of 6% instead of 5%, in violation of the principles of equality and proportionality.

  34. 34.

    Nogueira De Brito M (2014) Putting Social Rights in Brackets? The Portuguese Experience with Welfare Rights Challenges in Times of Crisis. Kilpatrick C and de Witte B (eds.) Social Rights in Times of Crisis in the Eurozone: The Role of Fundamental Rights’ Challenges. EUI WP 2014/05:87.

  35. 35.

    Kilpatrick C (2015) Constitutions, social rights and sovereign debt states in Europe: a challenging new area of constitutional inquiry. 43 EUI Working Paper Law p 12.

  36. 36.

    Canotilho M, Violante T, Lanceiro R (2015) Austerity measures under judicial scrutiny: the Portuguese constitutional case-law. European Constitutional Law Review, 11:183.

  37. 37.

    Law no. 3845/2010 “Measures for the implementation of the support mechanism for the Greek economy by the euro area Member States and the Internationa Monetary Fund”. The annex of the law was the first Memorandum of Understanding between Greece and creditors.

  38. 38.

    See Akrivopoulou C M (2013) Facing l’etat d’exception: the Greek Crisis Jurisprudence. Int’l J. Const. L. Blog www.iconnectblog.com/2013/07/facing-letat-dexception-the-greek-crisis-jurisprudence accessed 30 June 2015.

  39. 39.

    Marketou A (2017) Greece: Constitutional Deconstruction and the Loss of National Sovereignty. T Beukers T, de Witte B, Kilpatrick C (eds.) Constitutional Change through Euro-Crisis Law, CUP, p 188.

  40. 40.

    Ibidem, 189.

  41. 41.

    About the approach the Courts in Greece during the crisis, see in this volume Tassopoulos I, Political Emergencies as Challenges to the Impartiality of Public Law. The author argues that “The Courts, as is well known, ratified the Memoranda reducing dramatically salaries and pensions, and cutting back the welfare state. The Courts invoked the law of necessity, and the paramount national interest of preventing the official default of the country”. See also, Psychogiopoulou E (2014) Welfare Rights in Crisis in Greece: The Role of Fundamental Rights Challenges. C Kilpatrick and B De Witte (eds.) Social Rights in Times of Crisis in the Eurozone: The Role of Fundamental Rights’ Challenges (2014) EUI WP 2014/05, p 12.

  42. 42.

    Decision no. 2192/2014, par. 19.

  43. 43.

    Marketou A (2017) Greece: Constitutional Deconstruction and the Loss of National Sovereignty. T Beukers T, de Witte B, Kilpatrick C (eds.) Constitutional Change through Euro-Crisis Law, CUP, p 194.

  44. 44.

    Ibidem, 194.

  45. 45.

    Constitutional Court of Latvia, Case 2009 -08-01; case 2009-43-01; case 2009-44-01; case 2009-76-01; case 2009-88-01; case 2009-11-01.

  46. 46.

    Constitutional Court of Latvia, case 2010-17-01; case 2010-21-01.

  47. 47.

    Rasnača Z, Latvia, Report in www.eurocrisislaw.eui.eu.

  48. 48.

    Kilpatrick C (2015) Constitutions, social rights and sovereign debt states in Europe: a challenging new area of constitutional inquiry. 43 EUI Working Paper Law p 12.

  49. 49.

    For an economic analysis of the role of the IMF and of its policies see Stiglitz J (2002) Globalization and its Discontents. W.W. Norton & Company. See also Dreher A (2009) IMF Conditionality: Theory and Evidence. Public Choice, 141, no. 1/2.

  50. 50.

    Ioannidis M (2016) Europe’s new transformations: how the EU Economic Constitution changed during the Eurozone Crisis. Common Market Law Review 53:43.

  51. 51.

    Somma A (2014) Legal Change and Sovereign Debt Crisis. The Clash Between Capitalism and Democracy in the Western Legal Tradition, Paulus C G (ed.), A Debt Restructuring Mechanism for Sovereigns. C.H. Beck, Hart, Nomos, p 177.

  52. 52.

    Kilpatrick C (2015) Constitutions, social rights and sovereign debt states in Europe: a challenging new area of constitutional inquiry. 43 EUI Working Paper Law p 12.

  53. 53.

    Cisotta C, Gallo D (2014) The Portuguese Constitutional Court Case Law on Austerity Measures: A Reappraisal, Kilpatrick C, de Witte B(eds) Social Rights in Times of Crisis in the Eurozone: the Role of Fundamental Rights’ Challenges. European University Institute LAW Working Paper 2014/05:93.

  54. 54.

    Lane Scheppele K (2004) A Realpolitik Defense of Social Rights. Princeton Law and Public Affairs, Working Paper Series, Working Paper No. 05-004:14.

  55. 55.

    Ribeiro G A (2013) Judicial Activism Against Austerity in Portugal, Int’l J. Const. L. Blog. Dec. 3, 2013.

  56. 56.

    Ibidem.

  57. 57.

    Lane Scheppele K (2004) A Realpolitik Defense of Social Rights. Princeton Law and Public Affairs, Working Paper Series, Working Paper No. 05-004:14.

  58. 58.

    Ibidem.

  59. 59.

    Kilpatrick C (2015) Constitutions, social rights and sovereign debt states in Europe: a challenging new area of constitutional inquiry. 43 EUI Working Paper Law p 20.

  60. 60.

    Joerges C, Glinski C (eds) (2014) The European Crisis and the Transformation of Transnational Governance: Authoritarian Managerialism versus Democratic Governance. Hart Publishing, p 32.

  61. 61.

    See Fabbrini F (2016) Economic Governance in Europe: Comparative Paradoxes and Constitutional Challenges. Oxford University Press.

  62. 62.

    See Marketou A I, Dekastros M (2014) Constitutional Change through Euro Crisis Law: A Multi-Level Legal Analysis—Greece, Department of Law, European University Institute, p 101.

  63. 63.

    Qatar v Bahrain (1994) ICJ Reports, quoted by Fischer-Lescano A (2014) Human Rights in Times of Austerity Policy. The EU institutions and the conclusion of Memoranda of Understanding. Legal opinion commissioned by the Chamber of Labour, Vienna, p 33.

  64. 64.

    Contiades X, Tassopoulos I A (2013) The Impact of the Financial Crisis on the Greek Constitution. X. Contiades X (ed) Constitutions in the Global Financial Crisis: A Comparative Analysis. Ashgate, p 203.

  65. 65.

    Fischer-Lescano A (2014) Human Rights in Times of Austerity Policy. The EU institutions and the conclusion of Memoranda of Understanding. Legal opinion commissioned by the Chamber of Labour, Vienna, p 34.

  66. 66.

    Maduro M P, Frada A, Pierdominici L (2017) A Crisis Between Crises: Placing the Portuguese Constitutional Jurisprudence of Crisis in Context. E-pública, vol. 4, n.1:31.

  67. 67.

    Idem.

  68. 68.

    Ibidem.

  69. 69.

    See in this volume Bertolini E Financial Crisis as a New Genus of Constitutional Emergency?.

  70. 70.

    See in this volume Kuo M S From Institutional Sovereignty to Constitutional Mindset: Rethinking the Domestication of the State of Exception in the Age of Normalization.

  71. 71.

    Lane Scheppele K (2004) A Realpolitik Defense of Social Rights. Princeton Law and Public Affairs, Working Paper Series, Working Paper No. 05-004:40.

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  1. Department of Italian and Supranational Public Law, University of Milan, Milan, Italy

    Antonia Baraggia

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  1. School of Law, The University of Texas at Austin, Austin, TX, USA

    Richard Albert

  2. Harry Radzyner Law School, Interdisciplinary Center (IDC) Herzliya, Herzliya, Israel

    Yaniv Roznai

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Baraggia, A. (2020). Judging in Times of Economic Crisis: The Case Law on Austerity Measures in Comparative Perspective. In: Albert, R., Roznai, Y. (eds) Constitutionalism Under Extreme Conditions. Ius Gentium: Comparative Perspectives on Law and Justice, vol 82. Springer, Cham. https://doi.org/10.1007/978-3-030-49000-3_12

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