News Courts

Wednesday 21 March 2018

Government rejects Pringle claims about ESM treaty

Tim Healy

THE Government has rejected arguments by Independent TD Thomas Pringle that the European Stability Mechanism (ESM) Treaty providing for a conditional permanent bailout fund for the 17 states in the Eurozone breaches "no bailout" provisions of the EU Treaties.

The ESM Treaty provides for creation of a new ESM financial institution, akin to a bank, to provide conditional bailout funding to distressed states which use the Euro as currency. The 17 Eurozone states are required to make a capital contribution to the new institution with Ireland's contribution set at €11.14bn.

The new ESM financial institution to be set up under the ESM Treaty will provide, subject to strict conditions, limited forms of financial assistance which will have to be repaid, Michael Cush SC, for the Government and State, told the High Court.

While Mr Pringle contended the ESM Treaty breached the economic and monetary union (EMU) set out in the EU Treaties, he had not clarified exactly what that EMU was, counsel said. There was no determination of monetary policy in the ESM Treaty, he argued.

Mr Pringle was relying on provisions of the EU Treaties which prohibit the EU or its member states assuming the financial commitment or liabilities of members states and their governments but the ESM was neither the EU nor a member state, Mr Cush said.

The Government also rejected claims the proposed establishment of the ESM involves transfer to a new international institution of sovereign monetary powers and/or powers of monetary policy retained by the state via the EU.

Mr Pringle had raised no factors that rendered the ESM Treaty void as a matter of EU law and the High Court should not refer matters in his case to the European Court of Justice for determination, the Government contends.

Further claims by Mr Pringle that a constitutional referendum is required here before the ESM Treaty may be ratified were also rejected.

Shane Murphy SC, also for the Government and State, argued Mr Pringle was out of time to challenge a decision of the European Council of March 2011 to amend Article 136 of the Treaty of the Functioning of the EU (TFEU) to provde for an ESM. Mr Pringle had said he was concerned about a range of matters from the date of that decision but had not brought his action until April 2012, counsel said.

Ms Justice Mary Laffoy today began hearing arguments on behalf of the Government and State in the continuing hearing of the Donegal South West TD's action in which he contends the ESM Treaty breaches the EU Treaties, EU law and the Irish Constitution.

Among several arguments, the TD contends the ESM Treaty is inextricably intertwined with the Fiscal Treaty approved by the people by referendum last month and should also therefore have been put to the people in a referendum.

He claims the ESM Treaty is unconstitutional on grounds including it breaches EMU as approved in the EU Treaties by the Irish people and dilutes the fiscal sovereignty of this State.

The Government proposes to formally ratify the ESM Treaty early next month but Mr Pringle is to seek an injunction restraining the completion of ratification. He will seek the order once the relevant legislation is passed, as expected, by the Dail and Seanad shortly but before it goes to the President.

After the Oireachtas approves the legislation, a five day period must elapse before the President may sign it into law.

Mr Pringle has also asked that the High Court refer issues in the case to the European Court of Justice for determination, including whether the ESM Treaty breaches "no bailout" provisions of Economic and Monetary Union (EMU) agreed under various EU Treaties. The Government claims nothing arises in the case which requires determination by the ECJ.

The case continues.

Today's news headlines, directly to your inbox every morning.

Editor's Choice

Also in Irish News