Financial Crisis

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Karlsruhe gives green light for German ESM ratification

September 12, 2012

On September 12, 2012, the German Constitutional Court dismissed several constitutional complaints that sought an injunction to prevent German ratification of the European Stability Mechanism (ESM) - a central pillar of the Eurozone's crisis response - and the Fiscal Treaty in the preliminary phase of the proceedings (extracts in English). A full ruling is expected in a few months. German ratification is required for the ESM treaty to enter into force, and critical in financial terms for the ESM's credibility. The Court's preliminary ruling means that the last hurdle for the ESM to enter into force has now been cleared. German ratification should follow in the next few weeks. The court conditioned German ratification on two reservations to the ESM treaty: first, the German capital subscription needs to be limited to 190 billion Euros, as provided by the ESM Treaty (though the ESM's capital may be increased beyond this ceiling pursuant to the procedure forseen in Article 10 of the ESM Treaty); and second, notwithstanding the confidentiality of the ESM's deliberations, the German…

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Dublin, Karlsruhe and Luxembourg in dialogue

August 6, 2012

While financial markets have focused on Karlsruhe where the second challenge to the Eurozone rescue efforts in a year is currently pending, the Irish Supreme Court held on July 31 that Irish ratification of the Treaty establishing the European Stability Mechanism and the Fiscal Treaty was compatible with the Irish constitution.  The court referred two…

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ECHR leaves Northern Rock shareholders out in the cold

August 3, 2012

On August 1, the European Court of Human Rights (ECtHR) dashed hopes of Northern Rock shareholders to obtain compensation from the UK for the collapse and nationalization of British bank Northern Rock. The Fourth Section of the ECtHR unanimously dismissed the case Dennis Grainger and others v. UK (Application No. 34940/10) as manifestly ill-founded and inadmissible. The…

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Review of Expert Determinations of the International Swaps and Derivatives Association by Domestic Courts

May 2, 2012

A central policy concern since the onset of the Greek debt crisis in 2010 has been whether sovereign debt restructurings trigger credit default swaps (CDS). CDS are insurance-like financial products whereby a protection seller agrees to pay the protection buyer in case of a credit event on a reference entity (in this case Greece) in return for…

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Integration Through Fear

April 3, 2012

Quos Deus vult perdere prius dementat! The manner in which Europe is addressing its grave crisis seems to be validating this piece of wisdom attributed to Euripides, Seneca and others. One manifestation is an argument which has become prevalent. In his very first speech as Premier elect to the Italian Senate,…

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