Pringle begins ESM legal challenge

The European Stability Mechanism Treaty breaches the Irish Constitution, European Union law and the treaties of the EU on several grounds, Independent TD Thomas Pringle has argued before the High Court.

Mr Pringle’s action raises matters of “enormous importance” for the State and is fundamentally concerned with the rule of law in the State and the EU, his counsel John Rogers SC said.

The ESM treaty of February 2012 will dilute the financial sovereignty of this State and its capacity to say yes or no in the realm of economic and monetary matters, the Donegal South West TD contends. The treaty will also give officers of the State, particularly the Minister for Finance, powers beyond those conferred on him by law.

Mr Pringle claims the ESM treaty is inextricably intertwined with the Fiscal Stability Treaty approved by the people in last month’s referendum and he argues Ireland cannot formally ratify the ESM treaty next month, as intended by the Government, without first putting that to the people in a referendum.

He claims the treaty breaches the Constitution and other EU treaties on a number of grounds, including that it provides for establishment of an autonomous financial institution, akin to a bank, with the power to grant financial assistance beyond circumstances permitted by the EU treaties.

Under the treaty, there is power to call on Ireland to make a capital contribution of some €11.154 billion, a sum equal to one third of Government tax revenue last year, to the new institution and no limit to what funding may be sought in the future, Mr Rogers said.

Decisions on whether to grant emergency funding may also be taken by qualified majority voting with the effect the larger member states will decide, Mr Rogers said. A State that might say no “will not be heard”.

The effect of continuing contribution requirements on States with excessive deficits will be to exacerbate their fiscal deficits, public debt and liability to the ESM, Mr Pringle contends. This would not only render them more vulnerable financially but also place them in breach of provisions of the treaty on the Functioning of the EU (TFEU).

The breach of EU treaties resulting from conferring EU competences on an international autonomous institution was exacerbated by the extensive discretion conferred on that institution, plus the fact it would act outside the control of the EU and be subject to very limited review by the European Court of Justice, he argues.

Under the ESM treaty, the governors and staff of the new institution - to be based in Luxembourg - are immune from legal proceedings in relation to acts performed by them “in their official capacity”, the court heard. The new body will be funded, subject to review, by some €500 billion.

Ms Justice Marty Laffoy heard opening arguments today in the action by Mr Pringle against the Government, Ireland and the Attorney General. The case is expected to last several days.

In opposing the action, the defendants dispute Mr Pringle’s entitlement to the declarations sought, including that the treaty violates the principles of the TFEU and that any purported ratification of it is void.