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20 Maastricht Journal of European and Comparative Law 3 (2013)


The CJEU's judgment in Pringle saved the European Stability Mechanism from invalidity. The result was unsurprising, given that the contrary conclusion would have precipitated further crisis in the financial markets. The judgment is nonetheless highly interesting and not merely for those concerned with this aspect of EU law. This is because it contains much that is of more general relevance for the very nature of legal reasoning, and the blend of text, purpose and teleology that informs legal discourse. This article addresses two of the central claims made in the case.

The first was that the ESM was in reality concerned with monetary policy and not economic policy and thus fell within the exclusive competence of the EU, with the consequence that the Member States had no capacity to make the ESM. The second and most important aspect of the applicant's argument was that the ESM infringed the rule against bail outs contained in the Lisbon Treaty. The CJEU also rejected this argument. It correctly identified the rationale underlying the no bail out rule, this being to prevent diminution in the incentive for financial probity by the Member States. The Court then concluded that the terms of ESM assistance entailed no such diminution. This conclusion is however problematic as will be seen in the article, and the reality is that result in Pringle can only really be sustained by the addition of a teleogical dimension to the Court's reasoning.

A third dimension to the case concerned the ability of the EU institutions to participate in the ESM. Reasons of space mean that this is not examined in any detail in this article. In brief, the CJEU applied prior rulings to the effect that EU institutions are able to participate in agreements made outside the EU legal framework, provided only that they are compatible with EU law, and that the powers accorded to the EU institutions do not alter the essential character of the powers conferred on those institutions by the Treaties. The application of this rule may well have been defensible in relation to the ESM, but it nonetheless raises more general issues of principle and legitimacy that have not been explored. A subsequent article will consider the foundational, procedural and substantive issues posed by this rule.