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The MoU was an atypical EU law act (Pereira Coutinho 2013: 116; Kilpatrick 2014: 411): its entry into force and execution conditioned the application of the Council decision that implemented a Regulation based on article 122 (2) TFEU that created the financial mechanism (EFSM) that allowed the EU to bail-out Eurozone Member States.XXXVII As it was signed by the Commission on behalf of the EU [article 2 (2) of Decision 2011/344/EU], it could be qualified as ‘an act of an institution’ (Article 267 (1) of the TFEU) and submitted to a validity review by the Court of Justice under the preliminary reference procedure. The MoU created binding legal effects on both of its signatories. For the EU, the fulfilment of the MoU’s conditionality obliged the Council to authorize the payment of the scheduled loan instalments to the Portuguese State. A Council decision that denied such a disbursement could be appealed through the annulment procedure (Article 263 TFUE). For the Portuguese State, Council Recommendations taken in the framework of the excessive deficit procedure refer to the obligation to implement the measures as laid down in the Council Implementing Decision 2011/344/EU and further specified in the MoU and its subsequent supplements.XXXVIII The failure to comply with the MoU could ultimately determine the adoption by the Council of sanctions foreseen in article 126 (11) TFEU. The eventual qualification of the MoU as soft law would not exclude the admissibility of a preliminary reference on its validity. In Grimaldi the Luxembourg court declared that non-binding EU law acts, such as recommendations, may be submitted to a reference for a preliminary ruling when such acts intend to produce legal effects vis-à-vis third parties, namely when they ‘they are designated to supplement binding EU law provisions,’XXXIX which in this case were the Council Regulation (UE) 407/2011 and the Council Implementing Decision 2011/344/EU. 4. The MoU, the Charter and the rule of Law 4.1. If the MoU were an atypical EU law, the national budgetary provisions under review in the preliminary references submitted by Portuguese courts in Fidelidade Mundial and Via Directa would be ‘implementing Union law’ [Article 51 (1) of the Charter]. Those provisions Except where otherwise noted content on this site is licensed under a Creative Commons 2.5 Italy License E -117

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Austerity on the loose in Portugal: European judicial restraint in times of crisis

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Authors: Francisco Pereira Coutinho

Country

Portugal

Rights Involved

Right to social security

Issue

Resource expenditure
Resource generation
Transparency

Year: 2016

Summary: Discusses the MAR obligation as it relates to austerity measures adopted by Portugal. The international bailout granted to Portugal between 2011 and 2014 was conditional on the adoption by the Portuguese State of austerity measures included in a memorandum of understanding (MoU) signed by the European Commission on behalf of the European Union (EU) and the Member States. Its implementation caused a significant decrease in the level of protection of social rights. The compatibility of the MoU with core principles of the rule of law and with the EU ́s social Constitution was never tested in court. A systemic failure in the jurisdictional system of the EU immunized the MoU to any judicial challenge. At the apex of the system, the Court of Justice of the EU declined to answer preliminary references submitted by Portuguese lower courts that questioned the compatibility with the Charter of Fundamental Rights of the EU of national budgetary measures that implemented the MoU. At the bottom, Portuguese courts either failed to properly identify the EU law acts that were the source of national austerity measures or is regarded their role as common EU law courts of ordinary jurisdiction when they bypassed the opportunity to refer a question for a preliminary ruling of the Court of Justice challenging the validity of the MoU.

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Portugal case.pdf
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Austerity on the loose in Portugal: European judicial restraint in times of crisis

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