German top court rejects delay to euro ruling

Tue Sep 11, 2012 6:52am EDT
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By Stephen Brown

BERLIN (Reuters) - Germany's Constitutional Court will go ahead with a long-awaited ruling on Wednesday on the legality of the euro zone's new permanent bailout fund and budget rules, despite a last-minute legal challenge by a member of parliament.

On Tuesday, the court rejected an attempt to further delay a ruling on the European Stability Mechanism (ESM) and fiscal compact, which had previously been pushed back by months while the judges reviewed whether the German parliament is permitted under the constitution to ratify the treaties.

Further delay to the ruling on the ESM would have upset bond and currency markets which are already on tenterhooks awaiting the green light from the 17-member euro zone's biggest economy.

If the court upholds injunctions in its ruling at 10 a.m. (0400 EDT) on Wednesday, it will plunge the currency zone deeper into turmoil by casting doubt on Europe's ability to launch further rescue bids of heavily indebted southern states.

But legal experts believe the eight judges in the court's Second Senate will approve the bailout fund and budget package, while possibly imposing tough conditions that would limit Berlin's flexibility on future rescues.

Bielefeld University law professor Franz Mayer said the decision on Tuesday not to admit the last-ditch challenge lodged by conservative, eurosceptic lawmaker Peter Gauweiler was a "positive signal" for those hoping the court will allow the ratification of the new EU deal on Wednesday.

"It indicates that the judges know very well what they can do and what they cannot do and proves that they are well aware of the consequences of their decisions in the euro context," he said, adding that Gauweiler had a record of "filibustering".

Nonetheless, EU financial legislation is increasingly butting against limits the German constitution sets on national institutions relinquishing powers, so more cases seem likely.   Continued...

Journalists wait in front of the German Constitutional Court during the hearing on the European Stability Mechanism (ESM) and the fiscal pact in Karlsruhe July 10, 2012. REUTERS/Alex Domanski