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The Interplay Between EU Law and International Law to Set Up the Eurozone Rescue Mechanisms

from PART I - RESCUE MECHANISMS AND MONETARY POLICY

Published online by Cambridge University Press:  13 December 2017

Antonio Pastor Palomar
Affiliation:
Universidad Rey Juan Carlos, Madrid, Spain
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Summary

INTRODUCTION: A BODY OF LAW IN THE MAKING AGAINST AN AMBIVALENT FRAMEWORK

This chapter deals with a new form of international financial law: Eurozone rescue mechanisms. This regime stems from the financial assistance granted to Greece, Ireland, Portugal, Spain and Cyprus. To cope with the European debt crisis, this innovative body of law is being developed by different groups of EU Member States together with the EU institutions. The end product of the process may be either synthesis or fragmentation of the existing legal framework.

The following review is by no means a complete one because it does not discuss the law relating to financial market regulation and supervision, i.e. the European banking union.

However, the legal responses to the crisis are very interesting from an international law perspective. Firstly, there is the characterisation of the obligations set out in the agreements on pooled bilateral loans for Greece: are they international law obligations, or rather contracts subject to national law? These instruments set a certain pattern for other agreements to follow, under the mechanisms relating to Ireland, Portugal, Spain and Cyprus. Secondly, there is the role played by the European Financial Stability Facility (EFSF) as a public limited liability company incorporated in Luxembourg, which was also a party to an interstate agreement. Thirdly, there is the legal nature of the Memorandum of Understanding (MOU) established in Article 2(1) of the 2010 EFSF Framework Agreement (such as Spain's MOU on financial sector policy conditionality), as well as the MOU set out in Article 13 of the European Stability Mechanism (ESM) Treaty.

EU law interacts with international law. It must be taken into account that the set of European arrangements concluded between the Member States to face the financial crisis are subject to the CJEU's jurisdiction in accordance with Article 273 TFEU. In fact, the CJEU rendered a pragmatic judgment on 27 November 2012 in the Pringle case, which upheld the establishment of a stability mechanism for Member States whose currency is the euro.

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Publisher: Intersentia
Print publication year: 2016

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