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questions for a preliminary ruling of the Court of Justice challenging the validity of the MoU (section four).X 2. The EU genealogy of the Portuguese bailout legal instruments 2.1. On 7 May 2010, on the eve of what was named – in retrospective quite hyperbolically – ‘the most dramatic weekend in EU history’ (Ruffert 2011: 1779), the Heads of State or Government of the Eurozone reaffirmed their commitment to explore ‘the full range of means available to ensure the stability of the euro area’. Something had to be done to dam the systemic risk of a domino effect on the solvency of Eurozone Member States following the bailout of Greece agreed just days before the summit (on 2 May 2010). If countries such as Portugal, Italy, Ireland or Spain were to lose access to international debt markets the survival of the Euro could be at peril. The Commission was thus mandated to draft a European stabilization mechanism to preserve financial stability in Europe.XI On 10 May 2010, Ecofin approved the establishment of a European stabilization mechanism based on an EU regulation and a Special Purpose Vehicle adopted by Eurozone Member States pursuant to their national constitutional requirements. Regulation (EU) 407/2010 adopted the next day created the European Financial Stabilisation Mechanism (EFSM). On 7 June 2010, the European Financial Stability Mechanism (EFSF) was incorporated in Luxembourg as a private company. The activation of both bailout mechanisms was limited by the adoption of ‘strong conditionality, in the context of a joint EU/IMF support’, and based ‘on terms and conditions similar to the IMF’.XII Conditionality in this context was necessary to comply with the no-bailout clause of Article 125 TFEU.XIII The latter only permits the granting of financial assistance by the EU and between Eurozone Member States provided that the conditions attached to such assistance are such as to prompt the beneficiary Member State to implement sound budgetary policies.XIV 2.2. Regulation (EU) 407/2010 is based on Article 122 (2) TFEU that allows financial assistance to be granted, under certain conditions, to a Member State facing difficulties or Except where otherwise noted content on this site is licensed under a Creative Commons 2.5 Italy License E -110

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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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