Course Book

Faculty of Law 2015/2016 Economic and Financial Regulation in Europe Course Book Master: European Law School Globalisation and Law International Laws Nederlands Recht Fiscaal Recht Recht en Arbeid International and European Tax Law Forensica, Criminologie en Rechtspleging Course period 5 IER4020

LET OP: DEADLINE VOOR INSCHRIJVEN ONDERWIJS PERIODE 6: 1 JUNI – 17 APRIL DEADLINE REGISTRATION EDUCATION PERIOD 6: JUNE 1 – APRIL 17

Academic Year 2015/2016 Maastricht University Faculty of Law

Course Book

ECONOMIC AND FINANCIAL REGULATION IN EUROPE

Coordinator: Prof. Dr. Dr. Phedon Nicolaides

IER4020 Period 5

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TABLE OF CONTENTS 1. Scope of the course.........................................................................................................................3 2. Approach and learning goals: ..........................................................................................................3 3. Examination: ...................................................................................................................................3 4. Staff members teaching this course ................................................................................................4 5. Reading Material.............................................................................................................................4 6. Topics and tasks per week ...............................................................................................................5 6.1. Overview..................................................................................................................................5 6.2. Week 1: ....................................................................................................................................7 6.3. Week 2: ....................................................................................................................................8 6.4. Week 3: .................................................................................................................................. 10 6.5. Week 4 ................................................................................................................................... 12 6.6. Week 5 ................................................................................................................................... 13 6.7. Week 6: .................................................................................................................................. 16 6.8. Week 7 ................................................................................................................................... 18 6.9 Week 8 .................................................................................................................................... 20

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1. SCOPE OF THE COURSE The course covers 1. Primary and secondary legislation on economic and monetary policy [title VIII of the TFEU]. 2. The free movement of capital. 3. The EU’s response to the financial and economic crisis. 4. The banking union, the single supervisory mechanism and the single resolution mechanism. 5. The functioning of the institutions responsible for economic and monetary policy. 6. Relevant case law.

2. APPROACH AND LEARNING GOALS: Design of the lectures: The lectures provide analytical tools for understanding the conduct of economic and monetary policies in the EU, the division of tasks between different institutions and the capacity of EU rules and institutions to deal with the challenges of managing the single currency and resolving the current economic crisis. The course will also reflect on issues over which there is little or no case law.

Design of the tutorials: The tutorials will deepen the students´ understanding of the legal and institutional aspects of the topics discussed during the lectures. Students are expected to actively participate in the tutorials. They will prepare the tasks and reflect on the questions posed in the course book. Some tasks require group-work or coordination with fellow students. The tasks of the tutorials are designed to stimulate a critical analysis of the issues raised as well as a discussion among students. Thus, the quality of the student´s arguments is focused on rather than one correct answer. Students are encouraged to apply knowledge that they have obtained in previous courses.

3. EXAMINATION: The course will conclude with a written exam on the subjects covered in the lectures or in the tutorials. The exam will count for 60% of the final mark. Additionally, 40% of the final mark for the course will be based on assignments and in-class presentations. Further details on the assignments and in-class presentations will be announced during the first lecture.

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4. STAFF MEMBERS TEACHING THIS COURSE Prof. Dr. Dr. Phedon Nicolaides, Jan Tinbergen Chair for European Economics at the College of Europe, Bruges and endowed chair in European Economic Law, Faculty of Law, Maastricht University. Email: [email protected] Marie-Therese Gold, LL.M., PhD researcher at the International and European Law Department. Email: [email protected]

5. READING MATERIAL There is no single prescribed textbook for this course. The reading material will vary and will be indicated per lecture / tutorial. All participants should have the latest collection of the Treaties and other primary EU law (e.g. Blackstone´s EU Treaties and Legislation), and bring it to the group meetings. As regards the various intergovernmental agreements, secondary legislation and other documents relevant for this course we recommend the following compilation: Council of the European Union, ´Economic and Monetary Union: Legal and political texts` (2014) accessed 04 March 2016.

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6. TOPICS AND TASKS PER WEEK 6.1. OVERVIEW1 As the lectures will be held on Fridays, the tutorials will be taught in the following week. Title of Lecture / Tutorial

Students´ presentations2

Week 1 Lecture 1: 15.04.2016

Introduction: Objectives and structure of the course Evolution of the EMU and review of Treaty rules

Lecture 2: 22.04.2016 Tutorial 1

Free movement of capital: Articles 63-66 TFEU EMU´s institutional setting and reception in the national legal orders

1. Delors report 2. One market, one money

Lecture 3: 29.04.2016

Crisis and response of Member States: State aid

3. 2013 Banking Communication 4. Commission decision SA.39451 on Banca Tercas

Tutorial 2

Functioning of the ECB

Tutorial 3

T-319/11, ABN-AMRO v Commission T-33/10, ING v Commission

Lecture 4: 13.05.2016

Crisis and response of EU/MS: new rules, new instruments and institutions; C-370/12, Pringle The centrality of the Eurogroup

5. 6-pack 6. 2-pack

Bailing in and bailing out: Legal consequences and responsibility T-38/14, Kafetzakis v EP T-79/13, Accorinti v ECB Excessive Deficit Procedure and Macroeconomic Imbalance Procedure + European Semester

7. C-226/13, Fahnenbrock et al 8. T-291/13 – T-294/13

The establishment of Banking Union, SSM & SRM Accountability arrangements in the SSM +

9. SSM / ECB manual 10. BRRD / SRM

Week 2

Week 3

Week 4

Week 5

Tutorial 4 Week 6 Lecture 5: 20.05.2016 Tutorial 5 Week 7 Lecture 6: 27.05.2016 Tutorial 6

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For the dates of the tutorials, please consult your electronic schedules / Eleum. You will receive more information on the students´ presentations during the first lecture.

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SRM (SRB) Week 8 Lecture 7: 03.06.2016 Tutorial 7

C-62/14, Gauweiler et al (OMT judgement) Review + Q&A

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11. Views of the BVerfG 12. AG Opinion

6.2. WEEK 1: Lecture 1: Introduction to the course; evolution of Economic and Monetary Union (EMU), Treaty provisions on EMU, separation of economic and monetary policies & instruments The aims, structure and assessment methods of the course are explained. Then there is a review of the evolution of EMU and of the main provisions in the Treaty. · ·

Delors Report, Economic and Monetary Union in the European Community, 1989 http://ec.europa.eu/economy_finance/publications/publication6161_en.pdf One Market, One Money, European Economy, 1990 http://ec.europa.eu/economy_finance/publications/publication7454_en.pdf

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6.3. WEEK 2: Lecture 2: movement of capital: Articles 63-66 TFEU The lecture explains the rules, interpretation and the case law on the free movement of capital and reviews the reasons and consequences of the two recent instances [Cyprus and Greece] where restrictions on capital movement have been imposed. Materials: · Review of the Balance of Competences between the United Kingdom and the European Union, The Single Market: Financial Services and the Free Movement of Capital, 2014 Can be accessed at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/332874/29 02400_BoC_FreedomOfCapital_acc.pdf

Material for the students´ presentation: Group 1:

Delors report

Group 2:

One market, one money

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Tutorial 1: EMU´s institutional setting and reception in the national legal orders The tutorial will focus on the legal and institutional aspects of the construction of the EMU. 1. Analyse the construction of the EMU within the Treaties and the institutional set up therein: Which institutions are involved in which part of the EMU? Which institutions take the decisions in the economic policy area on which subjects? Which institutions take the decisions in the monetary policy area on which subjects? 2. It has been argued that the introduction of the EMU was a major change of the nature of European Integration. Discuss the reception of the EMU, especially the monetary part, in the national legal orders. Look at the way in which the Maastricht Treaty was approved in the national constitutional legal orders, especially the role national courts played. Use certain constitutional court rulings on the Maastricht Treaty for your analysis.

Materials: · ·

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A Hinarejos, ´Economic and monetary union` in C Barnard and S Peers (eds), European Union Law (Oxford University Press: Oxford 2014) 567ff. P Oliver, ´The French Constitution and the Treaty of Maastricht` 43 (1994) International and Comparative Law Quarterly 11-25 (for background information on the French constitutional system read the remaining article) M Herdegen, ´Maastricht and the German Constitutional Court: Constitutional Restraints for an “ever closer union”` 31 (1994) Common Market Law Review 235-249.

Further non-compulsory materials:

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For a better readability of the above mentioned journal articles: Treaty on European Union, together with the Complete Text of the Treaty Establishing the European Community (OJ C 224/1 of 31 August 1992), especially Art. B TEU, Art. 4, 4a, Art. 102a – 109m TEC.

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French Constitutional Council: Decision 92-308 DC of April 1992 (English translation of the decision available at European Constitutional Law Network, ´National Courts & Decisions`).

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French Constitutional Council: Decision 92-312 DC of 02 September 1992 (English translation of the decision available at European Constitutional Law Network, ´National Courts & Decisions`).

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German Federal Constitutional Court: 2 BvR 2134, 2159/92 of 12 October 1993 (English translation of the decision: see the appendix to M Herdegen, ´Maastricht and the German Constitutional Court: Constitutional Restraints for an “ever closer union” 31 (1994) Common Market Law Review 250ff.

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6.4. WEEK 3: Lecture 3: Crisis and response of Member States: State aid Member States have granted very large amounts of aid to financial institutions. The European Commission devised new rules to regulate public support of financial institutions and prevent distortions to competition. The lecture provides an overview of state aid rules, examines how they have been applied to banks and considers the judgment in case T-457/09. Material: · T. Beukers, Legal Writings on the Eurozone Crisis, 2014 · P. Nicolaides & I. Rusu, The Conflicting Roles of State Aid Control: Support of Financial Institutions v Safeguarding the Internal Market, Maastricht Journal of European and Comparative Law, 2010 · P. Nicolaides & I. Rusu, The Financial Crisis and State Aid, Anti-trust Bulletin, 2010 · T-457/09, Westfaelisch-Lippischer Sparkassen und Giroverband v European Commission.3 Appeal against Commission Decision 2009/971.4

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See also, the Commission document: Overview of decisions and on-going in-depth investigations of Financial Institutions in Difficulty, January 2016 Can be accessed at: http://ec.europa.eu/competition/recovery/banking_case_list_public.pdf

Material for the students´ presentation: Group 3:

2013 Banking Communication

Group 4:

Commission decision SA.39451 on Banca Tercas

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The text of the judgment can be accessed here: http://curia.europa.eu/juris/liste.jsf?pro=&nat=or&oqp=&dates=&lg=&language=en&jur=C%2CT%2CF&cit=non e%252CC%252CCJ%252CR%252C2008E%252C%252C%252C%252C%252C%252C%252C%252C%252C%252Ctru e%252Cfalse%252Cfalse&num=T457%252F09&td=%3BALL&pcs=Oor&avg=&page=1&mat=or&jge=&for=&cid=529470 4 The text of Commission Decision 2009/971 can be accessed here: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32009D0971&rid=1

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Tutorial 2: The functioning of the European Central Bank, its decision-making procedures 1. The European Central Bank is portrayed in contemporary media as a mighty powerful institution with the capacity to decide about the faith of Eurozone. Discuss the legal status of the ECB. In particular, in which ways is the ECB´s independence protected? Has the Treaty of Lisbon lead to changes in the ECB´s legal status? Further, take stock and discuss the accountability arrangements applicable to the ECB. Formulate your legal opinion on whether you agree with the ECB´s refusal to appear before the Irish Committee of Inquiry into the Banking Crisis. 2. Analyse the ECB´s decision-making procedures! Focus especially on the voting rules as effective of 1 Jan 2015 (Art. 10 of the Statute) and compare them with the previous situation. Further, compare the decision-making rules applicable to the ECB´s Governing Board with the Council voting rules. Against this background, discuss the implications this has / has not on the legitimacy of decisions taken according to the new rules. Further, what is the position of those members that have to pause?

Material: · N Lavranos, ´The limited functional independence of the ECB` 29 (2004) European Law Review 115 (via westlaw) · M Draghi, Accounts and Accountability: Speech by Mario Draghi, President of the ECB at the Euro 50 Group Roundtable on “Monetary Policy in Times of Turbulences” Frankfurt, 31 March 2015. · ´Appendix 7: Correspondence with the ECB` in Houses of the Oireachtas, ´Report of the Joint Committee of Inquiry into the Banking Crisis: Volume 2: Inquiry Framework` accessed 03 March 2016, 114-131. · European Central Bank, FAQ on the rotation of voting rights in the Governing Council. · European Central Bank, Rotation of voting rights in the Governing Council. Further non-compulsory material: · C. Zilioli and M. Selmayr, The Law of the European Central Bank (Hart Publishing: Oxford and Portland 2001). · C-11/00 Commission v ECB (CJEU 10 July 2003).

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6.5. WEEK 4 Tutorial 3: The tutorial will focus on certain aspects of state aid to financial institutions. Students will analyse how the European Commission enforces the rules on state aid to banking. They will do so by discussing the General Court´s judgements: T-319/11 ABN Amro and T-33/10 ING v Commission

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6.6. WEEK 5 Lecture 4: Crisis and response of EU/MS: new rules, new instruments and institutions; C-370/12, Pringle

The lecture examines the causes of the crisis and how the EU and/or Member States have tried to resolve problems by establishing new rules, procedures and institutions. It also considers whether the new rules and institutions can effective prevent new crises. The judgments in C-27/04, C-370/12, T-327/13 and T-38/14 and will also be analysed. Materials: · Vade mecum on the Stability and Growth Pact, European Economy, 2013 · P. Craig, Pringle: Legal Reasoning, Text, Purpose and Teleology, Maastricht Journal of European and Comparative Law, 2013 · C-27/04, Commission v Council · C-370/12, Pringle v Ireland · T-327/13, Mallis v Commission & ECB · T-38/14, Kafetzakis v Greece, Council, EP, Commision, ECB

Material for the students´ presentation: Group 5:

6-pack

Group 6:

2-pack

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Tutorial 4: The centrality of the Eurogroup The financial and sovereign debt crisis has highlighted the relevance of the Eurogroup. This week´s tutorial will focus on an analyse and discussion of the striking centrality of the “Eurogroup”, especially taking into consideration its “de-facto” position in the ECOFIN Council and the ESM and its role in the overhaul of the EMU architecture in the last years. 1. Compare the composition of the ECOFIN Council, the Eurogroup and the ESM Board of Governors. Based on such comparison, discuss the accountability arrangements. Additionally, analyse and discuss the transparency arrangements applying to the different formats. 2. Simulation: The Eurogroup has developed into a central powerhouse of decision-making not only for the Eurozone MS but indirectly deciding about the future of EU integration as a whole. Serious concerns have been raised about such role for this institution. The Eurogroup is mentioned in Art. 137 TFEU. Protocol (No 14) attached to the Treaties spells out further details. However, especially within the post-crisis governance framework of the EMU, the role of the Eurogroup is not adequately reflected in the Treaties. Against this background, especially the non-Eurozone MS, the European Parliament and wide variety of interest groups and civil society organisations demand to fundamentally reconsider the Eurogroup´s position within the current Treaty structure. The Commission submits to the Council a proposal for amendment of the Treaties as regards the Eurogroup. With the Commission and the European Parliament in favour of examining the issue of Treaty amendment, the European Council decides to task its President to convene a convention. You work in the relevant unit within (a) the European Parliament, (b) a national ministry of a Eurozone MS, (c) a national ministry of a Non-Eurozone MS, (d) a national parliament of a Eurozone MS and (e) a national parliament of a Non-Eurozone MS. Your Head of Unit will prepare and counsel the representatives of your institution in the convention. You are asked to give legal advice on how the Eurogroup should be best placed within the amended Treaty structure. Beyond the general aspects, your Head of Unit is especially interested in a proposal on (a) whether the Eurogroup should have decision-making powers, (b) for the accountability arrangements vis-à-vis the Eurogroup and (c) the way it and its actions ought to be subject to judicial review at EU level. You have to motivate your proposal. Materials: · P Craig, ´The Eurogroup: Legitimacy, Democratic Accountability and Decision-Making: Contribution to the Hearing on Institutional aspects of the new rules on economic governance and the role of the Eurogroup` 05 May 2015. · T-327/13 Mallis and Malli (CJEU 16 October 2014) · Remarks by J. Disselbloem following the Eurogroup meeting of 11 February 2016. · Eurogroup President, ´Summing-up letter: Eurogroup meeting of 11 February 2016` The Hague 19 February 2016. 14

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Eurogroup, ´Draft Eurogroup annotated agenda 02 March 2016` The Hague 02 March 2016. Remarks by J. Disselbloem following the Eurogroup meeting of 7 March 2016.

Further non-compulsory material: ·

U. Puetter, Governing informally: the role of the Eurogroup in EMU and the Stability and Growth Pact 11 (2004) Journal of European Public Policy

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6.7. WEEK 6: Lecture 5: Bailing in and bailing out: Legal consequences and responsibility When countries and banks were bailed out, holders of government bonds and creditors of banks were bailed in. This raises important questions as to who bears responsibility for the bailing in of bond holders and creditors. The lecture will focus on two judgments of the General Court in cases T38/14, Kafetzakis v European Parliament and T-79/13, Accorinti v ECB. Material:

· ·

Karl-Philipp Wojcik, 'Bail-in in the Banking Union' (2016) 53 Common Market Law Review, Issue 1, pp. 91–138 Anastasia Karatzia ‘Cypriot Depositors Before the Court of Justice of the European Union: Knocking on the Wrong Door?’ (2015), vol. 26(2) King’s Law Journal, p. 175

Material for the students´ presentation: Group 7:

C 226/13, Fahnenbrock et al

Group 8:

T-291/13 – T-294/13

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Tutorial 5: Excessive Deficit Procedure and Macroeconomic Imbalance Procedure + European Semester This week´s tutorial will focus on the EU´s economic policy framework. Throughout the crisis, the framework for the EMU´s economic policy pillar has been substantially reformed by means of secondary legislation (6-pack, 2-pack) as well as by intergovernmental agreements. Students will examine the legal basis for the European Semester, the decision-making procedures of the Excessive Deficit Procedure (EDP) and the Macroeconomic Imbalance Procedure (MIP) and therein, the rules applying to different groups of MS. 1. What is the EDP? What is the MIP? What are the legal bases for these two procedures? 2. Explain what the European Semester is and how it works. Identify the relevant elements of the EDP and the MIP in the European Semester. 2. Explain the decision-making procedures in the EDP and the MIP. Which institutions take the decisions in the two procedures. Analyse and evaluate the inter-institutional relationship therein. 4. Explain the differences between the Eurozone MS and the non-Eurozone MS in the procedures.

Material: As the European Semester 2016 is still ongoing, relevant material will be published on EleUM. It will complement the material listed below. · ·

Relevant legal sources can be found in: Council of the European Union, ´Economic and Monetary Union: Legal and political texts`. R Smits, ´The Crisis Response in Europe´s Economic and Monetary Union: Overview of Legal Developments` 38 (2015) Fordham International Law Journal 1135, 1140-1164.

Further non-compulsory material: ·

C-27/04 Commission v Council (13 July 2004).

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6.8. WEEK 7 Lecture 6: Establishment of Banking Union, SSM, SRM, multiple roles of the ECB The banking union and the single supervisory and resolution mechanisms are very recent constructions. They are intended to support the monetary union by improving the quality of banking supervision and by severing the link between banking debt and sovereign debt. The lecture will identify the main features of the banking union and consider the judgment in case T-496/14. Materials: · · · · · ·

C. Alcidi, et al, Enhancing the Legitimacy of EMU Governance, CEPS, 2014 http://www.ceps.eu/node/9914 DG ECFIN, EU Economic Governance http://ec.europa.eu/economy_finance/economic_governance/index_en.htm F. Amtenbrink, New Economic Governance in the European Union, in K. Purnhagen and P. Roth (Eds.), Varieties of European Economic Law and Regulation, (Springer, 2014) P. Craig, The Stability, Coordination and Governance Treaty: Principle, Politics T-496/14, UK v ECB P Nicolaides, ´”All Bad Things Must Come to an End”: The Application of State Aid Rules to the New EU Regime for Bank Resolution` Maastricht Journal 2016 (forthcoming)

Material for the students´ presentation: Group 9:

SSM / ECB manual

Group 10:

BRRD / SRM

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Tutorial 6: Accountability arrangements within the Single Supervisory Mechanism and the Single Resolution Mechanism Since late spring 2012, the European institutions have established the so-called Banking Union. The first major pillar therein is the Single Supervisory Mechanism (SSM), the second pillar the Single Resolution Mechanism (SRM). Both apply to the Eurozone MS and those Non-Eurozone EU MS who wish to join. 1. Against this background, discuss the different roles of the ECB. Focus especially on the ECB´s role within the traditional area of its competences, its particular role in the crisis and its role within the newly established Single Supervisory Mechanism (SSM). 2. Take stock of, analyse and discuss critically the accountability arrangements for the SSM and the SRM.

Materials: ·

·

· ·

Relevant articles in Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 320/1 of 30 November 2013) Relevant articles in Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 225/1 of 30 July 2014) R Simits, ´The Crisis Response in Europe´s Economic and Monetary Union: Overview of Legal Developments` 38 (2015) Fordham International Law Journal 1135, 1172-1177. P Nicolaides, ´End of bailing out of banks, but how accountable will the Single Resolution Board be? Europe is talking … blog.coleurope.eu 04 January 2016.

Further non-compulsory materials: ·

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Interinstitutional Agreement between the European Parliament and the European Central Bank on the practical modalities of the exercise of democratic accountability and oversight over the exercise of the tasks conferred on the ECB within the framework of the Single Supervisory Mechanism (OJ L 320/1 of 30 November 2013) Agreement between the European Parliament and the Single Resolution Board on the practical modalities of the exercise of democratic accountability and oversight over the exercise of the tasks conferred on the Single Resolution Board within the framework of the Single Resolution Mechanism (OJ L 339/58 of 24 December 2015)

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6.9 WEEK 8 Lecture 7: OMT German constitutional court interpretation, and summary of main points of the course, questions raised by students The last lecture of the course will review the arguments of the German constitutional court in the reference for preliminary ruling in case C-62/14 and the response of the Court of Justice. The second part of the lecture summarises the main issues covered in the course and responds to questions raised by students. Materials: ·

· ·

P Nicolaides, ´The Legal Implications of the Incompleteness of the Economic and Monetary Union` 22 (2015) Maastricht Journal of European and Comparative Law 481ff (via http://www.maastrichtjournal.eu/table_of_content.aspx) P Craig and M Markakis, ´Gauweiler and the legality of outright monetary transactions` 41 (2016) European Law Review 4ff (via westlaw) T Tridimas and N Xantohoulis, ´A Legal Analysis of the Gauweiler Case: Between Monetary Policy and Constitutional Conflict` 23 (2016) Maastricht Journal of European and Comparative Law 17ff (via http://www.maastrichtjournal.eu/table_of_content.aspx)

Material for the students´ presentation: 11.

Views of the BVerfG

12.

AG Opinion

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Tutorial 7: Review and Q&A 1. Students are expected to review their notes and the materials for the lectures / tutorials in order to prepare this week´s tutorial: a. European Institutions and Member States have adopted various measures in the attempt to overcome the financial and sovereign debt crisis. These measures can be distinguished in several ways. Prepare a list of meaningful dimensions according to which you are able to group together / distinguish the different measures (example: one dimension could be the legal nature of the measures). b. What is the role of courts in the context of the ESM?

2. Finally, we will spend some time to evaluate the course. This evaluation will be guided by the following inter-related questions. 1. What would you have liked to see in the course? 2. What would you drop from the course? Keep in mind that the schedule for the course is already quite packed. If you suggest an addition, think about which elements to drop at the same time and vice-versa.

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