06 July 2012

Fiscal Stability Treaty – Ratification requirements and present situation in the Member States

This note provides an overview of the ratification procedures of the modification of article 136 TFEU, the European Stability Mechanism Treaty and the Treaty on Stability, Coordination and Governance in EU Member States.

Article 136 (3) TFEU

The constitutional requirements for ratification differ from Member State to Member State. Application of the simplified revision procedure by the European Council under article 48(6), is conditional upon the principle that the amending decision does not provide for an increase of competences of the European Union.

This principle, as well as the fact that the article applies solely to the members of the eurozone, guided the analysis of certain EU Member States' governments who submit it to less constraining ratification procedures (Denmark, Greece and Latvia). But several Member States already indicated their decision to use the constitutional majority (Germany). The constitutions of other Member States require a constitutional majority for any treaty amendment (Austria).

Article 2 of the Decision of the European Council indicates as the objective for the date of entry into force 1st January 2013, provided that all EU Member States have successfully completed approval of the decision according to their respective constitutional requirements. Nevertheless, the ratification objective for the related ESM treaty was anticipated to 1st July 2012.

European Stabilty Mechanism Treaty

With the exception of Estonia, most of the Member States will treat ESM as a standard international treaty, and apply the relevant less constraining options for its ratification. In some Member States, ratification might be subject to a decision to be taken by a constitutional court or similar body (Estonia); in others, ex post scrutiny of ratification is currently going on (Germany).

According to the provisions in article 48 (1), the ESM treaty shall enter into force once parties representing at least 90 per cent of capital subscription (as specified in an annex and based on ECB contribution key) to have ratified it, i.e eurozone members. The stated objective for its entry into force is 1st July 2012.

Under the current circumstances, when Italy ratifies the treaty, which is forseen before the end of July, the conditions in terms of share of capital contributions will be fulfilled.

Treaty on Stability, Coordination and Governance in the Eonomic and Monetary Union

By virtue of article 3 paragraph 2 of the treaty, the Contracting Parties have the obligation to transpose the rules on balanced budgets "through provisions of binding force and permanent character, preferably constitutional" at the latest one year after the entry into force of the Treaty. Several Member States already have such rule embedded in the constitution (Germany, Austria, Poland, Hungary, Spain); in some cases more stringent than the requirements enshrined in the treaty (Germany), other countries indicate their intentions to upgrade the related provision (Austria).

According to article 14(2) and (3), the TSCG needs to be ratified by at least 12 euro area Member States to enter into force among them. At the time of the signing the objective date for its entry into force was 1st January 2013.

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